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Union of India & Ors. v. Gurdayal Singh

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 2865-2866 of 2015)Decided 9 Mar 2015
Civil Appeal Nos. 2865-2866 of 2015
Justice Anil R. Dave · Justice Amitava Roy

Background

A dispute arose under a railway contract, and the respondent approached the High Court seeking appointment of an arbitrator because he had no faith in railway officers acting as arbitrators, as the standard contract clause required. The High Court appointed a retired judge as sole arbitrator with the railway's consent, but also made observations that a particular contract clause (Clause 64 of the General Conditions of Contract) requiring departmental officers to act as arbitrator was an "unreasonable term" and not binding. The Union of India appealed to the Supreme Court, not against the arbitrator's appointment itself (to which it had already consented), but against the High Court's broader observations on Clause 64's validity.

Decision Breakdown

The Supreme Court granted leave and noted that since the appellants' counsel had already consented before the High Court to the appointment of the named retired judge as sole arbitrator, there was no reason to interfere with that appointment. However, the Court found that the validity of Clause 64 was never actually an issue argued before the High Court, so the High Court should not have made any observation on it. The Supreme Court accordingly quashed only the High Court's observations regarding Clause 64, while leaving the arbitrator's appointment undisturbed. The appeals were allowed to this limited extent, with no order as to costs.

Lesson Learnt

Courts should confine their rulings to the issues actually argued before them; observations made on points not raised by the parties can be challenged and set aside even when the main relief (here, the arbitrator's appointment) is left untouched.

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

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