Chattisgarh High Court

Ram Singh Yadav vs Union Of India on 21 October, 2022

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                                                                          AFR
                   HIGH COURT OF CHHATTISGARH, BILASPUR

                         Arbitration Request No. 25 of 2021
Ram Singh Yadav S/o Shravan Yadav Aged About 68 Years R/o Basera
Colony, Gali No. 2 Bhartiya Nagar, Ward No. 11 Bilaspur District Bilaspur
Chhattisgarh.
                                                                 ---- Applicant
                                      Versus
1.        Union of India Ministry of Railway, Through The Principal Chief
          Commercial Manager All Zonal Railway, New Delhi.
2.        Director Traffic, Coll. Chhattisgarh Railway Board New Delhi.
3.        Senior Divisional Commercial Manager South East Central Railway
          Bilaspur Chhattisgarh.
4.        Station Director South East Central Railway Bilaspur Chhattisgarh.
                                                              ---- Respondents
               (Cause Title taken from Case Information System)

     For Applicant             : Ms. Saumya Sharma, Advocate.

     For Respondents           : Mr. Ramakant Mishra, Deputy Solicitor General

     Date of Hearing           : 26.08.2022

     Date of Order             : 21.10.2022

     _________________________________________________________

                   Hon'ble Shri Arup Kumar Goswami, Chief Justice

                                       CAV Order


               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.
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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. 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. 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. 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. 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. 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. 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. In case of parties other

than Govt. Agencies, the redressal of the disputes

may be sought in the Court of Law."