Venkatesh Earthen Private Ltd. vs South East Central Railway

Alok Aradhe, J.—Heard.

In this application under Section 11(6) of the Arbitration and Conciliation Act, 1996, the applicant seeks appointment of an Arbitrator to adjudicate the dispute between the parties.

Facts giving rise to filing of the application briefly stated are that the applicant was awarded the contract for supply and stacking of 57,000 cubic meters machine crushed stone ballast on cess in Section between Jamtara to Sukri Mangela in connection with Gondia Jabalpur Gauge Conversion Project. The contract awarded to the applicant was terminated vide order dated 5.7.2011. Thereafter, the applicant submitted an application on 2.9.2012 requesting the General Manager i.e. non-applicant No. 1 to appoint an Arbitrator. The aforesaid application was received by the General Manager on 11.9.2012. However, the General Manager did not take action for appointment of the Arbitrator. Eventually, the petitioner filed this application on 28.1.2013.

Admittedly, the agreement contains an arbitration clause which reads as under:-

"64(3)(i) .......

(ii) In cases not covered by clause 64(3)(a)(i), the Arbitral Tribunal shall consist of a panel of three Gazetted Railway Officers not below J.A. Grade, as the Arbitrators. For this purpose, the Railway will send a panel of more than 3 names of Gazetted Railway Officers of one or more Departments of the Railway to the Contractor who will be asked to suggest to General Manager upto 2 names out of the panel for appointment as Contractor''s nominee. The General Manager shall appoint atleast one out of them as the Contractor''s nominee and will also simultaneously appoint the balance number of Arbitrators either from the panel or from outside the panel, duly indicating the presiding Arbitrator from amongst the 3 Arbitrators so appointed. While nominating the Arbitrators till be necessary to ensure that one of them is from Accounts Deptt. An Officer of Selection grade of the Accounts Deptt shall be considered of equal status to the officers in SA Grade of other Departments of the Railways for the purpose of appointment of Arbitrators.

(iii) In one or more of the Arbitrators appointed as above refuses to act as Arbitrator, withdraws from him office as Arbitrator, or vacates his/their office/offices or is/are unable or unwilling to perform his functions as Arbitrator for any reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay, the General Manager shall appoint new Arbitrator/Arbitrators to act in his/their place in the same manner in which the earlier Arbitrator/Arbitrators had been appointed. Such reconstituted Tribunal may, at its discretion proceed with the reference from the stage at which it was left by the previous Arbitrators(s).

It is also common ground that the case of the applicant is covered by Clause 64(3)(2) of the agreement.

Learned counsel for the applicant submitted that since despite receipt of notice, the non-applicants have failed to appoint the Arbitrator within the prescribed time limit. Therefore, the non-applicants have forfeited their right to appoint an Arbitrator under the agreement. It is further submitted that the applicant has made averments with regard to malafides in paragraphs 8, 9, 11, 13 and 14 of the application to which, no reply has been submitted on behalf of the non-applicants therefore, an independent Arbitrator should be appointed by this Court.

On the other hand, learned counsel for the non-applicants while inviting the attention of this Court to para 3 of the return, submitted that the applicant during the pendency of the contract had entered into correspondence with Deputy Chief Engineer and Chief Engineer (Construction). However, the applicant after termination of the contract, straight away submitted the application to the General Manager. It is also submitted that in case the applicant approaches the Chief Engineer or Deputy General Manager, action for appointment of the Arbitrator as per the arbitration agreement shall be taken.

I have considered the submission made by learned counsel for the parties. A Three Judge Bench of the Supreme Court while taking into account the requirement contained under Section 11(8) of the Act in para 20 in the case of Deep Trading Company Vs. Indian Oil Corporation and others (supra), has held as under:-

"20. Section 11(8) does not help the Corporation at all in the fact situation. Firstly, there is no qualification for the arbitrator prescribed in the agreement. Secondly, to secure the appointment of an independent and impartial arbitrator, it is rather necessary that some one other than an officer of the Corporation is appointed as arbitrator once the Corporation has forfeited its right to appoint the arbitrator under Clause 29 of the agreement."

In the instant case, from close scrutiny of the arbitration clause, it is evident that there is no requirement under the arbitration agreement to submit any application to any specific authority. From perusal of the general conditions of the contract, the expression "General Manager" means that the General Manager is the Officer incharge of the general superintendence and control of the Railway and shall also include the General Manager (Construction) and shall mean and include their successors of the successor Railway. Despite receipt of the notice from the applicant, the General Manager had refused to take any action for appointment of the Arbitrator. Therefore, the non-applicants have forfeited their right to appoint the Arbitrator. In view of the law laid down by the Supreme Court in the case of Deep Trading (supra) and with a view to ensure appointment of an independent and impartial Arbitrator, as laid down under Section 11(8) of the Act as well as averments made by the applicant in paragraphs 8, 9, 11, 13 and 14 of the application which have not been rebutted on behalf of the non-applicants, I deem it appropriate to appoint Mr. Justice S.C. Pandey (Retired) as an Arbitrator to arbitrate the dispute between the parties.

Office is directed to send a copy of this order to Mr. Justice S.C. Pandey (Retd.).

Accordingly, the arbitration case is disposed of.