ORDER 1. THIS APPLICATION UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 (HEREINAFTER REFERRED TO AS "THE ACT") HAS BEEN MOVED FOR APPOINTMENT OF ARBITRATORS IN ORDER TO DECIDE THE DISPUTE WHICH HAS ARISEN BETWEEN THE APPLICANTS AND THE RESPONDENT. 2. THE RESPONDENT DELHI METRO RAIL CORPORATION LTD. (IN SHORT "DMRC") IS A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES ACT, FOR IMPLEMENTATION AND SUBSEQUENT OPERATION OF DELHI MASS RAPID TRANSPORT SYSTEM. APPLICANT 1 KUMAGAI GUMI CO. LTD. AND APPLICANT 4 ITOCHU CORPORATION ARE COMPANIES INCORPORATED AND REGISTERED UNDER THE LAWS OF JAPAN. APPLICANT 2 SKANSKA INTERNATIONAL CIVIL ENGINEERING AB IS A COMPANY H INCORPORATED AND REGISTERED UNDER THE LAWS OF SWEDEN AND APPLICANT 3 HINDUSTAN CONSTRUCTION CO. LTD. IS A COMPANY INCORPORATED AND REGISTERED UNDER THE INDIAN COMPANIES ACT. 3. THE RESPONDENT INVITED TENDERS FOR CONTRACT MC1A, FOR DESIGN, CONSTRUCTION, EQUIPPING, TESTING AND COMMISSIONING OF FOUR UNDERGROUND STATIONS, INCLUDING APPROACH TRACKS BETWEEN VISHWA VIDYALAYA TO ISBT. THE APPLICANTS ENTERED INTO A JOINT VENTURE FOR THE PURPOSE OF PARTICIPATING IN THE BID. THE TENDER WAS ACCEPTED AND THE CONTRACT MC1A WAS AWARDED TO THEM ON 21-5-2001. CLAUSE 20 OF THE GENERAL CONDITIONS OF CONTRACT WHICH FORMS PART OF THE AGREEMENT ENTERED INTO BETWEEN THE PARTIES DEALS WITH CLAIMS, DISPUTES, CONCILIATION AND ARBITRATION. RELEVANT PART OF CLAUSES 20.4 AND 20.9 READ AS UNDER: "20.4. FOR THE PURPOSE OF SUB-CLAUSE 20.5, A DISPUTE SHALL BE DEEMED TO ARISE WHEN ONE PARTY SERVES ON THE OTHER PARTY A NOTICE IN WRITING (HEREINAFTER CALLED A NOTICE OF DISPUTE) STATING THE NATURE OF THE DISPUTE PROVIDED THAT NO SUCH NOTICE SHALL BE SERVED LATER THAN 28 DAYS AFTER THE DATE OF ISSUE OF PERFORMANCE CERTIFICATE BY THE EMPLOYERS REPRESENTATIVE. 20.9. IF THE EFFORTS TO RESOLVE ALL OR ANY OF THE DISPUTES THROUGH CONCILIATION FAIL, THEN SUCH DISPUTES OR DIFFERENCES, WHATSOEVER ARISING BETWEEN THE PARTIES, ARISING OUT OF, TOUCHING OR RELATING TO CONSTRUCTION/MANUFACTURE, MEASURING OPERATION OR EFFECT OF THE CONTRACT OR THE BREACH THEREOF SHALL BE REFERRED TO ARBITRATION IN ACCORDANCE WITH THE FOLLOWING PROVISIONS: (A) MATTERS TO BE ARBITRATED UPON SHALL BE REFERRED TO A SOLE ARBITRATOR WHERE THE TOTAL VALUE OF CLAIMS DOES NOT EXCEED RS 1.5 MILLION. BEYOND THE CLAIM LIMIT OF RS 1.5 MILLION, THERE SHALL