RAJASTHAN SMALL INDUSTRIES CORPORATION LIMITED versus M/S GANESH CONTAINERS MOVERS SYNDICATE

Citation: [2019] 1 S.C.R. 559 · Decided: 23-01-2019 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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[2019] 1 S.C.R. 559
RAJASTHAN SMALL INDUSTRIES
CORPORATION LIMITED
v.
M/S GANESH CONTAINERS MOVERS SYNDICATE
(Civil Appeal No. 1039 of 2019)
JANUARY 23, 2019
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Arbitration and Conciliation Act, 1996 – ss.11 and 15 –
Appointment of arbitrator – Terms of contract provided for
arbitration by the Managing Director of the appellant-Corporation
or his nominee – Respondent participated in the arbitral proceedings
– Arbitration petition by respondent seeking appointment of
independent arbitrator – Held: When the parties have consciously
agreed that the disputes or differences shall be referred to the
Managing Director himself or his nominee for sole arbitration and
having participated in the arbitral proceedings before arbitrator
for quite some time, the respondent cannot turn round and seek for
appointment of an independent arbitrator – Having participated in
the entire arbitration proceedings and acquiesced in the
proceedings, the respondent is estopped from challenging the
competence of the arbitrator.
Arbitration and Conciliation Act, 1996 –  Whether by virtue
of s.12 of the Amendment Act, the Managing Director of the
appellant-Corporation became ineligible to act – Held: After the
amendment to the Arbitration and Conciliation Act, 2015, s.12(5)
prohibited the employee of one of the parties from being an arbitrator
– In the instant case, the agreement between the parties was entered
into on 28.01.2000 and the arbitration proceedings commenced
way back in 2009 and thus, the respondent cannot invoke s.12(5)
of the Amendment Act, 2015 – As per s.26 of the Act, the provisions
of the amended Act 2015 shall not apply to the arbitral proceedings
commenced in accordance with the provisions of s.21 of the principal
Act, before the commencement of this Act unless the parties otherwise
agree – There was nothing to suggest that the parties had agreed
that the provisions of the new Act shall apply in relation to the arbitral
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SUPREME COURT REPORTS
[2019] 1 S.C.R.
proceedings –  The arbitration proceedings started way back in
2009 long before 2015 Amendment Act came into force and,
therefore, 2015 Amendment Act is not applicable to the case in hand
– The statutory provisions that would govern the matter are those
which were then in force before the Amendment Act – Therefore,
Managing Director was not ineligible to act as sole arbitrator –
Arbitration and Conciliation (Amendment) Act, 2015 – s.12.
Arbitration and Conciliation Act, 1996 – s.15 – Delay in
passing award – Termination of mandate and substitution of an
arbitrator –  Mere neglect of an arbitrator to act or delay in passing
the award by itself cannot be the ground to appoint another
arbitrator in deviation from the terms agreed to by the parties –
s.15 dealt with termination of the mandate and substitution of an
arbitrator – As per sub-section (1) of s.15, in addition to the
circumstances referred to in ss.13 and 14 of the Act, the mandate of
an arbitrator shall terminate where he withdraws from office for
any reason or by or pursuant to the agreement of the parties – In
terms of sub-section (2), after termination of arbitrator’s mandate,
the appointment of the substitute arbitrator would be in accordance
with the rules applicable to the appointment of an arbitrator who is
being replaced – s.11(6) of the Act would come into play only when
there was failure on the part of the party concerned to appoint an
arbitrator in terms of the arbitration agreement – In the instant
case, the High Court was not right in appointing an independent
arbitrator without keeping in view the terms of the agreement between
the parties and therefore, the impugned order appointing an
independent arbitrator/retired District Judge was not sustainable.
Arbitration and Conciliation Act, 1996 – s.15 – Remedy to
the Respondent-Contractor    – Arbitral Tribunal did not make
progress in the arbitration matter – As per the arbitral proceedings,
the chronological events were required to be ascertained and
reconstruction was required – Respondent filed application for
appointment of independent arbitrator – The fact of arbitration
application was brought to the notice of Arbitral Tribunal –
Respondent prayed for keeping the arbitration proceedings in
abeyance – On the basis of available materials, the Arbitral Tribunal
passed the final award on 21.01.2016 – Whether the award was
sustainable – Held: Since the High Court was in seisi

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