In Brief
NALCO, a Government of India enterprise, accepted a tender from Subhash Infra Engineers for construction work. After issuing a work order and requesting attendance at a kick-off meeting, the contractor refused to proceed unless specifications were changed. NALCO subsequently invoked the arbitration clause and appointed an arbitrator. The contractor filed a civil suit seeking declaration that the appointment was void and restraining arbitration. The Supreme Court held that a concluded contract from accepted tender is a binding arbitration agreement, and objections to its validity must be raised before the arbitrator under Section 16 of the Arbitration and Conciliation Act, not through civil suits. The Court also disqualified the appointed arbitrator due to his former status as company chairman and appointed a retired judge instead.
The lawyer headnote and full judgment text are available to registered users.