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2022 DIGILAW 466 (CHH)

Ram Singh Yadav, S/o. Shravan Yadav v. Union of India Ministry of Railway, Through The Principal Chief Commercial Manager All Zonal Railway

2022-10-21

ARUP KUMAR GOSWAMI

body2022
ORDER : 1. Heard Ms. Saumya Sharma, learned counsel for the applicant. Also heard Mr. Ramakant Mishra, learned Deputy Solicitor General, appearing for the respondents. 2. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, for short, ‘A&C Act’ for appointment of an arbitrator. 3. Pursuant to Notice Inviting Tender (NIT) issued on 29.10.2019 to run the Bilaspur Junction Two-Wheeler Stand for three years, the applicant participated in the tendering process and, being successful, a letter of acceptance was issued to the applicant on 07.12.2019. An agreement was also executed, being agreement No. COM-PS-TWO WHEELER-BSP, by the applicant and by the respondent No.3 on behalf of South Eastern Central Railways (SECR). However, the agreement is not dated. 4. Facts necessary for disposal of the petition, in short, are that due to Covid-19 pandemic, the train services were stopped and in such circumstances the Two-Wheeler stand (for short, ‘the stand’) was more or less closed till September, 2020. In such circumstances, railway authorities had sent a letter dated 02.09.2020 to the applicant seeking his consent to operate the stand for the remaining period of contract indicating therein that the period from 25.03.2020 to 22.06.2020 to be treated as dies-non and for the rest period same terms and conditions would apply. Subsequently, by letter dated 30.09.2020, the applicant was asked as to whether he will operate the stand on the condition of “footfall” based calculation of license fee. Under duress, the applicant agreed to operate the stand although detailed explanation with regard to “footfall” method was not explained to him for informed consent. It transpired that by letter dated 29.08.2021, the applicant requested the authorities to revise the calculation of license fee. As no reply was received, letter dated 08.09.2021 was issued for appointment of an independent arbitrator to resolve dispute. In reply, a letter was sent from the Office of the General Manager (Arbitration) dated 08.09.2021, requiring the applicant to convey his willingness/unwillingness regarding waiver of Section 12(5) & Section 31A (5) of the A&C Act. A prescribed proforma was also attached to the letter with a further request to send item-wise claim as well as total claim amount. In the meantime, the respondents continued to send demand notices and the applicant deposited whatever revenue he could generate. A prescribed proforma was also attached to the letter with a further request to send item-wise claim as well as total claim amount. In the meantime, the respondents continued to send demand notices and the applicant deposited whatever revenue he could generate. The applicant by his letter dated 14.09.2021 informed that he did not agree to waive off applicability of Section 12(5) of the A&C Act and accordingly, expressed his unwillingness to waive off his right. The break-up of the claim, indicating the same to be not necessarily the final claim, was indicated, further stating that his claim, on that date, is Rs.10,06,266/-. By the said letter, request was also made to the General Manager (Arbitration) to take appropriate decision on the matter of appointment of the arbitrator and to respond back at the earliest. 5. On 26.10.2021, Deputy General Manager (G) on behalf of General Manager wrote a letter to the applicant informing that the competent authority had nominated a panel comprising 04 (four) Retired Railway Officers of SA Grade and above, in terms of Clause 64(3)(b)(i) of General Conditions of Contract (GCC) for the applicant to indicate 02 (two) names as his nominees from the panel of names given in the letter within 30 days from the date of dispatch of the letter, from which the Competent Authority would appoint one of them as arbitrator, failing which, it was indicated that all the names appearing in the panel will be presumed as his approved nominees. The applicant did not respond to the said letter and filed this application on 26.11.2021 for appointment of arbitrator. 6. In the reply filed by the respondents, it is stated that it had appointed one Shri Mahesh Kumar Jain, whose name was also one of the four names mentioned in the letter dated 26.10.2021, by an order dated 02.12.2021 as a sole arbitrator and therefore, the petition deserves to be dismissed. 7. Ms. Sharma submits that the applicant having approached this Court due to failure of the respondents to appoint arbitrator, the respondents had forfeited their right to appoint arbitrator after filing of this petition on 26.11.2021. 