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2023 DIGILAW 177 (JHR)

Diksha Enterprises v. Union of India

2023-02-15

SHREE CHANDRASHEKHAR

body2023
ORDER : 1. Through this Arbitration Application, M/s Diksha Enterprises has approached this Court for appointment of an Arbitrator in terms of the mechanism for settlement of disputes provided under the Indian Railways Standard General Conditions of Contract, July 2014 (in short GCC-14) which forms part of Notice No. W-584/DHN/2014-15/Open/74/2 dated 19th March 2015. 2. The aforesaid tender notice was issued by the East Central Railway for “Renovation of Sounda-B (NCDC) Private Siding under Deposit terms for CCL; track renewal and other ancillary work of Jarandih-I Private Siding at Jarandih under deposit terms for CCL and like works at Bhandaridah as well as some works for extension of New Selected Dhori Private Siding and Renovation of Central Sounda Private Siding.” It is not in dispute that by a communication dated 17th July 2015 some of the works for which the applicant has submitted bid dated 13th May 2015 was accepted and an agreement dated 12th November 2015 was executed by the Divisional Engineer (Siding) E.C. Railway, Dhanbad (for and on behalf of the President of India). 3. The disputes settlement mechanism under the GCC-14 is provided under Clauses-63 and 64 of GCC-14 under which appointment of the Arbitrator is specifically dealt with under Clause-64(3). 4. Clause-64(3)(a)(ii) of GCC-14 which is relevant for the present purpose provides for constitution of the Arbitral Tribunal to consist of a panel of three Gazetted Railway Officers or two Railway Gazetted Officers not below JA Grade and a retired Railway Officer not below the rank of SAG officer as the Arbitrators. 5. Clause 64(3) of GCC-14 reads as under: “64.(3) (a)(i) In cases where the total value of all claims in question added together does not exceed Rs. 25,00,000 (Rupees twenty five lakh only), the Arbitral Tribunal shall consist of a Sole Arbitrator who shall be a Gazetted Officer of Railway not below JA Grade, nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by G.M. 64.(3) (a)(ii) In cases not covered by the Clause 64(3)(a) (i), the Arbitral Tribunal shall consist of a Panel of three Gazetted Railway Officers not below JA Grade or 2 Railway Gazetted Officers not below JA Grade and a retired Railway Officer, retired not below the rank of SAG Officer, 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 which may also include the names of retired Railway Officers empanelled to work as Railway Arbitrator to the contractor within 60 days from the day when a written and valid demand for arbitration is received by the GM. Contractor will be asked to suggest to General Manager at least 2 names out of the panel for appointment as contractor's nominee within 30 days from the date of dispatch of the request by Railway. 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. GM shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of contractor's nominees. 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 Railway for the purpose of appointment of arbitrator. 64.(3) (a)(iii) If one or more of the arbitrators appointed as above refuses to act as arbitrator, withdraws from his office as arbitrator, or vacates his/their office/offices or is/ are unable or unwilling to perform his functions as arbitrator for any reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay, the General Manager shall appoint new arbitrator/arbitrators to act in his/their place in the same manner in which the earlier arbitrator/arbitrators had been appointed. Such re-constituted Tribunal may, at its discretion, proceed with the reference from the stage at which it was left by the previous arbitrators. 64.(3) (a)(iv) The Arbitral Tribunal shall have power to call for such evidence by way of affidavits or otherwise as the Arbitral Tribunal shall think proper, and it shall be the duty of the parties hereto to do or cause to be done all such things as may be necessary to enable the Arbitral Tribunal to make the award without any delay. The Arbitral Tribunal should record day to-day proceedings. The Arbitral Tribunal should record day to-day proceedings. The proceedings shall normally be conducted on the basis of documents and written statements. 64.(3) (a)(v) While appointing arbitrators under Sub-Clause (i), (ii) and (iii) above, due care shall be taken that he/they is/are not the one/those who had an opportunity to deal with the matters to which the contract relates or who in the course of his/their duties as Railway servants expressed views on all or any of the matters under dispute or differences. The proceedings of the Arbitral Tribunal or the award made by such Tribunal will, however, not be invalid merely for the reason that one or more arbitrator had, in the course of his service opportunity to deal with the matters to which the contract relates or who in the course of his/their duties expressed views on all or any of the matters under dispute. 64.(3) (b)(i) The arbitral award shall state item wise, the sum and reasons upon which it is based. The analysis and reasons shall be detailed enough so that the award could be inferred therefrom. 64.(3) (b)(ii) A party may apply for corrections of any computational errors, any typographical or clerical errors or any other error of similar nature occurring in the award of a Tribunal and interpretation of a specific point of award to Tribunal within 60 days of receipt of the award. 