Johny J. Vilangadan v. General Manager, Southern Railway
2012-07-11
K.T.SANKARAN
body2012
DigiLaw.ai
JUDGMENT In all these Arbitration Requests, the parties are the same and the questions involved are identical. Therefore, these Arbitration Requests were heard jointly and they are being disposed of by this common order. The applicant and the first respondent entered into different contracts and separate agreements were executed between them. The agreements contain similar arbitration clause. Clauses 64 (3)(a)(i) and 64(3)(a)(ii) read as follows: "64(3)(a)(i) - In cases where the total value of all claims in question added together does not exceed Rs.10,00,000/- (Rupees Ten lakhs only), the Arbitral Tribunal consist of a sole arbitrator who shall be either the General Manager or a gazetted officer of Railway not below the grade of JA grade nominated by the General Manager in that behalf. The sole arbitration shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by Railway." "64(3)(a)(ii) - In cases not covered by clause 64(3) (a)(i), the Arbitral Tribunal shall consist of a panel of three Gazetted Rly. Officers not below JA 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 at least 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 it will be necessary to ensure that one of them is from the Accounts Department. An officer of Selection Grade of the Accounts Department 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." 2. The arbitration clauses in the model agreement were modified and there is some confusion with respect to the appointment of the arbitrator in cases where the total value does not exceed Rupees Five lakhs. It is stated that in A.R.Nos.36, 37 and 38 of 2010, the contract amount involved is less than Rupees Five lakhs. I do not think that this confusion would have any relevance in deciding these Arbitration Requests. 3.
It is stated that in A.R.Nos.36, 37 and 38 of 2010, the contract amount involved is less than Rupees Five lakhs. I do not think that this confusion would have any relevance in deciding these Arbitration Requests. 3. According to the applicant, agreements were entered into on 28.6.1995. The time stipulated for completing the work was 30.11.2005. On 9.6.2004, the applicant made the final claims, which were received by the respondents on 11.6.2004. According to the applicant, the works were completed within the extended time and amounts are due to him from the Southern Railway. The applicant made Annexure A2 final claim dated 9.6.2004. Since the amounts claimed by the applicant were not paid, he made a demand for resolving the dispute by arbitration (Annexure A3 dated 4.10.2004). Arbitrators were not appointed as per the request in Annexure A3. Therefore, the applicant filed A.R.Nos.41 to 47 of 2004 under Section 11(6) of the Arbitration and Conciliation Act. The respondents raised a contention that the said Arbitration Requests were premature. Arbitration Request Nos.41 to 47 of 2004 were later withdrawn by the applicant. 4. Thereafter, the applicant filed Arbitration Request Nos.4 to 10 of 2005 under Section 11(6) of the Arbitration and Conciliation Act, which were disposed of as per Annexure A6 order dated 21.3.2006. The operative portion of Annexure A6 order reads as follows: "9. Having regard to the aforesaid circumstances, I am not inclined to grant the request as prayed for. However, if the applicant is willing to appoint any of the arbitrators named in the panel submitted by the Railways during the course of the proceedings before this Court in A.R.No.41/2004 and connected matters, as his arbitrator, he may do so by informing the first respondent in these proceedings, in writing, with copy to the Divisional Railway Manager, Southern Railway, Thiruvananthapuram by registered post, within a period of a fortnight from today and if the applicant takes such a course, the Railways will further do the needful in terms of clause 64(3)(b) of the Arbitration Agreement." 5. According to the applicant, he complied with Annexure A6 order and nominated his nominee arbitrator from Annexure A5 panel given by the respondents.
