Holding

The appointment of the Superintendent Engineer, Arbitration Circle as sole arbitrator under Clause 65 is valid, Section 11(6) cannot be invoked thereafter, and the termination under Section 25(a) is set aside.

Summary

The appellant, a construction contractor, entered into a contract with the State of Himachal Pradesh that contained Clause 65, which stipulated that any dispute would be referred to a sole arbitrator appointed by the Engineer‑in‑Chief. When a dispute arose, the Chief Engineer appointed the Superintendent Engineer, Arbitration Circle, a government employee, as arbitrator. The contractor did not appear at the proceedings and the arbitrator terminated the case under Section 25(a) of the Arbitration and Conciliation Act, 1996. The contractor challenged the appointment of the arbitrator by filing a petition under Section 11(6) of the Act, but the High Court dismissed it, holding that the proper remedy was under Section 13. On appeal, the Supreme Court held that Clause 65 validly permits appointment by designation, that a government servant can serve as arbitrator, and that Section 11(6) cannot be invoked after the arbitration agreement has already been acted upon. The Court also ruled that the Amendment Act 2015 (Section 12(5) and Section 26) does not apply to proceedings commenced before its commencement. Consequently, the termination order was set aside and the Chief Engineer was directed to appoint an arbitrator under Clause 65 and allow the contractor to file his claim.

Issues considered

The validity of appointing a government employee as sole arbitrator under a contractual arbitration clause.
Whether Section 11(6) of the Arbitration and Conciliation Act, 1996 can be invoked to seek appointment of an independent arbitrator after the contractually appointed arbitrator has taken charge.
The applicability of the Arbitration and Conciliation (Amendment) Act, 2015, particularly Sections 12(5) and 26, to arbitration proceedings that commenced before the amendment came into force.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 12(5), s. 21, s. 23, s. 25, s. 26
Arbitration and Conciliation (Amendment) Act, 2015s. 12(5), s. 26

Subjects

ArbitrationAppointment of arbitratorGovernment contractSection 11(6)Section 25Amendment Act 2015Bias and independenceTermination of arbitral proceedings

Judgment

[2018] 14 S.C.R. 1005 1005

SP SINGLA CONSTRUCTIONS PVT. LTD. A
v.
STATE OF HIMACHAL PRADESH AND ANOTHER
(Civil Appeal Nos.11824-25 of 2018)
DECEMBER 04, 2018 B
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Arbitration and Conciliation Act, 1996:
ss. 11(6), 21 and 25 (a) – Appointment of arbitrator – Contract
between appellant-contractor and respondent-State – Dispute C
between the parties – Contractor requested appointment of
arbitrator – State appointed “Superintendent Engineer, Arbitration
Circle” as the arbitrator in terms of arbitration clause (clause 65
of General Conditions of Contract) – Contractor did not participate
in arbitration proceedings – The proceedings terminated u/s. 25(a)
D
– Contractor being aggrieved by appointment of the arbitrator, filed
petition u/s. 11(6) before High Court seeking appointment of
independent arbitrator – High Court dismissed the petition holding
that grievance against appointment of arbitrator in terms of
agreement, can be by way of petition u/s. 13 and while challenging
the award u/s. 34 and s. 11(6) was not invokable – On appeal, E
held: The appointment of the arbitrator was as per the arbitration
clause of the contract – Arbitration clauses in government contracts
providing that an employee of the Department will be the sole
arbitrator are neither void nor unenforceable – Appointment of the
Superintendent Engineer in the present case was not in deviation
F
of the arbitration clause of the contract – Any challenge to
appointment of arbitrator ought to have been raised before the
arbitrator himself in the first instance – Bar u/s. 12(5) of the
Amendment Act of 2015, to appointment of arbitrator by post, would
not be applicable to the present case because the Amendment Act
itself would not be applicable to the case as the arbitration G
proceedings commenced much prior to coming into force of
Amendment Act – When the parties have specifically agreed for
appointment of sole arbitrator, it was not proper for the contractor
to approach High Court for seeking appointment of independent
arbitrator – However, the termination of arbitration proceedings
H
1005
1006 SUPREME COURT REPORTS [2018] 14 S.C.R.

