NORTH EASTERN RAILWAY & ORS. versus TRIPPLE ENGINEERING WORKS

Citation: [2014] 6 S.C.R. 1143 · Decided: 13-08-2014 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2014] 6 S.C.R. 1143 
NORTH EASTERN RAILWAY & ORS. 
v. 
TRIPPLE ENGINEERING WORKS 
(Civil Appeal No. 6275 of 2014) 
AUGUST 13, 2014. 
[RANJAN GOGOi AND M. Y. EQBAL , JJ.] 
A 
B 
Arbitration & Conciliation Act, 1996: s. 11 (6) - Appointment of 
arbitrator- Contract providing for arbitration by Railway Officers -
C 
High Court appointing a retired Chief Justice as the Arbitrator -
Held: Although s. 11 says that the High Court must appoint arbitrator 
as per contract between the parties, there is a shift in this notion, 
in the sense that though the contract between the parties must be 
adhered to, deviation therefrom in exceptional circumstances is o 
permissible - In the instant case, appointment of retired judge 
contrary to the agreement requiring appointment of railway officer 
is valid as the arbitration proceedings did not conclude for two 
decades since the contractor raised his claims for alleged wrongful 
termination of the two contracts - The power of the Court under 
E 
the Act has to be exercised to effectuate the remedy provided 
thereunder and to facilitate the mechanism contemplated therein 
- In a situation where the procedure and process under the Act 
has been rendered futile, the power of the Court to depart from the 
agreed terms of appointment of arbitrators must be acknowledged 
- There was no infirmity much less any illegality or failure of justice 
can be said to be occasioned by the order passed by the High 
Court so as to warrant any interference. 
F 
The contracts awarded to the respondent-contractor 
were terminated and the arbitration proceedings commenced 
G 
in the year 1996, however the award was still not passed. The 
contract provided for arbitration by Railway Officers. The High 
Court appointed a retired Chief Justice as the Arbitrator. 
The question which arose for consideration in the instant 
1143 
H 
1144 
SUPREME COURT REPORTS 
[2014} 6 S.C.R. 
A appeal was whether the High Court was right in traveling 
beyond the framework of clause 64(3)(a)(ii) and (iii) of the 
General conditions of contract and in appointing a retired 
Chief Justice as arbitrator. 
B 
Dismissing the appeal, the Court 
HELD 1. The provisions of the General Conditions of 
Contract showed that the panel of arbitrators as per the 
agreement between the parties necessarily has to be 
Gazetted Railway Officers; any vacancy in the panel of 
c arbitrators has to be filled up in the same manner in which 
the initial panel is req&Mred to be constituted. [Para 4) [1150-
C-D] 
2. The "classical notion'' that the High Court while 
exercising its power' under Section 11 of the Arbitration & 
D Conciliation Act, 1996 must appoint the arbitrator as per the 
contract between the parties saw a significant erosion in *Ace 
Pipeline Contracts case wherein this Court had taken the view 
that though the contract between the parties must be 
adhered to, deviations therefrom in exceptional 
E circumstances would be permissible. A more significant 
development had come in a decision that followed soon 
thereafter in **Bharat Battery Manufacturer case wherein it 
was held that once an aggrieved party files an application 
under Section·11 (6) of the Act to the High Court, the opposite 
F party would lose its right of appointment of the arbitrator(s) 
as per the tenns of the contract The implication that the Court 
would be free to deviate from the terms of the contract is 
obvious. The apparent dichotomy in *Ace Pipeline Contracts 
and **Bharat Battery Manufacturerwas reconciled by a three 
judges bench of this Court in ***Northern Railway 
G Administration where the jurisdiction of the High Court under 
Section 11 (6) of the Act was sought to· be emphasized by 
taking into account the expression "to take the necessary 
measure" appearing in sub-section (6) of Section 11 and by 
further laying down that the said expression has to be read 
H 
NORTH EASTERN RAILWAY v. TRIPPLE 
1145 
ENGINEERING WORKS 
alongwith the requirement of sub-section (8) of Section 11 of A 
1the Act. In ****Singh Builders Syndicate, the appointment of 
a retired judge contrary to the agreement requiring 
'appointment of specified officers was held to be valid on the 
ground that the arbitration proceedings had not concluded 
for over a decade making a mockery of the process. This 
B 
Court has suggested therein that the government, statutory 
authorities and government companies should consider 
phasing out arbitration clauses providing for appointment of 
serv

Excerpt shown. Read the full judgment & AI analysis in Lexace.