Introduction

The docket of the Supreme Court has been growing larger and larger by the year and this
has been affecting its quality and efficacity in the delivery of justice. It has time and again
been articulated by a number of jurists in this country that the Supreme Court should curtail
its wide jurisdiction and confine itself to a set of core issues. In several cases before the
Apex Court, it has often been observed that the area of controversy is limited, law well
settled and does not require attention of the Apex Court of this country to decide such
matter. Yet, it has time and again been noticed that the Apex Court adjudicates on the issue
and delivers judgments that run into several pages where no great proposition of law
requiring the attention of the Supreme Court is laid down.

One such area of concern is the field of Arbitration which is now a growing and fertile field of
litigation for lawyers. The Arbitration and Conciliation Act of 1996 was the result of
recommendations for reform,2particularly in the matter of speeding up the arbitration
process3 and reducing intervention by the court and reducing litigation in the country.4 The
1996 Act is also no different from the 1940 Act. Even 14 years after its enactment, we find
every year that there are no less than a 100 cases of the Supreme Court reported on
arbitration and especially appointment of Arbitrator under Sec. 11 (4) , (5) & (6) of the
Arbitration Act, 1996.5This has been adding to the existing burden of the Court and in spite
of that, a large number of appeals are filed in the Supreme Court.

Appointment of Arbitrator by Chief Justice

The Parties to an arbitration are free to agree on the procedure for appointing of
arbitrators.6 The situations suitable for intervention of the Chief Justice or his designate
naming an arbitrator are:

i. The procedure agreed is not followed;

ii. There is no agreement on procedure.

In both situations, the intervention of the Chief Justice or his designate7 are necessary.
Under the first situation, if a party fails to act under such procedure, or the parties (or the two
arbitrators, one appointed by each party) are unable to reach an agreement expected of
them under such procedure, or a third party (including an institution) fails to perform any
function entrusted to it under such procedure, any part may request the Chief Justice or his
designate to take necessary measure, unless such other measure have been provided in the
agreement for securing such appointment.8

Contentious Issues under Chief Justice's Powers

In a petition moved under Section 11 of the 1996 Act, the Supreme Court has in a catena of
cases held that the broad issues which can be decided by the Chief Justice are as follows9

i. Territorial Jurisdiction;10
ii. Existence of an Arbitration Agreement;11
iii. Appointment of an Arbitrator;12
iv. Subsistence of an Arbitrable Dispute;13

Appointment of an Arbitrator: Administrative or Judicial

Section 11 provides for the procedure of appointment of Arbitrator by the Chief Justice. S. 11
(7) of the 1996 Act provides that 'a decision on a matter entrusted by ss. (4) or ss.(5) or
ss.(6) to the Chief Justice or the person or institution by him is final.' This led to a number of
disputes regarding the nature of the order passed by the Chief Justice on appointment of
Arbitrators and whether the same was judicial or administrative in nature?

(i) Initial Interpretation: Order is Administrative

Amongst some of the earliest interpretations of the provision of S.11(7) was the case
of Sundaram Finance Ltd v. NEPC India Ltd.14 In this case it was held "Under the 1996 Act
appointment of arbitrator/s is made as per the provision of Section 11 which does not require
the Court to pass a judicial order appointing arbitrator/s." This decision was reiterated in the
case of Ador Samia Private Ltd v. Peekav Holdings Limited,15 where it was held by the
Hon'ble Supreme Court that "It is now well settled that petition under Article 136 can lie for
challenging a judgment, decree, determination, sentence or order in any cause of matter
passed or made by any court or tribunal in the territory of India. As the learned Chief Justice
or his designate under Section 11(6) of the Act acts in administrative capacity as held by this
Court in the aforesaid decision it is obvious that this order is not passed by any court
exercising any judicial function nor it is a tribunal having trappings of a judicial authority... In
view of this settled legal position therefore, there is no escape from the conclusion that
orders passed by the learned Chief Justice under Section 11(6) of the Act being of an
administrative nature cannot be subjected to any challenge directly under Article 136 of the
Constitution of India."

