RAJASTHAN SMALL INDUSTRIES CORPORATION LIMITED versus M/S GANESH CONTAINERS MOVERS SYNDICATE on 23 January 2019

RAJASTHAN SMALL INDUSTRIESCORPORATION LIMITED

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M/S GANESH CONTAINERS MOVERS SYNDICATE

B

(Civil Appeal No. 1039 of 2019)

JANUARY 23, 2019

[R. BANUMATHI AND INDIRA BANERJEE, JJ.]

Arbitration and Conciliation Act, 1996 – ss.11 and 15 –Appointment of arbitrator – Terms of contract provided forCarbitration by the Managing Director of the appellant-Corporationor his nominee – Respondent participated in the arbitral proceedings– Arbitration petition by respondent seeking appointment ofindependent arbitrator – Held: When the parties have consciouslyagreed that the disputes or differences shall be referred to theDManaging Director himself or his nominee for sole arbitration andhaving participated in the arbitral proceedings before arbitratorfor quite some time, the respondent cannot turn round and seek forappointment of an independent arbitrator – Having participated inthe entire arbitration proceedings and acquiesced in theproceedings, the respondent is estopped from challenging theEcompetence of the arbitrator.

Arbitration and Conciliation Act, 1996 – Whether by virtueof s.12 of the Amendment Act, the Managing Director of theappellant-Corporation became ineligible to act – Held: After theamendment to the Arbitration and Conciliation Act, 2015, s.12(5)prohibited the employee of one of the parties from being an arbitrator– In the instant case, the agreement between the parties was enteredinto on 28.01.2000 and the arbitration proceedings commencedway back in 2009 and thus, the respondent cannot invoke s.12(5)of the Amendment Act, 2015 – As per s.26 of the Act, the provisionsof the amended Act 2015 shall not apply to the arbitral proceedingscommenced in accordance with the provisions of s.21 of the principalAct, before the commencement of this Act unless the parties otherwiseagree – There was nothing to suggest that the parties had agreedthat the provisions of the new Act shall apply in relation to the arbitral F

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Aproceedings – The arbitration proceedings started way back in2009 long before 2015 Amendment Act came into force and,therefore, 2015 Amendment Act is not applicable to the case in hand– The statutory provisions that would govern the matter are thosewhich were then in force before the Amendment Act – Therefore,Managing Director was not ineligible to act as sole arbitrator –BArbitration and Conciliation (Amendment) Act, 2015 – s.12.

Arbitration and Conciliation Act, 1996 – s.15 – Delay inpassing award – Termination of mandate and substitution of anarbitrator – Mere neglect of an arbitrator to act or delay in passingthe award by itself cannot be the ground to appoint anotherCarbitrator in deviation from the terms agreed to by the parties –s.15 dealt with termination of the mandate and substitution of anarbitrator – As per sub-section (1) of s.15, in addition to thecircumstances referred to in ss.13 and 14 of the Act, the mandate ofan arbitrator shall terminate where he withdraws from office forDany reason or by or pursuant to the agreement of the parties – Interms of sub-section (2), after termination of arbitrator’s mandate,the appointment of the substitute arbitrator would be in accordancewith the rules applicable to the appointment of an arbitrator who isbeing replaced – s.11(6) of the Act would come into play only whenthere was failure on the part of the party concerned to appoint anEarbitrator in terms of the arbitration agreement – In the instantcase, the High Court was not right in appointing an independentarbitrator without keeping in view the terms of the agreement betweenthe parties and therefore, the impugned order appointing anindependent arbitrator/retired District Judge was not sustainable.F

Conclusion

Arbitration and Conciliation Act, 1996 – s.15 – Remedy tothe Respondent-Contractor – Arbitral Tribunal did not makeprogress in the arbitration matter – As per the arbitral proceedings,the chronological events were required to be ascertained andreconstruction was required – Respondent filed application forGappointment of independent arbitrator – The fact of arbitrationapplication was brought to the notice of Arbitral Tribunal –Respondent prayed for keeping the arbitration proceedings inabeyance – On the basis of available materials, the Arbitral Tribunalpassed the final award on 21.01.2016 – Whether the award wassustainable – Held: Since the High Court was in seisin of the matter,H

the Arbitral Tribunal could have given further opportunity to therespondent to put forth his case – The proceedings of the ArbitralTribunal was pending for quite some time from 2009 till 2015 andafter the respondent approached the High Court in May, 2015, thearbitrator hurriedly passed the award – Respondent was repeatedlypraying for adjournment and was not present on the date of passingof the final award – It was noted in the proceedings dated 17.08.2011that the chronological events needed to be ascertained andreconstruction was required – It is not known whether the same wasascertained or not and whether reconstruction was done beforepassing the final award on 21.01.2016 – Respondent made numberof claims under various heads – Respondent ought to have beengiven an opportunity to substantiate its claim under various heads– Therefore, in order to do complete justice between the parties andin exercise of powers under Art.142 of the Constitution of India,award dated 21.01.2016 is to be set aside – The present ManagingDirector of the appellant would be the sole arbitrator and theManaging Director is directed to take up the matter and continuethe proceedings and afford sufficient opportunity to both the partiesto adduce further evidence and to make oral submissions and passthe final award within a period of four months – Constitution ofIndia – Art.142.

Constitution of India – Art.142 – Scope of – In exercise ofpower under Art.142, it is open to the court to mould the relief bysafeguarding the interest of parties – The paramount considerationin such cases should be to ensure that there is no injustice caused –The phrase “complete justice” engrafted in Art.142(1) is the wordof width couched with elasticity to meet myriad situations createdby human ingenuity or cause or result of operation of Statute lawor law declared under Arts.32, 136 and 141 of the Constitution –Arbitration and Conciliation Act, 1996.