According to the applicant, he complied with Annexure A6 order and nominated his nominee arbitrator from Annexure A5 panel given by the respondents. According to the applicant, though he complied with Annexure A6 order by issuing Annexure A7 letter dated 3.4.2006 nominating Sri.K.Masthan Rao from among the panel submitted by the Railways, Arbitral Tribunal was not constituted as directed in Annexure A6 order. Therefore, the applicant filed A.R.Nos.30 to 36 of 2006 on 16.8.2006. After filing A.R.Nos.30 to 36 of 2006, the Deputy General Manager/General for General Manager of Southern Railways issued Annexure A8 proceedings dated 19.9.2006 constituting an Arbitral Tribunal. The Chief Justice disposed of A.R.Nos.30 to 36 of 2006 by Annexure A9 order dated 13.12.2006, the relevant portion of which reads as follows: "4. Counsel for the applicant vehemently contends that even though Sri.K.Masthan Rao may be one of the persons in the panel for appointment of Arbitrator in the applications earlier made which culminated into order dated 21st March, 2006, but the applicant had a limited choice at that time as it was only from the panel an Arbitrator could be appointed, but the respondents have now forfeited their right to appoint an Arbitrator as, surely, such an appointment is made after the filing of these applications. Learned counsel relies upon the decision of the Honourable Supreme Court in Punj Lloyd Ltd. v. Petronet MHB Ltd. [(2006) 2 SCC 638]. Counsel further contends that once the respondents have forfeited their right to make an appointment of an Arbitrator, the applicant would certainly seek appointment of an Independent Arbitrator and the very fact that Sri.K.Masthan Rao was named by the applicant himself as an Arbitrator earlier was under circumstances when the applicant had no other choice. 5. There cannot be anyexception to the contention of the learned counsel for the applicant. There is indeed an arbitration clause in the agreement and the matter has to be referred to an Arbitrator. For appointment of Arbitrator, there is no dispute. Once, the respondents have lost right to make appointment of Arbitrator, this Court would consider it appropriate to make appointment of a former Judge of this Court as Arbitrator. It is urged by the learned counsel for the Railways that an Engineer with M.Tech. Degree has to be an Arbitrator because of the subject requiring expertise of such a person.
Once, the respondents have lost right to make appointment of Arbitrator, this Court would consider it appropriate to make appointment of a former Judge of this Court as Arbitrator. It is urged by the learned counsel for the Railways that an Engineer with M.Tech. Degree has to be an Arbitrator because of the subject requiring expertise of such a person. The Court only directs that the Arbitrator may seek assistance of an Engineer with M.Tech.Degree. Sri.Justice R.Bhaskaran, former Judge of this Court, residing at "Sreekrishna Kripa", Kaloor, Kochi - 682 017 is appointed as Arbitrator." 6. Justice R.Bhaskaran entered upon the Arbitration Reference on 18.12.2006. It is contended that sixteen sittings were conducted by him and the respondents participated in the arbitration proceedings. In view of Annexure A9 order dated 13.12.2006 appointing Justice R.Bhaskaran as the Arbitrator, the Arbitral Tribunal constituted as per Annexure A8 proceedings dated 19.9.2006 was terminated as per Annexure A10 proceedings of the Arbitrators dated 30.4.2007. 7. Thereafter in May 2007, the respondents filed S.L.P.(Civil) N0.14395 of 2007 before the Honourable Supreme Court challenging the order in A.R.No.30 of 2006. It is submitted by the learned counsel for the applicant that the orders in A.R.Nos.31 to 36 of 2006 were not challenged before the Honourable Supreme Court. The Honourable Supreme Court granted special leave to appeal and disposed of the appeal as per Annexure A11 order dated 7.12.2007. The Honourable Supreme Court held thus: "We fail to understand how can a Judge be appointed dehors the law of this Court. It was held by this Court in the case of ACE Pipeline Contracts (P) Ltd. versus Bharat Petroleum Corpn. Ltd. reported in 2007 (5) SCC 304 that "the departmental lethargy in making appointment of arbitrators in terms of the arbitration clause is well known. Therefore, mandamus can be issued by the Courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within a reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause.
