KONKAN RAILWAY CORPORATIONversusM/S. MEHUL CONSTRUCTION CO.

                   KONKAN RAILWAY CORPORATION                                    A
                                v.
                   MIS. MEHUL CONSTRUCTION CO.

                             AUGUST 21, 2000

   [G.B. PATTANAIK, DORAISWAMY RAJU AND S.N. VARIAVA, JJ.)                       B

      Arbitration and Conciliation Act, 1996, s.11(6)-Nature of the order
passed by Chi~( Justice or nominee appointing or r~fusing to appoint
arbitrator-Held, order passed by Chief Justice or nominee in exercise of
powers uls. 11(6) is administrative in nature; Chief Justice does not.function   C
as a court or tribunal and order passed is not amenable to jurisdiction of
Supreme Court under Article 136 of the Constitution.

       Practice and Procedure-Arbitration and Conciliation Act, 1996, s.11(6)-
Remedy available against refusal by Chi~( Justice to appoint arbitrator-Held,
it would be a case of non-performance of duty against which the High Court       D
could be approached for issuance of writ of mandamus-Constitution of India,
Article 226.

      In these special leave petitions and a writ petition nnder Article 32
against orders by the Chief Justices of the various High Courts or their
nominees either refusing to appoint or appointing arbitrator in exercise of      E
powers under s.11(6) of the Arbitration and Conciliation Act, 1996, two
questions arose for determination :

      (1) What is the nature of the order that is passed by the Chief Justice
or his nominee in exercise of powers u/s. 11(6) of the Act? and
                                                                                 F
      (2) Even if said order is held to be administrative in nature what is
the remedy open against the refusal for appointment of an arbitrator?

      Dismissing the petitions, the Court

     HELD: 1.1. The order passed by the Chief Justice or his nominee is
                                                                                 G
an administrative order. [571-A-B]

      1.2. The nature and function performed by the Chief Justice or
his nominee under s.11(6) being essentially to aid the constitution of
the arbitral tribunal cannot be held to be a judicial function as otherwise      H
                                   563
    564                  SUPREME COURT REPORTS               [2000] SUPP. 2 S.C.R.
A the legislature could have used the expression 'court' or 'judicial
    authority' instead or choosing the expression 'the Chief Justice or his
    nominee'. [569-G-H]

           1.3. An order refusing to appoint an arbitrator will not be amenable
    to the jurisdiction of the Supreme Court under Article 136 of the Constitu-
B   tion. [571-B]

         Sundaram Finance ltd. v. NEPC India ltd., [1999] 2 SCC 479 and
    Ador Samia Private Ltd. v. Peekay Holdings Limited, [1999] 8 SCC 572,
    approved.

C         2.1. An order refusing to appoint an arbitrator would be an act of
    non-performance of duty. The aggrieved party has a remedy ,to approach
    the High Court for issuance of a writ of mandamus. [571-C]

          2.2. The Chief Justice not having functioned as a Court or Tribunal
    and the order being administrative in nature, the observations and find-
D   ings are not binding and will not be taken into consideration by the
    arbitral tribunal, if an objection to validity or existence of arbitration
    agreement is taken before it. Such objection, if taken, shall be decided on
    its own merits. [571-G-H]

          CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) Nos.
E    11522-11526 of 1999.

          From the Judgment and Order dated 14/21.8.98 of the Bombay High
    Court in Arbitration Application Nos. 13-17 of 1996.

                                         WITH
F         SLP(C) No. 19549/99, W.P.(C) No. 81/2000 and SLP(C) Nos. 11317/99,
     12323/99, 8563/99 and 8581/99.

            Mukul Rohtagi, Additional Solicitor General. F.S. Nariman, S.K. Dholakia,
     Rajiv Dhawan, P.C. Markande, Gopal Subramaniam, Atul Y. Chitale, Ms.
     Suchitra A. Chitale, Sushi! Kumar Jain, A.P. Dhamija, Pradeep Aggarwal,
G    Subhash Sharma, A. Mishra, Mrs. Kiran Bhardwaj, B.V. Bairam Das, Sushma
     Suri, S.W.A. Qadri, T.V. Ratnam, Anil Katiyar, Guru Krishna Kumar, Sri Kala
     Guru K. Kumar, S.R. Setia, K.V. Srcckumar and V. Prasad Rao for the appear-
     ing parties.

