On Wednesday, the Supreme Court's Constitution Bench decided to postpone for two months the hearing of a reference that questions whether a person who is not qualified to serve as an arbitrator can nevertheless name an arbitrator. A bench made up of the Chief Justice of India, DY Chandrachud, Justices Hrishikesh Roy, PS Narasimha, Pankaj Mithal, and Manoj Misra was assigned to hear the case.

R. Venkataramani, India's Attorney General, first submitted a request for deferral on behalf of the Union Government.

"The matter could be deferred for a while till the committee gives its report. It is a consultative process."

Similar sentiments were expressed by Senior Advocate Fali Sam Nariman, who said:

"That would be preferable because the reference by the government is really on a new law to be enacted. That seems to be the memorandum of the government. So we do not know if the new law will be enacted or not".

They were referring to the sixteen-member expert group that the Ministry of Law and Justice established on June 14, 2023.  The committee, led by Dr. T.K. Vishwanathan, a former secretary of the Department of Legal Affairs, is charged with reviewing how arbitration law operates in India and making recommendations for changes to the 1996 Arbitration and Conciliation Act. The action was done to reduce the necessity for parties to ask courts for judicial involvement.

CJI DY Chandrachud questioned:

"We can defer the hearing. But what is the timeline?"

The AG answered:
"The committee should not take more than two months and I will also try to expedite the process. We will give a report back to the court as soon as deliberations are done."

The Supreme Court then decided to postpone the case by two months. In dictating the order, CJI DY Chandrachud said:

"We are informed that Union Govt has constituted an expert committee with a broad remit to consider the provisions of the Arbitration and Conciliation Act, 1996. The Attorney General submits that the issues which have been raised before the constitution bench will also come within the remit of the committee. After the report of the committee, the government will take a considered view on whether the modification of legislation is warranted. Mr. Fali S Nariman has also joined in and made the same submission as the other party. Hence, presently we direct that the two references before the Constitution bench be deferred by a period of two months. The court shall be apprised on the next date of the progress which has been made following the constitution of the committee. List on September 13, 2023."

The cases in question are JSW Steel Limited v. South Western Railway & Anr. and Central Organisation for Railway Electrification v. M/s ECI SPIC SMO MCML (JV) A Joint Venture Company. Whether someone who is ineligible to serve as an arbitrator will be selected is the question at hand.

The Supreme Court had already ruled in 2017's TRF Ltd. v. Energo Engineering Projects Ltd case that a person who is unfit to serve as an arbitrator cannot nominate someone to serve in that capacity. The Apex Court came to a similar result in Perkins Eastman Architects DPC v. HSCC (India) Ltd in 2020. However, the Supreme Court allowed the appointment of an ineligible individual as arbitrator in Central Organisation For Railway Electrification v. ECL-SPIC-SMO-MCML (JV), (2020), on the grounds that the facts of Energo Engineering and Perkins Eastmen did not apply to the issue at hand.  The Karnataka High Court used this ruling as support. The same, though, was challenged before the Supreme Court.

In the case Union of India v. Tantia Constructions, a three-judge panel chaired by Justice Nariman cast doubt on the position taken by the Central Organisation for Railway Electrification and forwarded the matter to a Larger Bench.