Arbitration | No Review Or Appeal Lies Against Order Appointing Arbitrator : Supreme Court

The Supreme Court observed that a review or appeal from an order of appointment of an arbitrator is impermissible.“Once an arbitrator is appointed, the arbitral process must proceed unhindered. There is no statutory provision for review or appeal from an order under Section 11, which reflects a conscious legislative choice.”, the Court held, while setting aside the Patna High Court's order allowing the review petition and recalling its earlier appointment of an arbitrator, despite the party having actively participated in the proceedings and seeking review nearly three years later. The Court said that “the High Court did not have the jurisdiction to reopen or review its earlier order passed under Section 11(6) of the A&C Act. Once the appointment was made, the court became functus officio and could not sit in judgment over the very issue it had already settled. The review order cuts against the grain of the Act, undermines the principle of minimal judicial interference, and effectively converts the review into an appeal in disguise.” The Court clarified that “while High Courts, as courts of record, do possess a limited power of review, such power is extremely circumscribed in matters governed by the Arbitration Act. It may be exercised only to correct an error apparent on the face of the record or to address a material fact that was overlooked. It cannot be used to revisit findings of law or reappreciate issues already decided.” A bench of Justices JB Pardiwala and R Mahadevan heard a case where a dispute arose out of a 2014 contract between HCC and BRPNNL. The arbitration clause had already been invoked once in an earlier dispute, culminating in a final award that was honoured. When a second dispute arose, HCC invoked the same clause and requested the BRPNNL Managing Director to appoint an arbitrator. When the MD failed to act, HCC approached the Patna High Court under Section 11, which appointed Justice Shivaji Pandey (Retd.) as sole arbitrator in 2021. For over three years, the parties actively participated in the arbitration, attending more than 70 hearings and jointly seeking extensions of the arbitrator's mandate under Section 29A. However, in early 2024, with arguments virtually complete, BRPNNL filed a review petition before the High Court, challenging the very existence of an arbitration agreement. The High Court accepted the challenge, suspended the proceedings, and subsequently dismissed HCC's Section 11 petition. Aggrieved by the High Court's decision, Hindustan Construction Company (HCC) appealed to the Supreme Court. Finding the High Court's interference to be meritless, the judgment authored by Justice R Mahadevan found the High Court's reopening of the issue, which it had decided, an attempt to violate the principle of minimal judicial interference warranted in the arbitration proceedings. “In the present case, the High Court had itself appointed the arbitrator in 2021 under Section 11(6) of the Act. Both parties participated fully, and more than seventy hearings took place. The High Court also extended the arbitrator's mandate twice under Section 29A. At that stage, the High Court could not, by invoking its jurisdiction under Articles 226 and 227, retrospectively invalidate its own appointment order on the strength of a subsequent interpretation of a similar clause in another matter. Such an approach undermines certainty, dilutes the sanctity of judicial orders, and erodes confidence in the arbitral process.”, the court observed. The Court noted that if Respondent No. 1 wished to challenge the High Court's appointment of the arbitrator, it ought to have invoked Section 16 of the Arbitration Act before the tribunal or filed an SLP under Article 136 of the Constitution. Instead, it chose to pursue a review petition, and that too after participating in the arbitration proceedings for nearly three years. “Once the Section 11 order had attained finality, the only remedies available to the respondents were to approach this Court under Article 136 or to raise objections under Section 16 before the arbitral tribunal. Having chosen neither route, and having participated in the arbitral proceedings, including joint applications under Section 29A, they were estopped from reopening the matter through review. A later judgment cannot revive a concluded cause of action.”, the court said. Accordingly, the appeal was allowed. Cause Title: HINDUSTAN CONSTRUCTION COMPANY LTD. VERSUS BIHAR RAJYA PUL NIRMAN NIGAM LIMITED AND OTHERSCitation : 2025 LiveLaw (SC) 1153Click here to download judgmentAppearance: For Petitioner(s) : Mr. Navin Pahwa, Sr. Adv. Mr. Senthil Jagdeesan, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Rishi Agrawala, Adv. Ms. Shruti Arora, Adv. Mr. Abhinabh Garg, Adv. Mr. E. C. Agrawala, AOR For Respondent(s) : Mr. Manish Kumar, AOR Mr. Divyansh Mishra, Adv. Mr. Yoshit Jain, Adv.

Arbitration | No Review Or Appeal Lies Against Order Appointing Arbitrator : Supreme Court

Yash Mittal

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