The Managing Director Cauvery Neeravari Nigam Limited vs. Constituent Attorney M/S Ferro Concrete Construction (India) Pvt. Ltd

ITEM NO.2	COURT NO.8	SECTION IV-A
S U P R E M E<br>C O U R T<br>O F<br>I N D I A<br>RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C)<br>No(s).<br>4785/2021
(Arising out of impugned final judgment and order dated<br>03-02-2021<br>in WA No. 87/2021 passed by the High Court Of Karnataka At<br>Bengaluru)
THE MANAGING DIRECTOR	KARNATAKA NEERAVARI NIGAM LTD. & ANR.	Petitioner(s)
VERSUS
CONSTITUENT ATTORNEY	M/S FERRO CONCRETE CONSTRUCTION (INDIA) PVT. LTD.	Respondent(s)
WITH<br>SLP(C) No. 5092/2021 (IV-A)<br>(FOR ADMISSION and I.R)<br>SLP(C) No. 5040/2021 (IV-A)<br>(FOR ADMISSION and I.R. and IA No.44060/2021-EXEMPTION FROM FILING<br>C/C OF THE IMPUGNED JUDGMENT)
Date : 21-10-2021 This petition was called on for hearing today.
CORAM :<br>HON'BLE MS. JUSTICE INDIRA BANERJEE<br>HON'BLE MR. JUSTICE J.K. MAHESHWARI
For Petitioner(s)	Mr. Naveen R. Nath, Sr. Adv.<br>Mr. Hetu Arora Sethi, AOR<br>Ms. Lalit Mohini Bhat, Adv.<br>Mr. Abhimanyu Verma, Adv.<br>Mr. Rahul Jain, Adv.
For Respondent(s)	Mr. Rajshekhar Rao, Sr. Adv.<br>Mr. Vinayak Mehrotra, Adv.<br>Ms. Radhika Yadav, Adv.<br>Mr. Amit Agrawal, AOR

UPON hearing the counsel the Court made the following O R D E R

This special leave petition is directed against the judgment and order dated 03.02.2021 passed by a Division Bench of the High Court of Karnataka at Bengaluru allowing the Writ Appeal No.73/2021 (GM-RES), Writ Appeal No. 76/2021 (GM-RES) and Writ Appeal No.87/2021 (GM-RES) filed by the respondent and setting aside the judgment and order dated 22.12.2020 passed by the learned Single Judge allowing the writ petition filed by the petitioners being Writ Petition No. 11389/2020.

The facts giving rise to the special leave petitions are very briefly enumerated hereinafter.

Sometime in 2015-2016, the petitioners invited a tender for executing the work of rehabilitation and improvement of Bhadra Dam. Pursuant to the aforesaid tender, the respondent submitted its bid. The contract was awarded to the respondent and an agreement was executed between the petitioner and the respondent on 20.04.2016. It appears that certain disputes arose between the parties in connection with the aforesaid contract. On behalf of the respondent, it was contended that bills raised by the respondent for execution of the contractual work remained outstanding.

By a letter dated 13.04.2019, the respondent called upon the petitioner to appoint an adjudicator for resolution of the disputes between the parties in terms of Clause 36 and 36.1 of the agreement. According to the petitioner, on or about 30.11.2019, the petitioner approved the running account bill and the representative of the respondent signed the same. However, on 07.03.2020, the respondent issued notice to the petitioners, invoking the arbitration clause in the agreement and appointed Shri S. Ramdas, retired Chief Engineer of the Government of Karnataka as

its nominee arbitrator. The petitioner was requested to appoint his nominee. By a letter dated 18.07.2020, the respondent, once again, called upon the petitioner to appoint its nominee arbitrator. This was, however, not done.

On 07.08.2020, the respondent approached the Institution of Engineers (India) for appointment of a nominee arbitrator for and on behalf of the petitioner. Pursuant to the application of the respondent, the Institution of Engineers (IndIa) appointed Shri M.L. Madhaiah as the nominee arbitrator of the petitioner. The petitioners contend that this was contrary to the arbitration Clause 25.3(a) of the Special Conditions of Contract which did not permit the respondent to appoint any arbitrator through the agency of the Institution of Engineers (India).

