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Patna High Court

J. K. Engicon Private LimitedversusThe State of Bihar

Decided
Disposal
DISPOSED

Holding

The unilateral appointment clause in Clause 25 is void and severable, but the substantive arbitration agreement survives, and the court may appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Summary

J.K. Engicon Private Ltd filed a request under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator pursuant to Clause 25 of its contract with the State of Bihar for road‑work on the Ekma‑Masrakh road. The respondents argued that the contract did not provide a valid arbitration mechanism because Clause 25 vested exclusive appointment power in the Engineer‑in‑Chief, relying on the earlier judgment in State of Bihar v. Kashish Developers. The petitioner relied on the same clause, which after a hierarchy of internal remedies, allowed arbitration, and on the Supreme Court’s decision in Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., which held that unilateral appointment clauses are void but the arbitration agreement survives and the court may appoint an arbitrator under Section 11(6). The High Court accepted this reasoning, declared the unilateral appointment provision severable, and exercised its power under Section 11(6) to appoint Justice Shyam Kishore Sharma as arbitrator. The order disposed of the request petition and directed the parties to cooperate with the arbitrator.

Issues considered

  • Whether Clause 25 of the contract constitutes a valid arbitration agreement within the meaning of Section 7 of the Arbitration and Conciliation Act despite its unilateral appointment provision.
  • Whether the court can appoint an arbitrator under Section 11(5) and 11(6) when the contractual appointment mechanism is void.
  • Whether the decision in State of Bihar v. Kashish Developers is binding precedent on the present petition.
  • Whether the petition for appointment of an arbitrator is maintainable.

Legislation cited

Subjects

  • Arbitration
  • Appointment of arbitrator
  • Section 11
  • Unilateral appointment clause
  • Severability
  • Public‑private contract
  • Road construction dispute
  • Bihar

Judgment

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                          REQUEST CASE No.52 of 2025
     ======================================================
     J. K. Engicon Private Limited a company having its head office at Hathua
     Chhawani, Chatardhari Bazar, P.S. Bhagwan Bazar, District - Chhapra, Bihar,
     duly represented by its Director Vikas Kumar Singh, aged about 37 years,
     Gender - Male, son of Jitendra Singh, Resident of Barwa Khurd, Daudpur,
     District -Saran, Bihar


                                                                    ... ... Petitioner
                                       Versus


1.   The State of Bihar through the Secretary, Road Construction Department,
     Government of Bihar, Patna
2.   The Engineer-In-Chief, Head-Quarter, Road Construction Department, 3rd
     Floor, Vishweshwaraiya Bhawan, Patna, Bihar
3.   The Chief Engineer, North Bihar Wing, Road Construction Department,
     Patna, Bihar
4.   The Superintending Engineer, Saran Circle, Road Construction Department,
     Patna, Bihar
5.   The Executive Engineer, Chhapra Road Division, Road Construction
     Department, Patna, Bihar


                                                                 ... ... Respondents
     ======================================================
     Appearance :
     For the Petitioner       :   Mr. Prashant Kumar, Advocate
                                  Mr. Divyam Kumar, Advocate
     For the Respondents      :   Mr. Vikas Kumar, Advocate
     ======================================================
     CORAM: HONOURABLE THE CHIEF JUSTICE
     ORAL JUDGMENT
      Date : 13-02-2026

                     This request case has been filed under Section 11(5)
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         and 11(6) of the Arbitration and Conciliation Act, 1996

         (hereinafter ‘1996 Act’) by J.K. Engicon Private Limited with

         the prayer for appointment of an arbitrator for adjudication of

         dispute between the parties in accordance with the Arbitration

         Agreement as contained in Clause 25 of the Agreement No. 06-

         SBD/2020-2021.

                       2. It is the case of the petitioner that such agreement

         was executed between the petitioner and Respondent no. 5 for

         execution      of    IRQP       (Improvement    of   Riding   Quality

         Programme) Work on the Ekma to Masrakh Road via Shajitpur,

         coverying KM0.000 to KM 31.60, under Road Division

         Chhapra for the year 2020-21, for a contract value of Rs.

         24,98,74,047/- (at 16.95% below the BOQ rate).

                       Subsequently, a supplementary agreement to the said

         agreement was also executed between the parties for an

         additional sum of Rs. 87,76,528/- covering the Electrical Utility

         Shifting work alongside the main IRQP project.

                       It is further case of the petitioner that since some

         dispute arose between the parties, the petitioner issued a notice

         on 24.06.2025 seeking appointment of the arbitrator to the

         respondents for adjudication of the claims to the tune of Rs.

