Title not extracted — [2005] Supp. 4 S.C.R. 688

Again, in Addanki Tiruvenkata Thata Desika Charyulu v. State of G Andhra Pradesh and Anr., AIR (1964) SC 807, the Settlement Officer was empowered to decide finally as to whether inam village was an 'inam estate'. It also barred jurisdiction of Civil Court from questioning the correctness of the decision. H

766 SUPREME COURT REPORTS [2005) SUPP. 4 S.C.R.

A Considering the question as to extent to which the powers of statutory tribunals are 'exclusive', the Constitution Bench after referring to Commissioner of Income Tax, stat:d:

"It is manifest that the answer to the question as to whether any particular case falls under the first or the second of the above categories would depend on the purpose of the statute and its general scheme, taken in conjunction with the scope of the enquiry entrusted to the tribunal set up and other relevant factors."

As already indicated by me earlier, sub-section (I) of Section 16 does not merely enable the Arbitral Tribunal to rule on its own jurisdiction, but requires it to continue arbitral proceedings and pass an arbitral award. [Sub- section (5)] It allows the aggrieved party to make an application for setting aside the award in accordance with Section 34. (Sub-section (6)]. Thus, in my judgment, Section 16 can be described as 'self-contained Code' as regards the challenge to the jurisdiction of Arbitral Tribunal. As per the scheme envisaged by Parliament, once the Arbitral Tribunal rules that it has jurisdiction, it will proceed to decide the matter on merits and make an award. Parliament has also provided the remedy to the aggrieved party by enacting that he may .make an application under Section 34 of the Act. In the circumstances, the proceedings cannot be allowed to be arrested or interference permitted during the pendency of arbitration proceedings. E It was submitted by. Mr. Venugopal that once the Chief Justice is satisfied as to fulfillment of conditions for the exercise of power to appoint an arbitrator and his decision is 'final', it would be impossible to hold that the Arbitral Tribunal can go behind che decision of the Chief Justice and_ hold F Otherwise.

Mr. Venugopal sugg§sted that Section 16 should be so construed that it would apply only to the cases covered by sub-sections (2) and (3) of Section 11 and notto sub-section (6) of Section JI and the appointment of an arbitrator made by the Chief Justice. By such interpretation, submitted the counsel, both the provisions can be harmoniously interpreted and properly applied.

Though the m~jority observed it to be 'one of the ways of reconciliation', I have my own reservation in acceptingjt Firstly, the function of the Court is to interpret the provision ds it is and not to amend, alter or substitute by interpretative process. Secondly, it 'fs for the Legislature to make a law

S.B.P. & CO. v. PATEL ENGINEERING LTD. (C.K. THAKKER. J.) 767 applicable to certain situations contemplated by it and the judiciary has no power in entering into 'legislative wisdom'. Thirdly, as held by me, the 'decision' of the Chief Justice is merely primafacie decision and sub-section (I) of Section 16 confers express power on the Arbitral Tribunal to rule on its own jurisdiction. fQ!Jrthly, it provides remedy to deal with situations created by the order passed by the Arbitral Tribunal. Finally and importantly, the situation envisaged by Mr. Venugopal would seldom arise. Normally, when parties agree on the appointment of an arbitrator or arbitrators, there would hardly be any dispute between them on such appointment which may call for intervention by Arbitral Tribunal under Section 16 of the Act. For all these reasons, I am unable to persuade myself to hold that Section 16 has limited application to cases covered by sub-sections (2) and (3) and not to sub-section (6) of Section 11 of the Act. The phraseology used by the Legislature does not warrant interpretation sought to be suggested by Mr. Venugopal.

It was also submitted that in case of failure on the part of the party to the arbitration agreement in appointing an arbitrator, an application can be made under Section 11 of the Act and arbitrator can be appointed by the Chief Justice or any person or institution designated by him. It was urged that it is settled law that judicial or quasi-judicial power has to be exercised by the authority to whom it is granted and cannot be delegated. As the intention of Parliament was to confer the power on the highest judicial authority, in the E State and in the country, it cannot be allowed to be exercised by 'any person' or 'institution'.

