Introduction:

In the landmark case Hindustan Construction Company Ltd. versus Bihar Rajya Pul Nirman Nigam Limited and Others, the Supreme Court of India delivered a significant ruling that fortifies the principle of minimal judicial interference in arbitral matters. The dispute originated from a 2014 construction contract where Hindustan Construction Company (hereinafter referred to as HCC) had entered into an agreement with Bihar Rajya Pul Nirman Nigam Limited (hereinafter referred to as BRPNNL). The contract contained an arbitration clause which was invoked once earlier, resulting in a concluded award that was duly honoured by both parties. When subsequent disputes arose, HCC again invoked the same clause. However, while the arbitral proceedings were nearing completion, BRPNNL attempted to challenge the very existence of the arbitration agreement through a review petition before the Patna High Court, nearly three years after actively participating in the arbitration. The High Court not only entertained the review but also suspended and ultimately nullified its original appointment of the arbitrator, prompting HCC to approach the Supreme Court. The apex court, reaffirming the limited scope of judicial interference under the Arbitration and Conciliation Act, 1996, held that once an arbitrator has been appointed under Section 11, no review or appeal lies against such an order and the High Court becomes functus officio, meaning it ceases to have the authority to revisit or overturn its own appointment. The judgment restores certainty to arbitration proceedings by emphasizing that judicial review cannot be a backdoor route to undo a concluded decision, especially after parties have fully participated in arbitration for years.

Arguments by the Petitioner (HCC):

The petitioner, HCC, vehemently contested the Patna High Court’s decision to recall the appointment of the arbitrator after nearly 70 arbitral hearings and multiple extensions granted under Section 29A of the Arbitration Act. According to HCC, once the High Court had exercised its jurisdiction under Section 11(6) and appointed Justice Shivaji Pandey (Retd.) as the sole arbitrator, the court became functus officio and had no authority thereafter to review or annul the said order. HCC further argued that the Arbitration Act embodies the legislative intent of reducing court interference in arbitration and enabling swift dispute resolution. By re-opening the issue after three years, BRPNNL was attempting to derail the arbitral process, defeat the statutory mandate, and misuse judicial mechanisms. HCC also contended that BRPNNL was estopped from raising objections regarding the existence of the arbitration agreement after it had not only participated in the proceedings but also jointly sought extensions of the arbitrator’s mandate. The petitioner highlighted that the appropriate statutory remedies available to BRPNNL were either a challenge under Section 16 of the Act, before the arbitral tribunal, or an appeal through a Special Leave Petition under Article 136 to the Supreme Court. By circumventing these routes and instead filing a review petition, BRPNNL attempted to reopen a closed issue, which was impermissible in law. The petitioner also criticized the High Court for relying on subsequent judgments in unrelated matters to invalidate its earlier order and for exercising powers beyond the scope of Articles 226 and 227 in arbitration-related proceedings. Such interference, according to HCC, jeopardized the sanctity of arbitral proceedings, undermined certainty in contracts, and allowed for forum shopping, thereby contravening both legislative intent and judicial precedents that prioritize autonomy and efficiency in arbitration.

Arguments by the Respondent (BRPNNL):

BRPNNL defended its review petition by asserting that the arbitration clause invoked by HCC in the subsequent dispute was non-existent or incapable of sustaining a valid arbitration. It argued that the underlying agreement did not authorize a second arbitral reference and that the initial invocation had exhausted the clause. BRPNNL further maintained that the High Court retains limited review powers under its constitutional jurisdiction, irrespective of provisions under the Arbitration Act, and such powers enable courts to correct jurisdictional defects. The respondent claimed that since the arbitration clause was void or inoperative in the second invocation, the High Court possessed inherent authority to rectify its earlier order. BRPNNL also referred to judicial precedents that seemingly supported a restricted interpretation of arbitration clauses, contending that the High Court was not functus officio but rather empowered to prevent a patently erroneous interpretation from progressing into an award. The respondent argued that continuing with arbitration based on a defective agreement would cause prejudice and lead to a futile exercise. They emphasized that procedural participation in arbitration cannot confer jurisdiction where none exists. BRPNNL thus insisted that the High Court’s power to review its earlier appointment was not an appellate exercise but a constitutional necessity for correcting a jurisdictional oversight. The respondent also contended that the subsequent judicial decisions interpreting similar arbitration clauses entitled the High Court to reconsider its earlier stance to uphold legal consistency.

Court’s Judgment:

The Supreme Court categorically rejected BRPNNL’s contentions and allowed HCC’s appeal, reiterating its consistent position that courts must adopt a hands-off approach after the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act. Justice R Mahadevan, authoring the judgment, held that once the court appoints an arbitrator, it becomes functus officio, meaning that it has fully discharged its role and lacks further authority to revisit or reassess the appointment. The apex court emphasized that the Arbitration Act embodies a conscious legislative policy of minimal judicial interference. Therefore, no statutory provision exists that permits either a review or an appeal against a Section 11 appointment order. Allowing such review would jeopardize the certainty, speed, and finality intended by the Act. The Supreme Court observed that BRPNNL had actively participated in the arbitration for nearly three years, attended over seventy hearings, and jointly requested extensions of the arbitrator’s mandate. Having chosen to neither challenge the appointment under Article 136 nor raise jurisdictional objections before the arbitrator under Section 16, the respondent could not indulge in a belated review petition. The doctrine of estoppel applied squarely against the respondent, preventing it from retracting its earlier stance after fully benefiting from the arbitration process. The Court warned that permitting such belated interference would not only upset the arbitral balance but incentivize litigants to misuse judicial processes as strategic delay tactics. The Supreme Court dismissed the High Court’s attempt to justify its review based on subsequent judgments, asserting that law does not permit resurrection of concluded causes of action through judicial developments in other cases. The High Court, by reopening its Section 11 order, had overstepped its jurisdiction under Articles 226 and 227, effectively converting a review into an appeal—which was impermissible. The Supreme Court restored the arbitral process, reaffirmed the appointment of the arbitrator, and clarified that judicial interference at such an advanced stage would erode confidence in arbitration as an efficient dispute resolution mechanism.