H          The Judgment of the Court was delivered by
  KONKAN RAILWAY CORPN. v. MEHUL CONSTRUCTION CO. [PATTANAIK, J.]             565
        PATTANAIK, J. In this batch of cases an important question arises for         A
 consideration of this Court, namely, under the provisions of Arbitration and
 Conciliation Act, 1996, what should be the correct approach of the Chief
 Justice or his nominee in relation to the matter of appointment of an Arbitrator
 under Section 11(6) of the Act, and what is the true nature of the said order
 and further if a person is aggrieved by such order, can he file application in
                                                                                      B
 a Court and whether such an application could be entertained and if so, in
 which forum? In Sundaram Finance Ltd. v. NEPC India Ltd., [1999] 2 Su-
preme Court Cases 479, while deciding the question as to whether under
Section 9 of the Arbitration and Conciliation Act, 1996, the Court has juris-
diction to pass an interim order even before commencement of arbitration
proceeding and before an Arbitrator is appointed, after analysing different           C
provisions of Arbitration Act, 1940 and the present Act of 1996 an observation
has been made to the effect "under the 1996 Act, appointment of Arbitrator is
made as per the provisions of Section 11 which does not require the Court to
pass a judicial order appointing Arbitrator." In Ador Samia Private Ltd. v.
Peekay Holdings Limited and Others, [ 1999] 8 Supreme Court Cases, 572, this          D
Court came to the conclusion that the Chief Justice of the High Court or his
designate under Section 11(6) of 1996 Act, acts in administrative capacity, and
such, an order of the Chief Justice is not passed by any court exercising any
judicial function nor is it a tribunal having the trappings of a judicial authority
and it must, therefore, be held that against such order, which is administrative
in nature application under Article 136 of the Constitution would not lie.            E
Notwithstanding the aforesaid decision of this Court in Ador Samia Pvt. Ltd.
(supra) case when the present batch of cases came up for consideration before
the Bench presided over by Majmudar, J. who was the author of Samia 's case
(supra) it was contended that the aforesaid decision requires consideration and
having acceded to the request of the petitioner, the Bench passed the order to        F
place this batch of cases before a Three Judge Bench and that is how these cases
have come before us.

       Two basic questions which really arise for consideration are, ( 1) what is
the nature of the order that is passed by the Chief Justice or his nominee in
exercise of power under sub-section (6) of Section 11 of the Act? and, (2) even       G
if said order is held to be administrative in nature what is the remedy open to
the person concerned if his request for appointment of an Arbitrator is turned
down by the learned Chief Justice or his nominee, for some reason or other?

       In deciding the latter question it would be necessary to find out the true
intention of the legislature in substituting 1940 Act by the preEent Act and          H
    566                 SUPREME COURT REPORTS                [2000] SUPP. 2 S.C.R.
A   bearing in mind the object of enactment of the new Act what should be the
    approach of the learned Chief Justice or his nominee when an application for
    appointment of an Arbitrator is made invoking the jurisdiction under Section
    11(6) of the 1996 Act.

