Jammu & Kashmir High Court - Srinagar Bench
Srinagar vs Ut Of J&K & Ors on 29 December, 2025
Author: Sanjay Dhar
Bench: Sanjay Dhar
2025:JKLHC-SGR:398
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT
SRINAGAR
Reserved on: 24.12.2025
Pronounced on:29.12.2025
Uploaded on: 29.12.2025
Whether the operative part
or full judgment is
pronounced: Full
Arb P. No.25/2023
MIS MIR SONS CONSTRUCTION PVT. LTD.
...PETITIONERS/APPELLANT(S)
Through: - Mr. Bilal Ahmad Malla, Advocate.
Vs.
UT OF J&K & ORS. ...RESPONDENT(S)
Through: - Mr. Waseem Gull, GA.
CORAM: HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE
JUDGMENT
1) The present petition filed in terms of Section 11(6) read with Section 14(2) and 15(2) of the J&K Arbitration and Conciliation Act, 1997 ( for short "the Act of 1997") has been filed by the petitioner seeking appointment of Arbitrator by way of substitution to resolve the disputes between the parties.
2) Briefly stated, the facts giving rise to filing of the present petition are that the contract for construction of "254 meter long two lane prestressed concrete road bridge over flood spill channel and Doodganga Nallah (combined) at Bemina Srinagar", was allotted to the petitioner company by Arb P No.25/2023 Page 1 of 13 2025:JKLHC-SGR:398 respondent PW(R&B) Department of Union Territory of Jammu and Kashmir (hereinafter referred to as "the respondent Department") in terms of letter No.PS/12299- 12305 dated 17.11.1999. The total cost of the work was estimated to the tune of Rs.531.00 lacs and the time for completion of the bridge was 36 months from the date of issuance of the allotment letter.
3) According to the petitioner, disputes arose between the parties with regard to payment of amount due and payable to the petitioner company. However, according to the respondent Department, the petitioner company caused delay in commencing the work, as a result of which it was able to complete only 30% work within the stipulated period of completion. It has been submitted by the respondent Department that the petitioner was given an extension of 11 months in addition to initial target time of 36 months but despite this, the petitioner company failed to achieve the target and instead completed the work in the year 2008 with the additional delay of 19 months.
4) The respondent Department has claimed that an amount of Rs.7,99,86,000/ has been released in favour of the petitioner company erroneously, though it was entitled to only an amount of Rs.6,95,36.077/. Thus, an excess Arb P No.25/2023 Page 2 of 13 2025:JKLHC-SGR:398 amount of Rs.1,04,49,923/ has been inadvertently paid to the petitioner company.
5) It appears that the respondent Department, in terms of Clause 64 of General Conditions of Contract (GCC) appointed Shri Mian Bashir Ahmad, retired Chief Engineer, as sole Arbitrator for resolution of disputes in terms of order No.239-PWD(R&B) of 2014 dated 16.06.2014. The learned Arbitrator entered upon the reference and commenced the arbitration proceedings. An interim award dated 28.06.2014 came to be passed by the learned Arbitrator, whereby an amount of Rs.203.00 lacs was awarded in favour of the petitioner company. The said award was, however, set aside by this Court in terms of order dated 10.10.2022 passed in CM(M) No.361/2020.
6) It also appears that the learned Arbitrator vide communication dated 23.09.2021, informed the petitioner company as also the respondent Department that on account of his ailing health, he was unable to continue to hold the arbitral proceedings. Accordingly, he withdrew himself from the arbitration proceedings on health grounds. In view of this development, the petitioner company is stated to have served upon the respondent Department letter dated 09.11.2021 seeking appointment new Arbitrator in terms of Section 14(2) and 15(2) of the Act invoking Clause 64 of the GCC.
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7) According to the petitioner company, despite having made a request to the respondent Department to appoint a new Arbitrator, the respondent Department failed to appoint the Arbitrator which has compelled the petitioner company to approach this Court for exercise its power under Section 11(6) of the Act of 1997.
8) According to the respondent Department, need to appoint an Arbitrator is no longer in existence as the interim award passed by the learned Arbitrator has been set aside by this Court. It has been further submitted that, in fact, the respondent Department has paid an excess amount of Rs.1,04,49,923/ to the petitioner company, regarding which a demand notice has been issued to it. It has been contended that the provisions contained in Section 15(2) of the Act of 1997 have no applicability to the present case.
9) I have heard learned counsel for the parties and perused the material on record.
10) The facts which remain undisputed in this case are that certain disputes arose between the parties in connection with execution of the contract awarded by the respondent Department to the petitioner company in terms of allotment letter dated 17.11.1999. It is also not in dispute that Clause 64 of the GCC provides for resolution of the disputes by arbitration. The same reads as under:
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64.DISPUTED CLAIMS AND ARBITRATION:
64.1 All disputes between the parties to the contract (other than those for which the contract agreement stipulates the decision the Engineer-in-charge/Accepting Authority/ Chief Engineer as final and binding) shall of after written notice by either party to the contract to the other of them and to the appointing authority hereinafter mentioned be referred for adjudication to a sole Arbitrator to be appointed as hereinafter provided.
