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M/s Durga Welding Works vs. Chief Engineer, Railway Electrification

Civil Appeal · 2022 INSC 12Decided 4 Jan 2022
Civil Appeal No. 54 of 2022
Ajay Rastogi · Abhay S. Oka

Background

After disputes arose under a works contract, the appellant contractor served a notice in August 2009 seeking appointment of an arbitrator and, when the railway authorities did not act, filed a Section 11(6) petition before the High Court of Orissa in October 2009. The appellant then took no further steps to pursue that petition or notify the respondents of it; meanwhile it selected arbitrators from a panel offered by the railway, participated in the resulting arbitral proceedings, but later stopped participating, leading to an ex-parte award against it in June 2013. The High Court was informed of the pending Section 11(6) petition only in 2016, almost three years after the award, and it eventually dismissed the petition in 2019, leaving the appellant free to challenge the award under Sections 34/37.

Decision Breakdown

The Supreme Court reaffirmed the settled legal principle (from Datar Switchgears v. Tata Finance and Punj Lloyd v. Petronet MHB) that once a Section 11(6) application is filed before the High Court, the other party forfeits its right to unilaterally appoint an arbitrator, and only the High Court retains jurisdiction to do so. However, on the particular facts, the appellant had itself gone silent on its own petition for years, actively participated in selecting arbitrators and initially engaging with the Arbitral Tribunal, and alerted the High Court to its pending petition only long after an ex-parte award had already been passed. Given this conduct, the Court held the High Court committed no error in declining to appoint an arbitrator under Section 11(6) and dismissing the petition, while leaving the appellant free to challenge the ex-parte award through the statutory remedy. The appeal was accordingly dismissed.

Lesson Learnt

Merely filing a court petition to preserve a legal right is not enough: a party must diligently pursue it; conduct inconsistent with that petition (such as participating in a parallel arbitral process one later claims is invalid) can defeat relief even where the underlying legal principle would otherwise favour the applicant.

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

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