           At the outset, it must be borne in mind that prior to the 1996 Act, the
B   Arbitration Act of 1940, which was in force in India provided for domestic
    arbitration and no provision was there to deal with the Foreign Awards. So far
    as the Foreign Awards are concerned, the same were being dealt with by the
    Arbitration (Protocol and Convention) Act, 1937, and the Foreign Awards
    (Recognition and Enforcement) Act, 1961. The increasing growth of global
c   trade and the delay in disposal of cases in Courts under the normal system in
    several countries made it imperative to have the perception of an alternative
    Dispute Resolution System, more particularly, in the matter of commercial
    disputes. When the entire world was moving in favour of a speedy resolution
    of commercial disputes, the United Nations Commission on International Trade
    Law way back in 1985 adopted the Uncitral Model Law of International
D
    Commercial Arbitration and since then, number of countries have given
    recognition to that Model in their respective legislative system. With the said
    Uncitral Model Law in view the present Arbitration and Conciliation Act of
    1996 has been enacted in India replacing the Indian Arbitration Act, 1940 ,
    which was the principal legislation on Arbitration in the country that had been
E   enacted during the British Rule. The Arbitration Act of 1996 provides not only
    for domestic arbitration but spreads its sweep to International Conunercial
    Arbitration too. The Indian law relating to the enforcement of Foreign
    Arbitration Awards provides for greater autonomy in the arbitral process and
    limits judicial intervention to a narrower circumference than under the previous
    law. To attract the confidence of International Mercantile community and the
F
     growing volume of India's trade and commercial relationship with the rest of
    the world after the new liberalisation policy of the Government, Indian
     Parliament was persuaded to enact the Arbitration and Conciliation Act of 1996
     in Uncitral Model and, therefore, in interpreting any provisions of the 1996 Act
    Courts must not ignore the objects and purpose of the enactment of 1996. A
G    bare comparison of different provisions of the Arbitration Act of 1940 with the
     provisions of the Arbitration and Conciliation Act, 1996 would unequivocally
     indicate that 1996 Act limits intervention of Court with an arbitral process to
     the minimum and it is certainly not the legislative intent that each and every
     order passed by an authority under the Act would be a subject matter of judicial
H    scrutiny of a Court of Law. Under the new law the grounds on which an award
  KONKAN RAILWAY CORPN. v. MEHUL CONSTRUCTION CO. [PATTANAIK, J.]             567
 of an Arbitrator could be challenged before the Court have been severely cut         A
 down and such challenge is now permitted on the basis of invalidity of the
 agreement, want of jurisdiction on the part of the Arbitrator or want of proper
 notice to a party of the appointment of the Arbitrator or of Arbitral proceedings.
The powers of the Arbitrator have been amplified by insertion of specific
provisions of several matters. Obstructive tactics adopted by the parties in
                                                                                      B
 arbitration proceedings are sought to be thwarted by an express provision
 inasmuch as if a party knowingly keeps silent and then suddenly raises a
procedural objection will not be allowed to do so. The role of institutions in
promoting and organising arbitration has been recognised. The power to
 nominate Arbitrators has been given to the Chief Justice or to an institution or
person designated by him. The time limit for making awards has been deleted.          c
The existing provisions in 1940 Act relating to arbitration through intervention
of Court, when there is no suit pending or by order of the Court when there
is a suit pending, have been removed. The importance of transnational
commercial arbitration has been recognised and it has been specifically
provided that even where the arbitration is held in India, the parties to the         D
contract would be free to designate the law applicable to the substance of the
dispute. Under the new law unless the agreement provides otherwise, the
Arbitrators are required to give reasons for the award. The award itself has now
been vested with status of a decree, inasmuch as the award itself is made
executable as a decree and it will no longer be necessary to apply to the Court
for a decree in terms of the award. All these aim at achieving the sole object        E
to resolve the dispute as expeditiously as possible with the minimum interven-
tion of a Court of Law so that the trade and commerce is not affected on account
of litigations before a Court. When United Nations established the Commission
on International Trade Law it is on account of the fact that the General
Assembly recognised that disparities in national laws governing international         F
trade created obstacles to the flow of trade. The General Assembly regarded
the Commission on International Trade Law as a medium which could play a
more active role in reducing or removing the obstacles. Such Commission,
therefore, was given a mandate for progressive harmonization and unification
of the law of International Trade. With that objective when Uncitral Model has
been prepared and the Parliament in our country enacted the Arbitration and
                                                                                      G
Conciliation Act of 1996 adopting Uncitral Model, it would be appropriate to
bear the said objective in mind while interpreting any provision of the Act. The
Statement of Objects and Reasons of the Act clearly enunciates that the main
objective of the legislation was to minimise the supervisory role of Courts in
the arbitral process. If a comparison is made between the language of Section         H
    568                  SUPREME COURT REPORTS               (2000] SUPP. 2 S.C.R.
A   11 of the Act and Article 11 of the Model Law it would be apparent that the
    Act has designated the Chief Justice of a High Court in cases of domestic
    arbitration and the Chief Justice of India in cases of international commercial
    arbitration, to be the authority to perform the function of appointment of
    Arbitrator whereas under the Model Law the said power has been vested with
    the Court. When the matter is placed before the Chief Justice or his nominee
B
    under Section 11 of the Act it is imperative for the said Chief Justice or his         '
    nominee to bear in mind the legislative intent that the arbitral process should
    be set in motion without any delay whatsoever and all contentious issues are
    left to be raised before the arbitral tribunal itself. At that stage it would not be
    appropriate for the Chief Justice or his nominee to entertain any contentious
C   issue ':·etween the parties and decide the same. A bare reading of Sections 13
    and 16 of the Act makes it crystal clear that questions with regard to the
    qualifications, independence and impartiality of the Arbitrator, and in respect
    of the jurisdiction of the Arbitrator could be raised before the Arbitrator who
    would decide the same. Section 13(1) provides that party would be free to agree
    on a procedure for challenging an Arbitrator. Sub-section (2) of said Section
D
    provides that failing any such agreement, a party intending to challenge an
    Arbitrator, either on grounds of independence or impartiality or on the grounds
    of lack of requisite qualifications, shall within 15 days of becoming aware of
    the constitution of the Tribunal send a written statement for the challenge to
    the Tribunal iiself. Section 13(3) provides that unless the Arbitrator withdraws
E   or the other party agrees to !hf'. challenge, the Tribunal shall decide on the
    challenge itself. Sub-section (4) of Section 13 mandates an Arbitrator to
    continue the arbitral proceedings and to make an award. Section 16 empowers
     the arbitral tribunal to rule on its own as well as on objections with respect to
     the existence or validity of the arbitration agreement. Conferment of such
F    power on the Arbitrator under 1996 Act indicates the intention of the
     legislature and its anxiety to see that the arbitral process is set in motion. This
     being the legislative intent, it would be proper for the Chief Justice or his
     nominee just to appoint an Arbitrator without wasting any time or without
     entertaining any contentious issues at that stage, by a party objecting to the
     appointment of an Arbitrator. If this approach is adhered to, then there would
G    be no grievance of any party and in the arbitral proceeding, it would be open
     to raise any objection, as provided under the Act. But certain contingencies
     may arise where the Chief Justice or his nominee refuses to make an
     appointment of an Arbitrator and in such a case a party seeking appointment
     of Arbitrator cannot be said to be without any remedy. Bearing in mind the _
H    purpose of legislation, the language used in Section 11(6) conferring power on
  KONKAN RAILWAY CORPN. v. MEHUL CONSTRUCTION CO. [PATIANAIK, J.]              569
 the Chief Justice or his nominee to appoint an Arbitrator, the curtailment of the     A
 powers of the Court in the matter of interference, the expanding jurisdiction
of the Arbitrator in course of the arbitral proceeding, and above all the main
objective, namely, the confidence of the international market for speedy
disposal of their disputes, the character and status of an order appointing
Arbitrator by the Chief Justice or his nominee under Section 11(6) has to be
                                                                                       B
decided upon. If it is held that an order under Section 11(6) is a judicial or
quasi-judicial order then the said order would be amenable for judicial
intervention and any reluctant party may frustrate the entire purpose of the Act
 by adopting dilatory tactics in approaching a Court of Jaw even against an order
of appointment of an Arbitrator. Such an interpretation has to be avoided in
order to achieve the basic objective for which the country has enacted the Act         C
of 1996 adopting Uncitral Model. If on the other hand, it is held that the order
passed by the Chief Justice under Section 11(6) is administrative in nature, then
in such an event in a case where the learned Chief Justice or his nominee
refuses erroneously to make an appoin;ment then an intervention could be
possible by a Court in the same way as an intervention is possible against an          D
administrative order of the executive. In other words, it would be a case of non-
performance of the duty by the Chief Justice or his nominee, and therefore, a
mandamus would lie. If such an interpretation is given with regard to the
character of the order that has been passed under Section 11 (6) then in the event
an order of refusal is passed under Section 11(6) it could be remedied by
issuance of a mandamus. We are persuaded to accept the second alternative              E
inasmuch as in such an event there would not be inordinate delay in setting the
arbitral process in motion. But, as has been explained earlier in the earlier part
of this judgment, the duty of the Chief Justice or his nominee being to set the
arbitral process in motion it is expected that invariably the Chief Justice or his
nominee would make an appointment of an Arbitrator so that the arbitral                F
proceeding would start as expeditiously as possible and the dispute itself could
be resolved and the objective of the Act can be achieved. In fact a Bench of
this Court in Sundaram Finance case (supra) while considering the scope of
Section 9 of the Act has approached the problem from this perspective and
incidental observation has been made that Section 11 does not require the Court
to pass a judicial order appointing Arbitrator. The nature and function                G
performed by the Chief Justice or his nominee under sub- section (6) of Section
11 being essentially to aid the constitution of the arbitral tribunal cannot be held
to be a judicial function as otherwise the legislature could have used the
expression 'court' or 'judicial authority' instead of choosing the expression
'the Chief Justice or his nominee'. If a comparison is made with the English           H
    570                  SUPREME COURT REPORTS                  [2000] SUPP. 2 S.C.R.
A   Arbitration Act, 1996 it would appear that under the English Act it is the Court
    which has been vested with the function of appointment of an Arbitrator upon
    failure of the agreed appointment procedure and an order made by the Court
    becomes appealable under Section 11(5) whereas under the Arbitration and
    Conciliation Act of 1996 in India the power of appointment is vested with the
    Chief Justice or his nominee.
B
           An analysis of different sub-sections of Section 11 would indicate the
    character of the order, which the Chief Justice or his nominee passes under
    Sub-section (6) of Section 11. Sub-section (3) and sub-section (4) deals with
    cases, in which a party fails to appoint an Arbitrator or the Arbitrators fail to
c   agree on the third Arbitrator and thus seeks to avoid frustration or unreasonable
    delay in the matter of constitution of the arbitral tribunal. It authorises the Chief
    Justice of India or the Chief Justice of a High Court concerned, or any person
    or institution designated by him to make the appointment upon request of a
    party, if the other party has failed to appoint an Arbitrator within thirty days
    from the receipt of a request to that end. Sub-sections 4, 5 and 6 designedly
D   use the expression "Chief Justice" in preference to a Court or other authority
    as in paragraphs (3) and (4) of Article II of the Model Law, obviously for the
    reason that the Chief Justice acting in his administrative capacity, is expected
    to act quickly without encroaching on the requirements that only competent
    persons are appointed as Arbitrators. Sub-section (4) does not lay down any
E   time limit within which the Chief Justice or his nominee, designated by him,
    has to make the appointment. It, however, expects that these functionaries
    would act promptly. While sub-sections (4) and (5) deal with removal of
    obstacles arising in the absence of agreement between the parties on a proce-
    dure for appointing the Arbitrator or Arbitrators, sub-section (6) seeks to
    remove obstacles arising when there is an agreed appointment procedure.
F   These obstacles are identified in Clauses (a), (b) and (c) of sub-section (6). Sub-
    section (6) provides a cure to these problems by permitting the aggrieved party
    to request the Chief Justice or any person or institution designated by him to
    take the necessary measure i.e. to make the appointment, unless the agreement
    on the appointment procedure provides other means for securing the appoint-
G   ment. Sub-section (6), therefore, aims at removing any dead-lock or undue
    delay in the appointment process. This being the position, it is reasonable to
    hold that while discharging the functions under sub-section (6), the Chief
    Justice or his nominee will be acting in his administrative capacity and such
    a construction would subserve the very object of the new Arbitration Law.