On 24.08.2020, the two nominee arbitrators appointed Justice L. Sreenivasa Reddy as the Presiding Arbitrator. On 01.09.2020, the Arbitrators sent a notice to the petitioner as well as to the respondent notifying that a preliminary meeting of the arbitrators would be held on 08.10.2020.

On 03.10.2020, the petitioner filed the above writ petition No.11389/2020 before the High Court of Karnataka praying*, inter alia***, for issuance of a writ or direction in the nature of certiorari quashing the constitution of the Arbitral Tribunal initiated by the respondent as illegal, contrary and violative of the terms of the contract.**

By a judgment and order dated 22.12.2020, the learned Single

Judge allowed the writ petitions and declared that the Arbitral Tribunal had not been constituted in accordance with law. The notice dated 01.09.2020 was quashed.

The respondent filed writ appeals being Writ Appeal Nos.73, 76 and 87/2021 (GM-RES) which have been allowed by the impugned judgment and order dated 03.02.2021.

After hearing the respective counsel, the Division Bench proceeded to consider the question of whether the writ petitions filed under Article 226 of the Constitution of India were maintainable before the High Court.

Referring to the judgment of this Court in the case of SBP & Co. vs. Patel Engineering Ltd. reported in (2005) 8 SCC 618, the Division Bench rightly observed that this Court had disapproved the entertaining of the writ petitions under Article 226 or 227 of the Constitution, by the High Courts, in the matter of arbitration proceedings.

We may now refer to the relevant provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996 Act') relied upon by the respective parties. The relevant provisions are Sections 4, 5, 7, 13, 16, 21, 23 particularly subsection (4) of Section 23, as amended by Act 33 of 2019, and Section 29A, as enacted and amended by Act 33 of 2019.

None of the aforesaid provisions lend support to the contentions of the petitioners that a writ petition challenging the

appointment of an arbitrator would be maintainable. On a conjoint reading of Section 13 with Section 16 of the 1996 Act, it is patently clear that a challenge to an arbitrator has to be made before the Arbitral Tribunal under Section 16 read with Section 13 of the 1996 Act. As held by this Court in Bhaven Construction through Authorised Signatory Premjibhak I. Shah vs. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. & Anr. Reported in 2021 SCC Online SC 8, disputes concerning the jurisdiction of the arbitrator would necessarily have to be adjudicated under Section 16 of the 1996 Act. Although that case involved the appointment of the sole arbitrator, same principle would apply to the constitution of an Arbitral Tribunal consisting of more than one arbitrator. Recourse to Article 226 or 227 of the Constitution is not permissible as rightly held by the Division Bench of the High Court of Karnataka. Sections 21, 23(4) and 29A have no relevance to the mode and manner of challenge to an arbitral tribunal and/or jurisdiction of such tribunal to proceed to adjudicate the disputes, as rightly argued on behalf of the respondent. Section 21 only provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent. The aforesaid section has obviously been incorporated keeping in mind the provisions of the Limitation Act, 1963, to protect a claim from getting time barred only because of the delay in appointment of an arbitral tribunal. Similarly, Section 23 sets the time lines to ensure expeditious and timely disposal of arbitration proceedings.

Section 29A sets the time line for making an award and also makes provisions for extension of time stipulations for completion of the arbitration proceedings.

We find no grounds at all to interfere with the wellconsidered judgment and order of the Division Bench of the Karnataka High Court. The Division Bench has reserved the liberty of the petitioner to raise all contentions regarding jurisdiction of the Arbitral Tribunal before the Arbitral Tribunal itself in accordance with the provisions of the 1996 Act.

The special leave petitions are, accordingly, dismissed.

Pending applications, if any, stand disposed of accordingly.

(GULSHAN KUMAR ARORA) (MATHEW ABRAHAM)

AR-CUM-PS COURT MASTER (NSH)