Report No. 176
2.8.6 The comparative advantages or disadvantages of the order under sec. 11 to be an administrative order or judicial order:
The Commission has received a large number of responses to the Consultation Paper. So far as sec. 11 is concerned, some suggested that the orders under sec. 11 should remain 'administrative' by retaining the words 'Chief Justice of India' or 'Chief Justice of the High Courts' or their nominees. Some others suggested that, if certain preliminary issues of jurisdiction could be settled at that stage (provided oral evidence was not necessary) the orders better be made on the judicial side by the 'Supreme Court' or 'the High Court', as the case may be.
In particular, the latter suggestion came at the Bombay seminar organized by the Indian Merchants Chamber where several retired Judges and others participated. The Indian Merchants Chamber, in fact, gave a draft of the provision to be inserted in the place of the existing sec. 11. The Commission was cautioned in the several responses to the Consultation Paper that it should not go by '1940 Act mindset' but has to keep the UNICTRAL Model in mind.
At the end of the day, it appeared to the Commission that while the '1940 Act mindset' should not be there, one should also be receptive to other alternative suggestions, if such alternatives could be improvements on the UNCITRAL Model. Several countries which have adopted the Model Law, as the basis, have made some changes to suit their local needs. While we should not have the '1940 Act mindset', that does not mean we should have a closed mind and not try to improve on the Model Law.
Thus for an objective consideration of what is best for the parties, who seek arbitration, neither an undue adherence to the '1940 Act mindset' nor an unnecessary anxiety to maintain 'UNCITRAL mind set' in its totality is desirable. As we shall presently show, those who suggested that the '1940 Act mindset' is to be eschewed have not in fact, made any in depth study of the advantages and disadvantages resulting from adoption of one or the other alternatives.
Those who assumed that there would be uncalled for court intervention if sec. 11 orders are made on the judicial side, appeared to the Commission to have not gone into the matter in detail but had come to entertain such a view with some kind of preconceived notions. The Commission, therefore, felt it is necessary to examine in detail the practical advantages and disadvantages of the alternative suggestions. We start with the principle accepted by the Supreme Court that the orders under sec. 11 by the Chief Justice of India or his nominee are 'administrative orders'.
This is also the position with regard to orders under sec. 11 by the Chief Justices of the High Courts or their nominees. After the Konkan Railways Case No.1 several writ petitions have been filed in the High Courts under Art. 226 of the Constitution of India questioning the orders of the Chief Justices of the High Courts or their nominees. Most of these writ petitions are filed by the State or public sector undertakings questioning the orders of appointment of arbitrator by the Chief Justice or his nominee.
The points raised generally are -
(i) that the dispute related to 'excepted' matters,
(ii) that the contractor had signed a receipt for payment acknowledging that he has no more claims,
(iii) only a departmental officer should have been appointed as the arbitrator or that there should be no arbitration if a departmental arbitrator was not to be appointed.