(ii) Doubting Thomas

This view of the Supreme Court in Ador Samia16 was referred by a two judge bench of the
Supreme Court referred for re-consideration by a larger bench. The decision of the bench of
three judges in Konkan Railway Corporation Ltd & Ors v. Mehul Construction Co.,17 affirmed
the view taken in Ador Samia,18 namely, that the order of the Chief Justice or his designate
in exercise of the power under S.11 of the Act was an administrative order and that such an
order was not amenable to the Jurisdiction of the Supreme Court under Article 136. The
effect of this judgment was that the decision of the Chief Justice being an administrative
order was now amenable to the Writ Jurisdiction under Article 226 of the Constitution and
hence, as one may say "The High Courts were flooded with Writ Petitions challenging the
appointment of the Arbitrators."

Thereafter, in Konkan Railway Corporation Ltd Anr v. Rani Construction Pvt. Ltd.,19 a bench
of two learned judges of the Supreme Court referred to a larger bench the decision of the
three judge bench for re-consideration, which was taken up for hearing in the case of by a
bench of five judges in the case Konkan Railway Corporation Ltd Anr v. Rani Construction
Pvt. Ltd.20 The issue before the Court may be summed up in the following words of the
referral order "It appears that the Chief Justice or his nominee, acting under Section 11 of
the Arbitration and Conciliation Act, 1996, have decided contentious issues arising between
the parties to an alleged arbitration agreement and the question that we are called upon to
decide is whether such an order deciding issues is a judicial or an administrative order?"

The Hon'ble Supreme Court after examining the intricacies involved and after careful
examination of the case laws held that "In conclusion, we hold that the order of the Chief
Justice or his designate under Section 11 nominating an arbitrator us not an adjudicatory
order and the Chief Justice or his designate is not a tribunal. Such an order cannot properly
be made the subject of a petition for special leave to appeal under Article 136. The decision
of the three Judge Bench in Konkan Railway Corporation & Ors v. Mehul Construction Co. is
affirmed."21

(iii) Final Position

This decision of the Supreme Court was again challenged in challenged in the case
of S.B.P. & Co v. Patel Engineering & Anr.,22 where the question before the Hon'ble
Supreme Court was the nature of the function of the Chief Justice or his designate under S.
11 of the Arbitration and Conciliation Act, 1996. The main issues which were examined in
this case are:

i. What is the nature of the function of the Chief Justice or his designate under S. 11 (6)
of the Arbitration and Conciliation Act, 1996?
ii. What is the scope and power of the Chief Justice under S. 11?

The Hon'ble Supreme Court examined the aforementioned issues in detail and held that the
power exercised by the Chief Justice or his designate under S. 11 of the Act is a judicial
power and not an administrative power. The ratio decidendi of the aforementioned case is
reproduced for ready reference:

