NDLI: Rajasthan Small Industries Corporation Limited Vs. M/s Ganesh Containers Movers Syndicate

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Managing Director Appointment of arbitrator Arbitration and Conciliation Act ss.11 and 15 1996
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Constitution of India Arbitration and Conciliation Act, 1996 (26 of 1996)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Arbitration and Conciliation Act, 1996 – ss.11 and 15 – Appointment of arbitrator – Terms of contract provided for arbitration by the Managing Director of the appellant-Corporation or his nominee – Respondent participated in the arbitral proceedings – Arbitration petition by respondent seeking appointment of independent arbitrator – Held: When the parties have consciously agreed that the disputes or differences shall be referred to the Managing Director himself or his nominee for sole arbitration and having participated in the arbitral proceedings before arbitrator for quite some time, the respondent cannot turn round and seek for appointment of an independent arbitrator – Having participated in the entire arbitration proceedings and acquiesced in the proceedings, the respondent is estopped from challenging the competence of the arbitrator. Arbitration and Conciliation Act, 1996 – Whether by virtue of s.12 of the Amendment Act, the Managing Director of the appellant-Corporation became ineligible to act – Held: After the amendment to the Arbitration and Conciliation Act, 2015, s.12(5) prohibited the employee of one of the parties from being an arbitrator – In the instant case, the agreement between the parties was entered into on 28.01.2000 and the arbitration proceedings commenced way back in 2009 and thus, the respondent cannot invoke s.12(5) of the Amendment Act, 2015 – As per s.26 of the Act, the provisions of the amended Act 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of s.21 of the principal Act, before the commencement of this Act unless the parties otherwise agree – There was nothing to suggest that the parties had agreed that the provisions of the new Act shall apply in relation to the arbitral proceedings – The arbitration proceedings started way back in 2009 long before 2015 Amendment Act came into force and, therefore, 2015 Amendment Act is not applicable to the case in hand – The statutory provisions that would govern the matter are those which were then in force before the Amendment Act – Therefore, Managing Director was not ineligible to act as sole arbitrator – Arbitration and Conciliation (Amendment) Act, 2015 – s.12. Arbitration and Conciliation Act, 1996 – s.15 – Delay in passing award – Termination of mandate and substitution of an arbitrator – Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties – s.15 dealt with termination of the mandate and substitution of an arbitrator – As per sub-section (1) of s.15, in addition to the circumstances referred to in ss.13 and 14 of the Act, the mandate of an arbitrator shall terminate where he withdraws from office for any reason or by or pursuant to the agreement of the parties – In terms of sub-section (2), after termination of arbitrator’s mandate, the appointment of the substitute arbitrator would be in accordance with the rules applicable to the appointment of an arbitrator who is being replaced – s.11(6) of the Act would come into play only when there was failure on the part of the party concerned to appoint an arbitrator in terms of the arbitration agreement – In the instant case, the High Court was not right in appointing an independent arbitrator without keeping in view the terms of the agreement between the parties and therefore, the impugned order appointing an independent arbitrator/retired District Judge was not sustainable. Arbitration and Conciliation Act, 1996 – s.15 – Remedy to the Respondent-Contractor – Arbitral Tribunal did not make progress in the arbitration matter – As per the arbitral proceedings, the chronological events were required to be ascertained and reconstruction was required – Respondent filed application for appointment of independent arbitrator – The fact of arbitration application was brought to the notice of Arbitral Tribunal – Respondent prayed for keeping the arbitration proceedings in abeyance – On the basis of available materials, the Arbitral Tribunal passed the final award on 21.01.2016 – Whether the award was sustainable – Held: Since the High Court was in seisin of the matter, the Arbitral Tribunal could have given further opportunity to the respondent to put forth his case – The proceedings of the Arbitral Tribunal was pending for quite some time from 2009 till 2015 and after the respondent approached the High Court in May, 2015, the arbitrator hurriedly passed the award – Respondent was repeatedly praying for adjournment and was not present on the date of passing of the final award – It was noted in the proceedings dated 17.08.2011 that the chronological events needed to be ascertained and reconstruction was required – It is not known whether the same was ascertained or not and whether reconstruction was done before passing the final award on 21.01.2016 – Respondent made number of claims under various heads – Respondent ought to have been given an opportunity to substantiate its claim under various heads – Therefore, in order to do complete justice between the parties and in exercise of powers under Art.142 of the Constitution of India, award dated 21.01.2016 is to be set aside – The present Managing Director of the appellant would be the sole arbitrator and the Managing Director is directed to take up the matter and continue the proceedings and afford sufficient opportunity to both the parties to adduce further evidence and to make oral submissions and pass the final award within a period of four months – Constitution of India – Art.142. Constitution of India – Art.142 – Scope of – In exercise of power under Art.142, it is open to the court to mould the relief by safeguarding the interest of parties – The paramount consideration in such cases should be to ensure that there is no injustice caused – The phrase “complete justice” engrafted in Art.142(1) is the word of width couched with elasticity to meet myriad situations created by human ingenuity or cause or result of operation of Statute law or law declared under Arts.32, 136 and 141 of the Constitution – Arbitration and Conciliation Act, 1996.
Judge	Hon'ble Ms. Justice R. Banumathi
Neutral Citation	2019 INSC 82
Petitioner	Rajasthan Small Industries Corporation Limited
Respondent	M/s Ganesh Containers Movers Syndicate
SCR	[2019] 1 S.C.R. 559
Judgement Date	2019-01-23
Case Number	1039

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