Holding

The Supreme Court upheld the parties' consensual arrangement for arbitrator appointments and disposed of the appeal, affirming that the power under Section 11(6) is a judicial power.

Summary

Asian Thermal Insulation (I) Ltd entered into a contract with Bridge & Roof Co. (I) Ltd that contained an arbitration clause. A dispute arose and the High Court, on the respondent's application, directed the matter to be placed before the Chief Justice of the Calcutta High Court for the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The appellant sought recall of that order, which the High Court refused. While the appeal was pending before the Supreme Court, the parties mutually agreed that the appellant would nominate Sri J. Chawla as its arbitrator, the respondent would nominate its arbitrator within 30 days, and thereafter the Chief Justice would nominate a presiding arbitrator who would be a retired High Court judge. The Supreme Court accepted this consensual arrangement and disposed of the appeal without further order, confirming the judicial nature of the Chief Justice's power under Section 11(6).

Issues considered

The validity and nature of the power exercised by the Chief Justice of a High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointing arbitrators.
Whether the parties may settle the appointment of arbitrators by mutual agreement during pendency of an appeal.
The appropriate remedy and jurisdiction for challenging the High Court's order directing arbitration.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 16, s. 34, s. 37

Subjects

ArbitrationArbitration clauseSection 11(6)Judicial powerConsensual settlementArbitrator appointmentSupreme CourtHigh Court

Judgment

A
ASIAN THERMAL INSULATION (I) P. LTD.
f·
v.
BRIDGE & ROOF CO. (I) LTD.

AUGUST 13, 2007
B
[DR. ARIJIT PASAYAT, £.K'.. THAKKER AND
LOKESHWAR SINGH PANTA, JJ.]

Arbitration and Conciliation Act, I 996-s. I I (6)-Dispute between ~ ......
c Company and the Contractor-Agreement between them contained an
arbitration clause-Issue of appointing arbitrator-On application of
Company, High Court directing the matter to be placed before the Chief
Justice-Appeal by Contractor before Supreme Court-Contractor had ...
already nominated its arbitrator-Parties agreed on a consensual
arrangement-Appeal accordingly disposed. of-Company to nominate its
D
,.. arbitrator within 30 days-Thereafter Chief Justice of High Court to nominate
the Presiding Arbitrator.

Respondent-company had entered into an agreement with Appellant- . ><
,, ~

contractor. The agreement contained an arbitration clause. Disputes arose
E between the parties. Order was passed by the High Court on the application
filed by Respondent. The matter was directed to be placed before the Chief
Justice of High Court for naming an arbitrator. High Court declined to recall
the order on the Appellant's petition.

During pendency of appeal before this Court, the parties agreed on a
F consensual arrangement.

Disposing of the appeal, the Court
-I

HELD: Though arguments were advanced in support of the respective
stand about the legality of the impugned order, it was agreed to by the parties
G that following arrangement can be made : The appellant has nominated one
Sri J. Chawla to be its arbitrator. Within a period of 30 days the respondent
shall nominate its arbitrator. Thereafter the Chief Justice of the High Court
shail nominate the Presiding A.rbitrator who shall be a retired Judge of any
High Court. [Para 6) (1008-B-C)
·r
H 1004
ASIAN THERMAL INSULATION (I) P. LTD .... BRIDGE & ROOF CO. (l)LTD. (PASAYAT. J.) } 005

SBP & Co. v. Patel Engineering Ltd & Anr., (2005) 8 SCC 618, relied A
on.

Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd, (2002) 2 SCC
388, referred to.

CIVIL APPEL LA TE JURISDICTION : Civil Appeal No. 3696 of2007. B
From the Order dated 19.9.2005 of the High Court of Calcutta in A.P. No.
209 of2005.
_.r:--<
Kumud Lata Das for the Appellant.

Puneet Jain, Sushi! Kumar Jain, H.D. Thanvi, Sarad Singhania and Christi
c
Jain for the Respondent.

The Judgment of the Court was delivered by

DR. ARIJIT PASAYAT, J. I. Leave granted. D
~

' . .
2. Controversy lies within a very narrow compass.

3. The factual background as projected by the appellant is as follows:

On 22.12.2003 work order was issued by the respondent to the appellant.
There was a clause for arbitration in the agreement which was to the following
E
effect:

"4 l. ARB/TRA TION

B&R confidently feel that there shall not arise any disputes or
differences during execution and completion of this order by the F
Contractor.
~
However, in the event of any disputes or differences arise between
Company (B&R) and Contractor (hereinafter called the said parties)
touching or concerning the interpretation of the terms and conditions
as performance of the order or in connection therewith or the rights G
and liabilities of either of the said parties hereto, the said parties shall
endeavour to settle the same amicably through mutual agreement
between them, but ifthe mutual settlement is not possible between the
~
Company and the Contractor, the provisions of the Indian Arbitration
& Conciliation Act, 1996 and all statutory re-enactment and H
"'
1006 SUPREME COURT REPORTS [2007) 8 S.C.R.