7. Ms. Sharma submits that the applicant having approached this Court due to failure of the respondents to appoint arbitrator, the respondents had forfeited their right to appoint arbitrator after filing of this petition on 26.11.2021. She submits that neither the GCC was signed by the parties nor the GCC was made part of the agreement between the parties and therefore, requiring the applicant to nominate two persons, as indicated by the letter dated 26.10.2021, in terms of Clause 64(3)(b)(i) of the GCC, was misconceived as Clause 33 of the agreement entered into between the parties had laid down the manner of appointment of the arbitrator. In support of her submissions, she relies on decisions of the Hon’ble Supreme Court in Punj Lloyd Ltd. Vs. Petronet MHB Ltd., reported in (2006) 2 SCC 638 and in M/s. Continental India Private Limited Vs. General Manager Northern Railway, reported in AIR 2022 SC 3526 . She also relies on a judgment of this Court dated 09.05.2022 passed in ARBR No. 38 of 2019 (Central Electronics Limited Vs. South East Central Railway). 8. Mr. Mishra submits that the respondents waited for 30 days for the response of the applicant to the letter dated 26.10.2021 and when no reply was forthcoming, had immediately taken steps for appointment of arbitrator and therefore, no occasion arises for this Court to appoint the arbitrator. Mr. Mishra has relied on a decision of the Hon’ble Supreme Court in Civil Appeal No. 4914 of 2022 dated 25.07.2022 in the case of Mahanadi Coalfields Limited & Another Vs. M/s. IVRCL AMR Joint Venture. 9. The copy of the present application was served on the learned counsel for the respondents on the very date of filing, i.e., on 26.11.2021. Admittedly, the order of appointment is subsequent to the filing of the present petition. 10. Clause 33 of the agreement reads as follows : “33. All disputes, questions or differences arising out of or in any way touching or concerning this agreement (except those the decision whereof is otherwise here in force specifically provided for) shall be referred to the sole arbitration of any person appointed by the General Manager (Arbitration), SEC Railway at the time of such appointment. All disputes, questions or differences arising out of or in any way touching or concerning this agreement (except those the decision whereof is otherwise here in force specifically provided for) shall be referred to the sole arbitration of any person appointed by the General Manager (Arbitration), SEC Railway at the time of such appointment. There will be no objection to any such appointment that the person appointed is a Government Servant, that he has to deal with the matters to which the agreement relates and that in the course of his duties as such Government Servant he had expressed the views on all or any of the matters in dispute or difference. The award of such arbitrator shall be final and binding on the parties to the agreement. It is a term of this Agreement that in the event of such arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason such General Manager (Arbitration), SEC Railway as aforesaid at the time of such transfer vacation of office or inability to act, shall appoint another person to act as Arbitrator in accordance with terms of this agreement, such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this agreement that no person other than a person appointed by the General Manager (Arbitration), SEC Railway as aforesaid should act as Arbitrator and if for any reason that it is not possible the matter is not to be referred to arbitration at all. Subject as aforesaid, the provision of the Arbitration and Conciliation Act 1996 or any statutory modification or re-enactment thereof and the rules made there-under from time to time shall apply to such arbitration. The Arbitrator may with the consent of parties extend from time to time, the tenure for making and publishing the award. The venue of arbitration shall be _________." 11. Perusal of the above would go to show that the manner of appointment of arbitrator is specifically laid down therein. There is no reference to the GCC in Clause 33. Mr. Mishra is also unable to show that there is any reference to GCC in the agreement. 12. The venue of arbitration shall be _________." 11. Perusal of the above would go to show that the manner of appointment of arbitrator is specifically laid down therein. There is no reference to the GCC in Clause 33. Mr. Mishra is also unable to show that there is any reference to GCC in the agreement. 12. In M/s. Continental India Private Limited (supra), the clause of arbitration at Clause 32 was substantially similar to the arbitration clause in the present case. Clause 32 reads as follows : “32. Arbitration. (a) In the event of any question, dispute or difference arising under or in connection with this Agreement (except as to matters the decision of which is specially provided for by this Agreement) the same shall be referred to the sole arbitration of a person appointed to be the arbitrator, by the General Manager or the Railway. It will be no objection if the arbitrator is a Government servant, that he had to deal with matters to which the Agreement relates or that in the course of his duties as a Government servant he has expressed views on all or any of the matters in dispute or difference. The Award of the arbitrator shall be final and binding on the parties to this Agreement. Provided always that the decision of the General Manager of the Railway as to the disputes which fell within the 'excepted matters' referred to above shall be final and binding on the