A was not correct as no warning was given by the arbitrator to the
contractor before terminating the proceedings – State directed to
appoint an arbitrator in terms of arbitration clause – Appellant
directed to file his claim before the arbitrator – Arbitration and
Conciliation (Amendment) Act, 2015 – ss.12(5) and 26.
B Disposing the appeals, the Court
HELD : 1. A perusal of clause (65) makes it apparently
clear that it was permissible to appoint a person by designation
and this will be evident from clause (65), in particular the sentence
“the arbitrator to whom the matter is originally referred being
C transferred or vacating his office or being unable to act for any
reason the Chief Engineer is to appoint another person….”. If
appointments were only to be made by name and not by
designation there could be no question of further appointment
on the Arbitrator vacating his office. It is only when an Arbitrator
is appointed by designation that the question of a vacancy upon
D the incumbent vacating office could arise thereby enabling the
Chief Engineer to appoint another person to act as arbitrator.
The Superintendent Engineer, Arbitration Circle appointed as
the Arbitrator is from the very arbitration circle, HPPWD and
such appointment is only as per clause (65) of the contract and
E there is no merit in the objection raised by the appellant.
[Para 10][1013-G-H; 1014-A-C]
2. It is not correct to say that the appointed arbitrator is an
employee in service of the HPPWD which the provision of Section
12(5) of the 1996 Act (as amended w.e.f. 23.10.2015) bars at the
F threshold itself. Arbitration clauses in government contracts
providing that an employee of the department will be the sole
arbitrator are neither void nor unenforceable. The fact that a
named arbitrator is an employee of one of the parties is not ipso
facto a ground to raise a presumption of bias or lack of
independence on his part. The arbitration agreements in
G government contracts providing that an employee of the
department or a higher official unconnected with the work or the
contract will be the arbitrator are neither void nor unenforceable.
[Para 11][1014-C-F]

H
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1007
HIMACHAL PRADESH

Indian Oil Corporation Limited and others v. Raja A
Transport Private Limited (2009) 8 SCC 520 : [2009]
13 SCR 510 ; Ace Pipeline Contracts (P) Ltd. v. Bharat
Petroleum Corporation Limited (2007) 5 SCC 304 :
[2007] 4 SCR 777 ; Union of India and another v.
M.P. Gupta (2004) 10 SCC 504 – relied on.
B
3. In government contracts before appointing arbitrators,
the appointing authority should be more vigilant and more
responsible in choosing arbitrators who are in a position to conduct
arbitral proceedings in an efficient manner without comprising
with the other duties. In the present case, the Superintendent
Engineer, Arbitration Circle, HPPWD was appointed as the sole C
Arbitrator who, by virtue of his designation, regularly does the
arbitration, devoting time to the arbitration proceedings and such
appointment of Superintendent Engineer cannot be said to be a
deviation from clause (65) of the agreement. [Para 12]
[1014-F-G; 1015-D-G] D
Union of India v. Uttar Pradesh State Bridge
Corporation Limited (2015) 2 SCC 52 – relied on.
4. Any challenge regarding the appointment of an arbitrator
as per the terms of the agreement between the parties must be
viewed in the context of the agreement between the parties. The E
parties have mutually agreed that there will be sole Arbitration
by the person appointed by the Engineer-in-Chief and that the
appellant shall have no objection to any such appointment that
the Arbitrator so appointed is a Government Servant. If the
appellant has any grievance that the appointment of the arbitrator
is by ‘post’ and not by ‘person’, the appellant ought to have raised F
the challenge before the arbitrator in the first instance. In the
petition filed before the High Court under Section 11(6) of the
Arbitration and Conciliation Act, 1996, the appellant has only
prayed for quashing the appointment of the Superintendent
Engineer, Arbitration Circle, HPPWD, as the sole arbitrator as
G
unconstitutional and sought for appointment of an independent
and impartial sole arbitrator to adjudicate the dispute between
the parties. It is fairly well settled that any challenge to the
arbitrator appointed ought to have been raised before the
arbitrator himself in the first instance. [Para 13][1015-F-H;
1016-A-B] H
1008 SUPREME COURT REPORTS [2018] 14 S.C.R.

A 5. As per Section 26 of the Amendment Act, the provisions
of the Amended Act, 2015 shall not apply to the arbitral
proceedings commenced in accordance with the provisions of
Section 21 of the Principal Act before the commencement of the
Amendment Act unless the parties otherwise agree. In the facts
and circumstances of the present case, the proviso in clause (65)
B
of the general conditions of the contract cannot be taken to be
the agreement between the parties so as to apply the provisions
of the amended Act. In the present case, arbitration proceedings
commenced way back in 2013, much prior to coming into force of
the amended Act and therefore, provisions of the amended Act
C cannot be invoked. [Para 15][1017-A-D]
Board of Control for Cricket in India v. Kochi Cricket
Private Limited and others (2018) 6 SCC 287: [2018]
2 SCR 829 – relied on.
Ratna Infrastructure Projects Pvt. Ltd. v. Meja Urja
D Nigam Private Limited (2017) SCC Online Del 7808 –
referred to.
6. In the present case, the Arbitrator has been appointed
as per clause (65) of the agreement and as per the provisions of
law. Once, the appointment of an arbitrator is made at the instance
E of the government, the arbitration agreement could not have been
invoked for the second time. [Para 19][1019-C-D]
Antrix Corporation Limited v. Devas Multimedia Private
Limited (2014) 11 SCC 560 : [2013] 6 SCR 453 – relied
on.
F
7. Section 25 of the Arbitration Act, 1996 deals with the
situation where the parties commit default without showing
sufficient cause and consequent termination of the proceedings.
Section 25 provides three situations where on account of the
default of a party, the arbitral tribunal shall terminate the
G proceedings. Section 25(a) provides that the Arbitral Tribunal
shall terminate the proceedings where the claimants failed to
communicate his claim in accordance with sub-section (1) of
Section 23 of the Act. In the present case, the appellant has
failed to file his statement of claim; and only sent the
communication to the arbitrator seeking adjournment on the
H
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1009
HIMACHAL PRADESH

