SUPREME COURT ORDERS FOR INVOCATION OF ‘APPEAL’ AND NOT ‘ARBITRATION’ BY DISSATISFIED PARTY

The Supreme Court has recently passed a judgment dated 22.11.2018 (Judgment) in the case of South Delhi Municipal Corporation vs. SMS AAMW Tollways Private Ltd. where it held that the jurisdiction of the designated officer invoked by the Respondent, i.e. the dissatisfied party, is under a departmental appeal and not under arbitration.

In this case the parties had agreed that in case of any dispute, the Respondent would approach a competent officer of the Appellant company and later, if dissatisfied by its response, to appeal to the commissioner of the Appellant company.

But, when a dispute arose between the parties and the Respondent approached a competent officer of the Appellant company, the Respondent being dissatisfied with the said response initiated arbitration instead of preferring appeal to the commissioner of the Appellant company.

The Supreme Court herein held that the departmental appeals are invoked only by a dissatisfied party for prevention of differences from arising and are decided by a designated officer of such department. Whereas, an arbitration can be invoked by both parties to dispute for the purpose of settling the dispute, if the agreement provides for the same.

Therefore, the Supreme Court set aside the High Court order ruling that “Neither the Competent Officer nor the Commissioner is enjoined to act judicially i.e. the decision on the basis of evidence adduced by both the parties. In fact, both the authorities, the Competent Officer and the Commissioner are required to deal with only one party i.e. the contractor. This cannot be characterized as an enquiry of a judicial nature which necessarily involves a consideration of the case of both sides by an independent Arbitrator. Additionally, there is no provision in the Agreement to refer any dispute or reference to arbitration.”

Satyam Singh Pal

Associate

The Indian Lawyer