Therefore, mandamus can be issued by the Courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within a reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the interest of parties or for any other reasons to be recorded in writing, the choice can go beyond the designated persons or institutions in appropriate cases. But court should normally adhere to the terms of arbitration clause and appoint the arbitrator/arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name." (Page 306) Therefore, in view of the aforesaid decision, the view taken by the learned Single Judge cannot be sustained. The same is set aside and the Arbitrator appointed by the Railways shall proceed in the matter and dispose of the whole matter preferably within a period of six months from today. The appeal is accordingly, allowed." 8. According to the applicant, the Arbitral Tribunal constituted by the Railways as per Annexure A8 dated 19.9.2006 was expected to proceed with the arbitration. However, according to the respondents, they could constitute a fresh Arbitral Tribunal. 9. The applicant filed O.P.(Arb.) No.287 of 2008 before the District Court, Thiruvananthapuram, under Sections 14 and 15 of the Arbitration and Conciliation Act to decide on the termination of the mandate of the Arbitral Tribunal and to pass an order to the effect that the mandate of the Arbitral Tribunal was terminated and the Arbitral Tribunal had no jurisdiction to enter upon the reference and adjudicate upon the disputes. In O.P.(Arb.) No.287 of 2008 (Annexure A18), the applicant contended that the period of six months prescribed in the judgment of the Honourable Supreme Court was over and the Arbitral Tribunal did not enter upon the reference and adjudicate upon the matters in dispute and pass the award within the time stipulated. The respondents filed Annexure A12 objection in O.P.(Arb.) No.287 of 2008, in which it was contended, inter alia, thus: "17. Averments in paras 4 and 5 of the petition are false and hence denied.
The respondents filed Annexure A12 objection in O.P.(Arb.) No.287 of 2008, in which it was contended, inter alia, thus: "17. Averments in paras 4 and 5 of the petition are false and hence denied. The allegation that because of the laches, delay and breach of the contract on the part of respondents 1 and 2, that the petitioner suffered huge loss is against true facts and denied emphatically. In accordance with the arbitration request made by the contractor, the railway was making all preparations to constitute the Arbitral Tribunals. But even before the period available for the same, the contractor rushed to the Hon'ble High Court with the arbitration requests 41/04 to 47/04 and finally on getting realised that the said requests are premature, the contractor himself represented that he is withdrawing the Arbitration Requests. Thereafter the very same petitioner approached the Hon'ble High Court with another bundle of petitions as AR Nos.4/05 to 10/05. In the said petitions, the Hon'ble High Court passed an order on 21.3.06 directing the petitioner to nominate one among the panel of the Gazetted Officers of the Southern Railway submitted by the respondents during the course of the proceedings in A.R.No.41/04 to A.R.47/04. On the request of the contractor the railway had constituted the Arbitral Tribunal with Sri.K.Masthan Rao as the sole Arbitrator and further a three member Tribunal with Sri.K.Masthan Rao as the presiding Arbitrator was also constituted. In the meanwhile the contractor again rushed to the High Court with Arbitration requests Nos.30/06 to 36/06. After filing such applications, the contractor refrained from participating in the arbitration proceedings. Finally in A.R.30/06 the Hon'ble High Court appointed Justice R.Bhaskaran (Retd) as the Arbitrator and thereby the Arbitrators appointed by the 1st respondent lost their mandate. After the appointment of Justice R.Bhaskaran as the Sole Arbitrator by the Hon'ble High Court, Railway also participated in his proceedings till the order of the Hon'ble Supreme Court stayed the common order of the Hon'ble High Court of Kerala in A.Rs.30 to 36/06. During the course of the above said SLP, Justice R.Bhaskaran was the Arbitrator. As on the date of the order of the Apex Court the Arbitrators appointed by the Railway was not functioning as the Arbitrators and the proceedings were terminated.