ground that the appellant has approached the High Court by filing A
petition under Section 11(6) of the Act. When the parties have
specifically agreed for appointment of sole Arbitrator of the person
appointed by the Engineer-in-Chief/Chief Engineer, HPPWD, the
appellant was not right in approaching the High Court seeking
appointment of an independent Arbitrator. [Para 21][1020-A-F]
B
8. Inspite of extension of time, since the appellant-
contractor had not filed statement of claim, the arbitrator
terminated the proceedings under Section 25(a) of the 1996 Act.
The appellant had been writing letters to the arbitrator before
the hearing seeking adjournment. However, on the fourth
occasion, proceedings were simply terminated since no hearings C
were held on earlier occasions, he expected that his request might
be accepted. The arbitrator could have issued a notice warning
the appellant that no adjournment would be granted under any
circumstances. Since, no such warning was given, it would be
appropriate to set aside the order of termination. In the interest D
of justice, an opportunity is to be afforded to the appellant to go
before the departmental arbitrator (as agreed by the parties in
clause (65) of the general conditions of contract. [Para 22]
[1020-F-H; 1021-A-B]
Case Law Reference E
[2013] 6 SCR 453 relied on Para 4
(2017) SCC Online Del 7808 referred to Para 5
[2018] 2 SCR 829 relied on Para 6
[2009] 13 SCR 510 relied on Para 11 F
[2007] 4 SCR 777 relied on Para 11
(2004) 10 SCC 504 relied on Para 11
(2015) 2 SCC 52 relied on Para 12
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 11824- G
11825 of 2018.
From the Judgment and Order dated 10.03.2014 of the High Court
of Himachal Pradesh at Shimla in Arbitration Case No. 4049 of 2013
and order dated 01.09.2014 in Review Petition No. RPST/20087/2014.
H
1010 SUPREME COURT REPORTS [2018] 14 S.C.R.

A Maninder Singh, Sr. Adv., Anirudh Wadhwa, Atul Shankar Vinod,
Prabhas Bajaj, Ms. Kanika Saran, Bhargav T., M. P. Vinod, Advs. for
the Appellant.
Abhinav Mukerji, Mrs. Bihu Sharma, Ms. Purnima Krishna, Ms.
Pratishtha Vij, Advs. for the Respondents.
B The Judgment of the Court was delivered by
R. BANUMATHI, J.
1. Leave granted.
2. These appeals arise out of the judgments dated 10.03.2014 in
C Arbitration Case No.4049 of 2013 and dated 01.09.2014 in Review
Petition No. RPST/20087/2014 passed by the High Court of Himachal
Pradesh in and by which the High Court dismissed the Arbitration Petition
and Review Petition filed by the appellant declining to appoint arbitrator
holding that as per the terms of the agreement, arbitrator had already
D been appointed.
3. Brief facts which led to the filing of these appeals are as
follows:-
The appellant was awarded construction work contract on
19.12.2006 relating to balance work of 214.00 mtrs. span C/C bearings
E on abutment bridge over river Beas at Harsipattan on Mandi Rewalsar
Chandesh-Rakhota Maserah Sarkaghat Tihra Sandhole Alampur
Jawalamukhi road for a sum of Rs.14,29,81,500/-. An agreement was
also entered into between the parties and clause (65) of the General
Conditions of Contract contains arbitration clause. The period allowed
for completion of work was on or before 04.01.2009. However, extension
F
was granted to the appellant up to 30.06.2010. The work was completed
by the appellant on 04.06.2011 and payment for the execution of work
was made. The appellant raised a dispute and requested for the
appointment of arbitrator vide its letter dated 18.10.2013. Pursuant to
the request of the appellant, the Chief Engineer, HPPWD appointed the
G “Superintendent Engineer, Arbitration Circle, HPPWD, Solan” as the
arbitrator on 30.10.2013 and the said appointment had been made in
terms of clause (65) of the agreement. The arbitrator entered upon
reference on 11.11.2013. The appellant after requesting for the
appointment of arbitrator either remained absent from the proceedings
or sought adjournments stating that he intends to challenge the
H
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1011
HIMACHAL PRADESH [R. BANUMATHI, J.]

