LexUNION OF INDIA versus M/S. SINGH BUILDERS SYNDICATE
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[2009] 3 S.C.R. 563 ~ -~ UNION OF INDIA A v. -- MIS. SINGH BUILDERS SYNDICATE (Civil Appeal No. 3632 of 2007) FEBRUARY 26, 2009 B [R.V. RAVEENDRAN AND H.L. DATTU, JJ.] ,,<, Arbitration and Conciliation Act, 1996: Section 11 - Appointment of Arbitrator - Retired Judge c of High Court - Appointment of - Challenged - Held: There should be conscious effort to ensure that Arbitral Tribunal is constituted promptly and arbitration does not drag for years and decades - In the facts and circumstances of the case :::- appointment of Retired Judge of High Court not interfered with D " - Constitution of India, Article 136. Arbitration - Delay and high costs - Discussed - Self regulation could make marked improvement. Professionalism in Arbitration - Suggestion for phasing E out arbitration clauses providing for serving officers and to encourage professionalism in arbitration . .> In this appeal, the appellant has challenged the order f of High Court appointing a Retired Judge of High Court F as sole arbitrator to decide the disputes in respect of a construction contract. It was contended by the appellant that as per clause 64 of the general terms and conditions, two serving Gazetted Railway Officers of equal status from the panel G ~ ¥ should be appointed, and they in turn would appoint an umpire. Dismissing the appeal, the Court 563 H 564 SUPREME COURT REPORTS (2009] 3 S.C.R. ·~ . A HELD: 1. It is true that the Arbitral Tribunal should be constituted in the manner laid down in the Arbitration agreement. Provisions for arbitration in contracts entered by governments, statutory authorities, and government companies, invariably require that the Arbitrators should 8 be their own serving officers. Such a provision has to be given effect, subject to requirements of independence and impartiality. But there can be exceptions and this case which has a chequered history, falls under such >. exceptions. [Para 3] [568-A-C] c 2.1. The object of the alternative dispute resolution process of arbitration is to have expeditious and effective disposal of the disputes through a private forum of parties' choice. If the Arbitral Tribunal consists of serving officers of one of the parties to the dispute, as members ~ D in terms of the arbitration agreement, and such Tribunal is made non-functional on account of the action or inaction or delay of such party, either by frequent transfers of such members of the Arbitral Tribunal or by failing to take steps expeditiously to replace the E arbitrators in terms of the Arbitration Agreement, the Chief Justice or his designate, required to exercise power under section 11 of the Act, can step in and pass appropriate orders. [Para 8] [570-F-H; 571-A] ~ ~ F 2.2. An effort should be made to ensure that officers who are likely to remain in a particular place are alone appointed as Arbitrators and that the Arbitral Tribunal consisting of serving officers, decides the matter expeditiously. Constituting Arbitral Tribunals with serving G officers from different far away places should be avoided. There can be no hard and fast rule, but there should be 1' ~ a conscious effort to ensure that Arbitral Tribunal is constituted promptly and arbitration does not drag on for years and decades. [Para 8] [571-8-D] H 2.3. The matter has now been pending for nearly ten UNION OF INDIA v. MIS. SINGH BUILDERS SYNDICATE 565 ~ -· years from the date when the demand for arbitration was A first made with virtually no progress. Having regard to the passage of time, if the Arbitral Tribunal has to be reconstituted in terms of clause 64, there may be a need to change even the other two members of the Tribunal. The delays and frequent changes in the Arbitral Tribunal B make a mockery of the process of arbitration. Having ,• regard to this factual background, the appointment of a retired Judge of the Delhi High Court as sole Arbitrator does not call for interference in exercise of jurisdiction under Article 136 of the Constitution of India. [Para 9] c [571-D-F] Northern Railway Administration, Ministry of Railway, New Delhi VS. Patel Engineering Co. Ltd. 2008 (11) SCALE 500, . • relied on . .. D Union of India vs. M.P. Gupta 2004 (10) SCC 504, referred to. 3. When a retired Judge is appointed as Arbitrator in place of serving officers, the government is forced to bear E the high cost of Arbitration by way of private arbitrator
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