         6,65,21,488/- (Rupees Six Crores Sixty-Five Lakhs Twenty-One
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         Thousand Four Hundred Eight-Eight Only) in relation to arrears

         for work completed, approved deviations and/or extra work

         performed, price escalation and applicable taxes etc., under the

         Agreement No. 06-SBD/2020-21.

                       3. The respondents failed to respond to the request of

         the petitioner, and as such , the petitioner has filed this petition

         for appointment of the arbitrator.

                       4. The learned counsel for the State on behalf of the

         Respondent Nos. 1 to 5 has filed counter affidavit wherein a

         specific stand has been taken in paragraph nos. 5 and 16, which

         is as follows:

                       “5. That at the outset, it is submitted that
                       the present application is not maintainable
                       in view of judgment/order dated 05.10.2024
                       passed in Civil Review No. 181 of 2023
                       (State of Bihar vs. Kashish Developer
                       Limited) by this Hon’ble Court.

                       16. That in reply to the statement made in
                       Paragraph Nos. 15 and 16 of the petition, it
                       is submitted that no arbitrator can be
                       appointed under Section 11 of Arbitration
                       and Conciliation Act, 1996 as there is no
                       such provision in the contact as has been
                       held in the matter of Civil Review No. 181
                       of 2023, State of Bihar vs. Kashish
                       Developers Limited, by this Hon’ble Court
                       (supra).”

                       4.1. The learned counsel for the State also placed the
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         decision of this Court in the aforesaid Civil Review Case No.

         181 of 2023 wherein it is held in paragraph no. 15 as follows:

                       15. On the above reasoning, this Court
                       finds that the present cases are almost
                       similar to Municipal Corporation of
                       Greater Mumbai (supra); wherein there
                       was a specific clause that there shall be no
                       arbitration. In the present case, there is no
                       provision for arbitration, if the appointment
                       is not made by the Engineer-in-Chief or the
                       administrative head of the Public Works
                       Division. In the context of the disability
                       visited on the Engineer-in-Chief and the
                       administrative head to make appointment of
                       an arbitrator; the agreement does not have
                       a clause for arbitration and the parties will
                       have to approach the Civil Court or any
                       other appropriate forum. That this Court
                       failed to notice the specific provision in the
                       arbitration agreement is an error on the
                       face of record.”

                       5. The learned counsel for the petitioner, on the other

         hand, placed the agreement and more specificly clause 25 of the

         agreement which, inter alia, states as follows :

                       “CLAUSE-25 Except where otherwise
                       provided in the contract all questions and
                       disputes relating to the meaning of the
                       specifications,   design,    drawings     and
                       Instructions here-in-before mentioned and as
                       to the quality of workmanship or materials
                       used on the work or as to any other question,
                       claim right matter or thing whatsoever in any
                       way arising out of or relating to contract,
                       designs, drawings, specifications, estimates,
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                       Instructions, orders or these conditions or
                       otherwise concerning the works or the
                       execution or failure to execute the same
                       whether arising during the progress of the
                       work or after the cancellation, termination,
                       completion or abandonment thereof shall be
                       dealt with as mentioned hereinafter.
                       (i) If the contractor considered any work
                       demanded of him to be outside the
                       requirements of the contract, or dispute any
                       drawings, record or decision given In writing
                       by the Engineer-In-Charge on any matter in
                       connection with or arising out of the contract
                       or carrying out of the contract or carrying
                       out of the work, to be unacceptable, he shall
                       promptly within 7 days request the
                       Superintending Engineer in writing for
                       written instruction or decision. Thereupon,
                       the Superintending Engineer shall give his
                       written instructions or decision within a
                       period of fifteen days from the receipt of the
                       contractor's letter.
                       If the Superintending Engineer falls to give
                       his instructions or decision in writing within
                       the aforesaid period or if the contractor is
                       dissatisfied with the instructions or decision
                       of the Superintending Engineer, the
                       contractor may, within 15 days of the receipt
                       of Superintending Engineer's decision, appeal
                       to the Chief Engineer who shall afford an
                       opportunity to the contractor to be heard, if
                       the latter so desires, and to offer evidence in
                       support of his appeal. The Chief Engineer
                       shall give his decision within 30 days of
                       receipt of contractor's appeal. If the
                       contractor is dissatisfied with this decision,
                       the contractor shall within a period of30 days
                       from receipt of the decision, give notice to the
                       Chief Engineer for appointment of arbitrator
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                       failing which the said decision shall be final
                       binding and conclusive and not referable to
                       adjudication by the arbitrator.
                       (ii) Except where the decision has become
                       final, binding and conclusive in terms of Sub
                       Para (i) above disputes or difference shall be
                       referred for adjudication through arbitrator
                       appointed by Engineer-in-Chief or the
                       administrative head of the said P.W.D. If the
                       arbitrator so appointed is unable or unwilling
                       to act or resign his appointment or vacates
                       his office due to any reason whatsoever
                       another sole arbitrator shall be appointed in
                       the manner aforesaid. Such person shall be
                       entitled to proceed with the reference from the
                       stage at which it was left by his predecessor.
                       It is a term of this contract that the party
                       invoking arbitration shall give a list of
                       disputes with amounts claimed in respect of
                       each such dispute along with the notice for
                       appointment of arbitrator and giving
                       reference to the rejection by the Chief
                       Engineer of the appeal.
                       It is also a term of this contract that no
                       person other than a person appointed by such
                       Engineer-in-Chief or the administrative head
                       of the department as aforesaid should act as
                       arbitrator and if for any reason that is not
                       possible, the matter shall not be referred to
                       arbitrator at all.
                       It is also a term of this contract that if the
                       contractor does not make any demand for
                       appointment of arbitrator in respect of any
                       claims in writing as aforesaid within 45 days
                       of receiving the Intimation from the Engineer-
                       in-Charge that the final bill is ready for
                       payment, the claim of the contractor shall be
                       deemed to have been waived and absolutely
                       barred and the Government shall be
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                       discharged and released of all liabilities
                       under the contract in respect of these claims.
                       The arbitration shall be conducted in
                       accordance with the provisions of the
                       Arbitration and Conciliation Act, 1996 (26 of
                       1996) or any statutory modifications or re-
                       enactment thereof and the rules made there
                       under and for the time being in force shall
                       apply to the arbitration proceeding under this
                       clause.
                       It is also a term of the contract that if any fees
                       are payable to the arbitrator these shall be
                       paid equally by both the parties.
                       It is also a term of the contract that the
                       arbitrator shall be deemed to have entered on
                       the reference on the date he issues notice to
                       both the parties calling them to submit their
                       statement of claims and counter statement of
                       claims. The venue of the arbitration shall be
                       such place as may be fixed by the arbitrator
                       in his sole discretion. The fees, if any, of the
                       arbitrator shall, if required to be paid before
                       the award is made and published, be paid half
                       and half by each of the parties. The cost of
                       the reference and of the award (Including the
                       fees, if any, of the arbitrator) shall be in the
                       discretion of the arbitrator who may direct to
                       any by whom and in what manner such costs
                       or any part thereof shall be paid and fix or
                       settle the amount of costs to be so paid.”

