M/S Sethi Construction Company, Vs Power Grid Corporation of India Ltd.

[2025:RJ-JP:43165-DB]

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

D.B. Civil Miscellaneous Appeal No. 2167/2025

M/s Sethi Construction Company, Having Its Registered Office At C-53, Sethi Colony, Agra Road, Jaipur- 302004, Rajasthan. Through Its Authorised Signatory Anil Kumar Sethi.

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----Appellant

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Versus

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Power Grid Corporation Of India Ltd., Head Office At B-9, Kutub Institutional Area, Katwaria Sarai, New Delhi110016, Through Its Deputy General Manager (C And M), B-4/184, Chitrakoot Scheme, Near Pratap Stadium, Jaipur.

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Arbitral Tribunal Of Shri Sukhjinder Singh, Sole Arbitrator, 401, Akshar Meadows, Sirsi Road, Hathoj Mod, Jaipur302041.

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----Respondents

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For Appellant(s)	:	Mr. Dinesh Kumar Mishra with Mr. BK Sharma & Mr. Kartik Agrawal
For Respondent(s)	:	Mr. Virendra Lodha, Sr. Advocate assisted by Ms. Ankita Rathore &
		Ms. Ashim Chatterjee

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HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE BALJINDER SINGH SANDHU

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Order

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28/10/2025

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The challenge in the present appeal is to the judgment passed by the Commercial Court No.2, Jaipur Metro-II, whereby while examining the objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’), the concerned Commercial Court has held the award passed by the Arbitrator to be null and void and contrary to the provisions of the

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[2025:RJ-JP:43165-DB]

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[CMA-2167/2025]

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(2 of 5)

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Act of 1996 holding that the single Arbitrator could not have passed the order.

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Learned counsel appearing for the appellant has raised the objections to the order passed by the Commercial Court and submitted that the order passed by the Commercial Court goes contrary to the view already expressed by this Court in the writ proceedings initiated by the respondents with regard to the nomination and appointment of the sole Arbitrator. 3. It is noticed that the respondent-Power Grid Corporation of India Ltd. received a notice on 01.05.2018 from the Arbitrator nominated by the present appellant which was challenged before this Court in Civil Writ Petition No.16258/2018. Learned Single Judge after considering the provisions and nature of the arbitration clause reached to a conclusion that the sole Arbitrator could have issued notices after the period has expired for opting a second Arbitrator on part of the other party namely, the Power Grid Corporation of India Ltd. Thus, the nomination of the sole Arbitrator was held to be justified. The appellant challenged the order of the learned Single Judge filed before the Division Bench in D.B. Special Appeal Writ No.197/2019 and the Division Bench upheld the order vide its judgment dated 05.04.2019 holding that the sole Arbitrator has been appointed without recourse to Sections 8 and 11 of the Act of 1996. He can, therefore, rule with reference to Section 16 of the Act of 1996 on his own jurisdiction. However, the Division Bench proceeded to make observation as under:

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“In the result, we do not find any infirmity in the order of the learned Single Judge. However, we leave it open to the appellant to agitate the question with regard to the competence of the arbitral tribunal including about the validity

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(3 of 5)

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[2025:RJ-JP:43165-DB]

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[CMA-2167/2025]

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of its appointment in accordance with the provisions of Section 16 of the Arbitration and Conciliation Act, 1996 on the first available opportunity while raising a plea thereabout in their statement of defence. It goes without saying that the Arbitrator obviously shall decide that question in the manner he may deem fit.

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With that liberty, the appeal stands dismissed. This also disposes of stay application.”

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We notice that at that point when the Division Bench has made aforesaid observations on 05.04.2019, the award had already been passed by the sole Arbitrator on 29.01.2019 and this fact was not brought to the knowledge of the Division Bench. No review application was filed before the Division Bench. Thus, the award dated 29.01.2019 attained finality and the observations made by the Division Bench while upholding the order of the learned Single Judge could not be implemented as the time had lapsed with the final award having been published by the Arbitrator. It appears that in spite of the aforesaid position on facts, the Commercial Court while hearing objections under Section 34 has proceeded to lay down; firstly that the Arbitrator is bound to comply with the observations of the order dated 05.04.2019 passed by the Division Bench and secondly, it also proceeds to examine the nomination and appointment of the sole Arbitrator. On both the counts, we agree with the counsel appearing for the appellant that the order cannot be sustained in law.

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As regards the observations of the Commercial Court relating to order dated 05.04.2019, suffice it to note that as on the day when the award was passed on 29.01.2019, there was no order of the Division Bench existing before 29.01.2019. The Arbitrator became functus officio and would therefore, have no power to amend or change the award. In the light thereto, the observation

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[2025:RJ-JP:43165-DB]

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[CMA-2167/2025]

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(4 of 5)

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of the Commercial Court holding the award to be bad in law is found to be without any basis and is a misconception of law. We leave it on that, so far as the order passed by the Division Bench is concerned.

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In our view, any order which cannot be implemented in law by an authority, has to be treated as otiose and cannot be implemented and it was not brought to the knowledge of the Division Bench that the award has already been passed. In fact, it was the duty of the respondents who raised objections before the Commercial Court to have brought this fact before the Division Bench when it passed the order dated 29.01.2019 and review can also be filed but the same has not been filed. Hence, we can safely say that the observations of the Division Bench cannot be implemented. At the same time, we also notice that the Division Bench has upheld the appointment of the Arbitrator. In light of the observations of the Commercial Court holding that the sole Arbitrator could not have been appointed in terms of the arbitration clause goes contrary to the observations of the High Court. Judicial propriety demands that a subordinate Court namely, the Commercial Court ought to take into consideration the judgments passed by the High Court. Once the Single Bench and Division Bench of the High Court held that the appointment of the Arbitrator and nomination thereto were in accordance with law, there was no occasion to hold otherwise by the Commercial Court. The declaration of the award being non est and void ab initio by the Commercial Court cannot be sustained and the same is, accordingly, set aside.

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[2025:RJ-JP:43165-DB]

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[CMA-2167/2025]

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(5 of 5)

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The appeal is allowed. The order passed by the Arbitrator dated 29.01.2019 stands upheld in law. There shall be no order as to costs.

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(BALJINDER SINGH SANDHU),J (SANJEEV PRAKASH SHARMA),ACTING CJ

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Rahul/Diksha-20

M/S Sethi Construction Company, v. Power Grid Corporation of India Ltd.

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M/S Sethi Construction Company, v. Power Grid Corporation of India Ltd.

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