During the course of the above said SLP, Justice R.Bhaskaran was the Arbitrator. As on the date of the order of the Apex Court the Arbitrators appointed by the Railway was not functioning as the Arbitrators and the proceedings were terminated. Hence the spirit of the order of the Apex court regarding the direction that "the arbitrator appointed by the railways shall proceed in the matter" can only be the new arbitrators to be appointed by the Railway shall proceed with the matter and dispose of the same. It is in consonance with the spirit of the Apex Court order that the railway had appointed Sri.P.Jayakumar as the sole Arbitrator and also tried to constitute the other three Member Tribunal with the cooperation of the contractor which he never extended. 18. Averments in paras 6 to 9 of the petition are false and hence denied. As stated earlier as on the date of the order of the Apex Court, the Arbitrators appointed by the Railway were not in existence. Those Arbitrators lost their mandate even as on the date of the appointment of Justice R.Bhaskaran as the Arbitrator by the Hon'ble High Court. The Hon'ble Supreme Court did not pass any order reviving the proceedings of the Railway by which the Arbitrators were appointed by the proceedings dated 19.9.06. Respondents 3 to 5 were not having the authority to enter upon the reference and adjudicate the disputes since the proceedings were already terminated. The appointment of new Arbitral Tribunal with 3 members could not be done due to the intentional misconduct of the contractor and non- cooperation in the proceedings. 19. Averments in paras 10 to 12 of the petition are false and hence denied. There was no reason for the contractor to abstain from participating in the arbitral proceedings since Sri.K.Masthan Rao, the previous sole Arbitrator happened to be abroad on deputation and hence the contractor was directed to give his choice from among the panel submitted by the Railways, which also remained without any response and so also returning the letters sent to him. It may be submitted that the Railway is ready to constitute the Tribunal and get the disputes resolved through the Arbitrators to be appointed as per the terms of the agreement, provided the contractor gives his choice of the Arbitrator.
It may be submitted that the Railway is ready to constitute the Tribunal and get the disputes resolved through the Arbitrators to be appointed as per the terms of the agreement, provided the contractor gives his choice of the Arbitrator. Simply because of the period of six months had expired from the date of the order of the Apex Court, the authority of the 1st Respondent in constituting the Arbitral Tribunal, was not lost and especially because the 3 Member Tribunal could not be constituted due to the complete lack of co-operation from the side of the Contractor. Also every attempt was made to get the order of the Apex Court modified and even at present there is no strict direction as to the period within which the disputes are to be answered." 10. The District Court disposed of O.P.(Arb.) No.287 of 2008 as per Annexure A15 order dated 14.8.2009, which reads as follows: "Counter filed. In view of the contention in the counter that the mandate of the arbitrator appointed earlier has been terminated with effect from 30.04.2007 and in view of the endorsement made by the counsel for the petitioner that the O.P. can be closed in view of the above contention, the petition is dismissed as not pressed with liberty for the petitioner to agitate the validity of the arbitral tribunal alleged to have been later constituted in appropriate proceedings. The parties are directed to bear their respective costs." 11. Thereafter, the present Arbitration Requests were filed by the applicant under Section 11(5) and (6) of the Arbitration and Conciliation Act praying for appointment of an independent and impartial arbitrator. The present Arbitration Requests (A.R.Nos.31 to 34 of 2009) were filed on 25.9.2009. Before filing the Arbitration Requests, the applicant sent Annexure A13 notice dated 21.8.2009 to the respondents nominating Sri.Venkatanarayanan, Deputy Chief Signal Telecommunication Engineer and Sri.A.K.Maurya, Senior Divisional Electrical Engineer. Annexure A13 letter was sent in reply to the letters dated 7.1.2008 (Annexure R2) and 31.1.2008 (Annexure R3), which, according to the applicant, were served on him only on 14.8.2009 through his counsel along with the objection in O.P.(Arb.)Nos.287 of 2008, 288 of 2008, 289 of 2008 and 290 of 2008, District Court, Thiruvananthapuram.
