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Supreme Court Refuses to Entertain Delayed Challenge to the Arbitral Tribunal

Overview

In this matter, the Supreme Court was presented with a challenge to an arbitral award. However, the focus was not on the amount awarded. Instead, it was on whether the arbitral tribunal itself was formed properly. 

The Municipal Corporation of Greater Mumbai (MCGM) argued that one of the arbitrators was appointed after the time period stated in the agreement collapsed and due to this delay, the entire arbitration process should be considered invalid. 

The High Court had already rejected this argument and refused to interfere with the award. The Supreme Court had to decide whether this issue raised by the appellant had any merit, especially when it had already taken part in the proceedings. 

 

Facts of the Case

In 1995, MCGM entered into an agreement with a consultancy firm, R.V. Anderson Associates Ltd. in Canada for improving the sewerage systems in Mumbai. The project was funded by the World Bank. After it was completed, a few payments were still under dispute, which further led to arbitration to be invoked in 2005. 

Both sides appointed their arbitrators. However, the process remained stagnant because the parties were trying to settle the matter through conciliation. After the conciliation failed, the process moved to arbitration and the two arbitrators had to appoint a third arbitrator. Two arbitrators were appointed following the same; however, both of them resigned one after the other due to certain circumstances. Finally, a third arbitrator was appointed in November 2008. 

MCGM attended a meeting in January 2009 and participated without raising any issue. But in February 2009, it raised certain objections saying that the arbitrator was appointed after the 30-day limit stated in the agreement and therefore the tribunal was invalid. 

The tribunal, however, rejected the objection and continued with the proceedings and eventually passed an award in favour of Anderson Associates, the respondent herein. 

 

Legal Issues

  1. Whether the tribunal became invalid because the third arbitrator was appointed after the 30-day time limit stated in the agreement.
  2. Whether the 30-day time limit for appointment of the arbitrator was merely a guideline or a mandatory provision.
  3. Whether MCGM could raise objections as to validity of the tribunal after already taking part in the arbitration proceedings. 
  4. Whether the courts should ideally interfere with the interpretation made by the arbitral tribunal. 

 

Decision

The Supreme Court dismissed the appeal and held that the tribunal was properly formed and the objection raised by MCGM was not valid. The Court laid down that the 30-day period was not aimed at cancelling the power of appointing an arbitrator in a strict manner. It was more like a guideline, giving the parties an option to approach another authority in case of any delay. Since neither of the parties did that, the arbitrator still had the power to appoint a third arbitrator even after the completion of the 30-day period. 

The Court also stated that it was unfair on the part of MCGM to raise issues later since it participated in the proceedings without raising any objections earlier. It was held that the parties cannot keep such technical objections as a backup and use them only when the outcome does not suit them. 

The Court reiterated that if the arbitrator’s view is reasonable, the judiciary has no reason to interfere with the same and the arbitral award was upheld in its entirety. 

 

Case Reference: Municipal Corporation of Greater Mumbai (Appellant) Vs. R.V. Anderson Associates Limited (Respondent)  Civil Appeal Nos. of 2026 (Arising out of SLP (C) Nos. 23846-47 of 2025) (SJB, Delivered by J.K. Maheshwari, J.)