Analysis of Supreme Court Judgment in Union of India vs. Parmar Construction Company

For appointment of an arbitrator, the High Court has to first resort to the mechanism as prescribed in the Contract and if the arbitrator appointed in terms of the agreement failed to discharge its obligations or to arbitrate the   dispute, then an application under Section 11(6) of the Arbitration and Conciliation Act can be considered for seeking appointment of an ‘Independent Arbitrator’.

In the given circumstances, it was the duty of the High Court to first resort to the mechanism in appointment of an arbitrator as per the terms of contract as agreed by the parties and the default procedure was opened to be resorted to if the arbitrator appointed in terms of the agreement failed to discharge its obligations or to arbitrate the dispute which was not the case set up by either of the parties.

To conclude, the High Court was not justified in appointing an independent arbitrator without resorting to the procedure for appointment of an arbitrator which has been prescribed under clause 64(3) of the contract under the inbuilt mechanism as agreed by the parties.

Judgement link : https://www.sci.gov.in/supremecourt/2018/4476/4476_2018_Judgement_29-Mar-2019.pdf