Allowing the appeal, the Court

HELD: 1. As per Clause 4.20.1 of Schedule-4 (GeneralConditions), the parties have agreed that all disputes anddifferences arising out of or in any way concerning the contract,shall be referred to the Managing Director himself or hisnominees for the sole arbitration and that there will be no objectionto any such appointment on the ground that the person so AB

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Aappointed is an employee of the Corporation and that he has dealtwith the matter to which the contract relates. When the partieshave consciously agreed that the disputes or differences shall bereferred to the Managing Director himself or his nominee forsole arbitration and having participated in the arbitral proceedingsbefore arbitrator for quite some time, the respondent cannot turnBround and seek for appointment of an independent arbitrator.The respondent having participated in the proceedings beforethe arbitral tribunal for quite some time and also having expressedfaith in the sole arbitrator, is not justified in challenging theappointment of the Managing Director of the appellant-CCorporation as the sole arbitrator. The respondent has not placedany material to show that it has reason to believe that thearbitrator had not acted independently or impartially. Therespondent has not brought on record any material to entertainan apprehension that the Managing Director of the appellant-

Corporation is not likely to act independently or impartially. OnDthe other hand, as per the proceeding of the arbitral tribunal dated21.10.2010, the respondent had expressed its full faith in thesole arbitrator and had also given a letter dated 21.10.2010 tothat effect. The fact that the sole arbitrator is the ManagingDirector of the appellant-Corporation is not a ground to raise aEpresumption of bias or lack of independence on his part. [Paras20, 21, 22][574-F-H; 575-A, F-G]

Indian Oil Corporation Limited and Others v. RajaTransport Private Limited (2009) 8 SCC 520 : [2009]13 SCR 510 – relied on.F2. Whether by virtue of Section 12 of the Amendment Act,the Managing Director has become ineligible to act:

After the amendment to the Arbitration and ConciliationAct, 2015, Section 12(5) prohibits the employee of one of theparties from being an arbitrator. In the instant case, the agreementGbetween the parties was entered into on 28.01.2000 and thearbitration proceedings commenced way back in 2009 and thus,the respondent cannot invoke Section 12(5) of the AmendmentAct, 2015. As per Section 26 of the Act, the provisions of theamended Act 2015 shall not apply to the arbitral proceedingsHcommenced in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unlessthe parties otherwise agree. [Para 23][576-B-D]

Board of Control for Cricket in India v. Kochi CricketPrivate Limited and others (2018) 6 SCC 287 : [2018]2 SCR 829; Aravali Power Company Private Limited v.Era Infra Engineering Limited (2017) 15 SCC 32 :[2017] SCR 497 – relied on.

TRF Limited v. Energo Engineering Projects Limited(2017) 8 SCC 377 : [2017] 7 SCR 409 – distinguished.

3. Whether the High Court was right in terminating themandate of the arbitrator appointed as per the agreement:

3.1 The proceedings of the arbitral tribunal continued till17.08.2011. The proceeding of the arbitral tribunal dated17.08.2011 showed that the “arbitrator observed that the fileregarding arbitration appears tampered/missing papers areincomplete and therefore, the chronological events need to beascertained and reconstitution will be required.” In thisbackground, the award was not passed till 2013. It is true thatthere was some delay in passing the award. However, between2011 and 2013, the respondent has not filed any application toexpedite the proceedings and for passing of the award. Therespondent neither filed the Request Case for passing of the awardat an early date nor filed the petition under Section 14 fortermination of the mandate of the arbitrator that the arbitratorhas ‘failed to act without undue delay’. [Para 30][579-E-G]

Union of India and Others v. Uttar Pradesh State BridgeCorporation Limited (2015) 2 SCC 52; Union of Indiav. Singh Builders Syndicate (2009) 4 SCC 523 : [2009]3 SCR 563 – referred to.

3.2 Mere neglect of an arbitrator to act or delay in passingthe award by itself cannot be the ground to appoint anotherarbitrator in deviation from the terms agreed to by the parties.Section 15 deals with termination of the mandate and substitutionof an arbitrator. Sub-section (1) of Section 15 states that in additionto the circumstances referred to in Sections 13 and 14 of the Act,the mandate of an arbitrator shall terminate where he withdraws A

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Afrom office for any reason or by pursuant to the agreement of theparties. In terms of sub-section (2), after termination ofarbitrator’s mandate, the appointment of the substitute arbitratorshall be in accordance with the rules applicable to the appointmentof an arbitrator who is being replaced. Section 11(6) of the Actwould come into play only when there was failure on the part ofBthe party concerned to appoint an arbitrator in terms of thearbitration agreement. In the case in hand, the High Court wasnot right in appointing an independent arbitrator without keepingin view the terms of the agreement between the parties andtherefore, the impugned order appointing an independentCarbitrator/retired District Judge is not sustainable. [Paras 31, 32,34][579-G-H; 580-C-D; 581-H; 582-A-B]

S.B.P. and Company v. Patel Engineering Limited andAnother (2009) 10 SCC 293 : [2009] 15 SCR 340;Yashwith Constructions (P) Ltd. v. Simplex ConcreteDPiles India Ltd. and Another (2006) 6 SCC 204: [2006]3 Suppl. SCR 96 – relied on.

Russell On Arbitration, 20[th] Edition, Pg. 136 quotedin Law relating to Arbitration and Conciliation, 9[th]Edition, by Dr. P.C. Markanda at Pg. 620 – referredEto.

4. Whether the award passed by the arbitrator dated21.01.2016 sustainable.

4.1 Since the High Court was in seisin of the matter, theArbitral Tribunal could have given further opportunity to theFrespondent to put forth his case. The proceedings of the ArbitralTribunal was pending for quite some time from 2009 till 2015 andafter the respondent approached the High Court in May, 2015,the arbitrator appears to have hurriedly passed the award. Therespondent was repeatedly praying for adjournment onG05.01.2016, 13.01.2016 and was not present on the date of passingof the final award dated 21.01.2016. The respondent has to begiven an opportunity to substantiate its claim under various heads.In order to do complete justice between the parties and in exerciseof power under Article 142 of the Constitution of India, the awarddated 21.01.2016 is set aside. In exercise of power under Article H

RAJASTHAN SMALL INDUSTRIES CORPN. LTD. v. GANESHCONTAINERS MOVERS SYNDICATE

142 of the Constitution of India, it is open to the court to mouldthe relief by safeguarding the interest of parties. The paramountconsideration in such cases should be to ensure that there is noinjustice caused. [Paras 36, 37][582-G-H; 583-A-B]

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Raj Kumar and others v. Union of India and another(2006) 1 SCC 737 : [2006] 1 SCR 169 – relied on B

4.2 The phrase “complete justice” engrafted in Article142(1) is the word of width couched with elasticity to meet myriadsituations created by human ingenuity or cause or result ofoperation of Statute law or law declared under Articles 32, 136and 141 of the Constitution. In the case in hand, to relegate therespondent to challenge the award under Section 34 of the Act, itwould further prolong the litigation between the parties.Considering the facts of the case and in order to do completejustice between the parties, in exercise of power under Article142 of the Constitution, award dated 21.01.2016 is set aside. Thepresent Managing Director of the appellant Corporation shall bethe sole arbitrator and the Managing Director is directed to takeup the matter and continue the proceedings and afford sufficientopportunity to both the parties to adduce further evidence and tomake oral submissions and pass the final award within a period offour months. [Paras 38, 39][583-E-H; 584-A]

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Ashok Kumar Gupta and another v. State of U.P. andothers (1997) 5 SCC 201 : [1997] 3 SCR 269 – reliedon.