BE THREE ARBITRATORS. FOR THIS PURPOSE, EMPLOYER WILL MAKE OUT A PANEL OF ENGINEERS WITH THE REQUISITE QUALIFICATIONS AND PROFESSIONAL EXPERIENCE. BEYOND THE CLAIM LIMIT OF RS 1.5 MILLION, THERE SHALL BE THREE ARBITRATORS. FOR THIS PURPOSE, EMPLOYER WILL MAKE OUT A PANEL OF ENGINEERS WITH THE REQUISITE QUALIFICATIONS AND PROFESSIONAL EXPERIENCE. THIS PANEL WILL BE OF SERVING OR RETIRED ENGINEERS OF GOVERNMENT DEPARTMENTS OR OF PUBLIC SECTOR UNDERTAKINGS. (B) FOR THE DISPUTES TO BE DECIDED BY A SOLE ARBITRATOR, A LIST OF THREE ENGINEERS TAKEN FROM THE AFORESAID PANEL WILL BE SENT TO THE CONTRACTOR BY THE EMPLOYERS FROM WHICH THE CONTRACTOR WILL CHOOSE ONE. (C) FOR THE DISPUTES TO BE DECIDED BY THREE ARBITRATORS, THE EMPLOYER WILL MAKE OUT A LIST OF FIVE ENGINEERS FROM THE AFORESAID PANEL. THE CONTRACTOR AND EMPLOYER SHALL CHOOSE ONE ARBITRATOR EACH AND THE TWO SO CHOSEN SHALL CHOOSE THE THIRD ARBITRATOR FROM THE SAID LIST, WHO SHALL ACT AS THE PRESIDING ARBITRATOR. (D)-(E) * * * (F) THE AWARD OF THE SOLE ARBITRATOR OR THE AWARD BY MAJORITY OF THREE ARBITRATORS AS THE CASE MAY BE SHALL BE BINDING ON ALL PARTIES." 4. THE APPLICANTS GAVE A NOTICE DATED 10-9-2003 TO THE RESPONDENT PURPORTING TO BE UNDER CLAUSE 20.4 OF THE GENERAL CONDITIONS OF CONTRACT IN RELATION TO SUBSTANTIAL ADDITIONAL QUANTITIES, TIME FOR COMPLETION, COST AND OTHER EFFECTS THAT HAD ARISEN OUT OR WILL BE INCURRED OR SUFFERED AS A CONSEQUENCE OF CHANGE IN THE EMPLOYERS REQUIREMENTS FROM THOSE A EXHIBITED AT ADDENDUM 6. THE RESPONDENT GAVE A REPLY TO THE SAID NOTICE ON 24-9-2003 AND INTIMATED THAT IT HAD DETERMINED UNDER CLAUSE 3.6 OF THE GENERAL CONDITIONS OF CONTRACT THAT THE AFORESAID CLAIM DID NOT EXIST. THEREAFTER, THE APPLICANTS SENT A NOTICE TO THE RESPONDENT ON 20-11-2003 STATING, INTER ALIA, THAT AS THE DISPUTE RELATING TO ADDITIONAL QUANTITIES/COST THAT AROSE OUT OF THE AMBIGUITIES THAT EMERGED BETWEEN THE EMPLOYERS REQUIREMENTS GIVEN IN THE TENDER DOCUMENTS AND THE SUBSEQUENT ADDENDUM 6 CHANGES, COULD NOT BE RESOLVED BETWEEN THE PARTIES, THE SAID DISPUTE MAY BE REFERRED TO ARBITRATION. IT WAS FURTHER MENTIONED IN THE NOTICE THAT AS THE CLAIM OF THE APPLICANTS EXCEEDS RS 1.5 MILLION, THE DISPUTE IS REQUIRED TO BE DECIDED BY A PANEL OF THREE ARBITRATORS. THE RESPONDENT GAVE A REPLY TO THE NOTICE ON 8-12-2003 STATING THAT SINCE THE APPLICANTS HAD NOT BEEN ABLE TO SUBSTANTIATE