appointment of arbitrator before the Chief Justice as per the provisions A
of Arbitration and Conciliation Act, 1996. Even after hearing, no statement
of claim was filed by the appellant. On 06.08.2014, arbitration proceedings
were terminated under Section 25(a) of the Arbitration and Conciliation
Act, 1996.
4. Being aggrieved by the appointment of “Superintendent B
Engineer, Arbitration Circle, Solan, HPPWD” as the arbitrator, the
appellant filed petition before the High Court under Section 11(6) of the
1996 Act praying for appointment of independent arbitrator. The High
Court placed reliance upon the judgment of this Court in Antrix
Corporation Limited v. Devas Multimedia Private Limited
(2014) 11 SCC 560 wherein it was held that in case, if any party is C
dissatisfied or aggrieved by the appointment of arbitrator in terms of the
agreement by other party/parties, his remedy would be by way of petition
under Section 13 of the 1996 Act, and, thereafter while challenging the
award under Section 34 of the 1996 Act. The High Court held that the
appointment of “Superintendent Engineer” as arbitrator being in terms D
of clause (65) of the agreement, Section 11(6) of the Act cannot be
invoked. The appointment of arbitrator could not be challenged by way
of an application under Section 11(6) of the 1996 Act. Being aggrieved
by the dismissal of the arbitration petition, the appellant is before us.
5. On behalf of the appellant, learned senior counsel Mr. Maninder E
Singh submitted that the appointment by office after coming into operation
of the 1996 Act, was no more permissible and any appointment could
only be made in terms of Section 11 of 1996 Act. It was further submitted
that since the arbitrator appointed by office had entered upon the
reference, the appellant was compelled to file Arbitration Petition No.4049
of 2013 and the High Court erroneously rejected the prayer made on F
behalf of the appellant for appointment of an independent arbitrator by
name. The learned senior counsel further submitted that the arbitrator
appointed by office, is an employee in service of the HPPWD which the
provision of Section 12(5) bars at the threshold. Learned senior counsel
placed reliance upon Ratna Infrastructure Projects Pvt. Ltd. v. Meja G
Urja Nigam Private Limited (2017) SCC Online Del 7808.
6. Refuting the above contention, on behalf of the respondent-
State, learned counsel submitted that the appointment of Superintendent
Engineer, Arbitration Circle is as per clause (65) of the agreement and
as per the provisions of law. In response to the contention that Section H
1012 SUPREME COURT REPORTS [2018] 14 S.C.R.

A 12(5) of the Amendment Act, 2015 bars appointment of arbitrator by
post, the learned counsel for the State placed reliance upon Board of
Control for Cricket in India v. Kochi Cricket Private Limited and
others (2018) 6 SCC 287 and submitted that the provisions of the
Amendment Act, 2015 shall apply in relation to arbitral proceedings
commenced on or after the date of commencement of the Amendment
B
Act, 2015 and shall not apply to the arbitral proceedings commenced
prior to the Amendment Act, 2015 unless the parties otherwise agree.
The learned counsel submitted that the provision contained in clause
(65) of the general conditions of the Contract would not amount to
agreement of the parties so as to imply application of the provisions of
C the Amendment Act, 2015.
7. We have carefully considered the contentions of the parties
and perused the impugned judgment and materials on record. The point
falling for consideration in this appeal is that in the light of the agreement
between the parties in clause (65) of the general conditions of contract
D whether the appellant/contractor can challenge the appointment of the
Superintendent Engineer, Arbitration Circle as Arbitrator to resolve the
dispute between the parties.
8. By the order of HPPWD dated 30.10.2013, the Superintendent
Engineer, Arbitration Circle, HPPWD, Solan was appointed as the sole
E Arbitrator to decide and make its award regarding claim/dispute given
by the appellant/contractor. The main thrust of challenge for appointment
of sole arbitrator was on the ground that the arbitrator had not been
appointed by name but, had been appointed by designation. It was
submitted that appointment of arbitrator by office is not permissible and
appointment ought to have been made by name and the same is evident
F from bare perusal of clause (65) of the contract. It was submitted that
as per Section 11(1) of the 1996 Act “a person of any nationality may
be an arbitrator, unless otherwise agreed by the parties…….”. It
was submitted that the Arbitrator appointed by the office is not an
appointment in terms of clause (65) of the contract and this aspect has
G not been properly considered by the High Court.
9. For proper appreciation of the contentions, we may usually
refer to Clause (65) of the general conditions of contract which reads as
under:-

H
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1013
HIMACHAL PRADESH [R. BANUMATHI, J.]

