Case Note & Summary
The litigation concerned an arbitration clause in a contract between a contractor and the Union of India. Clause 25-A of the contract provided that all questions, differences, or objections arising in connection with the contract, including termination and rights and obligations, were to be referred to the Superintending Engineer, Planning Circle, Chandigarh, or any officer acting as such at the time of reference, within 180 days i.e., six months from the date of making final payment to the contractor. The appellant contractor invoked the jurisdiction of the civil court under the Arbitration Act, 1940, alleging that the arbitrator had delayed considerably in making the award. The Senior Judge appointed an independent arbitrator, but the High Court of Punjab and Haryana, in Civil Revision No.516/91, set aside that order, finding that the contractor had consented for adjournments and there was no allegation of misconduct of the arbitrator. The High Court recorded that the arbitrator was proceeding in right earnest despite the contractor's non-cooperation, and after transfer of the original Superintending Engineer, his successor had taken up the arbitration. In the Supreme Court, the only question was whether the civil court, exercising powers under Sections 5, 8, 11 and 29 of the Arbitration Act, 1940, could revoke the appointment of an arbitrator appointed under Clause 25-A. The Court reiterated the settled law that courts cannot interpose and interdict the appointment of an arbitrator chosen by the parties under the contract unless legal misconduct, fraud, disqualification, etc., is pleaded and proved. A party cannot at its own will revoke the authority of an arbitrator appointed with its consent; revocation is equivalent to removal, which can be done only on specified grounds such as misconduct or omission to enter upon duties within time. There is no general power for the court to appoint an arbitrator unless the case falls within the relevant provisions of the Act, and the court will not make an appointment where the arbitration agreement provides a method for appointment. Clause 25-A expressly designated the named officer, who had entered upon duties immediately. Applying these principles, the Supreme Court held that the appellant, having consented to adjournments and delayed the proceedings, could not later contend that the arbitrator neglected to make the award. There were no laches on the part of the arbitrator. Since the parties had specifically chosen a named authority, without consent of the parties, the court had no jurisdiction to interpose and appoint an independent arbitrator under Section 8 or any other provision. Accordingly, the High Court was right in setting aside the Senior Judge's order. Considering the long pendency, the Supreme Court directed the arbitrator to adjudicate the dispute and give the award within six months from receipt of the order, clarifying that if the appellant did not cooperate, the time limit would not deter the arbitrator from deciding according to law. The appeal was dismissed with no order as to costs.
Headnote
A) Arbitration - Appointment of Arbitrator - Judicial Non-Interference with Contractual Appointment - Arbitration Act, 1940, Sections 5, 8, 11, 29 - The dispute pertained to revocation of arbitrator appointed under Clause 25-A of contract. Supreme Court held that civil court cannot revoke or replace arbitrator chosen under contract unless misconduct, fraud or disqualification is pleaded and proved; no general power to appoint arbitrator where agreement provides method. Hence High Court rightly set aside order appointing independent arbitrator. (Paras not mentioned) B) Arbitration - Revocation of Arbitrator's Authority - Delay and Non-Cooperation - Arbitration Act, 1940, Sections 5, 8, 11, 29 - Appellant alleged arbitrator delayed award; High Court found appellant consented to adjournments and did not cooperate; successor arbitrator willing to proceed. Held no laches on arbitrator; appellant cannot contend neglect after consenting to adjournments; court cannot appoint independent arbitrator when parties chose named authority. (Paras not mentioned) C) Arbitration - Direction to Arbitrator - Time-bound Award - Arbitration Act, 1940, Section 29 - Since matters pending long, arbitrator directed to adjudicate and give award within six months from receipt of order; if appellant does not cooperate, time limit not deter arbitrator to decide according to law. Appeal dismissed. (Paras not mentioned)
Issue of Consideration
Whether the Civil Court, while exercising powers under Sections 5, 8, 11 and 29 of the Arbitration Act, 1940, would be justified in revoking the appointment of an arbitrator appointed in terms of Clause 25-A of the contract.
Final Decision
Appeal dismissed; High Court order upheld; arbitrator directed to give award within six months from receipt of order; no costs.
Law Points
- Court cannot interpose and interdict appointment of arbitrator chosen by parties under contract unless legal misconduct
- fraud
- disqualification pleaded and proved
- party cannot revoke authority of arbitrator at own will
- revocation equivalent to removal on specified grounds
- no general power for court to appoint arbitrator when arbitration agreement provides method
- court cannot appoint independent arbitrator without consent of parties
- arbitrator directed to give award within six months
