The Supreme Court has asked the Attorney General to assist its Constitution Bench on two questions regarding the power of the Chief Justice while appointing arbitrators under the Arbitration and Conciliation Act 1996.
According to Section 11 of the Act, if the parties fail to agree on an arbitrator, the Chief Justice or his nominee may appoint an arbitrator. However, the question is whether the Chief Justice in such cases is exercising his judicial or administrative power.
If it is judicial power, a special leave petition will have to be filed in the Supreme Court. However, if it is an administrative power, it could be challenged before a single judge of the high court.
This is the issue which has arisen in several appeals to the Supreme Court moved by disputing companies and work contractors. The main case is Konkan Railway Corporation Ltd Vs Rani Constructions Ltd.
In all these cases, the Chief Justice of a high court or his nominee, acting under Section 11 of the Act, have decided contentious issues arising between the parties to arbitration agreements. The Constitution Bench has to decide the issue arising since 1997 in this bunch of cases.
Meanwhile, another question has also surfaced. Does the Chief Justice or his nominee have the authority to decide disputed issues; or in other words, is his power restricted to nomination of an arbitrator?
In the Konkan Railway case, the Bombay High Court order went beyond nominating the arbitrator. The Solicitor General contended that the order was judicial in nature as some issues were decided in the case. But an earlier judgment had held that such orders were administrative.
The argument of the Solicitor General and the parties who have appealed to the apex court is that the new arbitration law did not take away the power of the court to decide preliminary issues notwithstanding the arbitrator
