PCM Cement Concrete Pvt. Ltd. v. Union Of India, Represented By The Chief Engineer (Con), N. F. Railway
2022-12-05
N.KOTISWAR SINGH
body2022
DigiLaw.ai
JUDGMENT : Heard Mr. S. Sharma, learned counsel for the petitioner. Also heard Mr. G. Goswami, learned Standing Counsel, N.F. Railway. 2. The present application has been filed under Section 15(2) of the Arbitration and Conciliation Act, 1996 read with Section 11 of the said Act for appointment of the Substituted Arbitrator. 3. Before this application was filed, an Arbitrator was appointed to resolve the disputes between the parties by an order dated 20.09.2019 passed by this Court in Arb. Pet. No.33/2018. 4. The petitioner is a Private Limited Company engaged in the business of manufacturing and supplying of Railway sleepers, welding of rails etc. and the petitioner was awarded a contract by the Railway authorities for execution of work of welding of 52 Kg. (72 UTS/52kg (90UTS) Rolls in situ or in the depot or at location decided by Railway by using contractor’s own Mobile Flas Butt Welding Plant and SKV portion on running/rion running lines or on cess of consolidated formation or on ballasted bed in the project area of New Mainaguri-Jogighopa New Line Project in connection with which a formal contract was executed between the parties on 29.09.2010. 5. It appears that there was certain delay in completion of the execution of the work and because of such delay, the Railway authorities sought to deduct certain amount from the security deposit which led to dispute leading to certain litigation also, details of which we are not concerned in this proceeding. 6. In order to resolve the said dispute amicably, the respondent railway authorities proposed for appointment of arbitration by seeking to appoint Arbitral Tribunal from the penal of Arbitrators maintained by the Railway authorities who were or had been in service of Railways, to which the Railway authorities sought for waiver from the petitioner as provided under the proviso of 12(5) of the Arbitration and Conciliation Act, 1996, to which the petitioner declined. 7. Under the circumstances, the petitioner approached this Court by filing arbitration petition, being Arb. Pet. No. 33/2016 and this Court after hearing the parties disposed of Arb. Pet.33/2016 on 20.09.2019 with the following direction:- “16. After hearing learned counsel for the parties and on due consideration, Court is of the view that there is a dispute between the parties and such dispute is arbitrable in nature. The contract entered into between the parties provides for arbitration. Petitioner had invoked the arbitration clause.
Pet.33/2016 on 20.09.2019 with the following direction:- “16. After hearing learned counsel for the parties and on due consideration, Court is of the view that there is a dispute between the parties and such dispute is arbitrable in nature. The contract entered into between the parties provides for arbitration. Petitioner had invoked the arbitration clause. Respondents agreed to it but insisted on having arbitrator out of their panel, who are none else but former officers of Railways. 17. In matters of arbitration, independence and impartiality of arbitrator is of paramount importance. In fact, it has now been statutorily incorporated in the Arbitration and Conciliation Act, 1996, substituting Sections 11 (8) and 12 (1) thereof by way of amendment. 18. Therefore and taking an overall view of the matter, Court is of the view that parties should be referred to arbitration. Accordingly, Hon’ble Mr Justice (Retd.) B D Agarwal, a former Judge of this Court is appointed as the arbitrator to arbitrate the dispute between the parties, subject to his consent and disclosure.” 8. Pursuant to the direction of this Court appointing Hon’ble Mr. Justice (Retd.) B. D. Agarwal, a former Judge of this Court to act as the Arbitrator, the arbitration proceeding was taken up by the Arbitrator. However, it appears from the record that the Arbitration proceeding did not make any headaway in view of alleged non-cooperation by the respondents in settling fees and others and accordingly, the Court appointed Arbitrator returned the case and declined to proceed with the arbitration vide order dated 12.01.2020 passed by the Arbitrator. 9. In view of above refusal of the Arbitrator to proceed with the arbitration, the present petition has been filed under Section 15(2) of the Arbitration and Conciliation Act, 1996 read with Section 11 of the Act for appointment of a Substituted Arbitrator in lieu of the earlier Arbitrator appointed by this Court. 10. This application, however, has been resisted by the Railway authorities on the ground that if any Substituted Arbitrator is to be appointed, it must be in terms of the Contract agreement entered between the parties and accordingly, the petitioner may be directed to first resort to the terms of the contract before approaching the Court. It has been submitted that it is only when the respondents fail to comply with the terms of the contract to appoint an Arbitrator that the petitioner can approach this Court.
