Union of India & Ors. vs Parmar Construction Company and Ors.

Union of India & Ors. vs. Parmar Construction Company and Ors. dated 29th March, 2019

The Hon’ble Supreme Court by the above judgement concluded that:

i. The provisions of the Arbitration and Conciliation (Amendment) Act, 2015 shall only become applicable to proceedings where the notice of arbitration was served after 23 October, 2015 (the date when the said amendment came into force), unless otherwise agreed by the parties.

ii. A no-claim certificate signed by a contractor is not conclusive proof of there being no disputes as to payments, and each case must be analysed based on its facts and circumstances; and 

iii. If the arbitration agreement prescribes a specific procedure and criteria for appointment of an arbitrator /arbitral tribunal, courts must seek to adhere to the same and not directly proceed to appoint an independent arbitrator.”

In this case, the request for arbitration had been issued and received much prior to the commencement of the amendment Act on 23rd October, 2015. In view of Section 21 of the Arbitration and Conciliation Act, 1996 and adverting to its earlier judgment in Aravali Power Company Private Limited vs. Era Infra Engineering Limited, the Hon’ble Supreme Court held that the arbitration proceedings would be governed by 1996 Act notwithstanding the Amendment Act had come into operation and the applications under Section 11(6) of the Arbitration and Conciliation Act, 1996 was still pending before the Arbitral Court. The present judgement therefore clarifies a highly contentious issue post introduction of the Amendment Act, 2015. It reinforces the concept of party autonomy as one of the corner stones of arbitration. The Hon’ble Supreme Court also reiterated that the procedure of appointment, as agreed by the parties, ought to be adopted.