Supreme Court of India
M/S Narinder Singh And Sons vs Union Of India on 18 November, 2021Author: Sanjiv Khanna

Bench: Sanjiv Khanna, Hon’Ble Ms. Trivedi









Despite rounds of litigation, the disputes that arose in 1996

will, unfortunately, continue even post this judgment.

2. M/s. Narinder Singh and Sons, the appellant before us, vide letter

dated 27th January 1993 was awarded tender by the respondent

namely, Divisional Superintendent Engineer-II, Northern Railway,

Ferozepur Division, Ferozepur, Punjab, for additional washing line

Signature Not Verified
to accommodate 26 coaches at Jammu Tawi Railway Station.
Digitally signed by
Date: 2021.11.18
17:05:47 IST
Disputes arose when the respondent terminated the contract vide

letter dated 03rd April 1996 due to stated non-performance and

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repeated lapses by the appellant. The appellant, on the other

hand, alleged breaches on the part of the respondent who, it is

stated, had modified the original work and changed scope of the

work several times.

3. The appellant invoked the arbitration clause as per the contract

agreement and in response, the General Manager, Northern

Railways satisfied with the existence of the disputes, appointed an

arbitrator. The appellant approached the District Court for

termination of the mandate of the appointed arbitrator and

substitution with an independent Arbitrator. The District Judge,

Gurdaspur vide order dated 23rd December 2006 appointed Mr.

Justice A.L. Bahri (Retd.) as the sole arbitrator. The respondent

filed a Civil Revision Petition before the High Court against the

order of the District Judge, Gurdaspur, which set aside the order

of the appointment on the ground that the appointment of the

arbitrator could only be done by the Chief Justice or any other

Judge nominated by him. Finally, in the proceedings before the

Chief Justice of the Punjab and Haryana High Court at

Chandigarh, by an order passed on 15th February 2010, Mr.

Justice A.L. Bahri (Retd.) was again appointed as the arbitrator.

Civil Appeal No. 6734 of 2021 Page 2 of 9
4. The learned arbitrator, thereupon, pronounced an ex parte award

against the respondent on 27 th November 2010. Resultantly, the

respondent had filed objections under Section 34 of the Arbitration

and Conciliation Act, 1996 (for short, the ‘Act’) before the

Additional District Judge, Gurdaspur, which were dismissed vide

order dated 22nd March 2012. However, the respondent

succeeded in its appeal filed under Section 37 of the Act before

the Punjab and Haryana High Court at Chandigarh, which, vide

impugned judgment dated 24th October 2017, accepted FAO No.

5227 of 2012 (O&M) and set aside the award primarily on the

ground that the arbitrator had violated principles of natural justice

and had proceeded with great haste and hurry. It was also held

that pre-reference and pendente lite interest could not have been

awarded in terms of clause 16(2) of the General Conditions of the

Contract. On the question whether the Court could remand the

disputes to the Arbitrator, the impugned judgment holds that the

court remand was impermissible, but the parties were at liberty to

approach the arbitrator for fresh adjudication or avail any other

remedy permitted by law, while stating that the period spent in the

arbitration proceedings and the resultant litigation should be

excluded in terms of Section 43(4) of the Act.

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5. Having heard counsel for the parties, we find that the respondent

was “unable to present his case”, a valid ground and justification

for setting aside an award under clause (iii) to sub-section (2)(a) to

Section 34 of the Act. The award was also “in conflict with the

public policy of India” under clause (ii) to Section 34(2)(b) read

with the applicable Explanation 1 to Section 34(2) of the Act.

6. The appellant had filed the Statement of Claim on 3 rd May 2010.

On 31st May 2010, the respondent sought adjournment for filing

Statement of Defence, which was granted by the arbitrator. On

10th July 2010, written statement along with the copies of

documents were filed. The appellant, thereupon, filed rejoinder

and affidavit of Paramdeep Singh (PW-1) in evidence on 5 th

August 2010. On the same day itself, evidence of the appellant

was closed while declining the request of the respondent to

postpone cross-examination. Order dated 5th August 2010 also

records that the respondent had not filed its affidavit and had

requested for a date. Latter request, it is apparent, was accepted

by the arbitrator as the respondent was directed to file the affidavit

and produce the witness for cross-examination on the next date of

hearing. On 28th September 2010, the respondent prayed for

further time to file affidavits by way of evidence, which request for

adjournment was opposed. This order records that the respondent

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had not paid the arbitration fee and expenses in spite of the earlier