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566SUPREME COURT REPORTS[2019] 1 S.C.R.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1039Bof 2019.

From the Judgment and Order dated 22.04.2016 of the High Courtof Judicature for the State of Rajasthan (Jaipur Bench) at Jaipur inS.B. Civil Misc. Application (Arbitration) No. 31 of 2015.

Annam D. N. Rao, Sudipto Sircar, Annam Venkatesh, RahulCMishra, Advs. for the Appellant.

Shekhar Prit Jha, Ms. Himani Mishra, Ms. Sushmita M., Advs.for the Respondent.

The Judgment of the Court was delivered by DR. BANUMATHI, J. 1. Leave granted.

2. This appeal arises out of the judgment dated 22.04.2016 passedby the High Court of Rajasthan at Jaipur Bench in and by which theHigh Court has allowed the application filed by the respondent underSection 11 and Section 15 of the Arbitration and Conciliation Act, 1996Ethereby appointing Mr. J. P. Bansal, retired District Judge as the solearbitrator to resolve the dispute between the parties.

3. Brief facts which led to filing of this appeal are as under:- The appellant-Rajasthan Small Industries Corporation Limitedinvited tender for “Handling and Road transportation of ISOFcontainers and Cargo between Inland container Depots at Jaipur,Jodhpur and Ports.” Respondent-Contractor participated in the saidtender and Letter of Intent was issued in favour of the respondent-Contractor on 21.01.2000. The agreement was executed on 28.01.2000between the parties. Initially, the contract period was of three years; butGit was extended for another two years from 31.01.2003 by consent ofboth the parties. Dispute arose between the parties regarding impositionof transit penalty by the appellant upon the respondent for delay intransportation of containers, non-payment of handling charges ofcontainers for various period of time and several other disputes. Theterms of the contract Clause 4.20.1 of Schedule-4 (General Conditions)

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provided for arbitration by the Managing Director himself or his or hernominee for the sole arbitration. The respondent-Contractor requestedfor appointment of the arbitrator in terms of Clause 4.20.1 of Schedule-4 (General Conditions). One I.C. Shrivastava, IAS (Retd.) was appointedas the sole arbitrator on 21.02.2005. Since the progress of the solearbitrator was not satisfactory in disposing the matter, the said solearbitrator was removed on 26.03.2009 and in his place, Chairman-cum-Managing Director of the appellant-Corporation was appointed to act asthe sole arbitrator by the consent of both the parties.

4. For one reason or other, the arbitration proceedings could notbe concluded. According to the appellant, the matter was adjournedrepeatedly vide orders of the Arbitral Tribunal dated 10.02.2010,11.02.2010, 15.02.2010, 18.02.2010 and 10.03.2010 as no one appearedon behalf of the respondent-Contractor. On 16.03.2010, the respondentraised its doubts regarding impartiality of the newly appointed solearbitrator. The sole arbitrator passed the order dated 06.04.2010 statingthat the agreement Clause 4.20.1 of Schedule-4 (General Conditions)provides for arbitration by the Chairman-cum-Managing Director of theCorporation or his nominee and that only at the joint request of both theparties, the Chairman-cum-Managing Director has taken up the arbitrationto resolve the dispute between the parties. The proceedings furthercontinued fixing date of hearing on various dates till 17.08.2011.

5. On 07.02.2013, the respondent-Contractor sent a legal noticeto the appellant stating that even after so many requests, the sole arbitratorhas not passed the award and called upon the appellant to pay the amountof Rs.3,90,81,602/- said to have been settled, along with the statutoryinterest within one month. The appellant sent a reply dated 19.03.2013stating that since the Chairman-cum-Managing Director has beentransferred, award could not be passed and there is no question of paymentto the respondent-Contractor.

6. On 13.05.2015, the respondent-Contractor filed an applicationunder Section 11(6) and Section 15 of the Arbitration and ConciliationAct, 1996 before the High Court seeking for appointment of anindependent arbitrator for adjudication of dispute between the appellantand the respondent in respect of agreement dated 28.01.2000. On18.12.2015, it was brought to the notice of the arbitrator that an arbitrationapplication has been filed before the High Court. On 05.01.2016, theArbitral Tribunal adjourned the matter to 13.01.2016 as a last opportunity AB

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Aof hearing to the parties. On 13.01.2016, the arbitrator rejected theapplication of the respondent-Contractor and his request to adjourn thematter till hearing and final disposal of the arbitration application pendingbefore the High Court and held that the arbitration proceedings wouldbe finalized on the basis of available facts and therefore, adjourned thematter to 21.01.2016. The sole arbitrator passed an ex-parte award onB21.01.2016.

7. The High Court vide impugned order allowed the arbitrationapplication thereby appointing Mr. J.P. Bansal (Retd.), District Judge asthe sole arbitrator. The High Court held that the respondent-Contractorhad to approach the High Court due to prolongation of the matter beforeCthe sole arbitrator who kept on changing one after another and onlyafter the notice of the arbitration petition was served upon the appellant-Corporation, the arbitrator speeded up the proceedings and the ex-parteaward was passed on 21.01.2016 without hearing the respondent-Contractor. The High Court was of the view that the arbitrator hurriedDup to conclude the proceedings with a view to frustrate the arbitrationapplication.

8. Mr. A.D.N. Rao, learned counsel for the appellant-Corporationsubmitted that the High Court erred in not keeping in view of Clause4.20.1 of Schedule-4 (General Conditions) that the respondent could notEhave moved the application under Section 11 and Section 15 of theArbitration and Conciliation Act, 1996 in the light of the agreement betweenthe parties and the competence of the arbitral tribunal to adjudicate thedispute between the parties. It was further submitted that though thearbitrator was ready to proceed with the matter, the arbitrator could notmake progress since the respondent was either not present or continuallyFtaking adjournments and when the arbitrator was proceeding with thematter in right earnest, the respondent could not have approached theHigh Court seeking appointment of an arbitrator. It was urged that in thelight of the fact that a final arbitral award has been passed by the arbitraltribunal, the respondent could only challenge the same by way of anGappeal under Section 34 of the Arbitration and Conciliation Act, 1996and the impugned order of the High Court is liable to be set aside.