In my view, the submission is ill-conceived and has been made by looking at the matter from an incorrect angle. It first assumes that the function performed by the Chief Justice. is judicial or quasi-judicial and then proceeds p to examine legdl position on that basis and attempts to _salvage the situation by urging that the power must be exercised by the Chief Justice. In that case, however, the subsequent part "or any person or institution designated by him" (Chief Justice) would become redundant. Realising the difficulty and keeping in view the principles relating to interpretation of statutes, Mr. Nariman, Senior Advocate submitted that Section 11 provides for dichotomy of functions. G It contemplates two situations, and deals with two stages. The first stage consists of consideration of preliminary facts and taking of decision as to whether an arbitrator can be appointed. The second stage allows nomination of an arbitrator. According to Mr. Nariman, the first part is essentially a Judicial function which cannot be delegated to 'any person or institution' H

768 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A and at the most, it can be delegated to any Judge of the court. The second stage, however, is more or less ministerial and at that stage, the Chief Justice may, if he thinks fit, take help of any person or institution so that proper and fit person is appointed as arbitrator.

Though the submission weighed with the majority, I express my inability to agree with it for several reasons. Firstly, as earlier noted, it proceeds on the basis that the function of the Chief Justice is judicial or quasi-judicial, which is not correct. In my view, it is administrative which is apparent from the language of Section 11 and strengthened by Section 16 which enables the Arbitral Tribunal to rule on its own jurisdiction. Secondly, a court of law must give credit to Parliament that it is aware of settled legal position that judicial or quasi-judicial function cannot be delegated and if the function performed by the Chief Justice is judicial or quasi-judicial in nature, keeping in view legal position, it would not have allowed delegation of such function to 'any person or authority'. Thirdly, the majority held, and I am in respectful agreement with it, that the conferment of power on the Chief Justice is not as 'persona designata'. Hence, the power can be delegated. Finally, ifthe legislative intent is the exercise of power by the Chief Justice alone, one fails to understand as to how it can be exercised by a 'colleague' of the Chief Justice as well.

In my opinion, acceptance of the submission of Mr. Nariman would result in rewriting of a statute. The scheme of the legislation does not warrant such construction. No court much less the highest court of the country would interpret one provision (Section I 1) of an Act of Parliament which would make another provision (Section 16) totally redundant, otiose and nugatory. The Legislature has conferred power on the Chief Justice to appoint an arbitrator in certain contingencies. By the same pen and ink, it allowed the Chief Justice F to get that power exercised through 'any person or institution'. It is not open to a court to ignore the legislative mandate by making artificial distinction between the power to be exercised by the Chief Justice cir by his 'colleague' and the power to be exercised by other organs though Legislature was quite clear on the exercise of power by the persons and authorities specified therein. I accordingly reject the argument. G It was then urged that the principal ground for holding the function of the Chief Justice under sub-section (6) of Section 11 as administrative was to ensure immediate commencement of arbitration proceedings and speedy disposal of cases. In reality, however, it is likely to cause delay for the simple H reason that if the order passed by the Chief Justice of the High Court is

S.B.P. &CO. v. PATEL ENGINEERING LTD. [C.K. THAKKER,J.] 769

·" treated as judicial or quasi judicial, it can only be challenged in the Supreme A Court under Article 136 of the Constitution. So far as the order of the Chief Justice of India is concerned, it is 'final' as no appeal/application/writ petition lies against it. But if such decision is held to be administrative, initially, it can be challenged on the judicial side of the High Court under Article 226 of the Constitution. Normally, under the High Court Rules, such petitions are dealt with and decided by a Single Judge. Hence, the decision of a single Judge can further be challenged by filing a Letters Patent Appeal or Intra-court Appeal under the relevant clause of the Letters Patent applicable to the High Court concerned. Finally, an order passed by the Division Bench can always be made subject-matter of challenge before this Court under Article 136 of the Constitution. Thus, an interpretation sought to be adopted for the purpose of reducing litigation and speedy disposal of proceedings would really result .. in increase of litigation and delay in disposal of cases.

I must admit that once it is held that the order passed by the Chief Justice is administrative, it can be challenged in Writ Petition, Letters Patent Appeal and in Special Leave Petition. But in my opinion, while exercising extraordinary jurisdiction under Article 226 of the Constitution, the High Court would consider the provisions of the Act, such as, limited judicial intervention of Court (Section 5); power of Arbitral Tribunal to rule on its own jurisdiction and the effect of such decision (Section 16). It will also keep in mind the legisla.tive intent of expeditious disposal of proceedings and may not interfere at that stage. Ultimately, having jurisdiction or power to entertain a cause and interference with the order are two different and distinct matters. One does not necessarily result into the other. Hence, in spite of jurisdiction of the High Court, it may not stall arbitration proceedings by allowing the party to raise all objections before the Arbitral Tribunal. F In Laxmikant Revchand Bhojwani and Anr. v. Pratapsingh Mohansingh Pardeshi, [1995] 6 SCC 576, the relevant Rent Act did not provide for further appeal or revision against an order passed by the appellate authority. The aggrieved party, therefore, invoked supervisory jurisdiction of the High Court. The High Court allowed the petition and set aside the order passed by the appellate court. G

