UNION OF INDIA versus PARMAR CONSTRUCTION COMPANY

Citation: [2019] 5 S.C.R. 1009 · Decided: 29-03-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Disposed off

Cited by 5 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

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UNION OF INDIA
v.
PARMAR CONSTRUCTION COMPANY
(Civil Appeal No. 3303 of 2019)
MARCH 29, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Arbitration and Conciliation Act, 1996: s. 11(6) – Work
contract – Dispute between the parties – In view of arbitration clause
in the agreement, notice sent by respondent contractor to appellant
to appoint an arbitrator invoking clause of the contract to resolve
the dispute of payment of outstanding dues – Rejected by the
appellants submitting that “No Due Certificate” was signed and
that entails no dispute to be sent to arbitration – Subsequently,
application u/s. 11(6) by the respondent before the High Court for
appointment of independent arbitrator – High Court appointed a
retired judge of the High Court as an independent Arbitrator – On
appeal, held: Emphasis should be on the agreed terms and to first
resort to the procedure as prescribed and open for the parties to
the agreement to settle differences/disputes arising under the terms
of the contract through appointment of a designated arbitrator –
Independence and impartiality of the arbitrator has never been
doubted but where it is in doubt or where the arbitral tribunal
appointed in terms of the arbitration agreement has not functioned,
or has failed to conclude the proceedings or to pass an award
without assigning any reason, it becomes necessary to make a fresh
appointment – On facts, notice sent by respondent much prior to
enforcement of the Amendment Act, 2015, thus, the provisions of
the Act of 2015 not applicable – High Court was not justified in
appointing an independent arbitrator without resorting to the
procedure for appointment of an arbitrator prescribed under the
clause of the contract under the inbuilt mechanism as agreed by the
parties – Orders passed by the High Court quashed and set aside –
Appellants directed to appoint the arbitrator in terms of the
agreement – Arbitration and Conciliation(Amendment Act), 2015.
[2019] 5 S.C.R. 1009
1009
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SUPREME COURT REPORTS
[2019]  5 S.C.R.
Disposing of the appeals, the Court
HELD: 1.1 As per clause 43(2) of the Contract, the
contractor signs a “No claim” certificate in favour of the railway
in the prescribed format after the work is finally measured up
and the contractor shall be debarred from disputing the
correctness of the items covered under the “No Claim” certificate
or demanding a clearance to arbitration in respect thereof. Each
of the respondent has to attach no claim certificate with final bills
in the prescribed format to be furnished in advance before the
final bills are being examined and measured by the railway
authorities. Although it has been seriously disputed by the
appellants but that is the reason for which even after furnishing
no claim certificate with the final bills being raised, it came to be
questioned by the respondent(contractor) by filing an application
to refer the matter to arbitration invoking clause 64(3) of the
conditions of contract as agreed by the parties. Under clause 64(1),
if there is any dispute or difference between the parties hitherto
as to the construction or operation of the contract, or the
respective rights and liabilities of the parties on any matter in
question or any other ancillary disputes arising from the terms of
the contract or if the railway establishment fails to take a decision
within the stipulated period and the dispute could not be amicably
settled, such dispute or difference is to be referred to arbitration
and who shall arbitrate such disputes/differences between the
parties, the General Manager may nominate the officer by
designation as referred to under clause 64(3)(a)(i) and a(ii)
respectively with further procedure being prescribed for the sole
arbitrator or the Arbitral Tribunal to adjudicate the disputes/
differences arising under the terms of contract between the
parties. [Paras 20, 21][1025-G-H; 1026-A-E]
1.2 The conjoint reading of Section 21 read with Section 26
leaves no manner of doubt that the provisions of the Amendment
Act, 2015 shall not apply to such of the arbitral proceedings which
has commenced in terms of the provisions of Section 21 of the
Principal Act unless the parties otherwise agree. The Amendment
Act, 2015 which came into force, i.e. on 23.10.2015, shall not
apply to the arbitral proceedings which has commenced in
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accordance with the provisions of Section 21 of the Principal Act,
1996 before the coming into force of Amendmen

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