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The State of Jharkhand & Ors. v. M/s Hindustan Construction Co. Ltd.

Civil Appeal · 2017 INSC 1224Decided 14 Dec 2017
Civil Appeal No. 1093 of 2006
Chief Justice Dipak Misra · Justice A.K. Sikri · Justice A.M. Khanwilkar · Dr. Justice D.Y. Chandrachud · Justice Ashok Bhushan

Background

A 1989 construction contract between the State of Jharkhand and Hindustan Construction Co. Ltd. led to a dispute referred to arbitration, which lapsed; parallel suits followed, and in 2013 the Supreme Court itself referred the dispute to a retired judge as sole arbitrator, directing that the award be filed before the Supreme Court. After the arbitrator rendered an award in 2015, a dispute arose over which court had jurisdiction to treat that award as a decree ("Rule of the Court") given that the Supreme Court had retained seisin over the arbitration. A two-judge bench found conflicting precedent on this point and referred the legal question to a larger bench.

Decision Breakdown

The five-judge bench held that the Supreme Court's earlier administrative act of directing the award to be filed before it did not, by itself, confer jurisdiction on the Supreme Court to adjudicate objections to the award; that jurisdiction continues to vest in the court that would ordinarily have it under the scheme of the Arbitration Act. The Court overruled two of its own earlier decisions (Saith and Skelton, and Guru Nanak Foundation) that had suggested otherwise, holding they did not state the correct position of law. Since the State had already filed its objections before the civil court, the Court did not need to transfer the matter and simply directed that any pending objections be decided on merits within the usual process, disposing of the appeal with no order as to costs.

Lesson Learnt

Merely because the Supreme Court is supervising or has received an arbitral award for safekeeping does not shift jurisdiction to decide objections to that award away from the court that would normally have it under the Arbitration Act: litigants must still challenge an award in the correct forum designated by the statute.

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

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