64.2 For the purpose of appointing the sole arbitrator referred to above the Accepting Authority will send within thirty days of receipt of the notice, to the contractor a panel of three names of Civil Engineers, who shall all be presently unconnected with the organisation for which the work is executed, from any one of more of the following:
a) Presidents (past/present) of the Institution of Engineers (India), the Indian Roads Congress and the Institution of Surveyors;
b) Officers of the rank of Superintending Engineers and above, of the State and Central Government Organisation; and
c) Retired Officers of ranks mentioned vide sub-clause (2) above, on the panel of Arbitrators with the State Government and the Central Government.
64.3 The Contractor shall on receipt of the names as aforesaid, select any one of the persons named to be appointed as a sole Arbitrator and communicate his name to the appointing authority within thirty days of receipt of the names. The Appointing Authority shall thereupon, without any delay appoint the said person as the sole Arbitrator. 64.4 If the contractor fails to communicate such selection and above or declines to accept any of these names within the period specified, the Appointing Authority il make the selection and appoint the selected person as the sole Arbitrator.
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2025:JKLHC-SGR:398 64.5 If the Appointing Authority fails to send so contractor the panel of three names as aforesaid within the period specified, the contractor shall send to the Appointing Authority a panel of three names of persons who shall all be unconnected with organization for Which the work is executed from any one or more of the categories mentioned above. The Appointing Authority shall, on receipt of the names, as aforesaid, select any one other person named and appoint him as the sole Arbitrator. If the Appointing Authority fails to select the person and appoint him as the sole Arbitrator within 30 days of receipt of the panel and inform the contractor accordingly, the contractor shall be entitled to appoint one of the persons from the panel as the sole Arbitrator and communicate his name to the Appointing Authority.
64.6 If the Arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever, another sole Arbitrator shall be appointed as aforesaid.
64.7 The work under the contract shall, continue during the arbitration proceedings and no payments due or payable to the contractor shall be withheld on account of such proceedings.
644.8 The Arbitrator shall be deemed to have entered in the reference on the date he issues notice to both the parties fixing the date of the first hearing.
64.9 The Arbitrator may, from time to time with the consent of the parties, extend the time for making and publishing the award. 64.10 The Arbitrator shall give a separate award in respect of each dispute or difference referred to him.
64.11 The venue of arbitration shall be such place as may be fixed by the Arbitrator in his sole discretion.
64.12 The fees, if any, of the Arbitrator, shall if required to be paid before the award is made and published, be paid half and half by each of the parties. The costs of the reference other Arb P No.25/2023 Page 6 of 13 2025:JKLHC-SGR:398 than arbitration fees shall be settled at the discretion of the Arbitrator.
64.13 The award of the Arbitrator shall be final and binding on both the parties.
11) In the first instance, the appointing authority appointed Shri Mian Bashir Ahmad, retired Chief Engineer, as sole Arbitrator to arbitrate and resolve the disputes that had arisen between the parties. The learned Arbitrator entered upon the reference and made an interim award dated 28.06.2018 awarding a sum of Rs.203.00 lacs in favour of the petitioner company. The said award came to be challenged by the respondent Department and vide order dated 10.10.2022 passed in CM(M) No.361/2020, this Court has set aside the interim award. While setting aside the interim award passed by the learned Arbitrator, this Court observed as under:
5. Examination of the interim award in the context of the claim made, as disputed by the applicants could not be in the opinion of the Court a well-reasoned award. Admittedly, the Arbitrator has only extracted the claim from the petition and on examination has passed the interim award in three lines, which is not permissible under law, as every order having implications of grant of decree is to be passed on some material, forming such basis for the interim award, no such material has been discussed by the Arbitrator and there is no discussion about the dispute raised by the applicants regarding such claim. In the opinion of the Court the interim award being not reasoned is patently illegal and perverse, therefore, liable to be set aside.
12) In the meantime, the learned sole Arbitrator, vide his communication dated 23.09.2021, informed the appointing Arb P No.25/2023 Page 7 of 13 2025:JKLHC-SGR:398 authority as well as the parties that he has developed neurological health problems and is not in a condition to continue as sole Arbitrator and a request was made to the appointing authority to take necessary steps.
13) Sections 14 and 15 of the Act of 1997 deal with the situations relating to failure or impossibility of the Arbitrator to act and termination of mandate and substitution of Arbitrator. The same are reproduced as under:
14 - Failure or impossibility to act (1) The mandate of an arbitrator shall terminate if?
(a) he becomes de jure or de facto, unable to perform his functions or for reasons fails to act without undue delays; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate.
(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground, referred to in this section or sub-section (3) of section 13.
15 - Termination of mandate and substitution of arbitrator
1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate,?
(a) where he withdraws from office for any
reason, or
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(b) by or pursuant to agreement of the
parties.
(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the decision of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.
14) From a conjoint reading of the aforesaid provisions, it becomes clear that the mandate of Arbitrator terminates, if he becomes de jure or de facto unable to perform his functions or for reasons fails to act without any undue delays. The mandate of an Arbitrator also gets terminated if he withdraws from office or the parties agree to termination his mandate.
