Hindustan Construction Company Ltd. vs. Bihar Rajya Pul Nirman Nigam Limited (2025), Supreme Court.

The Supreme Court held that a clause in the construction contract providing for unilateral appointment of an arbitrator by the employer (with a fallback that no arbitration would occur if such appointment is not made) cannot be enforced under the current law. Consequently, the arbitration agreement stood rendered inoperative, and the request for appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) must be rejected.

1. The appellant, Hindustan Construction Company Ltd. (HCC), was awarded a contract by Bihar Rajya Pul Nirman Nigam Ltd. (BRPNNL) on 04.03.2014 for bridge construction over River Sone. The contract contained Clause 25 stipulating disputes would be resolved via arbitration.
2. In 2018, HCC raised claims for additional costs/delays. BRPNNL failed to respond, and HCC virtually triggered arbitration by sending notices as per Clause 25, followed by a formal request on 10.01.2020 under Section 11 of the A&C Act, seeking appointment of arbitrator.
3. The High Court (Patna) appointed a sole arbitrator on 18.08.2021. Arbitration proceeded for over three years with 70+ hearings, costs incurred, and final arguments concluded by July 2023.
4. Meanwhile, the respondents filed a civil review before High Court, which on 09.12.2024 dismissed HCC’s request case (No. 53/2020) and refused further arbitration.
5. Aggrieved, HCC filed this Civil Appeal before the Supreme Court.

1. Arbitration under A&C Act is based on party autonomy and contractual consent — but that autonomy must conform to statutory and public-policy bounds. The Clause 25 here had two parts: (1) requiring the employer (Managing Director) to appoint the arbitrator; (2) if such appointment cannot be made, disputes would not be referred to arbitration at all.
2. The Court noted that post the decision in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) (CORE), unilateral appointment clauses are unenforceable under the A&C Act.
3. Because the clause expressly made arbitration contingent on employer’s appointment — which could not lawfully be enforced — the clause’s second part (negative covenant) became operative: meaning no arbitration at all. The arbitration agreement thus became void.
4. The Court held that judicial re-writing or “curing” the clause (by appointing arbitrator itself under Section 11) would amount to rewriting the contract, which is impermissible.
5. Since the arbitration agreement was void, HCC’s application for arbitrator appointment must be rejected; hence the appeal is dismissed.

1. Arbitration governed by the Arbitration and Conciliation Act, 1996 — concept of party autonomy and enforceability of arbitration clauses.
2. Principle that unilateral-appointment clauses are invalid post-CORE decision.
3. Contract law doctrine: if a contract clause becomes unenforceable (illegal/void), any conditional provisions dependent on it may activate alternative stipulations (here, “no arbitration”).

The Supreme Court dismissed the appeal by Hindustan Construction Company Ltd. The arbitration agreement under the contract is held unenforceable; no arbitrator will be appointed under the Section 11 petition; parties must seek relief through conventional court-proceedings rather than arbitration.