It has been submitted that it is only when the respondents fail to comply with the terms of the contract to appoint an Arbitrator that the petitioner can approach this Court. 11. On the other hand, it has been submitted by the learned counsel for the petitioner that once the Arbitrator had been appointed by this Court, only this Court can appoint the Substituted Arbitrator. 12. In this regard, the learned counsel for the petitioner has relied on following decisions: (i) A decision rendered by the Single Bench of Allahabad High Court (Lucknow Bench) in Arbitration Application No.16 of 2015, decided on 05.01.2017 [ M/S Tirath Ram Sumer Kumar Vs. Rakesh Kumar Mishra]. (ii) A decision rendered by the Single Bench of Calcutta High Court in A.P. No.606 of 2008 decided on 05.02.2009 [Ramjee Power Construction Ltd. Vs. Damodar Valley Corporation]. 13. On the other hand, Mr. G. Goswami, learned Standing Counsel, N.F. Railway has relied on the decision of Hon’ble Supreme Court rendered in the Government of Haryana PWD Harnyana (B and R) Branch Vs. G.F. Toll Road Pvt. Ltd. And Ors. [Civil Appeal No.27/2019 (arising out of S.L.P. (C) No.20201 of 2018, decided on 03.01.2019] [MANU/SC/0003/2019]. 14. Mr. Goswami, learned counsel for the respondents has submitted that Section 15(2) of the Arbitration and Conciliation Act, 1996 provides that where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator replaced and as such, the petitioner must first invoke the rules referred to the terms of the contract before approaching this Court. 15. This Court, however, is not able to accept such proposition of the respondents for the reason that when the first Arbitrator was appointed, it was appointed by this Court on the basis of Section 11 of the Arbitration and Conciliation Act, 1996 as the terms of contract could not be applied. 16. This Court vide order dated 20.09.2019 passed in Arb. Pet.
16. This Court vide order dated 20.09.2019 passed in Arb. Pet. No.33/2018 while appointing the first Arbitrator had resorted to Section 11 of the Arbitration and Conciliation Act, 1996 in view of the fact that the railway authorities could not have appointed anybody who were or had been in the service of Railways in view of the requirement of neutrality laid down under Section 12(5) of the Arbitration and Conciliation Act, unless there is waiver to the applicability of the same by an expressed agreement in writing. 17. Thus, this Court while appointing the first Arbitrator considered that the Arbitral Tribunal could not have been constituted by the Railway authorities because of bar placed under Section 12(5) of the Arbitration and Conciliation Act and proceeded to appoint Hon’ble Mr. Justice (Retd.) B. D. Agarwal, a former Judge of this High Court under Section 11 of the Arbitration and Conciliation Act, 1996. 18. Under the circumstances, the contention of the Railway authorities that the petitioner should first invoke the terms of the contract cannot be accepted inasmuch as there has been change in law by imposing a bar as provided under Section 12(5) of the Arbitration and Conciliation Act, 1996 and there was/is no waiver by the petitioner by an expressed agreement in writing. 19. This Court respectfully agrees with the opinion rendered by the Calcutta High Court in Ramjee Power Construction Ltd. (supra) that the expression “ rules that were applicable to the appointment of the arbitrator being replaced” in Section 15 would mean modification under which the first Arbitrator was appointed and in the present case, the first Arbitrator was appointed by this Court under Section 11 of the Arbitration and Conciliation Act, 1996, the Substituted Arbitrator also has to be appointed in terms of Section 11 of the Arbitration and Conciliation Act, 1996. The relevant portion of the decision in Ramjee Power Construction Ltd.(supra) reads as follows, “As observed above, the expression “rules that were applicable to the appointment of the arbitrator being replaced” in Section 15, have carefully been chosen. If the arbitrator being replaced was appointed by the Chief Justice and/or his designate in accordance with Section 11 of the 1996 Act read with the applicable rules, the substitute arbitrator would also have to be appointed by the Chief Justice and/or his designate in the same manner.
If the arbitrator being replaced was appointed by the Chief Justice and/or his designate in accordance with Section 11 of the 1996 Act read with the applicable rules, the substitute arbitrator would also have to be appointed by the Chief Justice and/or his designate in the same manner. It is immaterial that the respondent has appointed an arbitrator in the meanwhile. The appointment of the arbitrator by the respondent, after filing of this application, is of no consequence.” Further, the decision relied on by the counsel for the Railway authorities in the G.F. Toll Road Pvt. Ltd (supra), it may be noted that during the conclusion of arguments, the counsel for both parties mutually agreed to the arbitration being conducted by a Sole Arbitrator in supersession of the arbitration Clause in agreement which provided for a three-member arbitration panel and as such, this Court is of the view that the said decision may not be strictly applicable in the present case. Accordingly, this Court is of the view that the Substituted Arbitrator can be appointed by this Court. 20. Accordingly, this Court proceeds to appoint Hon’ble Mrs. Justice Anima Hazarika, a retired Judge of this High Court, to act as the Substitute Arbitrator to decide the disputes between the parties subject to her willingness and disclosure and/or absence of any impediment as contemplated under Section 12 of the Arbitration and Conciliation Act, 1996. 21. The Registry of this Court will furnish a copy of this order to Hon’ble Mrs. Justice Anima Hazarika, (Retired) for doing the needful. 22. Parties will appear before the learned substituted Arbitrator within a period of one month from today and the learned Substituted Arbitrator will proceed with the arbitration in accordance with law. 23. With the above observations and directions, the present petition stand disposed of.