Case Note & Summary
The dispute arose from a contract awarded to M/s. Narinder Singh and Sons by the Divisional Superintendent Engineer-II, Northern Railway, for additional washing lines at Jammu Tawi Railway Station. The contract was terminated in 1996 due to alleged non-performance by the appellant, leading to claims of breach by both parties. The appellant invoked the arbitration clause, resulting in the appointment of an arbitrator who issued an ex parte award in favor of the appellant in 2010. The respondent challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, which was initially dismissed, but the Punjab and Haryana High Court later set aside the award, citing violations of natural justice and public policy. The Supreme Court, upon reviewing the case, agreed that the respondent was deprived of a fair opportunity to present its case and that the arbitrator had acted with undue haste. Consequently, the court appointed a new arbitrator to resolve the disputes, directing that the arbitration proceedings continue from the point of cross-examination of the appellant's witness. The court also clarified that the issue of interest would be left for the new arbitrator to decide, and the appeal was disposed of without costs.
Headnote
A) Arbitration - Ex Parte Award - Setting Aside - Arbitration and Conciliation Act, 1996, Section 34 - The court found that the arbitrator had violated principles of natural justice by not allowing the respondent a fair opportunity to present its case, leading to an ex parte award. The court held that the award was liable to be set aside under clauses (ii) and (iii) of Section 34(2) of the Act due to the respondent's inability to present its case and conflict with public policy (Paras 5-7). B) Appointment of Arbitrator - New Appointment - Arbitration and Conciliation Act, 1996 - The court appointed a new arbitrator to adjudicate the disputes after setting aside the previous award, ensuring both parties would share the arbitration costs. The court directed that the arbitration proceedings continue from the stage where the respondent could cross-examine the appellant's witness (Paras 9-10).
Issue of Consideration
Whether the ex parte award should be set aside due to violation of natural justice and public policy principles.
Final Decision
The Supreme Court set aside the ex parte award and appointed Mr. Justice S.N. Aggarwal as the new arbitrator to adjudicate the disputes, directing that the arbitration proceedings continue from the stage of cross-examination of the appellant's witness.
Law Points
- Arbitration
- natural justice
- ex parte award
- appointment of arbitrator
- principles of public policy