“Clause 65 of the General Conditions of Contract-…..Except A
where otherwise provided in the contract all questions and disputes
relating to the meaning of the specifications, designs drawings
and instructions therein before mentioned and as to the quality of
workmanship of materials used on the work or as to any other
question, claim, right matter or thing whatsoever in any way arising
B
out of or relating to the contractor designs drawings, specification
and estimates, instructions orders or these conditions otherwise
concerning the works of the execution or failure to execute the
same whether arising during the progress of the work or after the
completion or abandonment thereof shall be referred to the sole
arbitration of the person appointed by the Engineer-in-Chief/Chief C
Engineer, Himachal Pradesh Public Works Department. It will be
no objection to any such appointment that the arbitrator so
appointed is a Government servant that he had to deal with the
matters to which the contract relates, and that in the course of his
duties as Government servant he had expressed views on all or
D
any of the matters in dispute or different. The arbitrator to whom
the matter is originally referred being transferred or vacating his
office or being unable to act for any reason that (sic) the Chief
Engineer, HPPWD at the time of such transfer vacation of office
or inability to act shall appoint another person to act as arbitrator
in accordance with the terms of the contract. Such person shall E
be entitled to proceed with the reference from the stage at which
it was left by his predecessor, it is also a terms of this contract
that no person other than a person appointed by the Chief Engineer,
HPPWD, should act as arbitrator and if for any reason that is not
possible the matter is not be claim in dispute is Rs.50,000/- (Rupees
F
Fifty Thousand) and above, the arbitrator shall give reasons for
the award.
Subject as aforesaid the provision of the Arbitration Act, 1940 or
any statutory modification or re-enactment thereof and the rules
made thereunder and for the time being shall apply to the arbitration
proceeding under this clause.” [Underlining added] G

10. A perusal of clause (65) makes it apparently clear that it was
permissible to appoint a person by designation and this will be evident
from clause (65), in particular the sentence “the arbitrator to whom
the matter is originally referred being transferred or vacating his
H
1014 SUPREME COURT REPORTS [2018] 14 S.C.R.

A office or being unable to act for any reason the Chief Engineer is
to appoint another person….”. If appointments were only to be made
by name and not by designation there could be no question of further
appointment on the Arbitrator vacating his office. It is only when an
Arbitrator is appointed by designation that the question of a vacancy
upon the incumbent vacating office could arise thereby enabling the Chief
B
Engineer to appoint another person to act as arbitrator. The
Superintendent Engineer, Arbitration Circle appointed as the Arbitrator
is from the very arbitration circle, HPPWD and such appointment is
only as per clause (65) of the contract and we find no merit in the objection
raised by the appellant.
C 11. Likewise, there is no merit in the contention of the appellant-
contractor that the appointed arbitrator is an employee in service of the
HPPWD which the provision of Section 12(5) of the 1996 Act (as
amended w.e.f. 23.10.2015) bars at the threshold itself. In a catena of
judgments, the Supreme Court held that arbitration clauses in government
D contracts providing that an employee of the department will be the sole
arbitrator are neither void nor unenforceable. [Indian Oil Corporation
Limited and others v. Raja Transport Private Limited (2009) 8 SCC
520, Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corporation
Limited (2007) 5 SCC 304, Union of India and another v. M.P. Gupta
(2004) 10 SCC 504] The fact that a named arbitrator is an employee of
E one of the parties is not ipso facto a ground to raise a presumption of
bias or lack of independence on his part. The arbitration agreements in
government contracts providing that an employee of the department or
a higher official unconnected with the work or the contract will be the
arbitrator are neither void nor unenforceable.
F 12. Observing that, in government contracts before appointing
arbitrators, the appointing authority should be more vigilant and more
responsible in choosing arbitrators who are in a position to conduct arbitral
proceedings in an efficient manner without comprising with the other
duties, in Union of India v. Uttar Pradesh State Bridge Corporation
G Limited (2015) 2 SCC 52, it was held as under:-
“17. In the case of contracts between government corporations/
State-owned companies with private parties/contractors, the terms
of the agreement are usually drawn by the government company
or public sector undertakings. Government contracts have broadly
H two kinds of arbitration clauses, first where a named officer is to
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1015
HIMACHAL PRADESH [R. BANUMATHI, J.]