15) In the present case, the learned sole Arbitrator appointed by the appointing authority has withdrawn from his office due to his personal reasons on account of his ill health. Sub-section (1) of Section 15 of the Act of 1997 provides that in addition to the circumstances referred to in Section 13 or Section 14 of the Act of 1997, mandate of an Arbitrator would also terminate where he withdraws from office for any reason or by or pursuant to agreement of the parties. Sub-section (2) provides the procedure to substitute Arb P No.25/2023 Page 9 of 13 2025:JKLHC-SGR:398 an Arbitrator where the mandate of an arbitrator terminates. As per this provision, a substitute arbitrator has to be appointed according to the rules that were applicable to the appointment of the Arbitrator being replaced.
16) As already stated, since the sole Arbitrator in the present case has withdrawn from his office, therefore, his mandate gets terminated in accordance with the provisions contained in Section 14(1)(b) read with Section 15(1)(b) of the Act of 1997. So, for appointment of his replacement, the same procedure has to be adopted by the parties as they had adopted at the time of appointment of Shri Mian Bashir Ahmad, retired Chief Engineer, as Arbitrator.
17) The respondent Department has raised an objection to the appointment of a substitute Arbitrator on the ground that the interim award passed by the previous Arbitrator has been set aside by the Court, therefore, the claims raised by the petitioner company have been adjudicated upon and, as such, the said claims have been reduced to deadwood and, thus, there is no need to appoint a substitute Arbitrator.
18) I am afraid the contention raised by the respondent Department is wholly misconceived. In the first instance, it is to be noted that the award made by the previous Arbitrator was interim in nature and it was not a final award. Apart from this, if we have a look at the order passed by this Court Arb P No.25/2023 Page 10 of 13 2025:JKLHC-SGR:398 in the petition filed by the respondent Department seeking setting aside of the interim award, the relevant extracts whereof have been reproduced hereinbefore, it is revealed that the interim award has been set aside by this Court on the ground that the same is not reasoned and, as such, is patently illegal and perverse. It has been observed by the Court while setting aside the said interim award that the same has been made in three lines which is not permissible under law. It has also been observed by this Court that there is no discussion about the disputes raised by the claimant regarding the claims. So, the interim award has been set aside by this Court not on merits but because the same was unreasoned and merits of the claims raised by the claimant were not discussed and gone into by the learned Arbitrator. Once this Court has set aside the interim award passed by the learned Arbitrator without discussing the merits of the claims raised by the petitioner company, it cannot be stated that the said claims have been adjudicated upon and rejected on their merits so as to reduce them to deadwood. The contention of the respondent Department that the disputes between the parties have been rendered non- arbitrable is, therefore, without any substance.
19) Having held that the disputes between the parties are live and arbitrable, the question that is required to be Arb P No.25/2023 Page 11 of 13 2025:JKLHC-SGR:398 decided is as to in what manner a substitute Arbitrator has to be appointed. As already stated, the procedure that was adopted for appointment of the Arbitrator in the initial stage has to be repeated.
20) It appears in the instant case, after the previous Arbitrator withdrew himself from the case due to his health problems, the petitioner company addressed a communication dated 09.11.2021 to the appointing authority seeking appointment by way of substitution of a fresh Arbitrator. The petitioner company proposed the name of Mr. Rashid Ahmad Lone, retired District & Sessions Judge, for appointment as sole Arbitrator. It appears that the Chief Engineer of the respondent Department, by addressing communication dated 25.10.2023, made a request to the Principal Secretary to Government, Public Works Department, to appoint a new Arbitrator,. However, no Arbitrator has been appointed by the appointing authority in exercise of its powers under Clause 64 of the GCC nor the respondent Department has given its concurrence to the proposal made by the petitioner company vide its communication dated 09.11.2021. Therefore, it becomes imperative for this Court to step in and exercise its powers under Section 11(6) of the Act of 1997. Arb P No.25/2023 Page 12 of 13
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21) In view of the above, the petition is disposed of by referring all the disputes and differences covered by the agreement to the learned Sole Arbitrator in the following terms:
(I) Mr. Hon'ble Mr. Justice Sunil Hali, former Judge of this Court, is appointed as the Sole Arbitrator to adjudicate upon the disputes and differences between the parties arising out of and in connection with the agreement referred to above.
(II) A copy of this order be communicated to the learned Sole Arbitrator by the Registry of this Court within a period of ten days from today.
(III) The learned Sole Arbitrator is requested to forward the statutory statement of disclosure under Section 11(8) read with Section 12(1) of the Act of 1996 to the parties within a period of two weeks from the date of receipt of this order.
(IV) The parties shall appear before the learned Sole Arbitrator on a date and place to be fixed by the learned Sole Arbitrator.
(V) All the arbitral costs and fee of the Arbitral Tribunal shall be borne by the parties equally and shall be subject to final award that may be passed by the learned Arbitrator in relation to the costs.
(Sanjay Dhar) Judge SRINAGAR 29.12.2025 "Bhat Altaf-Secy"
Whether the Judgement is speaking: YES Whether the Judgement is reportable: YES Arb P No.25/2023 Page 13 of 13