Quashing the order of the High Court and keeping in view the legislative scheme, this Court said;

"Before parting with this judgment we would like to say that the High Court was not justified in extending its jurisdiction under Article H

770 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A 227 of the Constitution of India in the present case. The Act is a special legislation governing landlord-tenant relationship and disputes. The legislature has, in its wisdom, not provided second appeal or revision to the High Court. The object is to give finality to the decision of the appellate authority. The High Court under Article 227 . of the Constitution of India cannot assume unliinited. prerogative to B correct all species of hardship or wrong decisions. It must be restricted to cases of grave dereliction of duty and flagrant abuse of fundamental principles of law or justice, where grave injustice would be done unless the High Court interferes."

C [See also Koyilerian Janaki and Ors. v. Rent Controller (Munsiff), Cannore & Ors., [2000] 9 SCC 406 and Ouseph Mathai and Ors. v. M. Abdul Khadir, [2002] 1 SCC 319.]

In State of Orissa and Ors. v. Gokulananda Jena, [2003] 6 SCC 456, relying upon Konkan Railway Corporation Ltd. II, the High Court of Orissa D held that since the order passed by the Chief Justice was administrative, it was not amenable to writ jurisdiction under Article 226 of the Constitution.

Holding that the High Court was wrong and the writ petition under Article 226 was maintainable, a two-Judge Bench stated;

E "However, we must notice that in view of Section 16 read with Sections 12 and 13 of the Act as interpreted by the Constitution Bench of this Court in the Mis. Konkan Railway (supra) almost all disputes which could be presently contemplated can be raised and agitated before the Arbitrator appointed by the Designated Judge under Section 11 (6) of the Act. From the perusal of the said provisions . F of the Act, it is clear that there is hardly any area of dispute which cannot be decided by the Arbitrator appointed by the Designated Judge. If that be so, since an alternative efficacious remedy is available before the Arbitrator, writ court normally would not entertain a challenge to an order of the Designated Judge made under Section 11(6) of the G Act which includes considering the question of jurisdiction of the Arbitrator himself. Therefore, in our view even though a writ petition under Article 226 of the Constitution is available to an aggrieved party, ground available for challenge in such a petition is limited because of the alternative remedy available under the Act itself" (emphasis supplied) H

S.B.P. & CO. v. PATEL ENGINEERING LTD. [C.K. THAKKER,J.] 771

The above observations clearly go to show th.at though the constitutional remedy cannot be taken away and an. aggrieved party can invoke the jurisdiction of the High Court against an order passed by the Chief Justice, the Writ Court will be circumspect in entertaining a petition and in exercising extraordinary jurisdiction in such cases.

As has been held in earlier decisions as also in the majority judgment, the paramount consideration of Parliament in selecting the Chief Justice and in conferring upon him the power to appoint an arbitrator is to ensure complete independence, total impartiality and highest degree of credibility in arbitral process. The Chief Justice of India and Chief Justices of High Courts have been specially chosen considering their constitutional status as Judges of superior courts and their rich experience in dealing with such matters. The office occupied by them would infuse greater confidence in the procedure in appointing an arbitrator and in ensuring fairness, integrity and impartiality . . t

But .that does not mean that the Chief Justice is exercising judicial or quasi-judiei~i power:o~ the co~trary, the Chief Justice, acting in administrative capacity, as distinguished from judicial capacity, is expected to act quickly and expeditiously without being inhibited by procedural requirements and 'technical tortures'. In undertaking the task to appoint an Arbitral Tribunal, he is neither required to consu It parties nor arbitrators. The Chief Justice would thus uphold, preserve and protect solemnity of agreement between the parties to arbitration. This practice is prevalent in England and in other countries since several years.

l intend to conclude the discussion on this point by quoting the following pertinent observations of Lord Hobhouse in Pa/grave Gold Mining Co. v. McMillan, (1892) AC 460.: 61 LJ PC 85. Dealing with a similar situation and repelling an identical contention, before more than hundred years, the Law Lord rightly declared;

It is very common in England to invest responsible public officials with the duty of appointing Arbitrators under given circumstances. Such appointment should be made with integrity and impartiality, but it is new to their Lordships to hear them called judicial acts ..." (emphasis supplied)

The last question relates to issuance of notice to the party likely to be affected ·and affording an opportunity of hearing before making· an order of composition of Arbitral Tribunal. Section 8 of the old Act of 1940 expressly Hi

772 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A provided written notice and opportunity of hearing in case of appointment of , . an arbitrator or umpire. The present Act of 1996 neither provides for issuance of notice nor for opportunity of being heard.