parties hereto and such decision of the General Manager shall not be called in question before the arbitrator by either of the parties hereto. (b) In the event of the arbitrator dying, neglecting or refusing to act, or resigning or being unable to act for any reason, or his award being set aside by the Court for any reason it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid. (c) It is further a term of this Agreement that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not be referred to arbitration at all." 13. (c) It is further a term of this Agreement that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not be referred to arbitration at all." 13. The Hon’ble Supreme Court in M/s. Continental India Private Limited (supra) held that the decision of the High Court to constitute an Arbitral Tribunal in terms of Clause 64(3)(b) of the GCC was unsustainable as neither the GCC was signed by the parties nor the GCC was made part of the agreement between the parties and therefore, the parties are not governed by the GCC at all. It is further held that as the respondents failed to appoint arbitrator as per the agreed procedure and in terms of the agreement, the respondents had forfeited their right to appoint an arbitrator in terms of the agreement and therefore, the appellant was justified in filing the application before the High Court for appointment of a sole arbitrator. 14. In Punj Lloyd Ltd. (supra), reliance was placed in the case of Datar Switchgears Ltd. Vs. Tata Finance Limited, reported in (2000) 8 SCC 151 , wherein, the Hon’ble Supreme Court had observed as follows : “5. ……… " [S]o 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 appointment 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 case 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." (emphasis in original)” 15. In Central Electronics Limited (supra), this Court had observed as follows : “8. Only then the right of the opposite party ceases." (emphasis in original)” 15. In Central Electronics Limited (supra), this Court had observed as follows : “8. In Durga Welding Works vs. Chief Engineer, Railway Electrification, Allahabad and Another, reported in 2022 SCC Online SC 11, it is reiterated that once an application under Section 11(6) of the Act has been filed for appointment of an Arbitrator before the High Court, the respondent forfeits its right to appoint an arbitrator and the High Court alone has jurisdiction to appoint an arbitrator in exercise of power under Section 11(6) of the Act. 9. In this petition, the appointment of the arbitrator was made by the respondent after the petitioner had filed this petition under Section 11(6) of the Act. 10. In that view of the matter, I am of the considered opinion that the petitioner has made out a case for appointment of an arbitrator.” 16. Reliance placed by Mr. Mishra on Mahanadi Coalfields Limited & Another (supra) is misconceived. In Mahanadi Coalfields Limited & Another (supra), the issue that was considered was as to whether Clause 15 of the contract agreement constitutes or does not constitute an arbitration agreement within the meaning of Sections 2(b) and 7 of the A&C Act and on consideration of Clause 15, the Hon’ble Supreme Court had come to the conclusion that though Clause 15 of the Contract Agreement is titled “settlement of disputes” / arbitration, substantive part of the provision makes it abundantly clear that there is no arbitration agreement between the parties agreeing to refer either present or future disputes to arbitration. Clause 15 reads as follows : “15. Settlement of Disputes/Arbitration : 15.1. It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level. The contractor should make request in writing to the Engineer-in-Charge for settlement of such disputes/ claims within 30 (thirty) days of arising of the case of dispute/claim failing which no disputes/claims of the contractor shall be entertained by the company. 15.2. If differences still persist, the settlement of the dispute with Govt. Agencies shall be dealt with as per the Guidelines issued by the Ministry of Finance, Govt. of India in this regard. 15.2. If differences still persist, the settlement of the dispute with Govt. Agencies shall be dealt with as per the Guidelines issued by the Ministry of Finance, Govt. of India in this regard. In case of parties other than Govt. Agencies, the redressal of the disputes may be sought in the Court of Law.” 17. In the instant case, the respondents had not disputed arbitration clause and rather had also appointed arbitrator, albeit, after the applicant had filed his application before this Court. Therefore, the ratio of Mahanadi Coalfields Limited & Another (supra) is not applicable in the facts and circumstances of the case. 18. On due consideration, I find that the applicant has made out a case for appointment of an arbitrator. 19. Accordingly, Hon’ble Mr. Justice Dhirendra Mishra (Retd.) is appointed to act as the Arbitrator to resolve the disputes between the parties. 20. The Registry is directed to communicate this order to Hon’ble Mr. Justice Dhirendra Mishra (Retd.) in his Lordship’s proper address. 21. The arbitration application, accordingly, stands allowed.