The Supreme Court has, with the consent of the parties, replaced former Supreme Court judge Justice Arun Mishra as the sole arbitrator in a dispute between Parsa Kente Collieries Limited (PKCL), an Adani-linked company, and Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL).

A Bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohana appointed former Supreme Court judge Justice Sanjay Kishan Kaul as the new sole arbitrator.

The order was passed on August 3, 2026, in a petition filed by RRVUNL challenging the Rajasthan High Court's appointment of Justice Arun Mishra as arbitrator.

Parties Agree to Appointment of Justice Kaul

During the hearing, the Supreme Court indicated that it wanted to avoid a situation where objections concerning Justice Mishra's appointment could continue to arise during the arbitration or subsequently in proceedings challenging the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.

The Bench observed that it did not want to cause embarrassment to a former judge by allowing questions concerning his appointment to persist.

The Court ultimately recorded:

“Though we do not find the ground urged for change of arbitrator legally sustainable, however, during the course of hearing, the parties have mutually agreed for appointment of Justice Sanjay Kishan Kaul, former Judge of this Court, to be the sole arbitrator.”

Thus, while the Supreme Court did not accept the legal ground raised by RRVUNL for removal of Justice Mishra, it accepted the parties' consensus to appoint Justice Kaul.

Dispute Involves Adani-RRVUNL Joint Venture

PKCL was constituted as a joint venture between Adani Enterprises Limited and RRVUNL for the development, mining and transportation of coal.

At the time of the earlier dispute, Adani Enterprises held 74% of the joint venture, while RRVUNL held 26%.

The present arbitration dispute arose after the Rajasthan High Court appointed Justice Arun Mishra as the sole arbitrator to adjudicate disputes between the parties.

RRVUNL challenged the appointment, principally relying upon Justice Mishra's previous involvement in litigation concerning the same contractual relationship.

Earlier Supreme Court Judgment Involving Justice Mishra

RRVUNL pointed out that Justice Arun Mishra had previously dealt with a dispute involving the same parties and contractual arrangement while serving as a Supreme Court judge.

The earlier dispute concerned issues including price escalation, fixed costs and an escrow account and had resulted in an arbitral award in 2015.

The Rajasthan High Court subsequently interfered with that award, leading to proceedings before the Supreme Court.

In May 2019, a Bench comprising Justices Arun Mishra and M.R. Shah partly allowed PKCL's appeal. The judgment, authored by Justice M.R. Shah, restored the arbitral award concerning price escalation, while upholding the setting aside of PKCL's claims relating to approximately ₹78 crore in fixed costs and money lying in an escrow account.

RRVUNL relied upon Justice Mishra's participation in those earlier proceedings to raise its objection to his appointment as arbitrator in the present dispute.

RRVUNL: Same Contract, Same Parties

Senior Advocate Shyam Divan, appearing for RRVUNL, emphasised before the Supreme Court that the previous proceedings involved the very same contractual relationship.

“This very contract, this very clause, these very parties,” Divan submitted.

On the other hand, Senior Advocate Gourab Banerjee, appearing for PKCL, initially opposed the replacement of Justice Mishra.

He argued that Justice Mishra had been appointed by the court and that the earlier Supreme Court judgment was several years old. He also expressed concern that Justice Mishra was not present before the Court to respond to the allegations concerning his appointment.

Supreme Court Facilitates Consensus

The Bench then explored whether the parties could agree upon another arbitrator so that the controversy could be brought to an end.

The Court indicated that this would prevent the issue from resurfacing at a later stage, particularly in proceedings under Section 34 of the Arbitration and Conciliation Act challenging the eventual arbitral award.

RRVUNL agreed to the suggestion, and the parties informed the Court that they had reached consensus on two possible names, leaving the final choice to the Bench.

The Supreme Court selected Justice Sanjay Kishan Kaul, former judge of the Supreme Court, as the sole arbitrator.

Court Clarifies It Did Not Accept Ground for Removal

Importantly, the Supreme Court expressly clarified that it did not find RRVUNL's ground for seeking a change of arbitrator legally sustainable.

The replacement was instead effected pursuant to the mutual agreement reached between the parties during the hearing.

The Court accordingly modified the Rajasthan High Court's order and appointed Justice Kaul to adjudicate the dispute.

Case at a Glance

Parties: Parsa Kente Collieries Limited (PKCL) v. Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL)
Court: Supreme Court of India
Bench: CJI Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana
Order: August 3, 2026
Earlier Arbitrator: Justice Arun Mishra, former Supreme Court Judge
New Arbitrator: Justice Sanjay Kishan Kaul, former Supreme Court Judge
Nature of Appointment: By mutual consent of the parties
Key Provision: Section 34, Arbitration and Conciliation Act, 1996
Counsel: Senior Advocate Shyam Divan for RRVUNL; Senior Advocate Gourab Banerjee for PKCL