SP SINGLA CONSTRUCTIONS PVT. LTD. versus STATE OF HIMACHAL PRADESH AND ANOTHER

Citation: [2018] 14 S.C.R. 1005 · Decided: 04-12-2018 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Disposed off

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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1005
SP SINGLA CONSTRUCTIONS PVT. LTD.
v.
STATE OF HIMACHAL PRADESH AND ANOTHER
(Civil Appeal Nos.11824-25 of 2018)
DECEMBER 04, 2018
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Arbitration and Conciliation Act, 1996:
ss. 11(6), 21 and 25 (a) – Appointment of arbitrator – Contract
between appellant-contractor and respondent-State – Dispute
between the parties – Contractor requested appointment of
arbitrator – State appointed “Superintendent Engineer, Arbitration
Circle” as the arbitrator in terms of arbitration clause (clause 65
of General Conditions of Contract) – Contractor did not participate
in arbitration proceedings – The proceedings terminated u/s. 25(a)
– Contractor being aggrieved by appointment of the arbitrator, filed
petition u/s. 11(6) before High Court seeking appointment of
independent arbitrator – High Court dismissed the petition holding
that grievance against appointment of arbitrator in terms of
agreement, can be by way of petition u/s. 13 and while challenging
the award u/s. 34 and s. 11(6) was not invokable – On appeal,
held: The appointment of the arbitrator was as per the arbitration
clause of the contract – Arbitration clauses in government contracts
providing that an employee of the Department will be the sole
arbitrator are neither void nor unenforceable – Appointment of the
Superintendent Engineer in the present case was not in deviation
of the arbitration clause of the contract – Any challenge to
appointment of arbitrator ought to have been raised before the
arbitrator himself in the first instance – Bar u/s. 12(5) of the
Amendment Act of 2015, to appointment of arbitrator by post, would
not be applicable to the present case because the Amendment Act
itself would not be applicable  to the case as the arbitration
proceedings commenced much prior to coming into force of
Amendment Act – When the parties have specifically agreed for
appointment of sole arbitrator, it was not proper for the contractor
to approach High Court for seeking appointment of independent
arbitrator – However, the termination of arbitration proceedings
[2018] 14 S.C.R. 1005
1005
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1006                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
was not correct as no warning was given by the arbitrator to the
contractor before terminating the proceedings – State directed to
appoint an arbitrator in terms of arbitration clause – Appellant
directed to file his claim before the arbitrator – Arbitration and
Conciliation (Amendment) Act, 2015 – ss.12(5) and 26.
Disposing the appeals, the Court
HELD : 1. A perusal of clause (65) makes it apparently
clear that it was permissible to appoint a person by designation
and this will be evident from clause (65), in particular the sentence
“the arbitrator to whom the matter is originally referred being
transferred or vacating his office or being unable to act for any
reason the Chief Engineer is to appoint another person….”.  If
appointments were only to be made by name and not by
designation there could be no question of further appointment
on the Arbitrator vacating his office.  It is only when an Arbitrator
is appointed by designation that the question of a vacancy upon
the incumbent vacating office could arise thereby enabling the
Chief Engineer to appoint another person to act as arbitrator.
The Superintendent Engineer, Arbitration Circle appointed as
the Arbitrator is from the very arbitration circle, HPPWD and
such appointment is only as per clause (65) of the contract and
there is no merit in the objection raised by the appellant.
[Para 10][1013-G-H; 1014-A-C]
2. It is not correct to say that the appointed arbitrator is an
employee in service of the HPPWD which the provision of Section
12(5) of the 1996 Act (as amended w.e.f. 23.10.2015) bars at the
threshold itself. Arbitration clauses in government contracts
providing that an employee of the department will be the sole
arbitrator are neither void nor unenforceable.  The fact that a
named arbitrator is an employee of one of the parties is not ipso
facto a ground to raise a presumption of bias or lack of
independence on his part.  The arbitration agreements in
government contracts providing that an employee of the
department or a higher official unconnected with the work or the
contract will be the arbitrator are neither void nor unenforceable.
[Para 11][1014-C-F]
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1007
Indian Oil Corporation Limited and others v. Raja
Transport Private Limited (2009) 8 SCC 520 : [2009]
13 SCR 51

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