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2022 DIGILAW 483 (RAJ)

Brandavan Food Products v. Union Of India

2022-02-11

PANKAJ BHANDARI

body2022
ORDER 1. The applicant has preferred this arbitration application for appointment of an independent sole arbitrator. 2. It is contended by learned counsel for the applicant that as per Arbitration Clause 20.1 of the agreement, first an attempt was to be made for amicable settlement of the dispute between the parties. As per Clause 20.2, in the event that a dispute between the parties subsists beyond 30 days of negotiations between the parties, then the dispute shall be settled as per the provisions of Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996'). The dispute shall be referred to sole arbitration of Gazetted Railway Officer appointed to be an arbitrator by the General Manager of the Zonal Manager awarding the license and the Gazetted Railway Officer to be appointed as arbitrator, however, will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference. 3. It is contended that the applicant vide letter dated 12.11.2016 (Annexure-9) requested for appointment of an arbitrator. The authorities appointed Mr. Manoj Kumar Jain as arbitrator vide letter dated 14.2.2017. Mr. Manoj Kumar Jain recused himself on which another application was given to the authorities on 27.7.2017 for appointment of an arbitrator. No arbitrator was appointed, therefore, Arbitration Application No.103/2017 was filed before the High Court. During the pendency of this application, the non-applicant - respondent appointed Mr. C.R. Kumawat as arbitrator. The applicant has given his no objection to the appointment of Mr. C.R. Kumawat as arbitrator. Mr. C.R. Kumawat was a Railway Representative in another arbitration proceeding against the present applicant and when this fact was brought to his notice, he also recused himself. After filing of the present arbitration application, notices were issued to the Union. Union sought time to file reply and thereafter, they appointed Mr. Y.P. Singh as arbitrator, however, this Court directed Mr. Y.P. Singh not to proceed in the matter as he was already arbitrator in 5-6 cases. Mr. Y.P. Singh also recused himself on 15.6.2020. 4. It is contended by learned counsel for the applicant that in view of the judgments of the Apex Court in Perkins Eastman Architects DPF & Anr. Y.P. Singh as arbitrator, however, this Court directed Mr. Y.P. Singh not to proceed in the matter as he was already arbitrator in 5-6 cases. Mr. Y.P. Singh also recused himself on 15.6.2020. 4. It is contended by learned counsel for the applicant that in view of the judgments of the Apex Court in Perkins Eastman Architects DPF & Anr. Versus HSCC (India) Ltd.: AIR 2020 SC 59 and TRF Limited Versus Energo Engineering Projects Limited: (2017) 8 SCC 377 , a person, who cannot himself arbitrate in a matter, cannot appoint an arbitrator. It is contended that since the Zonal Manager or the General Manager cannot arbitrate, they cannot appoint an arbitrator. It is, therefore, prayed by the counsel that an independent arbitrator be appointed by the Court. 5. Learned counsel appearing for the Union of India has objected to the appointment of an independent arbitrator. Attention of this Court was drawn to sub-clause (c) of Clause 20.2, which reads as under: 'It is further a term of this contract 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 to be referred to arbitrator at all'. 6. It is contended that since the applicant is not agreeable to the list provided by the Union, an arbitrator cannot be appointed and in term of sub-clause (c) of Clause 20.2, matter cannot be referred to arbitrator at all. To buttress his argument, counsel for the Union of India has placed reliance on Union of India & Anr. Versus M.P. Gupta: (2004) 10 SCC 504 . 7. Counsel has also placed reliance on Sanjay Matai Versus Senior Divisional Commercial Manager & Anr.: S.B. Arbitration Application No.133/2017 decided by the Rajasthan High Court wherein it was held that clause 1 of Seventh Schedule of the Act does not debar appointment of a retired employee. The Court further held that there is no illegality for appointment of the retired employee having no past or present business relationship with the party. Further, it is contended that SLP preferred by Sanjay Matai was dismissed by the Apex Court. 8. The Court further held that there is no illegality for appointment of the retired employee having no past or present business relationship with the party. Further, it is contended that SLP preferred by Sanjay Matai was dismissed by the Apex Court. 8. Counsel for the Union of India has further placed reliance on Ace Pipeline Contracts Private Limited Versus Bharat Petroleum Corporation Limited: (2007) 5 SCC 304 wherein the Apex Court held that if a party requests to the Court to appoint an arbitrator other than that nominated in the agreement as the Arbitrator so nominated will not be impartial, such request is not tenable. Once, a party has entered into an agreement with eyes wide open, it cannot wriggle out of the situation. If the party feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the party to make an application under Section 34. 