Annexure A13 letter was sent in reply to the letters dated 7.1.2008 (Annexure R2) and 31.1.2008 (Annexure R3), which, according to the applicant, were served on him only on 14.8.2009 through his counsel along with the objection in O.P.(Arb.)Nos.287 of 2008, 288 of 2008, 289 of 2008 and 290 of 2008, District Court, Thiruvananthapuram. (It would appear that the applicant filed O.P.(Arb.) Nos.288, 289 and 290 of 2008 before the District Court making similar prayers as made in O.P.(Arb.)No.287 of 2008, which was disposed of as per Annexure A15 order.) The applicant contended that even after the issue of Annexure A13 letter, the respondents did not constitute the Arbitral Tribunal within thirty days. 12. After filing the present Arbitration Requests, as per Annexure R5 dated 20.10.2009, an Arbitral Tribunal was constituted by the Deputy General Manager/General for General Manager of the Southern Railway. It is submitted by the applicant that the first sitting of the Arbitral Tribunal constituted as per Annexure R5 was on 12.8.2010, beyond the period of six months from the date of constitution of the Tribunal. It is contended by the applicant that the Arbitral Tribunal constituted after the filing of the Arbitration Requests would not take away the jurisdiction of the Chief Justice to deal with the application under Section 11(6) of the Arbitration and Conciliation Act. The learned counsel for the petitioner relied on the decisions reported in Datar Switchgears Ltd. v. Tata Finance Ltd. and another ((2000) 8 SCC 151), 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) and Divisional Railway Manager v. West Coast Agencies (2005 (2) KLT 734) in this context. Learned counsel for the applicant contended that in view of the terms in the agreements and the works undertaken, no technical qualification is required for the Arbitrator to resolve the disputes involved in the case and, therefore, clause (a) of sub- section (8) of Section 11 of the Arbitration and Conciliation Act may not as such apply. The counsel also relied on the order dated 26.9.2006 in A.R.No.36 of 2005 (M/s.K.A.Pillai & Co. v. Union of India and another) in which this Court appointed a retired Judge as the Arbitrator in respect of a contract entered into between the applicant therein and the Southern Railway.
The counsel also relied on the order dated 26.9.2006 in A.R.No.36 of 2005 (M/s.K.A.Pillai & Co. v. Union of India and another) in which this Court appointed a retired Judge as the Arbitrator in respect of a contract entered into between the applicant therein and the Southern Railway. The counsel also relied on the decision of the Supreme Court in Denel (Proprietary Limited) v. Bharat Electronics Ltd. and another wherein a retired Judge of the Supreme Court was appointed as the sole Arbitrator in spite of the fact that the arbitration clause stipulated appointment of the Managing Director of the respondent therein as the Arbitrator. 13. Sri.M.C.Cherian, learned counsel appearing for the respondents contended that all through out the applicant was avoiding settlement of disputes by the Arbitral Tribunal and he does not really want to resolve the disputes. It is contended that the intention of the applicant is only to drag the proceedings. Before the respondents could take appropriate proceedings for constituting Arbitral Tribunal, the applicant rushed to this Court to pre-empt the proceedings of the respondents. It is pointed out that after Annexure A11 order was passed by the Honourable Supreme Court, the Railways issued Annexure R2 letter dated 7.1.2008 to the applicant requesting to nominate his nominee. But that letter was returned as unclaimed. Two other letters were also issued to the applicant, but those letters were also returned as unclaimed. The counsel also contended that the applicant was waiting to expire the period fixed by the Supreme Court and he did not issue any letter making his nomination till the expiry of the period. The counsel also pointed out that Annexures R7 to R13 letters were issued by the Arbitral Tribunal to the applicant, but he did not participate in the proceedings. 14. In Datar Switchgears Ltd. v. Tata Finance Ltd. and another ((2000) 8 SCC 151), the Supreme Court held thus: "19. So far as cases falling under Section 11(6) are concerned--such as the one before us-- no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11 (4) and Section 11(5) of the Act.