In exercise of power under sub-section (10) of Section 11 of the Act, the Chief Justice of India had framed a scheme, known as "The Appointment B of Arbitrators by the Chief Justice of India Scheme, 1996". Clause 7 provided for issuing notice to affected persons and read thus;

"Notice to affected persons.- Subject to the provisions of paragraph 6, the Chief Justice or the person or the institution designated by him shall direct that a notice of the request be given to all the parties to c the arbitration agreement and such other person or persons as may seem to him or is likely to be affected by such request to show cause, within the time specified in the notice, why the appointment of the arbitrator or the measure proposed to be taken should not be made or taken and such notice shall be accompanied by copies of all documents referred to in paragraph 2 or, as the case may be, by information or clarification, if any, sought under paragraph 5."

In Konkan Railway Corporation Ltd. II, the Constitution Bench held the function of the Chief Justice of appointment of an arbitrator under sub- section (6) of Section 11 as administrative and not judicial. In the light of the said finding, the Court proceeded to state that it was not necessary to issue notice to the parties likely to be affected. Section 11 did not provide for such notice. The Court, however, did not stop there. It held that by making a provision for issuance of notice, the scheme went 'beyond the terms of Section 11' and was bad on that ground. A direction was, therefore, issued to amend it. F Since the majority judgment has held the function of the Chief Justice as judicial, it ruled that such notice ought to be issued and opportunity of hearing ought to be afforded by the Chief Justice to the person or persons likely to be affected thereby in an appointment of arbitrator. G I have, on the other hand, held that the function of the Chief Justice under sub-section (6) of Section 11 is neither judicial nor quasi-judicial but administrative. It is also true that unlike Section 8 of the 1940 Act, 1996 Act does not envisage issuance of notice to the party likely to be affected by the order of the Chief Justice. H

S.B.P. & CO.'". PATEL ENGINEERING LTD. [C.K. THAKKER, J.J 773

The question, however, is : Can such clause in the scheme prepared by A the Chief Justice of India be held bad as going 'beyond the terms of Section 11 '? The Constitution Bench so held in Konkan Railway Corporation Ltd. If. With great respect to the Constitution Bench, such provision cannot be held inconsistent with the parent Act or otherwise bad in law. The Constitution Bench did not assign any reason as to why it was of the view that clause 7 could not stand or how it violated Section 11. But reference to Jaswant B Sugar Mills Ltd. v. Lakshmi Chand, [1963] Supp (l) SCR242: AIR (1963) SC 677; Engineering Mazdoor Sabha v. Hind Cycles Ltd., (1963] Supp I SCR 625 : AIR (1963) SC 874 and Associated Cement Companies Ltd. v. P.N. Sharma, [1965] 2 SCR 366 : AIR 1965 SC 1595 clearly shows that since the Constitution Bench was of the view that while performing function of appointing an C Arbitral Tribunal, the Chief Justice was not acting as a Court or Tribunal, he was not expected to issue notice or afford an opportunity of hearing to the parties likely to be affected by such decision.

Once the function of the Chief Justice is held to be administrative, there may not be 'duty to act judicially' on the part of the Chief Justice. Nevertheless D in such cases, an administrative authority is required to act 'fairly'. Basic proc,edural fairness requires such notice to the opposite party. The principle in W. v. Electricity Commissioners, ( 1924) 1 KB 171 : 93 LJ KB 390 or Ridge v. Baldwin, (1964) AC 40: [!963] 2 All ER 66: (1963) 2 WLR 935 may not apply to administrative functions, but another concept which developed at a E· later stage and accepted in public law field and found place in Administrative Law of 'duty to act fairly' would apply to administrative actions as well.