9. Ms. Mishra, learned counsel for the respondent-Contractorsubmitted that in view of Section 12 of the Arbitration and Conciliation(Amendment) Act, 2015, if the arbitrator is an employee/advisor or hasHany past or present business relation or being the Manager/Director

then he cannot be appointed as an arbitrator and not qualified to decidethe dispute and therefore, the High Court has rightly appointed the freshindependent arbitrator. It was submitted that the disqualification of theperson to hold the post of an arbitrator as enumerated in Seventh Scheduleof Arbitration and Conciliation (Amendment) Act, 2015 is a legal rightconferred upon the respondent-Contractor and there cannot be anypromissory estoppel against the statute by alleging that in the agreementdated 28.01.2000, the respondent agreed that the dispute and differencesshall be referred to the Managing Director himself or his nominee forthe sole arbitration. Placing reliance upon Union of India and Othersv. Uttar Pradesh State Bridge Corporation Limited (2015) 2 SCC 52,it was contended that when there is failure on the part of the arbitraltribunal to act and unable to perform its functions, it is open to a party tothe arbitration proceedings to approach the court for termination of themandate of the arbitrator and seek appointment of the substitute arbitrator.The learned counsel for the respondent further submitted that in thepresent case, since for a long period of about ten years, no award hasbeen passed and that the arbitrators were kept on changing for onereason or other, the respondent was justified in approaching the HighCourt for substitution or appointment of fresh arbitrator. It was submittedthat only after the respondent approached the High Court, the proceedingswere accelerated and award came to be passed.

10. We have carefully considered the contentions of both the partiesand perused the impugned judgment and materials on record. Thefollowing points arise for consideration:-

• In the light of the proceedings before the sole arbitrator on variousdates and when the proceedings before the arbitrator waspending, whether the respondent was right in filing arbitrationpetition approaching the High Court under Section 11 and Section15 of the Arbitration Act, 1996 for appointment of a substitutearbitrator?

• When by virtue of arbitration agreement Clause 4.20.1 ofSchedule-4 (General Conditions), parties have agreed that thedispute, differences between the parties to be resolved by theManaging Director or his nominee, whether the High Courtwas right in deviating from the terms of the agreement betweenthe parties and appointing an independent Arbitrator?

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A• Whether by virtue of Section 12 of the Arbitration andConciliation (Amendment) Act, 2015, the Chairman-cum-Managing Director has become ineligible to act as the arbitrator?

• Whether the High Court was right in terminating the mandateof the arbitrator whom the parties have agreed and appointingBsubstitute arbitrator on the ground that there was delay in passingthe award?

11. In deviation from the terms of the agreement, whetherthe respondent was right in filing arbitration petition under Section11 of the Arbitration Act:- Admittedly, the parties entered into anCagreement dated 28.01.2000 for handling on road transportation of ISOcontainers and cargo between the Inland Container Depot at Jaipur,Jodhpur and Ports. The agreement was to remain in force for a periodof three years starting from 10.04.2000. The abovementioned agreementwas extended for another period of two years starting from 31.01.2003.Clause 4.20.1 of Schedule-4 (General Conditions) provided for arbitrationDwhich reads as follows:-

“4.20.1 All disputes and difference arising out of or in any wayconcerning this Contract, shall be referred to the Managing Directorhimself, herself or his or her nominees for the sole arbitration.There will be no objection to any such appointment on the groundEthat the person so appointed is an employee of the Corporation,that he has dealt with the matters to which the contract relatesand that in the course of his duties. As such arbitration shall befinal and binding on the parties to the contract. If the person towhom the matter was originally referred to for arbitration becomesFunable to function on account of vacation of office, transfer,resignation, retirement from services, suspension or for any otherreason, whatsoever, the Managing Director shall nominate anotherperson to take over his function as soon as possible. Such personshall proceed further from the stage where the matter was left byhis predecessor. The arbitrator shall give reasons for the award.”G

12. In order to appreciate the points, it is necessary to refer to thedetails of various proceedings before the arbitrator, before the respondent-Contractor approached the High Court. In terms of Clause 4.20.1, I.C.Shrivastava, IAS (Retd.) was appointed as sole arbitrator by order dated21.02.2005. Since the progress of the arbitration proceedings before theH

said arbitrator was not satisfactory, vide order No.RSIC/Legal/08-09/23999-24001 dated 26.03.2009, appointment of I.C. Shrivastava, IAS(Retd.) as arbitrator was withdrawn. Since records were not receivedfrom the said arbitrator, an order was passed on 13.08.2009 in the presenceof both the parties, wherein it was agreed that the records of the caseare to be reconstructed and by the same order, it was decided to requestAdditional Chief Secretary (SSI), Rukmani Haldea, IAS to be the solearbitrator. However, subsequently by the consent of both the partiesChairman-cum-MD of the appellant-Corporation was appointed as thesole arbitrator.

13. The matter was adjourned before the arbitral tribunal on24.11.2009 and 30.11.2009 and other dates. It is seen from the order ofthe arbitral tribunal dated 08.01.2010, the earlier arbitrator was requestednumber of times to handover the records connected with the case; buthe had not handed over the records and therefore, parties were advisedto exchange records so that the proceedings could begin and the matterwas adjourned. In the subsequent hearing on 25.01.2010, both the partieswere represented by their counsel and therefore, the matter was adjournedto 08.02.2010 for final arguments. On 08.02.2010, arguments of therespondent-claimant was heard in part and the case was adjourned to10.02.2010 on account of paucity of time. On the subsequent hearingdates viz. 10.02.2010, 11.02.2010, 15.02.2010, 18.02.2010 and 10.03.2010,there was no representation for the respondent-claimant and the matterwas adjourned to 17.03.2010. Respondent-Contractor vide its letter dated16.03.2010 addressed to the Chairman and Managing Director of theappellant-Corporation raised doubts on impartiality of the arbitratorexpressing his desire to withdraw the arbitration from the present solearbitrator and was willing to get the matter adjudicated by the perviousarbitrator, I.C. Shrivastava who was already removed at the joint requestof the parties. By letter dated 18.03.2010, respondent requested foradjournment of the matter. On the next date of hearing i.e. on 19.03.2010,the respondent-Contractor has not entered appearance and the matterwas adjourned to 06.04.2010. On 06.04.2010, the respondent-Contractorwas appeared through its representative F.K. Sherwani. As seen fromthe proceeding of arbitrator dated 06.04.2010, though initially pressedfor arbitrator outside appellant-RSIC, finally gave his consent thatChairman-cum-Managing Director may arbitrate.

