## Facts

- A construction contract between a government railway administration and a contractor contained an arbitration clause requiring two serving gazetted railway officers as arbitrators and an umpire.
- The contractor requested arbitration in 1999; the railways failed to promptly constitute a functioning tribunal.
- In 2000, the contractor sought court appointment of arbitrators under the Arbitration and Conciliation Act, 1996.
- In 2002, a three-member tribunal was constituted per the contract, but the contractor-nominated serving officer was transferred and resigned; the railways did not timely supply a replacement panel, stalling the tribunal.
- After further court intervention, a replacement serving-officer arbitrator was appointed, but he too was transferred and resigned in 2005 after minimal proceedings, again stalling arbitration.
- In 2005, the contractor sought appointment of an independent sole arbitrator due to repeated breakdowns and delay; the railways belatedly nominated another serving officer during the petition.
- The High Court appointed a retired judge as sole arbitrator (and, after recusal, appointed another retired judge).
- The Union of India appealed, arguing the court could not depart from the contract’s requirement of serving-officer arbitrators.

## Issues

1. Whether a court acting under Section 11 of the Arbitration and Conciliation Act, 1996 may depart from the contract’s arbitration-appointment mechanism when that mechanism has repeatedly failed and caused inordinate delay.
2. Whether appointing a retired judge as a sole arbitrator was impermissible because the contract required a tribunal composed of serving railway officers.

## Decision

- The Supreme Court dismissed the appeal and upheld appointment of an independent sole arbitrator.
- The Court accepted that arbitration clauses in government contracts often specify serving-officer arbitrators and are generally to be respected, subject to independence and impartiality.
- Given the repeated transfers/resignations and prolonged stalling, the Court treated the case as an exception where strict enforcement of the contractual mechanism would defeat effective arbitration.
- The Court distinguished prior authority under the repealed Arbitration Act, 1940 as not controlling under the 1996 Act in these circumstances.
- The Court approved use of Section 11 to secure a workable constitution of the tribunal when the agreed procedure has proved unworkable in practice.

## Legal Principles

- Courts ordinarily should constitute an arbitral tribunal in the manner agreed by the parties, including personnel-based requirements, subject to independence and impartiality.
- Under the Arbitration and Conciliation Act, 1996, Section 11 permits judicial appointment that departs from the contractual procedure where repeated failure of the agreed mechanism results in serious delay and undermines arbitration.
- When a party-controlled appointment process becomes ineffective through repeated breakdowns, the court may appoint an independent arbitrator, including a retired judge, to ensure timely and fair adjudication.
- Earlier decisions under the 1940 Act limiting departure from contractual appointment mechanisms are not determinative for Section 11 appointments under the 1996 Act where the contractual process has demonstrably failed.

## Conclusion

The Court held that although contractual arbitration procedures generally govern tribunal constitution, persistent failure of a serving-officer mechanism and inordinate delay justified a court-appointed independent sole arbitrator under Section 11 to preserve effective arbitration.


Union of India v. Singh Builders Syndicate, (2009) 4 S.C.C. 523 (India 2009)