LexSHAILESH DHAIRYAWAN versus MOHAN BALKRISHNA LULLA
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A 8 c [2015] 12 S.C.R. 70 SHAILESH DHAIRYAWAN v. MOHAN BALKRISHNA LULLA (CivilAppeal No. 8731 of2015) OCTOBER 16, 2015 (A. K. SIKRI AND ROHINTON FALi NARIMAN, JJ.] Arbitration and Conciliation Act, 1996: s. 15(2) - Alppointment of substitute arbitrator on resignation of named arbitrator - Applicability of s. 15(2) when arbitrator to whom the matter was referred earlier with the consent of the parties 0 Withdraws therefrom- Held: If arbitration agreement that was arrived at between the parties did not specifically bar the appointment of another arbitrator on the withdrawal of earlier arbitrator appointed by the parties with mutual agreement, s. 15(2) of the Act would be attracted and a substitute arbitrator E could be appointed - Courts have the power to appoint s1.1bstitute arbitrator, which power is given by s. 15(2) of the Act as this provision is to be given liberal interpretation so as to apply to all possible circumstances under which the mandate of the earlier arbitrator may be terminated - F Arbitration Act, 1940 - s. 8. Interpretation of statutes: Purposive interpretation - H¢1d: Though literal rule of interpretation, till some time ago, was treated as the .'golden rule', it is now the doctrine of G purposive interpretation which is predominant, particularly in those cases where literal interpretation may not serve the purpose or may lead to absurdity- If it brings about an end which is at variance with the purpose of statute, that cannot be countenanced. H Dismissing the appeal, the Court 70 SHAILESH DHAIRYAWAN v. MOHAN BALKRISHNA 71 LULLA HELD: PERR. F. NARIMAN, J.: 1. Under Section A 8(1 )(b) read with Section 8(2) if a situation arises in which an arbitrator refuses to act, any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in a fresh appointment, and if such appointment is not made within 15 clear days after B service of notice, the Court steps in to appoint such fresh arbitrator who, by a deeming fiction, is to act as if he has been appointed by the consent of all parties. This can only be done where the arbitration agreement does not show that it was intended that the vacancy caused be C not supplied. However, under Section 15(2), where the mandate of an arbitrator terminates, a substitute arbitrator "shall" be appointed. Had Section 15(2) ended there, it would be clear that in accordance with the object D sought to be achieved by the Arbitration and Conciliation Act, 1996 in all cases and for whatever reason the mandate of an arbitrator terminates, a substitute arbitrator is mandatorily to be appointed. The arbitration agreement between the parties has now to be seen, and E it is for this reason that unless it is clear that an arbitration agreement on the facts of a particular case excludes either expressly or by necessary implication the substitution of an arbitrator, whether named or otherwise, such a substitution must take place. In fact, F sub-sections (3) and (4) of Section 15 also throw considerable light on the correct construction of sub- section (2). Under sub-section (3), when an arbitrator is replaced, any hearings previously held by the replaced arbitrator may or may not be repeated at the discretion G of the newly appointed Tribunal, unless parties have agreed otherwise. Equally, orders or rulings of the earlier arbitral Tribunal are not to be invalid only because there has been a change in the composition of the earlier Tribunal, subject, of course, to. a contrary agreement by H 72 SUPREME COURT REPORTS [2015] 12 S.C.R. A parities. This also indicates that the object of speedy resolution of disputes by arbitration would best be sub- served by a substitute arbitrator continuing at the point at which the earlier arbitrator has left off. [Para 20) [93- 0-H; 94-A-E] B 2. On the facts of the present case, it is clear that there is nothing in clause 8 of the consent terms to show that the resignation of the named arbitrator would lead to her vacancy not being supplied. All that the parties C have done by the said clause is to agree to refer their disputes to the arbitration of an independent retired Judge belonging to the higher Judiciary. There is no personal qualification of the named arbitrator that is required to decide the dispute between the parties. In D faot, she belongs to a pool of independent retired High Court and Supreme Court Judges, f
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