By now, it is well settled that when an administrative action is likely to affect rights of subjects, there would be a duty on the part of the authority to act fairly. F In Pear/berg v. Varty (Inspector of Taxes), [ 1972] 2 All ER 6: (1972) I WLR 534, Lord Pearson said;

"A tribunal to whom judicial or quasi-judicial functions are entrusted is held to be required to apply those principles (i.e. the rules G of natural justice) in performing those functions unless there is a provision to the contrary. But where some person or body is entrusted by Parliament that administrative or executive functions there is no presumption that compliance with the principles of natural justice is required although, as 'Parliament is not to be presumed to act unfairly', the courts may be able in suitable cases (perhaps always) H

774 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A to imply an obligation to act with fairness. " 5 (emphasis supplied)

In R. v. Commisioner for Racial Equality, (1982) AC 779: (1982) 3 WLR 159, Lord Diplock stated;

B ·"Where an act of Parliament confers upon an administrative body functions which involve its making decisions which affect to their detriment the rights of other persons or curtail their liberty to do as they please, there is a presumption that Parliament intended that the administrative body should act fairly towards those persons who will be affected by their decisions."

Rejecting the contention and observing that no prejudice had been caused to the mill-company, this Court did not interfere with the order. Speaking for the Court, A.K. Mukherjea, J. stated:

"The second question, however, as to what are ·the principles of natural justice that should regulate an administrative act or order is a much more difficult one to answer. We do not think it either feasible or even desirable to lay down any fixed or rigorous yardstick in this manner. The concept of natural justice cannot be put into a straitjacket. It is futile, therefore, to look for definitions or standards of ~atural justice from various decisions and then try to apply them to the facts of any given case. The only essential point that has to be kept in mind in all cases is that the person concerned should have a reasonable

S.B.P. & CO. v. PATEL ENGINEERrNG LTD. [C.K. THAKKER, J.] 775 opportunity of presenting his case and that the administrative authority concerned should act fairly, impartially and reasonably. Where administrative officers are concerned, the duty is not so much to act judicially as to act fairly. (emphasis supplied)

In MohinderSingh Gillv. Chief Election Commission, [1978) I SCC 405 B : [1978) 2 SCR 272 after considering several cases, Krishna Iyer, J. stated :

"Once we understand the soul of the rule as fairplay in action - and it is so - we must hold that it extends to both the fields. After all, administrative power in a democratic set-up is not allergic to fairness C in action and discretionary executive justice cannot degenerate into unilateral injustice. Nor is there ground to be frightened of delay, inconvenience and expense, if natural justice gains access. For fairness itself is a flexible, pragmatic and relative concept, not a rigid, ritualistic or sophistkated abstraction. It is not a bull in a china shop, nor a bee in one's bonnet. Its essence is good conscience in a given situation; D: nothing more - but nothing less. "

(emphasis supplied)

In Nally Bharat Engineering Co. Ltd. v. State of Bihar, [1990) 2 SCC 48, the Government, on an application by a dismissed workman transferred his case from one Labour Court to another Labour Court without issuing a notice or giving opportunity to the employer.

Setting aside the order and referring to several cases, the Supreme Court invoked the 'acting fairly' doctrine. The Court stated: "Fairness, in our opinion, is a fundamental principle of good administration. It is a rule to ensure the vast power in the modem State is not abused but properly exercised. The State power is used for proper and not for improper purposes. The authority is not misguided by extraneous or irrelevant considerations. Fairness, is also a principle to ensure that statutory authority arrives at a just decision either in promoting the interest or affecting the rights of persons. To use the ( timehallowed phrase that 'justice should not only be done but be seen to be done' is the essence of fairness equally applicable to administrative authorities. Fairness is thus a prime tes! for proper and good administration. It has no . set form or procedure. It depends upon the facts of each case. " (emphasis supplied) 1

776 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A Quoting the observations of Paul Jackson, the Court said:

"It may be noted that the terms 'fairness of procedure', 'fair play in action', 'duty to act fairly' are perhaps used as alternatives to 'natural justice' without drawing any distinction. But Prof. Paul Jackson points out that 'such phrases may some/ imes be used to refer not to B the obligation to observe the principles of natural justice but, on the contrmy, to refer to a standard of behaviour which, increasingly, the courts require to be followed even in circumstances where the duty to observe natural justice is inapplicable'. " (emphasis supplied) C de Smith states:

"The principal value of the introduction of the 'duty to act fairly' into the courts' vocabulary has been to assist them to extend the benefit of basic procedural protections to situations where it would be both confusing to characterize as judicial or even quasi-judicial, D the decision-makers' functions, and inappropriate to insist on a procedure analogous to a trial."

