09 June 2025 Arbitration Law >> Business & Commercial Law  

In a significant ruling, the High Court has granted an extension to the mandate of a Standing Arbitral Tribunal (SAT) overseeing disputes related to the construction of a special rail bridge across the Chenab River. The decision, which extends the tribunal's term until June 30, 2026, dismisses a vigorous opposition from Konkan Railway Corporation Ltd. (Konkan Railway), emphasizing the unique nature and complexity of the ongoing arbitration.

The case revolves around a contract dated November 24, 2004, for the design and construction of a critical rail bridge project. Due to the project's unique challenges and a history of disputes, the parties, Chenab Bridge Project Undertaking (Chenab) and Konkan Railway, specifically constituted a three-member Standing Arbitral Tribunal (SAT) on February 28, 2012, to adjudicate disputes arising from the contract on a half-yearly basis.

A History of Tribunals and Delays:

The arbitration proceedings have seen several iterations of the SAT. Initially, a Presiding Arbitrator's inability to proceed led to a High Court appointment, which was later modified by the Supreme Court. In 2013, by consent, Justice (Retd.) R.V. Raveendran was appointed as Presiding Arbitrator (Raveendran SAT) for claims 1 to 3, while a separate tribunal, the Jain SAT, was to handle claims 4 onwards.

However, the Jain SAT faced allegations of undue delay, prompting Chenab to seek its termination. This led to the constitution of a new SAT in January 2021, the "Mittal SAT," which is currently seized of claims from the fourth to the twenty-fourth half-yearly claim. The present petitions primarily concern half-yearly claims 10 to 19, which involve a staggering 105 sub-heads of claims.

Konkan Railway's Objections Dismissed:

Konkan Railway strenuously opposed the extension, seeking to terminate the SAT's mandate or even replace its members. Their objections were primarily based on four grounds:

1. Conflict with Arbitration Agreement: Allegations that the Mittal SAT's procedural decisions conflicted with the original arbitration agreement, particularly regarding deadlines for claims.
2. Undue Delay: Contention that the Mittal SAT was not proceeding with sufficient alacrity.
3. Risk of Amendments: Apprehension that the Mittal SAT might permit amendments to the Statement of Claim for future half-yearly claims, causing further delays.
4. Replacement of Arbitrators: A request for the court to replace the current arbitrators with retired High Court or Supreme Court judges.

The High Court meticulously considered these objections but ultimately rejected them. The court asserted its limited scope of interference under Section 29-A of the Arbitration and Conciliation Act, stating it could not "sit in judgement on the wisdom of operational and procedural decisions of the arbitral tribunal."

Court's Rationale for Extension:

The judgment highlighted several reasons for extending the mandate:

• Tribunal's Autonomy: The arbitral tribunal is the master of its proceedings, and its decisions on how to conduct and sequence adjudication are not for the court to interfere with.
• Sequential Handling: The parties, including Konkan Railway, had not previously quarreled with the sequential nature of how the claims were being dealt with.
• Efficiency and Continuity: Refusing an extension for a portion of the claims would "skew the entire terrain" and disrupt the ongoing arbitration, contradicting the original intent of establishing a continuous dispute resolution platform for the project.
• Parties' Conduct: The court noted that both parties had contributed to delays, including seeking adjournments. Konkan Railway itself had sought interventions and filed numerous applications.
• No Undue Delay: After examining the extensive record of proceedings, including those conducted throughout the COVID-19 pandemic, the court was not convinced that the SAT had conducted the proceedings with undue delay. The massive volume of documents (lakhs of pages) also contributed to the time taken.
• Unilateral Appointment: The court acknowledged the SAT's unilateral appointment structure, noting that a five-judge Constitutional Bench of the Supreme Court has since declared such appointments illegal prospectively. However, given the significant time and resources already expended, substituting the arbitrators would be counterproductive without clear evidence of partiality or independence issues.
• Consent for Extension: The parties had previously agreed to seek a joint extension of the mandate for some references in May 2024, which the court had considered in a prior order.

Conclusion and Directions:

The court dismissed Konkan Railway's objections, concluding that no case had been made out for concluding undue delay or for substituting the arbitrators. The apprehension regarding future amendments was also deemed an insufficient basis for intervention.

The mandate of the Mittal SAT for the relevant references has been extended to June 30, 2026. The court consciously opted for a shorter extension than requested (December 31, 2026) to encourage promptness. It directed both parties to strictly adhere to timelines and avoid unnecessary adjournments. The SAT was also requested to communicate any logistical constraints and consider imposing costs for frivolous applications.

A "token cost" of Rs. 1 lakh was imposed on Konkan Railway, payable to Chenab within six weeks, citing the untenable nature of the objections and the court's expended time and resources. The ruling underscores the judiciary's commitment to expediting commercial arbitrations while respecting the autonomy of arbitral tribunals.

Section 21, Arbitration and Conciliation (Amendment) Act - 2001  

Arbitration and Conciliation Act, 1996