act as sole arbitrator; and second, where a senior officer like a A
Managing Director, nominates a designated officer to act as the
sole arbitrator. No doubt, such clauses which give the Government
a dominant position to constitute the Arbitral Tribunal are held to
be valid. At the same time, it also casts an onerous and responsible
duty upon the persona designata to appoint such persons/officers
B
as the arbitrators who are not only able to function independently
and impartially, but are in a position to devote adequate time in
conducting the arbitration. If the Government has nominated those
officers as arbitrators who are not able to devote time to the
arbitration proceedings or become incapable of acting as arbitrators
because of frequent transfers, etc., then the principle of “default C
procedure” at least in the cases where Government has assumed
the role of appointment of arbitrators to itself, has to be applied in
the case of substitute arbitrators as well and the Court will step in
to appoint the arbitrator by keeping aside the procedure which is
agreed to between the parties. However, it will depend upon the
D
facts of a particular case as to whether such a course of action
should be taken or not. What we emphasise is that Court is not
powerless in this regard.”
As pointed out earlier, in the case at hand, the Superintendent
Engineer, Arbitration Circle, HPPWD was appointed as the sole
Arbitrator who, by virtue of his designation, regularly does the arbitration E
devoting time to the arbitration proceedings and such appointment of
Superintendent Engineer cannot be said to be a deviation from clause
(65) of the agreement.
13. Any challenge regarding the appointment of an arbitrator as
per the terms of the agreement between the parties must be viewed in F
the context of the agreement between the parties. As pointed out earlier,
the parties have mutually agreed that there will be sole Arbitration by
the person appointed by the Engineer-in-Chief and that the appellant
shall have no objection to any such appointment that the Arbitrator so
appointed is a Government Servant. If the appellant has any grievance G
that the appointment of the arbitrator is by ‘post’ and not by ‘person’,
the appellant ought to have raised the challenge before the arbitrator in
the first instance. Be it noted, in the petition filed before the High Court
under Section 11(6) of the Arbitration and Conciliation Act, 1996 on
28.12.2013, the appellant has only prayed for quashing the appointment
H
1016 SUPREME COURT REPORTS [2018] 14 S.C.R.

A of the Superintendent Engineer, Arbitration Circle, HPPWD, Solan as
the sole arbitrator as unconstitutional and sought for appointment of an
independent and impartial sole arbitrator to adjudicate the dispute between
the parties. It is fairly well settled that any challenge to the arbitrator
appointed ought to have been raised before the arbitrator himself in the
first instance.
B
14. Drawing our attention to the wordings in Clause (65) “that
the agreement is subject to any statutory modification or re-
enactment thereof and the rules made thereunder and for the time
being shall apply to the arbitration proceeding under this clause”
the learned senior counsel contended that these words would certainly
C attract Section 12(5) of the Act as amended with effect from 23.10.2015.
In this regard, the learned senior counsel placed reliance upon Delhi
High Court judgment in Ratna Infrastructure Projects Pvt. Ltd. v.
Meja Urja Nigam Private Limited (2017) SCC Online Del 7808
wherein interpreting the similar words in a contract, Delhi High Court
D held that those words satisfy the requirement of Section 26 (amended
Act of 2015) of there being an agreement between the parties that the
Act as amended with effect from 23.10.2015 will apply and held as
under:-
“22. ……. The words “any statutory modification or re-enactment
E thereof and the rules made thereunder and for the time being in
force shall apply to the arbitration…” satisfies the requirement of
Section 26 of there being an agreement between the parties that
the Act as amended with effect from 23rd October 2015 will apply.
The Court is not prepared to draw the fine distinction between
‘agree’ and ‘agreed’. Once the amendment to the clause clearly
F stated that all statutory modidications and re-enactments would
apply, then there is no need for further agreement in that respect
after 23rd October, 2015. The plea of the Respondent in this regard
is rejected.
23. The net result is that Section 12(5) as amended with effect
G from 23rd October 2015 would apply. Section 12(5) clearly prohibits
the employee of one of the parties from being an Arbitrator. This
would straightway disqualify Mr. Kher who happens to be a
serving GM of the Respondent. Therefore it is to no avail that the
Respondent has by its letter dated 21st August 2016 appointed
H Mr. Kher as an Arbitrator to adjudicate the Arbitration Case Nos.
1 of 2013 and 1 of 2014. His mandate stands terminated.”
SP SINGLA CONSTRUCTIONS PVT. LTD. v. STATE OF 1017
HIMACHAL PRADESH [R. BANUMATHI, J.]