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A14. On 29.04.2010, the matter could not be taken up as on28.04.2010, the arbitral tribunal passed the order stating that the solearbitrator-CMD has to go to Mumbai for attending a very importantofficial work and the matter was adjourned to 19.05.2010. The matterwas then adjourned to 20.05.2010, 16.06.2010, 25.08.2010 and 21.10.2010.It is seen that the respondent-claimant (vide letter dated 21.10.2010)Bstated that they have full faith in the present sole arbitrator and that thematter has to be decided at an early date on the basis of material availableon record at the earliest.

15. For want of reconciliation of records of the parties and certainclarifications, by order dated 24.03.2011, the arbitrator directed both theCparties to appear before him on 18.04.2011 along with complete recordsrelating to the claim and counter claim. On the next hearing dates i.e.20.04.2011 and 21.04.2011, there were detailed discussions between theparties and the sole arbitrator and accordingly, the respondent-Contractoragreed to withdraw certain claims. By various correspondence datedD21.04.2011, 18.05.2011, 20.05.2011 and 24.05.2011, the arbitrator requiredcertain clarifications from both the parties to finalise the award and replieswere also received. On 17.08.2011, in the presence of both the parties,the arbitral tribunal passed the following order:- “The “file regarding this arbitration” appears tempered/missingEpaper or incomplete. Therefore, the chronological events need tobe ascertained and reconstruction will be required. The detailedorder will be passed informing both the parties in this respect.They must wait till further order in this content.”

16. It was in the above background, the respondent-ContractorFsent a legal notice dated 07.02.2013 stating that both the parties havesubmitted their relevant claims before the sole arbitrator on 18.04.2011and that it was mutually agreed to settle the claim after deduction ofsome amount and that the amount was finalised and settled forRs.3,90,81,602/- and in spite of the fact that settled amount was agreedbetween the parties, no award was passed by the arbitrator. TheGrespondent sent another legal notice dated 07.03.2013 reiterating theclaim for Rs. 3,90,81,602/- along with statutory interest. The appellant-Corporation has sent a detailed reply dated 19.03.2013 denying anysettlement and also denying that the amount was finalised for a sum ofRs.3,90,81,602/-.

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17. It was in the above backdrop, on 13.05.2015, the respondent-Contractor filed an application under Section 11 and Section 15 of theArbitration and Conciliation Act, 1996 before the High Court forappointment of an independent arbitrator for adjudication of disputesand differences between the appellant-Corporation and the respondent-contractor in respect of agreement dated 28.01.2000. When the saidpetition was pending before the High Court, the arbitrator vide orderdated 18.12.2015 fixed the next date of hearing for 05.01.2016. Therespondent-Contractor sent a letter requesting to keep the arbitrationproceedings in abeyance. However, the Arbitral Tribunal adjourned thematter to 13.01.2016 and then to 21.01.2016, on which date the finalaward came to be passed by the Arbitral Tribunal. It was thereafter, bythe impugned order dated 22.04.2016 passed by the High Court retiredDistrict Judge, Mr. J.P. Bansal was appointed as the sole arbitrator toresolve the dispute between both the parties.

18. As pointed out earlier, on 06.04.2010, though the respondentinitially pressed for arbitrator outside RSIC, then finally gave its consentfor Managing Director to arbitrate. The said proceeding dated 06.04.2010reads as under:-

“Shri F.K. Sherwani appeared on behalf of the Claimant and ShriG.C. Garg and Shri R.K. Agarwal, Advocates appeared on behalfof the Corporation. Shri F.K. Sherwani initially pressed forappointing an Arbitrator from outside RSIC. His apprehensionwas that the CMD will not be an independent Arbitrator since heis likely to take interest of the RSIC into consideration. This wouldbe more so due to the financial difficulties being faced by theCorporation.

It was explained to Shri Sherwani that the agreement signed inprinciple provides for arbitration by the Chairman or MD of theCorporation or his nominee and also it was at the joint request ofboth the parties that the arbitration was taken away from theearlier Arbitrator. After discussions it was decided that the CMDmay arbitrate the dispute. Shri Sherwani also has given his consentthat CMD may arbitrate.

The next date of hearing is fixed for 29.04.2010 at 3.00 PM.”

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Athey have full faith in the present sole arbitrator and that they wouldlike the sole arbitrator to decide the case and pass an award on thebasis of material available on record at the earliest.” As stated earlier,to that effect, Shri Ram B. Salve, sole proprietor of the respondent hadalso given a letter dated 21.10.2010. Since the papers were missing orincomplete, in the presence of both the parties, the arbitral tribunal videBits order dated 17.08.2011 has decided that the chronological eventsneed to be ascertained and reconstruction will be required and a detailedorder will be passed informing both the parties in this regard. As seenfrom the proceedings of the arbitral tribunal till that time, the respondentvoluntarily participated and acquiesced in the proceedings before theCarbitral tribunal and also expressed faith in the sole arbitrator. Havingthus voluntarily participated in the arbitral proceedings, the respondenthas sent a legal notice dated 07.02.2013 to the appellant-Corporationstating that in the arbitral proceedings, the respondent mutually agreedto the claim and the matter was settled for a sum of Rs.3,90,81,602/- and that in spite of repeated requests, the amount was not paid to theDrespondent. The respondent also sent another legal notice dated07.03.2013 reiterating its demand for payment of Rs.3,90,81,602/-. Tothat effect, the appellant-Corporation has sent a detailed reply dated19.03.2013.

20. It is in this backdrop, the respondent has filed the arbitrationEpetition before the High Court under Section 11 and Section 15 of theArbitration and Conciliation Act, 1996 on 13.05.2015 seeking appointmentof an independent arbitrator. As noted earlier, as per Clause 4.20.1 ofSchedule-4 (General Conditions), the parties have agreed that all disputesand differences arising out of or in any way concerning the contract,Fshall be referred to the Managing Director himself or his nominees forthe sole arbitration and that there will be no objection to any suchappointment on the ground that the person so appointed is an employeeof the Corporation and that he has dealt with the matter to which thecontract relates. When the parties have consciously agreed that thedisputes or differences shall be referred to the Managing Director himselfGor his nominee for sole arbitration and having participated in the arbitralproceedings before arbitrator for quite some time, the respondent cannotturn round and seek for appointment of an independent arbitrator.