H          The nature of the function performed by the Chief Justice being es sen-
  KONKAN RAILWAY CORPN. v. MEHUL CONSTRUCf!ON CO. [PATIANAIK, J.]            571
tially to aid the Constitution of the Arbitration Tribunal immediately and the       A
legislature having consciously chosen to confer the power on the Chief Justice
and not a Court, it is apparent that the order passed by the Chief Justice or his
nominee is an administrative order, as has been held by this Court in Ador
Samia 's case and the observations of this Court in Sundaram Finance Ltd. case
also is quite appropriate and neither of those decisions require any re-consid-
                                                                                     B
eration. This being the position even an order refusing to appoint an Arbitrator
will not be amenable to the jurisdiction of this Court under Article 136 of the
Constitution. Needless to mention such an order refusing to appoint an Arbi-
trator after deciding the contentious issues would be an act of non-performance
of duty and in view of what has been stated earlier the concerned authority
could be directed by mandamus to perform its duty.                                   c
      Having answered the two basic questions raised, as above, let us now
examine the impugned orders in the different cases, which are before us. In
S.L.P.(Civil) No. 11522-11526 of 1999, the order of the learned Chief Justice
of Bombay High Court in appointing an Arbitrator is the subject matter of
challenge . .':ince the order of appointment passed by the learned Chief Justice,    D
is administrative in nature and the learned Chief Justice does not function as
a Court or a Tribunal, the said order is not amenable to the jurisdiction of this
Court under Article 136 of the Constitution. The special leave petitions, are
accordingly dismissed.

