The Supreme Court of India restored an arbitration appeal concerning a construction contract awarded by the State of Madhya Pradesh. The appeal was previously dismissed by the High Court on the grounds that the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (the "1983 Act") was applicable instead of the Arbitration and Conciliation Act, 1996. The Supreme Court ruled that the High Court's decision to set aside the arbitration award was unjust, especially since the appellant initially sought relief under the 1983 Act. The case has been remanded back to the High Court for a fresh hearing on the merits, with specific instructions to not annul the award solely based on the applicability of the 1983 Act.

Background:

• Contract Rescinded: The appellant was appointed to construct a minor bridge under a contract with the State of Madhya Pradesh, which was later rescinded by the respondents.
• Arbitration Clause: The contract included an arbitration clause (Clause 29), leading the appellant to seek the constitution of an Arbitral Board.
• Application for Reference: After rejection of the appellant’s request for arbitration, they applied for a reference to the Madhya Pradesh Arbitration Tribunal under Section 7 of the 1983 Act.
• Tribunal's Order: The Arbitration Tribunal concluded that the Arbitration Act, 1996, would apply due to the existence of an arbitration clause.

Legal Proceedings:

• High Court Appointment: The appellant filed a petition under Section 11(6) of the Arbitration Act, which led to the appointment of a retired District Judge as the Arbitrator.
• Arbitration Award: The Arbitrator made an award on 25th April 2014 in favor of the appellant.
• Challenge by Respondents: The respondents challenged the award under Section 34 of the Arbitration Act, which was dismissed by the District Judge. Subsequently, they appealed under Section 37, leading to the High Court setting aside the award on the basis of the 1983 Act's applicability.

Supreme Court's Observations:

• Timing of the Precedent: The Supreme Court noted that the precedent relied upon by the High Court was established four years after the award was made.
• Jurisdictional Objection: The respondents did not challenge the High Court's order under Section 11(6) at the appropriate stage, nor was Section 16(1) of the Arbitration Act invoked before the Arbitrator.
• Article 142 Intervention: The Supreme Court invoked Article 142 of the Constitution to ensure complete justice, directing the High Court to rehear the appeal on merits without annulling the award based solely on the 1983 Act.

Final Directions:

• Restoration of Appeal: The appeal under Section 37 of the Arbitration Act has been restored and is scheduled for a hearing before the High Court of Madhya Pradesh.
• Monetary Directions: The appellant is required to deposit the award amount with the High Court, to be held in a fixed deposit until the disposal of the appeal.

The Supreme Court allowed the appeals, ensuring that the High Court will now decide the matter on merits without reconsidering the applicability of the 1983 Act as the sole ground for setting aside the award.