15. Considering the facts and circumstances of the present case, A
we are not inclined to go into the merits of this contention of the appellant
nor examine the correctness or otherwise of the above view taken by
the Delhi High Court in Ratna Infrastructure Projects case; suffice it
to note that as per Section 26 of the Arbitration and Conciliation
(Amendment) Act, 2015 the provisions of the Amended Act, 2015 shall
B
not apply to the arbitral proceedings commenced in accordance with the
provisions of Section 21 of the Principal Act before the commencement
of the Amendment Act unless the parties otherwise agree. In the facts
and circumstances of the present case, the proviso in clause (65) of the
general conditions of the contract cannot be taken to be the agreement
between the parties so as to apply the provisions of the amended Act. C
As per Section 26 of the Act, the provisions of the Amendment Act,
2015 shall apply in relation to arbitral proceedings commenced on or
after the date of commencement of the Amendment Act, 2015 (w.e.f.
23.10.2015). In the present case, arbitration proceedings commenced
way back in 2013, much prior to coming into force of the amended Act
D
and therefore, provisions of the Amended Act cannot be invoked.
16. In Board of Control for Cricket in India v. Kochi Cricket
Private Limited and others, (2018) 6 SCC 287, this Court has held that
the provisions of Amendment Act, 2015 (with effect from 23.10.2015)
cannot have retrospective operation in the arbitral proceedings already
commenced unless the parties otherwise agree and held as under:- E

“37. What will be noticed, so far as the first part is concerned,
which states—
“26. Act not to apply to pending arbitral proceedings.—
Nothing contained in this Act shall apply to the arbitral F
proceedings commenced, in accordance with the provisions of
Section 21 of the principal Act, before the commencement of
this Act unless the parties otherwise agree.…”
is that: (1) “the arbitral proceedings” and their commencement is
mentioned in the context of Section 21 of the principal Act; (2) G
the expression used is “to” and not “in relation to”; and (3) parties
may otherwise agree. So far as the second part of Section 26 is
concerned, namely, the part which reads, “… but this Act shall
apply in relation to arbitral proceedings commenced on or after
the date of commencement of this Act” makes it clear that the
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1018 SUPREME COURT REPORTS [2018] 14 S.C.R.

A expression “in relation to” is used; and the expression “the” arbitral
proceedings and “in accordance with the provisions of Section 21
of the principal Act” is conspicuous by its absence.”
17. Immediately after the appointment of the Superintendent
Engineer, Arbitration Circle as the sole Arbitrator (30.10.2013), the
B appellant preferred Arbitration Petition No.4049/2013 (28.12.2013) before
the High Court under Section 11(6), 14 and 15 of the Arbitration and
Conciliation Act, 1996 for appointment of an independent sole Arbitrator.
18. The High Court placed reliance upon the judgment in Antrix
Corporation Limited v. Devas Multimedia Private Limited (2014) 11
C SCC 560 and held that when the Superintendent Engineer, Arbitration
Circle was appointed as the Arbitrator in terms of the agreement (or
arbitration clause), the provisions of sub-section (6) of Section 11 cannot
be invoked again. The High Court further observed that in case, the
other party is dissatisfied or aggrieved by the appointment of an arbitrator
in terms of the agreement, his remedy would be by way of petition under
D Section 13 and thereafter while challenging the award under Section 34
of the 1996 Act.
19. The High Court in the impugned judgment placed reliance
upon the judgment in Antrix Corporation Limited v. Devas Multimedia
Private Limited (2014) 11 SCC 560 wherein the Supreme Court held
E as under:-
“31. The matter is not as complex as it seems and in our view,
once the arbitration agreement had been invoked by Devas and a
nominee arbitrator had also been appointed by it, the arbitration
agreement could not have been invoked for a second time by the
F petitioner, which was fully aware of the appointment made by the
respondent. It would lead to an anomalous state of affairs if the
appointment of an arbitrator once made, could be questioned in a
subsequent proceeding initiated by the other party also for the
appointment of an arbitrator. In our view, while the petitioner was
G certainly entitled to challenge the appointment of the arbitrator at
the instance of Devas, it could not do so by way of an independent
proceeding under Section 11(6) of the 1996 Act. While power has
been vested in the Chief Justice to appoint an arbitrator under
Section 11(6) of the 1996 Act, such appointment can be questioned
under Section 13 thereof. In a proceeding under Section 11 of the
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HIMACHAL PRADESH [R. BANUMATHI, J.]