['Judicial Review of Administrative Action'; (1995); p. 399]

It is thus clear that the doctrine of 'fairness' has become all pervasive. E As has been said, the 'acting fairly' doctrine proved useful as a device for evading confusion which prevailed in the past. "The courts now have two strings to their bow." An administrative act may be held to be subject to the requirement and observance of natural justice either because it affects rights or interests and hence would involve a 'duty to act judicially' or it may be F administrative, pure and simple, and yet, may require basic procedural protection which would involve 'duty to act fairly'. [Wade & Forsyth; 'Administrative Law'; (2005); pp. 492-94; de Smith; "Judicial Review of Administrative Action", (1995); pp. 397-98]

'Acting fairly' is thus an additional weapon in the armoury of the court. G It is not intended to be substituted for another much more powerful weapon 'acting judicially'. Where, however, the former ('acting judicially') cannot be '. wielded, the court will try to reach injustice by taking resort to the latter - less powerful weapon ('acting fairly'). [See C.K. Thakker : "From Duty to Act Judicially to Duty to Act Fair~v", [2003] 4 SCC (lour) l].

H As the Chief Justice is performing administrative function under sub-

S.B.P.&CO. v. PATEL ENGINEERING LTD. [C.K. THAKKER,J.] 777 section (6) of Section 11 in appointing an arbitrator, there is no 'duty to act judicially' on his part, nonetheless there is 'duty to act fairly' which requires him to issue notice to the other side before taking a decision to appoint an arbitrator. I am, therefore, of the view that clause 7 of the scheme as stood prior to the amendment, could neither be held bad in law nor inconsistent with Section 11 of the Act. I am, therefore, in respectful agreement with the majority judgment on that point.

On the basis of the above findings, my conclusions are as under;

(i) The function performed by the Chief Justice of the High Court or the Chief Justice of India under sub-section (6) of Section 11 of the Act (i.e. Arbitration and Conciliation Act, 1996) is administrative, - C pure and simple -, and neither judicial nor quasi-judicial.

(ii) The function to be performed by the Chief Justice under sub- section (6) of Section 11 of the Act may be performed by him or by 'any person or institution designated by him'. D (iii) While performing the function under sub-section (6) of Section 11 of the Act, the Chief Justice should be prima facie satisfied that the conditions laid down in Section 11 are satisfied.

(iv) The Arbitral Tribunal has power and jurisdiction to rule 'on its own jurisdiction' under sub-section (1) of Section 16 of the Act. E (v) Where the Arbitral Tribunal holds that it has jurisdiction, it shall continue with the arbitral proceedings and make an arbitral award.

(vi) A remedy available to the party aggrieved is to challenge the award in accordance with Section 34 or Section 37 of the Act. F (vii) Since the order passed by the Chief Justice under sub-section (6) of Section 11 of the Act is administrative, a Writ Petition under Article 226 of the Constitution is maintainable. A Letters Patent Appeal/lntra- court Appeal is competent. A Special Leave Petition under Article 136 of the Constitution also lies to this Court. G (viii) While exercising extraordinary jurisdiction under Article 226 of the Constitution, however, the High Court will be conscious and mindful of the relevant provisions of the Act, including Sections 5, 16, 34 to 37 as also the object of the legislation and exercise its power with utmost care, caution and circumspection. H

778 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A (ix) The decision of the Constitution Bench in Konkan Railway Corporation ltd. II, to the extent that it held the function of the Chief Justice under sub-section (6) of Section 11 of the Act as administrative is in consonance with settled legal position and lays down correct law on the point.

B (x) The decision of the Constitution Bench in Konkan Railway Corporation Ltd. fl, to the extent that it held clause 7 of "The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996" providing for issuance of notice to affected parties as 'beyond the term of Section 11' and bad on that ground is not in accordance with law and does not state the legal position correctly. c (xi) Since the Chief Justice is performing administrative function in appointing an Arbitral Tribunal, there is no 'duty to act judicially' on his part. The doctrine of 'duty to act fairly', however, applies and the Chief Justice must issue notice to the person or persons likely to be affected by the decision under sub-section (6) of Section 11 of the D Act.

(xii) All appointments of Arbitral Tribunals so far made without issuing notice to the parties affected are held legal and valid. Henceforth, however, every appointment will be made after issuing notice to such person or persons. In other words, this judgment will have prospective E operation and it will not affect past appointments or concluded proceedings.

S.K.S. Appeals disposed of.