orders. The learned arbitrator adjourned the matter to 21 st October

2010, subject to the payment of costs by the respondent to the

appellant of Rs. 10,550/-, i.e., cost of proceedings for one day. On

21st October 2010, the respondent filed affidavit of Mr. Abhay

Kumar, Senior Divisional Engineer-II, Northern Railway, Ferozepur

as well as an application for recall of costs. This application for

waiver of costs was opposed and rejected. Since the cost was not

paid, the affidavit by way of evidence, it was directed would not be

taken on record. This order of 21st October 2010 also records that

while the respondent had not paid the arbitration fee and

expenses, the appellant had already paid Rs. 50,000/- towards

arbitration fee and expenses. The arbitrator adjourned the matter

to 9th November, 2010 for final arguments and an ex parte award

dated 27th November 2010 was passed awarding an amount of

Rs. 20,25,255/- along with interest @ 12% per annum from 03 rd

April 1996 till payment was made. For this purpose, the arbitrator

had relied upon Section 31(7) of the Act.

7. Section 19 of the Act states that while the arbitral tribunal is not

bound by the Code of Civil Procedure, 1908 or the Indian

Evidence Act, 1872, in the absence of any agreement between the

parties as to the procedure to be followed, the arbitral tribunal may

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conduct the proceedings in the manner it considers appropriate.

Section 18 mandates that both parties shall be treated with

equality and each party shall be given a full opportunity to present

his case. Reference can also be made to Sections 24 and 25 and

newly enacted Section 29A of the Act, which though not applicable

to this case, emphasise on quick and prompt adjudications. Idioms

carping ‘delay’ and ‘hurry’ in adjudication highlight the importance

of both speedy disposal and reasonable opportunity, as both are

essential for an even-handed and correct decision. Neither should

be sacrificed nor inflated, as to prolong or trample a just and fair

adjudication. A pragmatic and common-sense approach would

invariably check any discord between the desire for expeditious

disposal and adequacy of opportunity to establish one’s case. In

the context of the present case, we agree with the High Court that

there was unnecessary haste and hurry by the arbitrator,

especially when the respondent had filed the affidavit by way of

evidence on 21st October 2010. Earlier, the respondent had filed

written statement shortly after the appellant had filed the claim

statement. The respondent was also deprived of reasonable and

fair opportunity to cross-examine Paramdeep Singh (PW-1). The

respondent had also moved an application for waiver of costs,

which was rejected on 21st October 2010, albeit the arbitrator

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decided to continue the arbitration to proceed ex parte and

adjourned the matter to 9th November 2010 for final arguments. As

the evidence of the respondent by the way of affidavit was not

taken on record, their contentions and evidence were not

considered and thus debilitated the respondent from stating their

case. Given the aforesaid factual position, there was violation of

principles of natural justice and lack of full opportunity as

envisaged by Section 18 of the Act, thereby, impeding a fair and

just decision. Consequently, the award suffers and is liable to be

set aside in terms of clause (iii) to Section 34(2)(a) as well as

clause (ii) to Section 34(2)(b) of the Act.

8. During the course of hearing before us, Mr. Ashish Verma, learned

counsel for the appellant, and Mr. Sanjay Jain, learned Additional

Solicitor General appearing for the respondent, have agreed that

this Court may appoint an arbitrator for adjudication of the

disputes, which prayer we accept.

9. We hereby appoint Mr. Justice S.N. Aggarwal, a retired Judge of

the Punjab and Haryana High Court, #1458, Sector 40-B,

Chandigarh (Mobile: +91-9876716983) as the arbitrator to

adjudicate and decide the said disputes. He would be paid

arbitration fee and expenses in terms of the schedule to the Act.

Civil Appeal No. 6734 of 2021 Page 7 of 9
The appellant and the respondent would equally bear the said fee

and expenses. The respondent would pay 50% of the arbitration

fee and expenses to the learned arbitrator within one month from

the date of the first hearing. The appellant would pay its share of

50% fee on the date when the final arguments commence. We

have made the aforesaid direction in view of the conduct of the

respondent in not paying their share of fee and expenses to the

earlier arbitrator. We hope and trust that the parties would

cooperate with the learned arbitrator now appointed to ensure

expeditious disposal. The arbitration proceedings shall continue

from the stage, permitting the respondent to cross-examine

Paramdeep Singh (PW-1). We also direct that the respondent

would file their affidavits by way of evidence within four weeks

from the date the learned arbitrator enters upon reference.

Arbitration record shall be forwarded to Mr. Justice S.N. Aggarwal

(Retd.) and if not available, the parties shall reconstruct the same

by filing self-certified copies of pleadings and documents as filed

by them in the arbitration proceedings.

10. We also clarify that the question of award of interest, pre-

reference and pendente lite, is left open to be decided by the

arbitrator, without being bound by the findings of the High Court in

the impugned order.

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11. The civil appeal is disposed of in the aforesaid terms with no order

as to costs.


NOVEMBER 18, 2021.

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