i. The power exercised by the Chief Justice of the High Court or the Chief Justice of
India under S. 11(6) of the Act is not an administrative power. It is a judicial power.
ii. The power under S. 11(6) of the Act, in its entirety, could be delegated, by the Chief
Justice of the High Court only to another judge of that court and by the Chief Justice
of India to another judge of the Supreme Court.
iii. In case of designation of a judge of the High Court or of the Supreme Court, the
power that is exercised by the designated, judge would be that of the Chief Justice as
conferred by the statute.
iv. The Chief Justice or the designated judge will have the right to decide the preliminary
aspects as indicated in the earlier part of this judgment. These will be, his own
jurisdiction, to entertain the request, the existence of a valid arbitration agreement,
the existence or otherwise of a live claim, the existence of the condition for the
exercise of his power and on the qualifications of the arbitrator or arbitrators. The
Chief Justice or the judge designated would be entitled to seek the opinion of an
institution in the matter of nominating an arbitrator qualified in terms of S. 11(8) of the
Act if the need arises but the order appointing the arbitrator could only be that of the
Chief Justice or the judge designate.
v. Designation of a district judge as the authority under S. 11(6) of the Act by the Chief
Justice of the High Court is not warranted on the scheme of the Act.
vi. Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court
would not interfere with orders passed by the arbitrator or the arbitral tribunal during
the course of the arbitration proceedings and the parties could approach the court
only in terms of Section 37 of the Act or in terms of S. 34 of the Act.
vii. Since an order passed by the Chief Justice of the High Court or by the designated
judge of that court is a judicial order, an appeal will lie against that order only under
Article 136 of the Constitution of India to the Supreme Court.
viii. There can be no appeal against an order of the Chief Justice of India or a judge of
the Supreme Court designated by him while entertaining an application under S.
11(6) of the Act.
ix. In a case where an arbitral tribunal has been constituted by the parties without
having recourse to S. 11(6) of the Act, the arbitral tribunal will have the jurisdiction to
decide all matters as contemplated by S. 16 of the Act.
x. Since all were guided by the decision of this Court in Konkan Railway Corporation
Ltd. and Anr. v. Rani Construction Pvt. Ltd23 and orders under S. 11(6) of the Act
have been made based on the position adopted in that decision, we clarify that
appointments of arbitrators or arbitral tribunals thus far made, are to be treated as
valid, all objections being left to be decided under S. 16 of the Act. As and from this
date, the position as adopted in this judgment will govern even pending applications
under Section 11(6) of the Act.
 xi. Where District Judges had been designated by the Chief Justice of the High Court
under S. 11(6) of the Act, the appointment orders thus far made by them will be
treated as valid; but applications if any pending before them as on this date will stand
transferred, to be dealt with by the Chief Justice of the concerned High Court or a
Judge of that court designated by the Chief Justice.
xii. The decision in Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Pvt.
Ltd.,24 is overruled.

Effect of judgment in S.B.P. & Co v. Patel Engineering & Anr. (SBP)

One of the most important effects of the judgment was the prospective ruling direction, which
provided that any appointment of an arbitrator under S. 11 made prior to 26.10.2005 had to
be treated as valid and objections including the existence or validity of the arbitration
agreement, have be decided by the arbitrator under S.16 of the Act. The legal position
enunciated by SBP would govern only application to be filed under S.11 of the Act from
26.10.2005 as also applications under S.11 (6) of the Act pending as on 26.10.2005 where
arbitrator was not appointed. The decision of the Hon'ble Supreme Court was reiterated in
the case of Maharishi Dayanand University v. Anand Coop. L/C Society Ltd &
Anr.,25 wherein it was observed by the Court that if an appointment of an arbitrator has been
made before 26.10.2005, that appointment has to be treated as valid even if it challenged
before this Court.

The next issue which has been raised in many an appeal i.e. who should decide whether
there is an arbitration agreement or not. Should it be decided by the Chief Justice or his
designate before making an appointment of arbitrator under S.11 or the arbitrator who is
appointed under S.11 of the Act? This issue is no longer res-integra. Ever since the decision
in SBP., it is recognised law, that any question on whether there is an arbitration agreement
or not, or whether the party who has applied under S.11 of the Act, is a party to such an
agreement, is an issue which has to be decided by the Chief Justice or his designate under
S.11 before making appointment of arbitrator.26

Conclusion

The decision of the Supreme Court in SBP was a watershed moment in the history of the
Arbitration Act in India. The decision in SBP has gone a long way in clearing many a legal
hurdle in appointment of arbitrators under the Act. It has clearly laid down the law applicable
to the exercise of powers by the Chief Justice or his designate under S. 11 of the Act.

The aim of this Article would hence be achieved by summarizing the powers of the Chief
Justice or his designate under S.11 - his own jurisdiction, to entertain the request, the
existence of a valid arbitration agreement, the existence or otherwise of a live claim, the
existence of the condition for exercise of his power and on the qualifications of the arbitrator
or arbitrators, and by believing that it has cleared many a doubt on the subject.