Anil Mehta vs General Manager, Northern Railway

Navin Chawla, J

This petition under Section 15(2) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) has been filed by the petitioner

seeking termination of the mandate of Arbitral Tribunal constituted on 19.09.2014 and to appoint a substitute Arbitral Tribunal to adjudicate the

disputes that have arisen between the parties in relation to the work of “Misc work between Samrala to Sanehwal stations in connection with

Chandigarh Ludhiana new B.G. Rail Link Project†awarded by the respondent in favour of the petitioner vide Acceptance Letter dated 29-08-2011

and a formal contract agreement No.84W/Dy.CE/Const-II/CDG dated 11-11-2011.

The counsel for the petitioner submits that disputes have arisen between the parties in relation to the above work, on the request of the petitioner,

the respondent appointed Arbitral Tribunal on 19.09.2014 in accordance with Clause 64 of the General Condition of Contract between the parties. He

submits that though more than 3 years have passed, the arbitration proceedings are still at the stage of pleadings. He further submits that in this entire

period of more than three years, there has not been a single sitting of the Arbitral Tribunal where all three members of the Arbitral Tribunal have been

present. He further draws my reference to the letter dated 24.06.2016 addressed by the respondent to the Arbitral Tribunal for expediting the

adjudication of the disputes. He submits that in spite of this request, only one sitting of the Arbitral Tribunal took place on 06.02.2017, where again it

was only the Presiding Arbitrator who was present and the other two arbitrators had remained absent. He submits that thereafter, there has been no

further sitting of the Arbitral Tribunal.

Learned counsel for the respondent does not dispute the above facts. He however, submits that the respondent has taken note of the concerned of

the petitioner and it would ensure that a fresh Arbitral Tribunal is constituted within a period of two days from today.

Notice on this petition was issued to the respondent on 03.11.2017. Three months have passed since that date and admittedly respondents have not

yet acted on the plight of the petitioner.

Supreme Court in Union of India vs. Singh Builders Syndicate (2009) 4 SCC 523, in almost similar circumstances, had upheld the order of the High

Court appointing a Sole Arbitrator instead of three member Arbitral Tribunal comprising of the serving officers of the respondents in accordance with

Clause 64 of the General Condition of Contract Act. The Supreme Court had held as under:-

“14) It was further held in Northern Railway case that the Chief Justice or his designate should first ensure that the remedies provided

under arbitration agreement are exhausted, but at the same time also ensure that twin requirements of sub-section (8) of Section 11 of the

Act are kept in view. This would mean that invariably the Court should first appoint the arbitrators in the manner provided for in the

arbitration agreement. But where the independence and impartiality of the arbitrator(s) appointed/nominated in terms of the arbitration

agreement is in doubt, or where the Arbitral Tribunal appointed in the manner provided in the arbitration agreement has not functioned and

it becomes necessary to make fresh appointment, the Chief Justice or his designate is not powerless to make appropriate alternative

arrangements to give effect to the provision for arbitration.

15) The object of the alternative dispute resolution process of arbitration is to have expeditious and effective disposal of the disputes

through a private forum of the parties choice. If the Arbitral Tribunal consists of serving officers of one of the parties to the dispute, as

members in terms of the arbitration agreement, and such tribunal is made non-functional on account of the action or inaction or delay of

such party, either by frequent transfers of such members of the Arbitral Tribunal or by failing to take steps expeditiously to replace the

arbitrators in terms of the arbitration agreement, the Chief Justice or his designate, required to exercise power under Section 11 of the Act,

can step in and pass appropriate orders.â€​

The Supreme Court in the said judgment had also observed that effort should be made by the respondent to ensure that officers, who are likely to

remain in a particular place are alone appointed as Arbitrators and that the Arbitral Tribunal consisting of service officers, decides the matter

expeditiously. The Supreme Court had directed that the constitution of Arbitral Tribunal with serving officers from different faraway places should be

avoided.

As noted by the Supreme Court in the above judgment, the object of the alternate dispute resolution process of Arbitration is to have expeditious

and effective disposal of the disputes. Arbitration cannot be allowed to be dragged in the manner as has been done in the present case. As noted

above for more than three years, the parties are still at the stage of completion of pleadings. In spite of repeated requests of the petitioner, the

respondent could only make a request to the Arbitral Tribunal to expedite the proceedings but thereafter took no effective steps to ensure compliance

with the said request. Today again an assurance has been given to the court that a fresh Arbitral Tribunal will be constituted by the respondent,

however, there is no guarantee that this Arbitral Tribunal would act with expedition.

In view of the above, I see no impediment in terminating the mandate of Arbitral Tribunal so constituted by the respondent vide its notice dated

19.09.2014 and appointing a substitute sole Arbitrator in its place.

I appoint Mr.Sanjivan Kumar Sarvaria, Retired District & Sessions Judge, 5, Court Road, Delhi-110054, Mobile-9910384642, E-mail:

sksarvaria@gmail.com as a Sole Arbitrator to adjudicate the disputes that have arisen between the parties in relation to the above work.

The Arbitration will continue from the stage where it was before the earlier Arbitral Tribunal. The respondent would ensure that the arbitral record

is obtained from the earlier Arbitral Tribunal and place it before the sole Arbitrator now being appointed by this Court.

The Arbitration shall be conducted under the aegis of the Delhi International Arbitration Centre (DIAC). The arbitration and the fee shall be

governed by the DIAC rules.

The petition is allowed in the above terms with no order as to costs.