So far as cases falling under Section 11(6) are concerned--such as the one before us-- no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11 (4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appoint does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. ...." 15. In Punj Lloyd Ltd. v. Petronet MHB Ltd. ((2006) 2 SCC 638), a three Judge Bench of the Supreme Court relied on the decision in Datar Switchgears Ltd. v. Tata Finance Ltd. and another ((2000) 8 SCC 151). 16. In Union of India v. Bharat Battery Manufacturing Co. (P) Ltd. ((2007) 7 SCC 684), the Supreme Court relied on the decisions in Datar Switchgears Ltd. v. Tata Finance Ltd. and another ((2000) 8 SCC 151) and Punj Lloyd Ltd. v. Petronet MHB Ltd. ((2006) 2 SCC 638) and held thus: "As already noticed, the respondent filed Section 11(6) petition on 30.3.2006 seeking appointment of an arbitrator. The appellant, thereafter, said to have appointed one Dr.Gita Rawat on 15.5.2006 as a sole arbitrator, purportedly in terms of Clause 24 of the agreement. Once a party files an application under Section 11(6) of the Act, the other party extinguishes its right to appoint an arbitrator in terms of the clause of the agreement thereafter. The right to appoint arbitrator under the clause of agreement ceases after Section 11 (6) petition has been filed by the other party before the Court seeking appointment of an arbitrator." 17.
The right to appoint arbitrator under the clause of agreement ceases after Section 11 (6) petition has been filed by the other party before the Court seeking appointment of an arbitrator." 17. In Divisional Railway Manager v. West Coast Agencies (2005 (2) KLT 734), a Division Bench of this Court held thus: "11. Chapter III of the Act relates to Composition of Arbitral Tribunal. S.11 therein relates to Appointment of Arbitrators. Sub-s.(2) of S.11 provides that subject to sub-s. (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-s.(6) to which sub-s.(2), as noticed above, is subject to, provides that where, under an appointment procedure agreed upon by the parties, a party fails to act as required under that procedure, a party may request the Chief Justice or his designate to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. Therefore, in our view, when the writ petitioner has failed to act as required under the procedure agreed upon by the parties in sub-clause 64(1)(i) of GCC, the compulsion in sub-cl. 64(3)(a)(iii) of GCC that no person other than a Gazetted Railway Officer should act as an Arbitrator would not survive. This is so because sub-s.(5) of S.11 provides that when an agreement on a procedure for appointing the Arbitrators referred to in sub-s.(2) fails, the appointment shall be made upon the request of a party by the Chief Justice or his designate. In doing so, the Chief Justice or his designate shall have due regard to the provisions contained in sub-s.(8) of S.11 which works as a legislative guideline for the Chief Justice or his designate in making the choice of the person to be appointed as the Arbitrator. If it were the intention of the Legislature that the measure taken by the Chief Justice or his nominee can be to appoint only the arbitrator identified by name or office in the agreement, such a stipulation would have been expressly provided in sub-s.(8).
If it were the intention of the Legislature that the measure taken by the Chief Justice or his nominee can be to appoint only the arbitrator identified by name or office in the agreement, such a stipulation would have been expressly provided in sub-s.(8). The absence of such a provision therein and the prescription in sub-s.(8) that in taking the measure, the Chief Justice or his nominee shall, in appointing an arbitrator, have due regard to (a) any qualifications required of arbitrator by the agreement of the parties; and (b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator, the two factors enumerated in the said sub-section, go to show that the power to appoint an arbitrator while taking such measure as is required, includes the power to choose. The factor (b) noticed above enables the Chief Justice to secure the appointment of independent and impartial arbitrator. This is sufficient indication that the Chief Justice need not limit his choice to the arbitrator identified by name or office in the agreement (in this case, to a Railway Officer). Therefore, such power to appoint cannot be tied down to the terms as to appointment contained in the agreement as regards the identity of the arbitrator. 12. In our considered view, the object sought to be achieved by such a mechanism ensures that a party, who has the right to make the appointment of the Arbitrator, having not done so on request by the party seeking reference for arbitration, should not be permitted to urge before the Chief Justice or his nominee that notwithstanding the fact that it had rejected the request for arbitration or has refused to make the appointment, the Chief Justice or his nominee exercising the statutory power under S.11(6) of the Act is tied down to the preference dictated by the opposite party (Railways in this case) in the matter of choosing the arbitrator. Such a contention, if it is accepted, will lead to fetter the power of the Chief Justice or his nominee to take the necessary measure as warranted by the situation for which they are empowered in terms of S.11(6) subject only to the legislative guidelines contained in sub-s.(8) of S.11. In our view, any other construction would lead to whittling down the quality of power conferred by sub-s.11(6) on a high office. ..... ....... 15.
