Rajasthan Small Industries Corporation Limited vs M/s Ganesh Containers Movers Syndicate

 Rajasthan Small Industries Corporation Limited vs M/s Ganesh Containers Movers Syndicate - Important Supreme Court Judgment 2019

On 23rd January, 2019, in the case of Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers Syndicate [Civil Appeal No.1039 of 2019], the main question falling for consideration was whether the High Court was right in terminating the mandate of the arbitrator appointed as per the agreement and appointing a substitute arbitrator in the application filed under Section 11(6) and Section 15 of the Arbitration and Conciliation Act, 

It was held that “mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties.”

In the present case, the proceedings of the arbitral tribunal continued till 17.08.2011. From the proceedings dated 17.08.2011, it was seen by the Supreme Court that the arbitrator had “observed that the file regarding arbitration appears tampered/ missing papers are incomplete and therefore, the chronological events need to be ascertained and reconstitution will be required” and it was “in this background, the award was not passed till 2013.” The Supreme Court observed that “it is true that there was some delay in passing the award” however, “between 2011 and 2013”, the respondent had “not filed any application to expedite the proceedings and for passing of the award.” The Court noticed that the respondent had “neither filed the Request Case for passing of the award at an early date nor filed the petition under Section 14 of the Act for termination of the mandate of the arbitrator that the arbitrator has ‘failed to act without undue delay’.”

It was held that “Section 11(6) of the Act would come into play only when there was failure on the part of the party concerned to appoint an arbitrator in terms of the arbitration agreement” and in the case in hand, the High Court “was not right in appointing an independent arbitrator without keeping in view the terms of the agreement between the parties and therefore, the impugned order appointing an independent arbitrator/retired District Judge is not sustainable.”