A modifications thereof and the rules made thereunder shall apply to
such arbitrations."

4. On 27.11.2004 a notice of demand was sent to the site of the
respondent and it was returned with the p.ostal endorsement "refused". On
30.6.2005 the request was reiterated. On 9.8.2005 an order was passed by the
B High Court on the application filed by the respondent. The matter was directed
to be placed before the Chief Justice of the High Court for naming an
arbitrator. On 19.9.2005 the High Court refused to recall its order dated 9.8.2005
on the appellant's petition. On 26. l 0.2005, this Court in SBP & Co. v. Patel
Y)-..
Engineering Ltd. & Anr., [2005] 8 SCC 618 has dealt with the nature of power
exercised by the Chief .Justice of High Court or Chief Justice of India, as the
c case may be, under the Arbitration and Conciliation Act, 1996 (in short the
'Arbitration Act') and held that same is a judicial power and not an administrative
power. The decision in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) ·"\

Ltd., [2002] 2 SCC 388 was overruled in SBP & Co. (supra). The conclusions -
per majority were as follows:
D
"47. We, therefore, sum up our conclusions as follows:
ll
(i) The power exercised by the Chief Justice of the High Court or
the Chief Justice of India under Section 11 (6) of the Act is not
... ; f ~

an administrative power. It is a judicial power.
E (ii) The power under Section 11(6) of the Act, in its entirety, could
be delegated, by the Chief Justice of the High Court only to
another Judge of that Court and by the Chief Justice of India to
another Judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the
F Supreme Court, the power that is exercised by the designated
Judge would be that of the Chief Justice as conferred by the .
statute. 1

(iv) The Chief Justice or the designated Judge will have the right to
decide the preliminary aspects as indicated in the earlier part of
G this judgment. These .will be his own jurisdiction to entertain the
request, the existence of a valid arbitration agreement, the existence
or otherwise of a live claim, the existence of the condition for the
exercise of his power and on the qualifications of the arbitrator
or arbitrators. The Chief Justice or the designated Judge would 'T
...
be entitled to seek the opinion of an institution in the matter of
H /
ASIAN THERMAL INSULATION (I) P. LTD v. BRIDGE & ROOF CO. (I) LTD. [PASAYAT, J] 1007
.,,, nominating an arbitrator qualified in terms of Section 11 (8) of the A
Act if the need arises but the order appointing the arbitrator
could only be that of the Chief Justice or the designated Judge.

(v) Designation of a District Judge as the authority under Section
11(6) of the Act by the Chief Justice of the High Court is not
warranted on. the scheme of the Act. B
(vi) Once the matter reaches the Arbitral Tribunal or the sole arb;trator,
. the High Court would not interfere with the orders passed by the
-.,,,---r arbitrator or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could approach the Court
only in terms of Section 3 7 of the Act or in terms of Section 34 c
of the Ac.t.
(vii) Since an order passed by the Chief Justice of the High Court or
by the designated Judge of that Court is a judicial order, an
appeal will lie against that order only under Article 136 of the
Constitution to. the Supreme Court. D
(viii) There can be no appeal against an order of the Chief Justice of
• -4 India or a Judge of the Supreme Court designated by him while
entertaining an application under Section 11(6) of the Act.

(ix) In a case where an Arbitral Tribunal has been constituted hy the
parties without having recourse to Section 11(6) of the Act, the E
Arbitral Tribunal will have the jurisdiction to decide all matters
as contemplated by Section 16 of the Act.

(x) Since all were guided by the decision of this Court in Konkan
Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. and orders under
Section 11(6) of the Act have been made based on the position F
adopted in that decision, we clarify that appointments of arbitrators
or Arbitral Tribunals thus far made, are to be treated as valid, all
objections being left to be decided under Section 16 of the Act.
As and from this date, the position as adopted in this judgment
will govern even pending applications under Section 11 (6) of the
Act.
G

(XI) Where District Judges had been designated by the Chief Justice
of the High Court under Section 11(6) of the Act, the appointment
orders thus far made by them will be treated as valid; but
applications if any pending before them as on this date will stand
H
1008 SUPREME COURT REPORTS (2007] 8 S.C.R.

A transferred, to be dealt with by the Chief Justice of the High
Court concerned or a Judge of that Court designated by the Chief
Justice.
(xit) The decision in Konkan Rly. Corpn. Ltd v. Rani construction
(P) Ltd is overruled".
B 5. Though arguments were advanced in support of the respective stand
about the legality of the impugned order, it was agreed to by learned counsel
for the partie~ that following arrangement can be made.

"The appellant has nominated one Sri J. Chawla to be its arbitrator.
Within a period of 30 days the respondent shall nominate its arbitrator.
c Thereafter the Chief Justice of the High Court shall nominate the
Presiding Arbitrator who shall be a retired Judge of any High Court."

7. Appeal is accordingly disposed of with no order as to costs.

J) B.B.B. Appeal disposed of.