21. The respondent having participated in the proceedings beforethe arbitral tribunal for quite some time and also having expressed faithH

RAJASTHAN SMALL INDUSTRIES CORPN. LTD. v. GANESHCONTAINERS MOVERS SYNDICATE [R. BANUMATHI, J.]

in the sole arbitrator, is not justified in challenging the appointment of theManaging Director of the appellant-Corporation as the sole arbitrator.In Indian Oil Corporation Limited and Others v. Raja TransportPrivate Limited (2009) 8 SCC 520, this Court held as under:- “34. The fact that the named arbitrator is an employee of one ofthe parties is not ipso facto a ground to raise a presumption ofbias or partiality or lack of independence on his part. There canhowever be a justifiable apprehension about the independence orimpartiality of an employee arbitrator, if such person was thecontrolling or dealing authority in regard to the subject contract orif he is a direct subordinate (as contrasted from an officer of aninferior rank in some other Department) to the officer whosedecision is the subject-matter of the dispute.

44. While considering the question whether the arbitral procedureprescribed in the agreement for reference to a named arbitrator,can be ignored, it is also necessary to keep in view clause (v) ofsub-section (2) of Section 34 of the Act which provides that anarbitral award may be set aside by the court if the composition ofthe Arbitral Tribunal or the arbitral procedure was not inaccordance with the agreement of the parties (unless suchagreement was in conflict with any provision of Part I of the Actfrom which parties cannot derogate, or, failing such agreement,was not in accordance with the provisions of Part I of the Act).The legislative intent is that the parties should abide by the termsof the arbitration agreement.” [underlining added]

22. The respondent has not placed any material to show that ithas reason to believe that the arbitrator had not acted independently orimpartially. The respondent has not brought on record any material toentertain an apprehension that the Managing Director of the appellant-Corporation is not likely to act independently or impartially. On the otherhand, as noted earlier, as per the proceeding of the arbitral tribunal dated21.10.2010, the respondent had expressed its full faith in the sole arbitratorand had also given a letter dated 21.10.2010 to that effect. The fact thatthe sole arbitrator is the Managing Director of the appellant-Corporationis not a ground to raise a presumption of bias or lack of independence onhis part. The arbitration Clause 4.20.1 of Schedule-4 (General Conditions)stipulates a high official i.e. - Managing Director of the Corporation notconnected with the contract or the work executed by the respondent.

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AHaving participated in the entire arbitration proceedings and acquiescedin the proceedings, the respondent is estopped from challenging thecompetence of the arbitrator. The respondent was not justified in filingthe arbitration petition seeking appointment of an independent arbitrator.

Whether by virtue of Section 12 of the Amendment Act,Bthe Managing Director has become ineligible to act:-

23. After the amendment to the Arbitration and Conciliation Act,2015, Section 12(5) prohibits the employee of one of the parties frombeing an arbitrator. In the present case, the agreement between theparties was entered into on 28.01.2000 and the arbitration proceedingsCcommenced way back in 2009 and thus, the respondent cannot invokeSection 12(5) of the Arbitration and Conciliation (Amendment) Act, 2015.As per Section 26 of the Act, the provisions of the amended Act 2015shall not apply to the arbitral proceedings commenced in accordancewith the provisions of Section 21 of the principal Act, before thecommencement of this Act unless the parties otherwise agree.D

24. In Board of Control for Cricket in India v. Kochi CricketPrivate Limited and others, (2018) 6 SCC 287, this Court held that theprovisions of Amendment Act, 2015 (with effect from 23.10.2015) cannothave retrospective operation in the arbitral proceedings alreadycommenced unless the parties otherwise agree. In the present case,Ethere is nothing to suggest that the parties have agreed that the provisionsof the new Act shall apply in relation to the arbitral proceedings.

25. Contending that the sole arbitrator/Chairman-cum-ManagingDirector, by virtue of 2015 amendment, has become ineligible to act asthe arbitrator, the learned counsel for the respondent placed relianceFupon TRF Limited v. Energo Engineering Projects Limited (2017) 8SCC 377. In the said case, though the agreement/purchase order wasdated 10.05.2014 (prior to the amendment), notice invoking arbitrationwas issued on 28.12.2015 (after the Amendment Act 2015) and theletter of the Managing Director nominating the arbitrator is datedG27.01.2016. In such factual matrix of the case, this Court has held thatthe named arbitrator-Managing Director of the respondent therein hadbecome ineligible by operation of law and therefore, he cannot nominateanother person as an arbitrator. In para (54), it was held as under:- “54. In such a context, the fulcrum of the controversy would be,can an ineligible arbitrator, like the Managing Director, nominate H

RAJASTHAN SMALL INDUSTRIES CORPN. LTD. v. GANESHCONTAINERS MOVERS SYNDICATE [R. BANUMATHI, J.]

an arbitrator, who may be otherwise eligible and a respectableperson. As stated earlier, we are neither concerned with theobjectivity nor the individual respectability. We are only concernedwith the authority or the power of the Managing Director. By ouranalysis, we are obligated to arrive at the conclusion that once thearbitrator has become ineligible by operation of law, he cannotnominate another as an arbitrator. The arbitrator becomes ineligibleas per prescription contained in Section 12(5) of the Act. It isinconceivable in law that person who is statutorily ineligible cannominate a person. Needless to say, once the infrastructurecollapses, the superstructure is bound to collapse. One cannothave a building without the plinth. Or to put it differently, once theidentity of the Managing Director as the sole arbitrator is lost, thepower to nominate someone else as an arbitrator is obliterated.Therefore, the view expressed by the High Court is not sustainableand we say so.” [underlining added]

26. The facts of the said case are entirely different from the casein hand. In the said case, when notice invoking arbitration was issued on28.12.2015, after the Amendment Act, 2015 came into force with effectfrom 23.10.2015, by virtue of which the person named in the agreementbecame ineligible to act as the arbitrator. In the case in hand, thearbitration proceedings started way back in 2009 long before 2015Amendment Act came into force and therefore, 2015 Amendment Actis not applicable to the case in hand. The statutory provisions that wouldgovern the matter are those which were then in force before theAmendment Act.

27. To fortify our view, we can usefully refer to the decision ofthis Court in Aravali Power Company Private Limited v. Era InfraEngineering Limited (2017) 15 SCC 32. In this case, the invocation ofarbitration was on 29.07.2015 and the arbitrator was appointed on19.08.2015 and the parties appeared before the arbitrator on 07.10.2015well before 23.10.2015 i.e. date on which the Amendment Act wasdeemed to have come into force. It was held that the statutory provisionsthat would therefore govern the controversy are those that were in forcebefore the Amendment Act came into effect. This Court has thereforedirected that the arbitration, in pursuance of the appointment of thearbitrator on 19.08.2015, shall proceed in accordance with law.