THEIR CLAIM, THERE WAS NO DISPUTE WHICH WAS REQUIRED TO BE REFERRED TO ARBITRATION. THE RESPONDENT GAVE A REPLY TO THE NOTICE ON 8-12-2003 STATING THAT SINCE THE APPLICANTS HAD NOT BEEN ABLE TO SUBSTANTIATE THEIR CLAIM, THERE WAS NO DISPUTE WHICH WAS REQUIRED TO BE REFERRED TO ARBITRATION. THE APPLICANTS IN THESE CIRCUMSTANCES PRAY THAT AS THE RESPONDENT HAS FAILED TO ACT UNDER THE APPOINTMENT PROCEDURE AGREED UPON BETWEEN THE PARTIES, THE DISPUTE MAY BE REFERRED TO ARBITRATION AND FOR THE SAID PURPOSE ARBITRATORS MAY BE APPOINTED. 5. THE RESPONDENT IN ITS REPLY HAS SUBMITTED THAT ITS GENERAL CONSULTANT. CONSIDERING THE VARIOUS CORRESPONDENCE AND DOCUMENTS HAD DETERMINED UNDER CLAUSE 3.6 OF THE GENERAL CONDITIONS OF CONTRACT THAT A CASE OF EMPLOYERS VARIATION DID NOT EXIST AND, CONSEQUENTLY, THERE WAS NO ERROR ON ITS PART IN NOT AGREEING TO CONCILIATION PROCEEDINGS. HOWEVER, IN PARA AND ALSO IN REPLY TO PARAS 17 TO 23 OF THE APPLICATION, THE RESPONDENT HAS GIVEN CONSENT FOR REDRESSAL OF THE ALLEGED DISPUTE RAISED BY THE APPLICANTS IN ACCORDANCE WITH E CLAUSE 20.9 OF THE GENERAL CONDITIONS OF CONTRACT. IN VIEW OF THIS STAND TAKEN BY THE RESPONDENT THE DISPUTE REQUIRES TO BE REFERRED TO ARBITRATION. HAVING REGARD TO SUB-CLAUSE (A) OF CLAUSE 20.9 OF THE GENERAL CONDITIONS OF CONTRACT, THE DISPUTE HAS TO BE REFERRED TO THREE ARBITRATORS, AS ACCORDING TO THE APPLICANTS, THEIR CLAIM EXCEEDS RS 1.5 MILLION. 6. SUB-CLAUSES (A) AND (C) OF CLAUSE 20.9 OF THE GENERAL CONDITIONS OF F CONTRACT PROVIDE THAT THE EMPLOYER WILL MAKE OUT A PANEL OF ENGINEERS WITH REQUISITE QUALIFICATIONS AND PROFESSIONAL EXPERIENCE, WHO MAY BE SERVING OR RETIRED ENGINEERS OF GOVERNMENT DEPARTMENTS OR OF PUBLIC SECTOR UNDERTAKINGS. THE CONTRACTOR AND EMPLOYER SHALL CHOOSE ONE ARBITRATOR EACH AND THE TWO SO CHOSEN SHALL CHOOSE THE THIRD ARBITRATOR FROM THE SAID PANEL, WHO SHALL ACT AS THE PRESIDING ARBITRATOR. SHRI F.S. NARIMAN, LEARNED SENIOR COUNSEL FOR THE APPLICANTS HAS SUBMITTED THAT AS THE RESPONDENT DID NOT AGREE FOR RESOLUTION OF THE DISPUTE THROUGH ARBITRATION WITHIN 30 DAYS OF THE SERVICE OF NOTICE BY THE APPLICANTS, THE RESPONDENT HAS FORFEITED ITS RIGHT TO CLAIM APPOINTMENT OF ARBITRATORS FROM THE PANEL PREPARED BY IT AS PROVIDED IN SUB-CLAUSES (A) AND (C) OF CLAUSE 20.9 OF THE GENERAL CONDITIONS OF CONTRACT. LEARNED COUNSEL HAS FURTHER SUBMITTED THAT IN SUCH