The Supreme Court in one of its judgment stated that party to an agreement cannot be an arbiter in his own cause.

The case in hand states the GM of the M.P. Road Development Authority quantified the liquidated damages. The contractor assailed it and the petitioner raised a challenge against it under Arbitral Tribunal under Section 7 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 which is pending till now. The Court though initiated the recovery proceedings without awaiting the verdict out of the arbitral proceedings.

The Contractor then approached the High Court. The Court dismissed his writ petition. The judgement was then challenged in the Supreme Court.

The Court after going through details observed that it was not justified of the authorities to initiate recovery proceedings invoking the procedure under the Land Revenue Act without awaiting the outcome of the arbitral proceedings as the dispute was pending adjudication. 

The Apex Court stated:

"Once the dispute is pending adjudication before the Arbitral Tribunal constituted 12 under the Adhiniyam, 1983 in terms of clause 25 of the agreement, the respondent, in the facts and circumstances, was not justified to raise demand on termination of contract claiming liquidated damages and the respondent cannot become an arbiter in its own cause and unless the dispute is settled by a procedure prescribed under the law, the respondents would not be held to be justified in initiating recovery proceedings invoking the procedure under the Land Revenue Act."

The Judgement has been delivered by Justice N.V. RAMANA, Justice INDIRA BANERJEE, Justice AJAY RASTOGI on 30-08-2019.

Read Judgement Here:

 

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