In our view, any other construction would lead to whittling down the quality of power conferred by sub-s.11(6) on a high office. ..... ....... 15. Referring to para 23 of the judgment in Datar Switchgear's case (supra), the learned counsel for the writ petitioner emphasised that the parties having entered into the contract and settled on a procedure, due importance has to be given to such procedure and that the Court has to respect the terms of the contract entered into by the parties and endeavour to give importance and effect to it. It is urged that when the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the said clause. These observations have been made by the Apex Court in the context of the facts of that case wherein the crux of the issue was that appointment of arbitrator was made by the respondent therein before the filing of the Arbitration Request under S.11(6). As we have already held, the effect of the provisions of the agreement would stand superseded by the authority of the Chief Justice and his nominee conferred by S.11(6), in cases where the appointment is not made before the Arbitration Request is made by the presentation of the request in the form of an application in the Court, in terms of the Scheme for Appointment of Arbitrators by the Chief Justice of High Court of Kerala, 1996 and the Kerala Arbitration and Conciliation (Court) Rules, 1997. In the instant case, no appointment having been made before the filing of such request by the 1st respondent, the writ petitioner is precluded from claiming that the Chief Justice or his nominee could have either appointed or directed the Railways to appoint only a Gazetted Railway Officer as provided under sub-cl. 64(3) (a) (iii) of GCC." 18. In Indian Oil Corporation Limited and others v. Raja Transport Private Limited ((2009) 8 SCC 520), the Supreme Court held thus: "38. Before parting from this issue, we may however refer to a ground reality. Contractors in their anxiety to secure contracts from Government/statutory bodies/public sector undertakings, agree to arbitration clauses providing for employee arbitrators. But when subsequently disputes arise, they baulk at the idea of arbitration by such employee arbitrators and tend to litigate to secure an "independent" arbitrator.
Before parting from this issue, we may however refer to a ground reality. Contractors in their anxiety to secure contracts from Government/statutory bodies/public sector undertakings, agree to arbitration clauses providing for employee arbitrators. But when subsequently disputes arise, they baulk at the idea of arbitration by such employee arbitrators and tend to litigate to secure an "independent" arbitrator. The number of litigations seeking appointment of independent arbitrator bears testimony to this vexed problem. 39. It will be appropriate if Governments/statutory authorities/public sector undertaking reconsider their policy providing for arbitration by employee arbitrators in deference to the specific provisions of the new Act reiterating the need for independence and impartiality in arbitrators. A general shift may in future be necessary for understanding the word "independent" as referring to someone not connected with either party. That may improve the credibility of arbitration as an alternative dispute resolution process. Be that as it may. Re: Question (ii) 40. Where the arbitration agreement names or designates the arbitrator, the question whether the Chief Justice or his designate could appoint any other person as the arbitrator, has been considered by this Court in several decisions. 41. In Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn. Ltd. ((2007) 5 SCC 304), a two-Judge Bench of this Court held that where the appointing authority does not appoint an arbitrator after receipt of request from the other party, a direction can be issued under Section 11(6) to the authority concerned to appoint an arbitrator as far as possible as per the arbitration clause. It was held that normally the court should adhere to the terms of the arbitration agreement except in exceptional cases for reasons to be recorded or where both the parties agree for a common name. 42. In Union of India v. Bharat Battery Mfg. Co. (P) Ltd. ((2007) 7 SCC 684), another two-Judge Bench of this Court held that once the notice period provided for under the arbitration clause for appointment of an arbitrator elapses and the aggrieved party files an application under Section 11(6) of the Act, the right of the other party to appoint an arbitrator in terms of the arbitration agreement stands extinguished. 43. The divergent views expressed in Ace Pipeline ((2007) 5 SCC 304) and Bharat Battery ((2007) 7 SCC 684) were sought to be harmonised by a three- Judge Bench of this Court in Northern Railway Admn.