CIRCUMSTANCES THE CHIEF JUSTICE OR HIS DESIGNATE IS FREE TO APPOINT ANY ARBITRATOR HAVING DUE REGARD TO ANY QUALIFICATIONS REQUIRED OF THE ARBITRATORS BY THE AGREEMENT OF THE PARTIES AND OTHER CONSIDERATIONS AS ARE LIKELY TO SECURE THE APPOINTMENT OF AN INDEPENDENT AND IMPARTIAL ARBITRATOR, AS CONTEMPLATED UNDER SUB-SECTION (8) OF SECTION 11 OF THE ACT. FOR THIS SUBMISSION SHRI NARIMAN HAS TAKEN SUPPORT FROM A DECISION RENDERED IN DATAR SWITCHGEARS LTD. V. TATA FINANCE LTD.1 SHRI MUKUL ROHATGI, LEARNED SENIOR COUNSEL FOR THE RESPONDENT HAS SERIOUSLY CHALLENGED THE LEGAL PROPOSITION URGED BY SHRI NARIMAN AND HAS SUBMITTED THAT ON A CORRECT INTERPRETATION OF SECTION 11 OF THE ACT, SUCH A RESULT WOULD NOT FOLLOW AND APPOINTMENT OF THE ARBITRATOR HAS TO BE MADE IN ACCORDANCE WITH THE AGREEMENT EXECUTED BY THE PARTIES WHERE UNDER THREE ARBITRATORS HAVE TO BE CHOSEN FROM A PANEL PREPARED BY THE RESPONDENT. 7. FOR THE PURPOSE OF PRESENT PROCEEDINGS. IT IS NOT NECESSARY TO DECIDE THE AFORESAID CONTROVERSY. IN MY OPINION, APPOINTMENT OF ARBITRATORS SHOULD BE MADE KEEPING IN MIND THE MANDATE OF SUB-SECTION (8) OF SECTION 11 OF THE ACT. THE APPLICANTS HAVE GIVEN A PANEL OF ARBITRATORS, WHICH HAS BEEN SUGGESTED BY THE INSTITUTION OF ENGINEERS (INDIA), AND THEY WANT THAT THEIR ARBITRATOR SHOULD BE SELECTED OUT OF THE SAID PANEL. IN ORDER TO ALLAY ANY APPREHENSION IN THE MINDS OF APPLICANTS AND TO ENSURE FAIRNESS I CONSIDER IT JUST AND PROPER TO NOMINATE ONE ARBITRATOR FROM THE PANEL FURNISHED BY THE APPLICANTS. IN THIS PANEL, THREE PERSONS ARE SUCH WHO HAVE WORKED AS CHIEF ENGINEERS IN THE IRRIGATION DEPARTMENT OF THE STATE GOVERNMENTS. THEY MAY NOT BE HAVING THE EXPERIENCE OF THE NATURE WHICH IS REQUIRED FOR RESOLUTION OF THE DISPUTE BETWEEN THE PARTIES. I, ACCORDINGLY, APPOINT SHRI P.V. VIJAY, FIE, MICA, RETIRED DIRECTOR GENERAL, CPWD AS THE NOMINEE ARBITRATOR ON BEHALF OF THE APPLICANTS. DR. Y.P. ANAND, FORMER CHAIRMAN, RAILWAY BOARD, WHOSE NAME FINDS PLACE AT SERIAL NO. 1 IN THE PANEL SUBMITTED BY THE RESPONDENT, IS APPOINTED AS NOMINEE ARBITRATOR OF THE RESPONDENT. THESE TWO ARBITRATORS WILL CHOOSE THE THIRD ARBITRATOR FROM THE PANEL WHICH SHALL BE PREPARED AND SUBMITTED TO THEM WITHIN 15 DAYS BY THE RESPONDENT (DMRC), WHO SHALL ACT AS THE PRESIDING ARBITRATOR. THE ARBITRAL TRIBUNAL SHALL MAKE ALL POSSIBLE ENDEAVOUR TO DECIDE THE DISPUTE EXPEDITIOUSLY.