The Supreme Court has overturned a decision by the Patna High Court regarding a disagreement between Hindustan Construction Company Ltd. and Bihar Rajya Pul Nirman Nigam Limited about who should decide on their dispute. The case was about choosing an arbitrator and understanding a part of their construction contract.
In 2014, Hindustan Construction Company Ltd. (HCC) got a contract to build a bridge over the River Sone in Bihar. The contract included a section that said any disagreements would be settled by an arbitrator.
In 2018, HCC claimed extra costs because of delays. When they didn't get a response, they started the process to resolve the disagreement through arbitration. The Patna High Court chose Justice Shivaji Pandey to be the arbitrator in 2021.
In 2024, Bihar Rajya Pul Nirman Nigam Limited wanted to change the arbitrator because of Justice Pandey's new job and a new rule from the Bihar Government. The High Court stopped the arbitration, which led HCC to take the matter to the Supreme Court.
The Supreme Court, led by Justice R. Mahadevan, decided that the High Court made a mistake by trying to change its own decision. The court stressed that once an arbitrator is chosen, the process should only be stopped for good reasons.
The court confirmed that the agreement to use arbitration was valid, even though the High Court had earlier said otherwise. It pointed out that both parties clearly wanted to use arbitration to settle their dispute.
The Supreme Court noticed that both parties took part in the arbitration process and asked for more time, showing that they agreed to the arbitration.
The Supreme Court canceled the High Court's decision and ordered the appointment of a new arbitrator to continue the proceedings. The new arbitrator must finish the arbitration within a year.
The court criticized Bihar Rajya Pul Nirman Nigam Limited for not responding properly, reminding public organizations that they need to act fairly and efficiently.
This decision highlights the importance of respecting agreements to resolve disputes through arbitration and the limited role courts should play once arbitration has started.