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AWhether the High Court was right in terminating themandate of the arbitrator appointed as per the agreement:-

28. The main question falling for consideration is whether theHigh Court was right in terminating the mandate of the arbitrator appointedas per the agreement and appointing a substitute arbitrator in theBapplication filed under Section 11(6) and Section 15 of the ArbitrationAct. As pointed out earlier, the proceedings before the Arbitral Tribunalproceeded till 17.08.2011 and thereafter, no progress was made. Therespondent issued legal notice on 07.02.2013 calling upon the appellantto pay Rs.3.90,81,602/- alleging that the said amount was settled duringthe course of proceedings before the Arbitral Tribunal. Reiterating theCdemand, the respondent has again sent the legal notice on 07.03.2013.However, no award came to be passed. The respondent filed applicationunder Sections 11 and 15 of the Act of 1996 on 13.05.2015 seekingappointment of an independent arbitrator for adjudication of the disputesand differences between the appellant and the respondent.

D

29. In support of his contention, the learned counsel for therespondent relied upon the decision in Union of India and others v.Uttar Pradesh State Bridge Corporation Limited (2015) 2 SCC 52.Learned counsel for the respondent contended that the arbitrator failedto conclude the proceedings even after four years and the High CourtErightly appointed the substitute arbitrator departing from the arbitrationclause in the agreement between the parties. In the said case, since theArbitral Tribunal did not pass award in spite of expiry of four years, therespondent thereon filed Request Case No.10/2010 and the High Courtpassed order dated 09.03.2011 giving the last chance to the ArbitralTribunal to complete the arbitral proceedings within a period of threeFmonths. In para (6) of the judgment, this Court pointed out that the HighCourt took note of the various dates and hearings that are fixed by theTribunal between 25.03.2011 and 25.06.2011 and came to the conclusionthat the delay caused in the arbitral proceedings was intentional. Afterreferring to Union of India v. Singh Builders Syndicate (2009) 4 SCCG523 and other judgments, this Court observed that the delays and frequentchanges in the Arbitral Tribunal defeat the process of arbitration andtherefore, the appointment of the arbitrator by the court of its own choicedeparting from the arbitration clause has become an acceptableproposition of law which can be termed as a legal principle which hascome to be established by a series of judgments of this Court. Having H

regard to the facts of the said case, observing that the delay in arbitralproceedings was intentional, in para (6) of Uttar Pradesh State BridgeCorporation Limited, it was held as under:- “6. The High Court took note of the various dates of hearingsthat are fixed by the Tribunal between 25-3-2011 and 25-6-2011and came to the conclusion that delay caused in the arbitralproceedings was intentional. So much so, the members of theArbitral Tribunal were continuing their dilatory tactics in decidingthe matter before it since 2007 and four years had passed in theprocess. The Tribunal had faltered even after giving specificdirections to conclude the matter within three months and longadjournments were granted thereby violating the specific directionsof the High Court. Terming this attitude of the members of theTribunal as negligent on their part towards their duties with nosanctity for any law or for the orders of the High Court, the HighCourt allowed the petition of the respondent herein and set asidethe mandate of the Tribunal with the appointment of sole arbitratorby the Court itself.”

30. Having regard to the factual matrix of the present case, in ourconsidered view, the ratio of the said decision cannot be applied to thecase in hand. Per contra, in the present case, the proceedings of thearbitral tribunal continued till 17.08.2011. From the proceeding of thearbitral tribunal dated 17.08.2011, it is seen that the “arbitrator observedthat the file regarding arbitration appears tampered/missing papersare incomplete and therefore, the chronological events need to beascertained and reconstitution will be required.” It is in thisbackground, the award was not passed till 2013. It is true that there wassome delay in passing the award. However, between 2011 and 2013, therespondent has not filed any application to expedite the proceedings andfor passing of the award. The respondent has neither filed the RequestCase for passing of the award at an early date nor filed the petitionunder Section 14 of the Act for termination of the mandate of the arbitratorthat the arbitrator has ‘failed to act without undue delay’.

31. Mere neglect of an arbitrator to act or delay in passing theaward by itself cannot be the ground to appoint another arbitrator indeviation from the terms agreed to by the parties. We may usefullyrefer to RUSSELL ON ARBITRATION, 20[th] Edition which readsas under:- A

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“Mere neglect of an arbitrator to act, as distinct from refusal orincapacity, does not of itself give the court power to appoint anotherarbitrator in his place. It does, however, give the court power toremove him, whereupon there is a power to replace him.”*

*[RUSSELL ON ARBITRATION, 20[th] Edition, Pg. 136Bquoted in Law relating to Arbitration and Conciliation, 9[th] Edition,by Dr. P.C. Markanda at Pg. 620]

32. Section 15 deals with termination of the mandate andsubstitution of an arbitrator. Sub-section (1) of Section 15 states that inaddition to the circumstances referred to in Sections 13 and 14 of theCAct, the mandate of an arbitrator shall terminate where he withdrawsfrom office for any reason or by pursuant to the agreement of the parties.In terms of sub-section (2), after termination of arbitrator’s mandate,the appointment of the substitute arbitrator shall be in accordance withthe rules applicable to the appointment of an arbitrator who is beingreplaced.D

33. After analysis of the scheme of Sections 11, 14 and 15, inS.B.P. and Company v. Patel Engineering Limited and Another(2009) 10 SCC 293, this Court held that the legislature has repeatedlylaid emphasis on the necessity of adherence to the terms of agreementbetween the parties in the matter of appointment of arbitrators andEprocedure to be followed for such appointment. In para (31), it was heldas under:- “31. ………..Even Section 15(2), which regulates appointmentof a substitute arbitrator, requires that such an appointment shallbe made according to the rules which were applicable to theFappointment of an original arbitrator. The term “rules” used in thissub-section is not confined to statutory rules or the rules framedby the competent authority in exercise of the power of delegatedlegislation but also includes the terms of agreement entered intobetween the parties.”