1996 Act, the Chief Justice cannot replace one arbitrator already A
appointed in exercise of the arbitration agreement.”
……….
33. Sub-section (6) of Section 11 of the 1996 Act, quite
categorically provides that where the parties fail to act in terms of
a procedure agreed upon by them, the provisions of sub-section B
(6) may be invoked by any of the parties. Where in terms of the
agreement, the arbitration clause has already been invoked by
one of the parties thereto under the ICC Rules, the provisions of
sub-section (6) cannot be invoked again, and, in case the other
party is dissatisfied or aggrieved by the appointment of an arbitrator C
in terms of the agreement, his/its remedy would be by way of a
petition under Section 13, and, thereafter, under Section 34 of the
1996 Act.”
In the present case, the Arbitrator has been appointed as per clause
(65) of the agreement and as per the provisions of law. Once, the D
appointment of an arbitrator is made at the instance of the government,
the arbitration agreement could not have been invoked for the second
time.
20. As pointed out earlier the Arbitrator has already entered upon
reference on 11.11.2013. The Arbitrator had first hearing on 07.12.2013; E
on which date appellant-contractor was absent. For the next date of
hearing on 13.03.2014 the Arbitrator has recorded the finding that the
appellant-claimant-contractor was absent without any intimation to the
Tribunal. In this regard, Mr. Maninder Singh, the learned Senior Council
for the appellant has drawn our attention to the letter dated 12.03.2014
sent by the appellant requesting for adjournment. Similarly, in the next F
date of hearings before the arbitrator namely, 03.04.2014, 25.04.2014
and 06.08.2014 the appellant-contractor did not appear; but only sent
the letters requesting for adjournment. On 03.04.2014, the matter was
adjourned to 25.04.2014 directing that both parties to come prepared for
the next date of hearing on 25.04.2014. Similar was the order passed on G
25.04.2014 that both parties have to come prepared for the next date of
hearing on 06.08.2014. Since the appellant-claimant did not appear before
the Arbitrator, the Arbitrator terminated the proceedings on 06.08.2014
under Section 25(a) of the 1996 Act.

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1020 SUPREME COURT REPORTS [2018] 14 S.C.R.

A 21. Section 25 of the Arbitration Act, 1996 deals with the situation
where the parties commit default without showing sufficient cause and
consequent termination of the proceedings. Section 25 provides three
situations where on account of the default of a party, the arbitral tribunal
shall terminate the proceedings which are as under:-
B (i) Under Section 25(a) where the claimant fails to
communicate his statement of claim in accordance with sub
section (1) of Section 23;
(ii) Under Section 25(b) continue the proceedings on the failure
of the respondent to communicate his claim of defence in
C accordance with sub-section (1) of Section 23;
(iii) Under Section 25(c) continue the proceedings, and make
the arbitral award on the evidence before it, in the event of
a party failing to appear at an oral hearing or produce
documentary evidence.
D Section 25(a) provides that the Arbitral Tribunal shall terminate
the proceedings where the claimants failed to communicate his claim in
accordance with sub-section (1) of Section 23 of the Act. In the present
case, the appellant has failed to file his statement of claim; and only sent
the communication to the arbitrator seeking adjournment on the ground
E that the appellant has approached the High Court by filing petition under
Section 11(6) of the Act. When the parties have specifically agreed for
appointment of sole Arbitrator of the person appointed by the Engineer-
in-Chief/Chief Engineer, HPPWD, the appellant was not right in
approaching the High Court seeking appointment of an independent
Arbitrator.
F
22. Inspite of extension of time, since the appellant-contractor
had not filed statement of claim, the arbitrator terminated the proceedings
under Section 25(a) of the 1996 Act by proceedings dated 06.08.2014.
The appellant-contractor did not file his statement of claim before the
arbitrator since the appellant had approached the High Court by filing
G petition under Section 11(6) of the 1996 Act, probably under the advice
that the appellant can get an independent arbitrator appointed. The
appellant had been writing letters to the arbitrator before the hearing
seeking adjournment. However, on the fourth occasion, proceedings were
simply terminated since no hearings were held on earlier occasions, he
expected that his request might be accepted. The arbitrator could have
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HIMACHAL PRADESH [R. BANUMATHI, J.]

issued a notice warning the appellant that no adjournment would be A
granted under any circumstances. Since, no such warning was given,
we deem it appropriate to set aside the order of termination. Appellant
had made a claim on account of delay as indicated in his letter dated
18.10.2013 under various heads. In the interest of justice, in our
considered view, an opportunity is to be afforded to the appellant to go
B
before the departmental arbitrator (as agreed by the parties in clause
(65) of the general conditions of contract) and the proceedings of the
arbitrator dated 06.08.2014 terminating the proceedings is to be set aside.
We are conscious that after the Amendment Act, 2015, there cannot be
a departmental arbitrator. As discussed earlier, in this case, the agreement
between the parties is dated 19.12.2006 and the relationship between C
the parties are governed by the general conditions of the contract dated
19.12.2006, the provisions of the Amendment Act, 2015 cannot be invoked.
23. In the result, the appeals are disposed of with the following
directions:-
(i) the proceedings of the arbitrator dated 06.08.2014 terminating D
the arbitral proceedings is set aside. In terms of clause (65) of the
general conditions of contract, the Chief Engineer, Himachal
Pradesh Public Works Department is directed to appoint an
arbitrator in terms of clause (65) of the agreement.
(ii) the appellant shall file his claim before the arbitrator so E
nominated and the arbitrator shall afford sufficient opportunities
to both the parties and proceed with the matter in accordance
with law.
We make it clear that we have not expressed any opinion on the
merits of the claim of the appellant. F

Kalpana K. Tripathy Appeals disposed of.

G

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