SC Reinforces Limits of Review Jurisdiction in Arbitrator Appointments

The Supreme Court of India (SC), in the case of Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Limited & Others, delivered a judgment on  November 28 2025, categorically holding that High Courts cannot exercise review jurisdiction to retrospectively invalidate their own orders appointing arbitrators under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act), merely on the basis of a subsequent interpretation of a similar clause in another matter.

The SC emphasized that once parties have actively participated in arbitral proceedings, conducted hearings, and jointly sought extensions under Section 29A, they are estopped from challenging the existence or validity of the arbitration agreement.   

1. Background

In this case, Bihar Rajya Pul Nirman Nigam Limited (BRPNNL) awarded a contract to Hindustan Construction Company (HCC) for construction of a bridge over River Sone in Bihar. The contract contained Clause 25, which provided that disputes arising from the contract “shall be referred to and settled by the sole Arbitration of Administrative Head/Engineer-in-Chief of BRPNNL or his nominee.” The clause further stipulated that if such appointment was for any reason not possible, the matter shall not be referred to arbitrator at all.

When disputes arose, HCC approached the Patna High Court under Section 11(6) of the Arbitration Act to seek appointment of an arbitrator. By judgment dated 18th August 2021, the Patna High Court interpreted Clause 25 by applying the doctrine of severability, holding that while the unilateral appointment mechanism became inoperative after the 2015 Amendment to the Arbitration Act, the substantive agreement to arbitrate survived.  The Court severed the inoperative appointment procedure and upheld the arbitration agreement.

Arbitration proceedings were initiated, during which over seventy hearings were conducted. The parties jointly requested extensions of the arbitrator’s mandate pursuant to Section 29A, which were granted by the Patna High Court on two separate occasions.    

2. Reveral of the Appointment

However, BRPNNL, after actively participating in proceedings for over three years, filed a writ petition invoking the Patna High Court’s jurisdiction under Article 226 and 227 of the Constitution of India, seeking to set aside the initial appointment order of the arbitrator.

BRPNNL relied on a subsequent interpretation of a similar clause given by a coordinate bench of the Patna High Court in State of Bihar v. Kashish Developers in 2024 (Kashish Developers). In the said case, the Patna High Court had interpreted an identically worded Clause 25 as a “contingent contract” under Sections 31 and 33 of the Indian Contract Act, holding that the clause had two parts: first, a positive covenant for arbitration by an arbitrator appointed by the Managing Director; and second, if such appointment cannot be made, the matter shall not be referred to arbitration. It was further held that since the 2015 Amendment to the Arbitration Act rendered the first part (unilateral appointment) unenforceable, and required it to be severed, the second part remained valid triggering the contractual contingency that disputes shall be resolved through courts, and not arbitration.   The Court concluded that to appoint an arbitrator under Section 11 would amount to rewriting the contract and violating party autonomy.

In the said writ petition, the Patna High Court relied on the above precedent and held that the earlier appointment was based on an incorrect interpretation, thereby terminating the ongoing arbitral proceedings. 

3. Intervention by the Supreme Court:

The SC’s judgment addressed two critical themes – firstly, the absence of review jurisdiction in the Arbitration Act. The SC held unequivocally that the Arbitration Act is a self-contained code and does not confer any power of review upon courts.   Review jurisdiction under Order 47 Rule 1 Code of Civil Procedure, 1908 may be exercised only to correct an error apparent on the face of the record or to address a material fact that was overlooked and not to revisit findings of law or reappreciate issues already decided.

The SC distinguished cases where review was permitted due to procedural lapses from the present matter, where the High Court reopened the issue of interpretation of the arbitration clause based solely on a subsequent judgment.  Such an approach, the Court observed, dilutes the finality of a decision, and defeats the very legislative policy of minimal judicial intervention in the scheme of the Arbitration Act.  

Secondly, the SC underscored the purposive reading of Section 7(4)(c) of the Act, which states that an arbitration agreement “evidenced in writing” includes an exchange of a statement of claim and defence, where one party asserts the existence of such an agreement and the other does not dispute it.

The SC held that when parties actively participate in arbitral proceedings, file pleadings, adduce evidence, jointly seek extensions, and conduct seventy hearings without raising any objection to the arbitration agreement, such conduct unequivocally demonstrates acceptance of the agreement’s existence and validity.

The SC further clarified that BRPNNL’s reliance on the SLP dismissal in Kashish Developers was misplaced, as a non‑speaking dismissal merely indicates the Court’s discretionary refusal to interfere under Article 136.

At best, such a decision has persuasive value with its only legal effect being bringing finality to the dispute between the parties in that particular case. 

Conclusion

The Supreme Court set aside the High Court’s judgment and directed appointment of a substitute arbitrator within two weeks, with explicit directions that the newly appointed arbitrator shall continue proceedings from the stage at which they were interrupted.   This pragmatic direction prevents the inequity and inefficiency of restarting the arbitral process after three years of proceedings.

This judgment is a significant victory for arbitration certainty in India. For commercial parties, the decision serves as a clear reminder that conduct during the arbitration itself carries significant consequences. Once a party has actively engaged in the proceedings, it cannot later seek to undo or contradict that position through subsequent legal steps.