G

G34. In Yashwith Constructions (P) Ltd. v. Simplex ConcretePiles India Ltd. and Another (2006) 6 SCC 204, the Supreme Courtwas called upon to examine the scope of Section 15 of the Act in thebackdrop of the fact that after resignation of the arbitrator appointed bythe Managing Director of the respondent company, another arbitratorwas appointed by him in accordance with the arbitration agreement. AtH

that stage, the petitioner thereon filed an application under Section 11(5)read with Section 15(2) of the Act praying for appointment of a substitutearbitrator to resolve the disputes between the parties. The said applicationwas dismissed by the Chief Justice holding that Section 15(2) refers notonly to the statutory rules framed for regulating the appointment ofarbitrators but also to contractual provisions for such appointmentupholding the view taken by the Chief Justice. In para (4), it was held asunder:- “4. ………The withdrawal of an arbitrator from the office forany reason is within the purview of Section 15(1)(a) of the Act.Obviously, therefore, Section 15(2) would be attracted and asubstitute arbitrator has to be appointed according to the rulesthat are applicable for the appointment of the arbitrator to bereplaced. Therefore, what Section 15(2) contemplates is anappointment of the substituted arbitrator or the replacing of thearbitrator by another according to the rules that were applicableto the appointment of the original arbitrator who was beingreplaced. The term “rules” in Section 15(2) obviously referred tothe provision for appointment contained in the arbitration agreementor any rules of any institution under which the disputes werereferred to arbitration. There was no failure on the part of theparty concerned as per the arbitration agreement, to fulfil hisobligation in terms of Section 11 of the Act so as to attract thejurisdiction of the Chief Justice under Section 11(6) of the Act forappointing a substitute arbitrator. Obviously, Section 11(6) of theAct has application only when a party or the person concernedhad failed to act in terms of the arbitration agreement.WhenSection 15(2) says that a substitute arbitrator can be appointedaccording to the rules that were applicable for the appointment ofthe arbitrator originally, it is not confined to an appointment underany statutory rule or rule framed under the Act or under the scheme.It only means that the appointment of the substitute arbitratormust be done according to the original agreement or provisionapplicable to the appointment of the arbitrator at the initialstage…….” [underlining added]

As held in Yashwith Constructions, Section 11(6) of the Act wouldcome into play only when there was failure on the part of the partyconcerned to appoint an arbitrator in terms of the arbitration agreement.

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AIn the case in hand, the High Court, in our view, was not right in appointingan independent arbitrator without keeping in view the terms of theagreement between the parties and therefore, the impugned orderappointing an independent arbitrator/retired District Judge is notsustainable.

B35. Remedy to the Respondent-Contractor:- The awardpassed by the arbitrator dated 21.01.2016, whether sustainable, is thenext question falling for consideration. As discussed earlier, after17.08.2011 the Arbitral Tribunal could not make progress and as per theproceeding of the Arbitral Tribunal dated 17.08.2011, the arbitratorobserved that the “…..missing papers are incomplete…..theCchronological events need to be ascertained and reconstitution willbe required….”. As pointed out earlier, the respondent filed applicationunder Sections 11 and 15 of the Act of 1996 before the High Court on13.05.2015. As per the proceedings of the Arbitral Tribunal dated18.12.2015, the arbitration application before the High Court was broughtDto the notice of the tribunal and the same was recorded. On 05.01.2016,the respondent prayed for keeping the arbitration proceedings in abeyanceand the matter was adjourned for 13.01.2016. The Arbitral Tribunalpassed a detailed order on 13.01.2016 stating that the matter is pendingfor quite some time and on the basis of the available facts and materials,the matter will be finalized and adjourned the matter for 21.01.2016. OnEthe basis of available materials, the Arbitral Tribunal passed the finalaward on 21.01.2016 awarding a sum of Rs.1,38,000/-, Rs.83,000/- andRs.1,97,110/- in respect of claims at Serial Nos.3, 4 and 9 respectively tothe claimant and the respondent’s claim in respect of other claims wasrejected. So far as the counter claim of the appellant-Corporation inFrespect of Serial No.17, the arbitrator awarded a sum of Rs.58,39,018/-.

36. Since the High Court was in seisin of the matter, the ArbitralTribunal could have given further opportunity to the respondent to putforth his case. The proceedings of the Arbitral Tribunal was pending forquite some time from 2009 till 2015 and after the respondent approachedGthe High Court in May, 2015, the arbitrator appears to have hurriedlypassed the award. It is pertinent to note that the respondent wasrepeatedly praying for adjournment on 05.01.2016, 13.01.2016 and wasnot present on the date of passing of the final award dated 21.01.2016.As pointed out earlier, it was noted in the proceedings dated 17.08.2011that the chronological events need to be ascertained and reconstructionH

will be required. It is not known whether the same was ascertained ornot and whether reconstruction was done before passing the final awardon 21.01.2016. The respondent has made number of claims under variousheads. The respondent has to be given an opportunity to substantiate itsclaim under various heads. In order to do complete justice between theparties and in exercise of power under Article 142 of the Constitution ofIndia, the award dated 21.01.2016 is to be set aside.

37. In exercise of power under Article 142 of the Constitution ofIndia, it is open to the court to mould the relief by safeguarding theinterest of parties. The paramount consideration in such cases shouldbe to ensure that there is no injustice caused. In Raj Kumar and othersv. Union of India and another (2006) 1 SCC 737, this Court held asunder:- “19. …….in exercise of our powers under Article 142 of theConstitution in order to do complete justice to a section of thepersonnel who would otherwise be placed in an inequitablesituation for which the authorities are also partly to blame. It isopen to this Court to mould the relief by safeguarding the interestof the parties even while declaring the law. The paramountconsideration in such cases should be to ensure that there is noinjustice caused…….”

38. The phrase “complete justice” engrafted in Article 142(1) isthe word of width couched with elasticity to meet myriad situationscreated by human ingenuity or cause or result of operation of Statutelaw or law declared under Articles 32, 136 and 141 of the Constitution.(VideAshok Kumar Gupta and another v. State of U.P. and others(1997) 5 SCC 201) In the case in hand, to relegate the respondent tochallenge the award under Section 34 of the Act, it would further prolongthe litigation between the parties. Considering the facts of the case andin order to do complete justice between the parties, in exercise of powerunder Article 142 of the Constitution, the award dated 21.01.2016 is setaside.

39. In the result, the impugned order of the High Court dated22.04.2016 is set aside and this appeal is allowed. The present ManagingDirector of the appellant-Rajasthan Small Industries Corporation Limitedshall be the sole arbitrator and the Managing Director is directed to takeup the matter and continue the proceedings and afford sufficient AB

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Aopportunity to both the parties to adduce further evidence and to makeoral submissions and pass the final award within a period of four months.It is made clear that the arbitrator may not be influenced by any of theviews expressed by the High Court.

BDevika Gujral

Appeal allowed.

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