        Special Leave Petition (Civil) No.19549/99 is directed against the order     E
 of the learned Chief Justice of Gauhati High Court, refusing to appoint an
 Arbitrator, after entertaining contentious issues and deciding the said issues by
elaborate consideration, on a finding that t);iere is no valid agreement for
 arbitration. Even if, it was not open for the learned Chief Justice to entertain
the contentious issues and deciding the same, but since the ultimate order is        F
administrative in nature, as has been held by us and since the learned Chief
Justice does not function as a Court or Tribunal, the order, cannot be subject
to judicial scrutiny of this Court under Article 136 of the Constitution. The
aggrieved party, however, has a remedy to approach the High Court for issu-
ance of a writ of mandamus, if so advised, in accordance with law. It is clarified
                                                                                     G
that the learned Chief Justice not having functioned as a Court or Tribunal and
the order being administrative in nature, the observations and findings are not
binding and will not be taken into consideration by the Arbitral Tribunal, if an
objection to validity or existence of Arbitration Agreement is taken before it.
Such objection, if taken, shall be decided on its own merits. The special leave
petition stands rejected.                                                            H
    572                  SUPREME COURT REPORTS                 (2000] SUPP. 2 S.C.R.
A          Writ Petition (Civil) No. 81/2000 is a petition under Article 32 of the
    Constitution, against the very order of the learned Chief Justice of Gauhati
    High Court, which was the subject matter of challenge in Special Leave
    Petition(c) No. 19549/99. We fail to understand how a petition under Article
    32, at all is entertainable against the order of the learned Chief Justice, refusing
    to appoint an Arbitrator under Section 11 of the Arbitration and Conciliation
B
    Act, 1996. This petition under Article 32, accordingly stands dismissed.

