UNION OF INDIA versus PRADEEP VINOD CONSTRUCTION COMPANY

Citation: [2019] 17 S.C.R. 64 · Decided: 14-11-2019 · Supreme Court of India · Bench: R. BANUMATHI, A.S. BOPANNA, HRISHIKESH ROY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 17 S.C.R.
UNION OF INDIA
v.
PRADEEP VINOD CONSTRUCTION COMPANY
(Civil Appeal No. 6400 of 2016)
NOVEMBER 14, 2019
[R. BANUMATHI, A. S. BOPANNA AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996 – s.11 – Northern
Railways awarded two contracts for misc. civil engineering works
to the respondent – According to appellant, the respondent received
full and final payments and acknowledged the same – However,
respondent raised claims in both the contracts and invoked
arbitration clause contained in the agreements and requested
appointment of arbitrator – Appellant rejected the claim –
Thereafter, respondent filed petition u/s.11 of the Act and sought
appointment of the arbitrator – High Court appointed an
independent arbitrator for adjudication of disputes between the
parties, instead of directing appointment as per Cl.64 of the
agreement – On appeal, held: In the instant case, considering the
various matters of railway contracts and setting aside of the
appointment of independent arbitrators, after referring to M.P.
Gupta, V.S. Engineering, Parmar Construction Company and other
Judgments, the appointment of the independent arbitrator was set
aside – When the agreement specifically provides for appointment
of named arbitrators, the appointment should be in terms of the
agreement – The High Court was not right in appointing an
independent arbitrator ignoring Cl.64 of the General conditions
of contract – Therefore, the appellant directed to appoint arbitrator
in terms of Cl.64(3) of the agreement.
Allowing the appeals, the Court
HELD: 1. In Union of India and another v. M.P. Gupta
(2004) 10 SCC 504, Union of India and another v. V.S. Engineering
(P) Ltd. (2006) 13 SCC 240, Union of India v. Singh Builders
Syndicate (2009) 4 SCC 523 and in a catena of judgments, the
court held that whenever the agreement specifically provides for
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   [2019] 17 S.C.R. 64
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appointment of named arbitrators, the appointment of arbitrator
should be in terms of the contract. [Para 14] [72-D]
2. The court, in V.S. Engineering observed that in the case
of public institutions which are slow in responding to the request
made by the contractor for appointment of an arbitrator, the
power of the High Court to appoint an arbitrator under Section
11 is not taken away.  The failure of the authorities in appointing
an arbitrator and when the contractor approached the court for
appointment of an arbitrator under Section 11 of the Act, it will
then be in the discretion of the Chief Justice/designated Judge
to appoint a railway officer as per the contract or a High Court
Judge. [Para 14] [73-D-E]
3.  Considering the various matters of railway contracts
and setting aside the appointment of independent arbitrators,
after referring to M.P. Gupta and V.S. Engineering and other
judgments, in Parmar Construction Company, this Court set aside
the appointment of the independent arbitrator and directed the
General Manager of the Railways to appoint arbitrator in terms
of Clause 64(3) of the agreement. The ratio of the Parmar
Construction Company squarely applies to the case in hand.
When the agreement specifically provides for appointment of
named arbitrators, the appointment should be in terms of the
agreement.  The High Court was not right in appointing an
independent arbitrator ignoring Clause 64 of the General
Conditions of Contract. [Para 15] [73-F-G; 74-C-D]
SP Singla Pvt. Ltd. v. State of Himachal Pradesh and
another (2019) 2 SCC 488 – referred to.
Union of India v. Parmar Construction Company
(2019) 5 SCALE 453 ; Union of India and another v.
M.P. Gupta (2004) 10 SCC 504 ; Union of India and
another v. V.S. Engineering (P) Ltd. (2006) 13 SCC
240 : [2006] 9 Suppl. SCR 125 ; Union of India v.
Singh 
Builders 
Syndicate 
(2009) 
4 
SCC
523 : [2009] 3 SCR 563 – relied on.
Case Law Reference
(2019) 2 SCC 488
referred to
Para 11
(2019) 5 SCALE 453
relied on
Para 11
UNION OF INDIA v. PRADEEP VINOD
CONSTRUCTION COMPANY
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SUPREME COURT REPORTS
[2019] 17 S.C.R.
(2004) 10 SCC 504
relied on
Para 14
[2006] 9 Suppl. SCR 125
relied on
Para 14
[2009] 3 SCR 563
relied on
Para 14
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6400
of 2016.
From the Judgment and Order dated 15.05.2015 of the High
Court of Delhi at New Delhi in Arbitration Petition bearing ARB.P. No.
168 of 2015.
With
Civil Appeal No. 6420 of 2016.
Bharat Singh, Raj Bahadur, Advs. for the Appellant.
Miss Geetanjali Mohan
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