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Hindustan Construction Company Ltd. vs Bihar Rajya Pul Nirman Nigam Limited

Not available · 2025 INSC 1365Decided 28 Nov 2025
Not available
Justice J.B. Pardiwala · Justice R. Mahadevan

Background

Hindustan Construction Company had an arbitration dispute with Bihar Rajya Pul Nirman Nigam Limited (a Bihar public-sector bridge construction corporation), and the arbitral proceedings were disrupted partway through: reportedly because of an issue with the original arbitrator. The company repeatedly wrote to the Corporation seeking appointment of an independent substitute arbitrator, but the Managing Director did not respond. The Patna High Court, when approached under Section 11 of the Arbitration Act, dismissed the company's request and effectively suspended the arbitration altogether rather than ordering a substitution.

Decision Breakdown

The Supreme Court held that when an arbitrator becomes unable to continue, the correct legal course is to substitute a new arbitrator and continue the proceedings from where they left off, not to suspend or restart the entire arbitration, since prior proceedings remain valid unless a party specifically objects. The Court set aside the High Court's order and directed it to appoint a substitute arbitrator within two weeks, who must continue from the interrupted stage and try to finish within a year. The Court also strongly criticised the public-sector Corporation's Managing Director for staying silent despite repeated requests, holding that the State and its instrumentalities must act as a "model litigant" (fair, responsive, and transparent) and issued a stern warning against repetition, while stopping short of imposing costs.

Lesson Learnt

Where an arbitrator cannot continue, Indian law favours substituting a new arbitrator to carry on from the point of interruption rather than scrapping the process, preserving time and effort already invested; and government bodies are expected to respond promptly to legitimate requests rather than forcing citizens or companies into court through silence.

Official source (sci.gov.in)View Judgment (PDF)

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