                       5.1. Learned counsel for the petitioner placed

         reliance in the case of Hindustan Construction Company Ltd.

         -Versus- Bihar Rajya Pul Nirman Nigam Limited and Others

         reported in 2025 SCC OnLine SC 2578, wherein Issue No. 2

         was quoted, which is as follows :
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                       Issue No.2

                       “Whether a valid and subsisting arbitration
                       agreement exists between the parties within
                       the meaning of Section 7 of the A&C Act, and
                       whether Clause 25 of the agreement satisfies
                       the statutory requirements of an arbitration
                       clause.”

                       The Hon’ble Supreme Court after quoting the Clause

         No. 25 of the agreement in paragraph no. 12.9 where similar

         clause was there, has been pleased to hold as follows:

                     “12.11. This principle was reaffirmed in
                     Central       Organisation      for    Railway
                     Electrification v. ECI SPIC SMO MCML
                     (JV)27, and conclusively settled by the
                     Constitution Bench in CORE II v. ECI SPIC
                     SMO MCML (JV)28, wherein, it was held that
                     unilateral appointment clauses in public-
                     private contracts violate Article 14 and offend
                     the principle of nemo judex in causa sua. The
                     Constitution Bench observed in paragraph 164
                     as follows:

                           "Unilateral appointment clauses in a
                           public-private contract fail to provide
                           the minimum level of integrity required
                           in authorities performing quasi-
                           judicial functions such as arbitral
                           tribunals. Therefore, a unilateral
                           appointment clause is against the
                           principle of arbitration, that is,
                           impartial resolution of disputes
                           between parties. It also violates the
                           nemo judex rule which constitutes the
                           public policy of India in the context of
                           arbitration. Therefore, unilateral
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                           appointment clauses in public-private
                           contracts are violative of Article 14 of
                           the Constitution for being arbitrary, in
                           addition to being contrary to the
                           equality    principle     under      the
                           Arbitration Act.”

                       12.12. Accordingly, the portion of Clause 25
                       that vests exclusive appointment power in
                       one party and forecloses arbitration in
                       default of such appointment must be severed
                       as void and unenforceable. However, the
                       substantive agreement to arbitrate survives
                       by virtue of the doctrine of severability.”