43. The divergent views expressed in Ace Pipeline ((2007) 5 SCC 304) and Bharat Battery ((2007) 7 SCC 684) were sought to be harmonised by a three- Judge Bench of this Court in Northern Railway Admn. v. Patel Engg. Co. Ltd. ((2008) 10 SCC 240). After examining the scope of sub-section (6) and (8) of Section 11, this Court held: "11. The crucial expression in sub-section (6) is 'a party may request the Chief Justice or any person or institution designated by him to take the necessary measure' (emphasis in original). This expression has to be read along with requirement in sub-section (8) that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have 'due regard' to the two cumulative conditions relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitration. 12. A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. In other words, the Court may ask to do what has not been done. The Court must first ensure that the remedies provided for are exhausted. It is true as contended by Mr.Desai, that it is not mandatory for the Chief Justice or any person or institution designated by him to appoint the named arbitrator or arbitrators. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations. 13. The expression 'due regard' means that proper attention to several circumstances have been focussed. The expression 'necessary' as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable steps required to be taken. 14. ... It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements of sub-section (8) of Section 11 have to be kept in view, considered and taken into account." 19. In the peculiar facts and circumstances of the case, I am of the view that it is just and necessary to appoint an independent arbitrator.
In the peculiar facts and circumstances of the case, I am of the view that it is just and necessary to appoint an independent arbitrator. The applicant complains that the respondents did not properly constitute the Arbitral Tribunal, while the respondents contend that the applicant was protracting the proceedings and avoiding appointment of arbitrators as per the terms of the arbitration agreement. It is not disputed and it is clear from the facts narrated above that the parties were before this Court in three sets of Arbitration Requests in 2004, 2005 and 2006. The present Arbitration Requests are the fourth in the series. The agreements were signed between the parties in 1995. Final claim was made by the applicant in 2004. Even now, the disputes between the parties have not been resolved. Had there been no arbitration clause, probably civil courts would have disposed of the cases and resolved the disputes much earlier. The purpose and object of the Arbitration and Conciliation Act is to resolve the disputes expeditiously. In the present cases, even after several rounds of litigation, the arbitration proceedings have not really commenced. Both parties accuse each other for the delay. The applicant even disputes the impartiality of the officers of the Railways in view of the nature of the disputes in the various proceedings before this Court and the District Court. It is submitted by the learned counsel for the applicant that the respondents did not disclose the correct facts before the Honourable Supreme Court. It is submitted that though Justice R.Bhaskaran, who was appointed as per Annexure A9 order, conducted sixteen sittings, the respondents did not disclose the same in the Special Leave Petition filed before the Honourable Supreme Court thereafter. The applicant also contends that the Arbitral Tribunal constituted in compliance of Annexure A6 order dated 21.3.2006 terminated their proceedings as per Annexure A10 dated 30.4.2007 and that fact was also not brought to the notice of the Honourable Supreme Court. It is also relevant to note here that from the pleadings and records produced in the cases, it would appear that only the order in A.R.No.30 of 2006 was challenged before the Honourable Supreme Court. The orders in A.R.Nos.31 to 36 of 2006 were not challenged before the Supreme Court. It is clear that though the parties fought several litigations, both the parties could be blamed for making a hide and seek game.
The orders in A.R.Nos.31 to 36 of 2006 were not challenged before the Supreme Court. It is clear that though the parties fought several litigations, both the parties could be blamed for making a hide and seek game. 20. If an independent Arbitrator is appointed, it would protect the interests of both the parties. I am also inclined to accept the contention of the applicant that technical qualifications are not required for the arbitrator for resolving the disputes involved in the cases. Even assuming that the arbitrator requires any assistance of a technical expert, he can very well seek such assistance at the request of any of the parties. Accordingly, the Arbitration Requests are allowed. Justice V.Ramkumar, a former Judge of the High Court of Kerala, is appointed as the sole Arbitrator to decide the disputes between the parties in the Arbitration Requests. The Arbitrator would be free to fix his fee.