The Apex Court on 23.01.2019, in RAJASTHAN SMALL INDUSTRIES CORPORATION LIMITED v M/S GANESH CONTAINERS MOVERS SYNDICATE[1], allowed the appeal that had risen from the High Court of Rajasthan at Jaipur Bench’s judgment wherein the application of the respondent made under Section 11 and Section 15 of the Arbitration and Conciliation Act, 1996 as the sole arbitrator for resolving the dispute between the parties had been allowed.

FACTS:

A tender invitation had been made by the appellant, invited tender wherein an agreement was entered upon by the respondent and the appellant. In connection, to the imposing of the transit penalty by the appellant due to the delaying in transporting of the containers, and several other issues.

A per the clause specified in the contract, the Managing Director /his /her nominee was to be appointed as the sole arbitration. A request was made by the respondent for appointing the arbitrator. As the sole arbitrator’s progress was not up to the mark, he was removed while in his post a sole arbitrator from the appellant’s side was appointed with the consent of both the parties. However, due to some reasons or the other, the proceedings were not concluded.

 Eventually, doubts regarding the impartiality of the new arbitrator were raised by the respondent, further the award was not passed and an amount of Rs.3,90,81,602/- had been called upon to be paid by the appellant. A reply was sent by the appellant where it stated that as the Chairman-cum-Managing Director was transferred, the award had not been able to be passed and that there arises no question regarding the payment to the respondent.

An application was filed by the respondent under Section 11(6) and Section 15 of the Arbitration and Conciliation Act, 1996  in the High Court to seek appointment of an independent arbitrator, while it was notified to the arbitrator about the arbitration application been filed in the High Court. The application had to face rejection at the hands of the arbitrator while adjourning the matter.

An ex-parte award had been passed by the arbitrator, while the arbitration application was also allowed by the High Court by its order.

ISSUE: Has the High Court committed an error while terminating the mandate of the arbitrator that was appointed according to the agreement?

DECISION HELD BY THE SUPREME COURT OF INDIA:

When the matter was brought before the Apex Court, the Supreme Court of India, while setting aside the order and allowing the appeal confirmed the appointment of the then current Managing Director of the appellant as the sole arbitrator.