                       6. In view of such ratio laid down by the Hon’ble

         Supreme Court, I am of the humble view that the portion of

         Clause 25 in the agreement which has been executed in the case

         in hand vesting exclusive appointment power in one party i.e.

         the Engineer-in-Chief or the administrative head of the P.W.D.

         and forecloses arbitration in default of such appointment, must

         be severed as void and an unenforceable. However, the

         substantive agreement to arbitrate survives by virtue of doctrine

         of severability.

                       In Hindustan Construction Company Ltd. (supra), it

         has been further held in paragraph nos. 12.16 and 14 as follows :

                       “12.16. In light of the above discussion, the

         following propositions emerge:

                                    (i) The parties' conduct clearly
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                       demonstrates their intention to arbitrate,
                       satisfying the requirement of Section 7(4)(c);
                                   (ii) Clause 25, in its substantive
                       form, constitutes a valid arbitration
                       agreement;
                                   (iii)    The     unilateral     and
                       exclusionary appointment mechanism is void
                       and severable; and
                                    (iv) This Court is empowered

                         under Section 11(6) to cure the defect and

                         appoint an independent arbitrator.

                              xx       xx     xx         xx

                      14. In the present case, the respondents have
                      placed considerable reliance on the fact that
                      the decision in Kashish Developers, which was
                      referred to by the High Court in the impugned
                      judgment, stands "affirmed" on account of the
                      dismissal of the Special Leave Petition.
                      However, the circumstances in Kashish
                      Developers involved appointment made without
                      affording the State an opportunity to oppose it.
                      Whereas, the present matter arose after
                      extensive      pleadings,     objections,    and
                      participation by both parties. The two cases are
                      therefore factually distinct, and such reliance
                      cannot justify revisiting or unsettling the
                      earlier appointment order.
                                   14.1. It is necessary to restate the
                      well-settled legal position regarding the
                      precedential value of orders dismissing Special
                      Leave Petitions. A non-speaking dismissal of
                      an SLP signifies only that this Court, in its
                      discretion under Article 136, has declined to
                      interfere. It does not amount to approval of the
                      reasoning of the subordinate forum. The
                      doctrine of merger does not apply to such
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                      dismissals. This position has been consistently
                      affirmed      by      this    Court,    including
                      Kunhayammed v. State of Kerala; and P.
                      Singaravelan v. District Collector, Tiruppur.
                                  14.2. Similarly, in State of Uttar
                      Pradesh v. Atul Kumar Dwived, after reviewing
                      earlier authorities, this Court reiterated that
                      dismissal of an SLP at the threshold without
                      reasons does not elevate the underlying
                      judgment to binding precedent unless
                      accompanied by an express declaration of law
                      under Article 141.
                                   14.3. Accordingly, the respondents'
                       reliance on the supposed "affirmation" of
                       Kashish Developers is wholly misconceived. A
                       non-speaking dismissal of an SLP neither
                       endorses the reasoning of the judgment
                       challenged nor transforms it into binding
                       precedent. At best, such a decision has
                       persuasive value; its only legal effect is to
                       bring finality to the dispute between the parties
                       in that particular case.”

                       7. In view of the foregoing discussions, I am of the

         humble view that in spite of the Clause no. 25, this Court has

         got ample power for appointment of arbitrator and there is no

         legal impediment in the adjudication of dispute by the arbitrator

         more particularly when the dispute arises out of the agreement

         which is being civil in nature and the petitioner having

         exhausted the channel available for resolution of the dispute.

                       8. In view of such finding as arrived at and on

         consensus of both the learned counsel for the parties, Hon’ble
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         Mr. Justice Shyam Kishore Sharma, former Judge of this Court,

         is appointed as learned Arbitrator to adjudicate all disputes

         arising out of agreement entered into between the parties to the

         lis.

                       9. All the pleas and issues raised, on merits, are left

         open to be considered and decided by the learned Arbitrator.

                       10. The learned Arbitrator shall be entitled to fee as

         per the Schedule of the Act.

                       11. Since the dispute arises out of an agreement of

         the year 2021, the hearing be expedited.

                       Parties undertake to fully cooperate and not to take

         any unnecessary adjournment.

                       The issue of limitation, if any, is left open to be

         raised before the learned Arbitrator.

                       12. Joint Registrar (List) is directed to communicate

         the order to the learned Arbitrator.

                       13. Learned counsel for the parties also undertake to

         communicate the order to the learned Arbitrator.

                       14. The Arbitral Tribunal shall issue notice to the

         parties.

                       15. The Request Petition stands disposed of in the

         above terms.
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                                     16. Interlocutory Application(s), if any, shall stand

                      disposed of.




                                           (Sangam Kumar Sahoo, CJ)
shailendra/-
AFR/NAFR
CAV DATE
Uploading Date          16.02.2026
Transmission Date


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