M/S LAXMI CONTINENTAL CONSTRUCTION CO. versus STATE OF U.P. & ANR.

Citation: [2021] 6 S.C.R. 208 · Decided: 20-09-2021 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 6 S.C.R.
M/S LAXMI CONTINENTAL CONSTRUCTION CO.
v.
STATE OF U.P. & ANR.
(Civil Appeal No. 6797 of 2008)
SEPTEMBER 20, 2021
[M. R. SHAH AND A. S. BOPANNA, JJ.]
Arbitration – Agreement between appellant and respondent-
State – Appointment of an officer of the State department, as
arbitrator in terms of arbitration clause in the agreement – Whether
his mandate to continue the arbitration proceedings came to an
end on his retirement – Whether continuance of arbitration
proceedings by him after retirement can be said to be a misconduct
– Held: Considering the arbitration clause in the agreement, once
a departmental officer was appointed as an arbitrator, he
continued to be the sole arbitrator till the arbitration proceedings
were concluded unless he incurred disqualification under
provisions of the Arbitration Act, 1940; and it cannot be said that
his mandate to continue with the arbitration proceedings came to
an end on his retirement – The Civil Judge, in an arbitration suit
filed by appellant u/s.28 of the Arbitration Act, had extended the
time to the arbitrator to complete the arbitration proceedings and
granted further period of 30 days which was after his retirement
and after specifically overruling/rejecting the objections raised by
respondents that after retirement, he cannot continue with the
arbitration proceedings – Once the Arbitrator continued with the
arbitration proceedings and passed award (in favour of appellant-
claimant) within the extended period of time, it cannot be said that
he misconducted himself by continuing with the arbitration
proceedings – Arbitration Act, 1940 – ss.28 and 30/33.
Allowing the appeal, the Court
HELD: 1.1. In the present case, the agreement contains
an arbitration Clause as per Clause 52 of the agreement. In view
of the same, the only qualification for appointment as an
arbitrator is that he should be the officer of the rank of the
Superintending Engineer or higher. Once such an officer is
appointed as an Arbitrator, he continues to be the Sole Arbitrator
   [2021] 6 S.C.R. 208
208
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till the arbitration proceedings are concluded unless he incurs
the disqualification under the provisions of the Indian Arbitration
Act, 1940. Even after his retirement, the arbitration proceedings
have to be continued by the same Arbitrator. Clause 52 of the
agreement does not provide at all that on the retirement of such
an officer, who is appointed as a Sole Arbitrator, he shall not
continue as a Sole Arbitrator and/or the mandate to continue with
the arbitration proceedings will come to an end. [Para 11][215-
H; 216-D-F]
1.2. The Sole Arbitrator, who at the relevant time was the
Chief Engineer and was qualified to become the Sole Arbitrator
was even nominated and/or appointed by the Chief Engineer as
per clause 52. Therefore, considering the Clause 52 of the
agreement, it cannot be said that his mandate to continue with
the arbitration proceedings would come to an end on his
retirement. [Para 13][217-B-C]
2. Even the observations made by the High Court in the
impugned judgment and order that the Sole Arbitrator
misconducted himself by continuing with the arbitration
proceedings after his retirement is also not tenable at law. In
the present case, the Civil Judge (Senior Division), Roorkee
extended the time to the Sole Arbitrator to complete the
arbitration proceedings and granted further period of 30 days
which was after his retirement and after specifically overruling/
rejecting the objections raised by the respondents that after
retirement, he cannot continue with the arbitration proceedings.
Therefore, once the Sole Arbitrator continued with the
arbitration proceedings and passed the award within the
extended period of time, it cannot be said that he has
misconducted himself as he continued with the arbitration
proceedings. [Para 16][217-H; 218-A-C]
3. The impugned judgment passed by the High Court
quashing and setting aside the award (passed by the Sole
Arbitrator) as well as the order passed by the Civil Judge
making the award, Rule of the Court deserves to be quashed
and set aside. [Para 17][218-C-D]
Himalayan Construction Co. v. Executive Engineer,
Irrigation Division, J&K and Anr., (2001) 9 SCC 359
– relied on.
M/S LAXMI CONTINENTAL CONSTRUCTION CO. v.
STATE OF U.P. & ANR.
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SUPREME COURT REPORTS
[2021] 6 S.C.R.
Prasun Roy v. Calcutta Metropolitan Development
Authority and Anr., (1987) 4 SCC 217 : [1987

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