9. I have considered the contentions of the parties and have perused the arbitration clause. 10. In TRF Limited (supra), it was held that if a person, who is ineligible to arbitrate, he cannot nominate a person to act as an arbitrator. In Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited Versus Ajay Sales & Suppliers & Ors.: SLP (Civil) No.13520 of 2021, the arbitration clause was to the effect that all disputes and differences arising out of or in any way touching or concerning the agreement, whatsoever shall be referred to the sole Arbitrator, the Chairman, Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. and his decision shall be final and binding for the parties. It was further held by the Court that once, the Chairman is 'ineligible' to act as an arbitrator to resolve the dispute between the parties in view of sub-section (5) of Section 12 read with Seventh Schedule of the Act, he loses mandate to continue as a sole arbitrator. Therefore, it cannot be said that High Court has committed any error in appointing the arbitrator other than the sole arbitrator-Chairman. In view of the judgment in TRF Limited (supra), it is clear that a person, who is himself ineligible to act an arbitrator, cannot nominate someone as an arbitrator and if such ineligibility accrues, then in view of Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited & Ors. In view of the judgment in TRF Limited (supra), it is clear that a person, who is himself ineligible to act an arbitrator, cannot nominate someone as an arbitrator and if such ineligibility accrues, then in view of Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited & Ors. (supra), the Court is competent to appoint an arbitrator, but before appointing an arbitrator, it is important to see the arbitration clause, which was entered into between the parties. 11. In the present case, sub-clause (c) of Clause 20.2 of the agreement specifically provides 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 to be referred to arbitrator at all. In M.P. Gupta (supra), in the agreement there was Clause (3)(a)(iii), which reads as under: '(3)(a)(iii) It is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all.' The Apex Court in view of the express provision contained therein that two gazetted railway officers shall be appointed as arbitrators held that Justice P.K. Bahri could not be appointed by the High Court as the sole arbitrator. On this sole ground alone, the judgment and order under challenge to the extent it appoints Justice P.K. Bahri as sole arbitrator was set aside. The Apex Court directed the appellant to appoint two gazetted railway officers as arbitrators. The newly appointed arbitrators were directed to enter into reference within a period of another one month and thereafter the arbitrators were directed to make the award within a period of three months. This judgment was prior to the amendment in the Arbitration act, but from the judgment, it can be deduced that the Apex Court considered the expressed bar and the provision provided that if arbitrator is not appointed for any reason, then the matter is not to be referred to the arbitrator at all. In Sanjay Matai (supra), it was held by the Rajasthan High Court that a retired railway employee can be appointed as an arbitrator. In the present case in hand also, a retired railway employee was appointed as an arbitrator. 12. In Sanjay Matai (supra), it was held by the Rajasthan High Court that a retired railway employee can be appointed as an arbitrator. In the present case in hand also, a retired railway employee was appointed as an arbitrator. 12. There being an express bar in the agreement that no person other than the person appointed by the authority as aforesaid should act as an arbitrator and if for any reason that is not possible, the matter is not to be referred to the arbitrator at all, this Court is not inclined to appoint an independent arbitrator. However, in view of the fact that learned counsel for railway is agreeable to appointment of retired railway employee and has suggested to the Court that they would supply a list of retired railway employees and applicant can choose from amongst them to act as an arbitrator, this Court deems it proper to direct the respondents to supply a list of retired railway employees within 15 days of receipt of copy of this order and the applicant should within 15 days thereafter choose from the list an arbitrator and inform the railway of the same. The railway should thereafter appoint such person as an arbitrator and the arbitrator should thereafter proceed to decide the dispute. The arbitration application is accordingly disposed of. 13. The arbitrator shall be entitled to lay down fees as provided under Manual of Procedure for Alternative Disputes Resolution, 2009, as amended from time to time.