Central Organisation for Railway Electrification vs M/s Eci-Spic-Smo-Mcml (Jv) a Joint Venture Company

1.2 Clause 64(3)(b) of GCC deals with appointment of arbitrator where applicability of Section 12(5) of the Act has not been waived off. The modified Clause 64(3)(b) inter alia provided that the arbitral tribunal shall consist of a panel of three retired railway officers not below the rank of SAO officer as arbitrator. For this purpose, the Railway will send a panel of at least four names of retired railway officer(s) empanelled. The contractor will be asked to suggest to the General Manager at least two names out of the panel for appointment as the contractor’s nominee and the General Manager shall appoint at least one out of them as the contractor’s nominee. The General Manager will also simultaneously appoint the balance number of arbitrators from the panel or from outside the panel. [Para 18] [1246-F-H]

1.3 After coming into force of the Arbitration and Conciliation (Amendment) Act, 2015, when Clause 64 of the General Conditions of Contract was modified inter alia providing for constitution of Arbitral Tribunal consisting of three arbitrators either serving or retired railway officers, the High Court is not justified in appointing an independent sole arbitrator without resorting to the procedure for appointment of the arbitrator as prescribed under Clause 64(3)(b) of the General Conditions of Contract. [Para 19] [1247-E-F]

1.4 Even in the application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, the respondent prayed for appointment of a sole arbitrator in terms of Clause 1.2.54(b)(i) of the Tender Agreement/Clause 64 of the General Conditions of Contract for adjudicating the disputes which have arisen between the parties. The respondent itself sought for appointment of arbitrator in terms of Clause 64 of the General Conditions of Contract. As the value of the work contract was worth more than Rs.165 crores, the dispute can be resolved only by a panel of three arbitrators in terms of Clause 64(3)(b) of the General Conditions of Contract. The respondent was not right in seeking for appointment of a sole arbitrator in terms of Clause 1.2.54(b)(i) of the Tender Agreement/Clause 64 of the General Conditions of Contract. [Para 20] [1247-G-H; 1248-A] Union of India v. Parmar Construction Company (2019) SCC Online SC 442 ; Union of India v. Pradeep Vinod Construction Company (2019) SCC Online SC 1467 ; Government of Haryana PWD

Haryana (B and R) Branch v. G.F. Toll Road Private Limited and Others (2019) 3 SCC 505 : [2019] 1 SCR

270 – relied on.

Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Limited (2017) 4 SCC 665 ; Bharat Broadband Network Limited v. United Telecoms Limited (2019) 5 SCC 755 – referred to.

2. The appellant has forwarded a list of four retired railway officers on its panel thereby giving a wide choice to the respondent to suggest any two names to be nominated as arbitrators out of which, one will be nominated as the arbitrator representing the respondent-Contractor. The very reason for empanelling the retired railway officers is to ensure that the technical aspects of the dispute are suitably resolved by utilising their expertise when they act as arbitrators. Merely because the panel of the arbitrators are the retired employees who have worked in the Railways, it does not make them ineligible to act as the arbitrators. [Para 27] [1251-A-B]

Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Limited (2017) 4 SCC 665; Bharat Broadband Network Limited v. United Telecoms Limited (2019) 5 SCC 755 – relied on.

3. By the letter dated 26.09.2018, the respondent conveyed their disagreement in waiving the applicability of Section 12(5) of the Amendment Act, 2015. By the letter dated 25.10.2018, in terms of Clause 64(3)(b) of GCC (where applicability of Section 12(5) has not been waived off) the appellant has nominated a panel of four retired railway officers to act as arbitrators and requested the respondent to select any two from the list and communicate to the appellant within thirty days from the date of the letter for formation of Arbitration Tribunal. The respondent has neither sent its reply nor selected two names from the list and replied to the appellant. Without responding to the appellant, the respondent has filed petition under Section 11(6) of the Arbitration and Conciliation Act before the High Court on 17.12.2018. When the respondent has not sent any reply to the communication dated 25.10.2018, the respondent is not justified in contending that the appointment of Arbitral Tribunal has not been made before filing of the application under Section 11 of the Act and that the right of the appellant to constitute Arbitral Tribunal is extinguished on filing of the application under Section 11(6) of the Act. [Para 30] [1253B-E]

Punj Lloyd Ltd. v. Petronet MHB Ltd. (2006) 2 SCC

638 ; Union of India v. Bharat Battery Manufacturing Co. (P) Ltd. (2007) 7 SCC 684 : [2007] 8 SCR 993 – referred to.

4. In the present matter, after the respondent had sent the letter dated 27.07.2018 calling upon the appellant to constitute Arbitral Tribunal, the appellant sent the communication dated 24.09.2018 nominating the panel of serving officers of Junior Administrative Grade to act as arbitrators and asked the respondent to select any two from the list and communicate to the office of the General Manager. By the letter dated 26.09.2018, the respondent conveyed their disagreement in waiving the applicability of Section 12(5) of the Amendment Act, 2015. In response to the respondent’s letter dated 26.09.2018, the appellant has sent a panel of four retired Railway Officers to act as arbitrators giving the details of those retired officers and requesting the respondent to select any two from the list and communicate to the office of the General Manager. Since the respondent has been given the power to select two names from out of the four names of the panel, the power of the appellant nominating its arbitrator gets counter-balanced by the power of choice given to the respondent. Thus, the power of the General Manager to nominate the arbitrator is counter-balanced by the power of the respondent to select any of the two nominees from out of the four names suggested from the panel of the retired officers. In view of the modified Clauses 64(3)(a)(ii) and 64(3) (b) of GCC, it cannot therefore be said that the General Manager has become ineligible to act as the arbitrator. [Para 37] [1257-C-F]

TRF Limited v. Energo Engineering Projects Limited (2017) 8 SCC 377 : [2017] 7 SCR 409 – held

inapplicable.

TRF Limited, in Perkins Eastman Architects DPC and another v. HSCC (India) Limited (2019) SCC Online SC 1517 – referred to.

5. There is an express provision in the modified clauses of General Conditions of Contract, as per Clauses 64(3)(a)(ii) and 64(3)(b), the Arbitral Tribunal shall consist of a panel of three Gazetted Railway Officers [Clause 64(3)(a)(ii)] and three retired Railway Officers retired not below the rank of Senior Administrative Grade Officers [Clause 64(3)(b)]. When the agreement specifically provides for appointment of Arbitral Tribunal consisting of three arbitrators from out of the panel serving or retired Railway Officers, the appointment of the arbitrators should be in terms of the agreement as agreed by the parties. That being the conditions in the agreement between the parties and the General Conditions of the Contract, the High Court was not justified in appointing an independent sole arbitrator ignoring Clauses 64(3)(a)(ii) and 64(3)(b) of the General Conditions of Contract. [Para 38] [1257-G-H; 1258-AB] Union of India and Another v. M.P. Gupta (2004) 10 SCC 504 ; Union of India and Another v. V.S. Engineering (P) Ltd. (2006) 13 SCC 240 : [2006] 9 Suppl. SCR 125 – relied on.