64.(3) (b)(iii) A party may apply to Tribunal within 60 days of receipt of award to make an additional award as to claims presented in the arbitral proceedings but omitted from the arbitral award. 64.(4) In case of the Tribunal, comprising of three Members, any ruling on award shall be made by a majority of Members of Tribunal. In the absence of such a majority, the views of the Presiding Arbitrator shall prevail. 64.(5) Where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made. 64.(6) The cost of arbitration shall be borne by the respective parties. The cost shall inter-alia include fee of the arbitrators, as per the rates fixed by Railway Board from time to time and the fee shall be borne equally by both the parties. 64.(6) The cost of arbitration shall be borne by the respective parties. The cost shall inter-alia include fee of the arbitrators, as per the rates fixed by Railway Board from time to time and the fee shall be borne equally by both the parties. Further, the fee payable to the arbitrators would be governed by the instructions issued on the subject by Railway Board from time to time irrespective of the fact whether the arbitrators is/are appointed by the Railway Administration or by the court of law unless specifically directed by Hon'ble court otherwise on the matter. 64.(7) Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules thereunder and any statutory modifications thereof shall apply to the arbitration proceedings under this Clause.” 6. The disputes settlement mechanism provides for resolution of dispute at the level of the General Manager who within 120 days after receipt of the contractor's representation shall make and notify a decision on all matters referred to by the contractor. Under Clause-64(1)(ii) of GCC-14, the demand for arbitration needs to be in specific terms as to the matters which are in question or subject of the dispute or difference as also the amount of claim item-wise. It is further provided under Clause-64(1)(iii) of GCC-14 that the arbitration proceedings shall be assumed to have commenced from the day a written and valid demand for arbitration proceeding is received by the Railway. 7. The applicant has pleaded that there is a letter dated 31st March 2021 from the Assistant Divisional Engineer-II, E.C. Railway, Gomoh for preparation of the final bill which did not include the entire work executed by it. Therefore, it has raised its objection through the letter dated 13th April 2021 stating that inspite of completion of work to the extent of 99% payment was not released to it. This communication has been followed by further communications dated 24th September 2021 and 18th February 2022. The communication dated 24th September 2021 by the applicant requesting for measurement of the works executed by it has been denied by the Sr. Divisional Engineer-III, E.C. Railway, Dhanbad. While the dispute continued, the applicant has sent notice dated 18th February 2022 to the General Manager as provided under Clause-63 of GCC-14. In response to the letter dated 18th February 2022, the Sr. Divisional Engineer-III, E.C. Railway, Dhanbad. While the dispute continued, the applicant has sent notice dated 18th February 2022 to the General Manager as provided under Clause-63 of GCC-14. In response to the letter dated 18th February 2022, the Sr. Divisional Engineer-III, E.C. Railway, Dhanbad has taken a stand that vide letter dated 3rd January 2022 the claim raised by the contractor was declined. Thereafter, the applicant has issued notice dated 22nd April 2022 and raised a claim for Rs. 69,87,416.50/-. And, through letter dated 22nd April 2022, the applicant has invoked the Arbitration Clause for resolution of dispute. 8. In the counter-affidavit, the respondent has raised an objection that the applicant did not resort to in-house mechanism as provided under Clause-64 of GCC-14. 9. Based on this objection, Mr. Anil Kumar, the learned Assistant Solicitor General of India assisted by Mr. Pratyush Kumar, the learned Central Government Counsel submits that the applicant cannot move an application straight-away under section 11(6) of the AC Act. 10. This objection seems to be not sustainable in the light of the letter dated 18th February 2022 which has been written to the General Manager which is the authority at the first instance under Clause-63 of GCC-14 which shall have the jurisdiction for resolution of dispute between the parties. There is no dispute as to validity of the Arbitration Clause or that the dispute raised by the applicant does not fall within the scope of Arbitration or that the dispute is not arbitratorable. 11. While so, I find that this is a fit case for exercise of the powers under section 11(6) of the AC Act for appointment of a sole Arbitrator for resolution of dispute between the parties. 12. Though it is not necessary, but the learned counsels appearing for the parties have indicated their agreement for appointment of Mr. R.S. Poddar, a Former Development Commissioner of the State of Jharkhand and Former Chairman of Real Estate Regulatory Authority of the State of Jharkhand (mob. nos. 9431104676/9304226879) for being appointed as the sole Arbitrator. 13. Ordered Accordingly. 14. The parties shall approach the learned Arbitrator within four weeks. 15. Arbitration Application No. 25 of 2022 is allowed in the aforesaid terms.