          Special Leave Petition (Civil) No. 11317/99 is directed against the order
    of the nominee of learned Chief Justice of Andhra Pradesh High Court, ap-
    pointing an Arbitrator under Section 11(6) of the Act. The order in question
c   being administrative in nature and the nominee of the learned Chief Justice, not
    being a Court or a Tribunal, as held by us, this special leave petition stands
    dismissed.

           Special Leave Petition (Civil) No. 12323 of 1999 is by the Union of
    India, against the order of the nominee of the learned Chief Justice of Andhra
D   Pradesh High Court, appointing an Arbitrator under Section 11 (6) of the Act.
    For the reasons, already indicated in SLP(C) No. 11317/99, this special leave
    petition stands dismissed.

           Special Leave Petition (Civil) No. 8563/99 is directed against the order
    of the nominee of the learned Chief Justice of Madras High Court, appointing
E   an Arbitrator under Section 11(6) of the Act. For the reasons, already indicated,
    the said order of appointment being administrative in nature and the nominee
    of the learned Chief Justice, not being a Court or a Tribunal, the order in
    question is not amenable to the jurisdiction of this Court under Article 136 of
    the Constitution and consequently, the special leave petition stands dismissed.
F
           Special Leave Petition (Civil) No. 8581/99 is directed against the order
    of the nominee of the learned Chief Justice of Madras High Court, appointing
    an Arbitrator under Section 11 (6) of the Act. For the self same reasons,
    indicated in SLP (C) No. 8563/99, this special leave petition stands dismissed.

    S.M.                                                          Petitions dismissed.