Case Note & Summary
The Supreme Court addressed appeals concerning the appointment of a third arbitrator in an arbitration dispute between the appellants and respondent No.1, arising from contracts related to the Koyna Hydroelectric Project. The appellants challenged the Bombay High Court's orders which deemed their writ petitions against the appointment of Shri Justice M.N. Chandurkar as the third arbitrator as not maintainable. The High Court's decision was based on prior judgments that classified the Chief Justice's powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 as administrative. However, the Supreme Court, in a landmark ruling, overruled this classification, asserting that such powers are judicial in nature and can be challenged under Article 136 of the Constitution. The Court examined the arbitration agreements between the parties, particularly focusing on the provisions for appointing arbitrators and the implications of Section 15(2) regarding substitute arbitrators. It concluded that the appointment of a substitute arbitrator must align with the original agreement's terms, thereby emphasizing the importance of contractual adherence in arbitration processes. The Court ultimately upheld the appellants' position, clarifying the legal framework governing arbitrator appointments and the maintainability of related writ petitions.
Headnote
A) Arbitration Law - Appointment of Arbitrators - Judicial Power - Section 11(6) Arbitration and Conciliation Act, 1996 - The Supreme Court held that the power exercised by the Chief Justice under Section 11(6) is judicial and not administrative, allowing for appeals under Article 136 against such orders. This clarified the nature of judicial authority in arbitrator appointments (Paras 2, 12). B) Arbitration Law - Substitute Arbitrators - Section 15(2) Arbitration and Conciliation Act, 1996 - The Court emphasized that the appointment of a substitute arbitrator must adhere to the original agreement's terms, reinforcing the necessity of following contractual provisions in arbitration (Paras 16-18). C) Arbitration Law - Maintainability of Writ Petitions - The Court ruled that writ petitions against orders of the designated Judge regarding arbitrator appointments are not maintainable, affirming the need for adherence to arbitration agreements (Paras 11, 12).
Issue of Consideration
Whether the appointment of Shri Justice M.N. Chandurkar as the third arbitrator was legally correct under the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court upheld the appeals, clarifying that the power exercised under Section 11(6) is judicial and not administrative, allowing for appeals under Article 136. The Court emphasized the need for adherence to the terms of the arbitration agreements and ruled that the appointment of a substitute arbitrator must follow the original agreement's provisions.
Law Points
- Judicial power in arbitration
- Section 11(6) Arbitration and Conciliation Act
- 1996
- appointment of arbitrators
- substitute arbitrators
- maintainability of writ petitions
