New Delhi: The Supreme Court on 3 August replaced former apex court judge Justice Arun Mishra with another former judge, Justice S.K. Kaul, in an arbitration dispute between Adani-linked Parsa Kente Collieries Ltd (PKCL) and Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL).
The latter had sought a change of the arbitrator, arguing that in 2019 Justice Mishra judged a separate dispute between the two companies.
The earlier and the present dispute relate to a 30-year-old agreement between PKCL and RRVUNL coal transportation.
The 2019 dispute, too, came into the spotlight when the top court listed it out of turn during the summer vacation that year. This had prompted senior advocate Dushyant Dave to write an open letter to then CJI Ranjan Gogoi. In August 2019, through his letter, Dave took strong exception to the out-turn-listing of two Adani-linked cases before Justice Mishra’s bench during the summer break.
One of them was the dispute between PKCL and RRVUNL.
Justice M.R. Shah was the other member in the two-judges bench that heard it.
PKCL is a joint venture between Adani Enterprises Ltd and RRVUNL wherein they have a 30-year-old agreement for development, mining and transportation of coal. The venture was formed in October 2007 and under this agreement Adani Enterprises holds 74 percent and RRVUNL the remaining 26 percent.
What was the 2019 dispute
The dispute that reached Supreme Court in 2019 concerned price escalation, fixed costs and funds parked in an escrow account.
The [Rajasthan?] High Court had interfered [?] in a 2015 arbitral award involving the two parties and decided in favor of RRVUNL. Upon a challenge, justices Mishra and Shah’s bench partly allowed PKCL’s appeal. Restoring the arbitral award on price escalation, the bench had upheld the setting aside of PKCL’s claim towards Rs 78 crore in fixed costs and funds parked in an escrow account.
Taking exception to out-turn-listing of this matter, Dave had pointed out that in August 2018, the Supreme Court bench of justices R.F. Nariman and Indu Malhotra had granted leave in the case.
But, in April 2019, a notice was published by the Registrar (judicial) stating regular hearing matters would be taken up during the summer break. This was as per the CJI’s approval then.
Thereafter, on 9 May a list of cases to be heard was published and the civil appeal between PKCL and RRUVNL found mention in it. Notably, a registrar of the top court had on 14 March, 2019, noted in an order that the matter was not ready for hearing.
Despite that, the matter was listed on 21 May before the bench of justices Mishra and Shah. It was heard for two days and a judgment was reserved on 22 May. Five days later, judgement was pronounced in the case. Justice Shah had authored the final judgment.
What is the latest dispute
In its latest dispute, RRUVNL had flagged the 2019 proceedings to oppose Justice Mishra’s appointment to arbitrate the matter.
But on 3 July a Rajasthan High Court bench led by Acting Chief Justice Sanjeev Prakash Sharma went ahead with the appointment. Raising this before the Supreme Court, RRUVNL sought appointment of a new arbitrator.
On 3 August, a three-judge bench led by Chief Justice Surya Kant ordered the appointment of Justice Kaul while hearing RRVUNL’s appeal. But it was done only after the two sides jointly agreed, after much persuasion by the court.
During the hearing PKCL’s lawyer senior advocate Gourab Banerjee disagreed with the suggestion to change an arbitrator. He said the judgment referred in RRUVNL’s appeal is old. He also expressed serious concerns over the way the case was presented.
On a query by CJI Surya Kant’s bench, RRUVNL’s counsel senior advocate Shyam Divan submitted that the matter decided in 2019 pertained to the same contract, under scrutiny now for a different dispute. He said the parties involved were the same too.
At this, Banerjee clarified that Justice Mishra was not the author of the judgment.
Divan insisted for a change and urged the bench to “save us all from an embarrassment” by appointing an arbitrator “in the face of the circumstances”.
The bench expressed its predicament and said it did not want to embarrass a former top court judge. Later, both sides unanimously agreed upon Justice Kaul’s name, which the bench recorded while finalising his appointment in its order.
At the same time, the top court noted that the ground raised in RRVUNL’s petition for a change of arbitrator was not legally sustainable.
Advocate Kartik Seth, advocate for RRUVNL, told ThePrint, “The integrity of the judicial process rests as much on the perception of fairness as on fairness itself. As counsel, our intention was never to cast any aspersion on a sitting or retired judge. Our concern raised an important question of law—whether a judge who has previously dealt judicially with disputes arising between the same parties can subsequently act as an arbitrator, particularly where the disclosure under Section 12 does not reflect that prior judicial association.”
He, however, added that in the present case that question was neither pressed by RRVUNL nor finally adjudicated, “since the parties arrived at a consensus before the Supreme Court on the appointment of another learned former judge as arbitrator”.
“The purpose of our challenge therefore stood achieved, and there was little reason to invite an academic determination of a larger question which no longer required an answer in that case,” said Seth.
(Edited by Amrtansh Arora)
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