Tantia-Ccil (Jv) vs Union Of India
2016 Latest Caselaw 7194 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      ARB.P. 615/2016
       TANTIA-CCIL (JV),                                  ..... Petitioner
                          Through:     Mr Soumya Chakraborty, Senior
                                       Advocate with Mr Rajesh Pathak and
                                       Mr      Abhishek      Chakraborty,
                                       Advocates.

                          versus

       UNION OF INDIA                                    ..... Respondent
                     Through:          Mr Jagjit Singh, Mr Preet Singh and
                                       Ms Kiran, Advocates.

       CORAM:
       HON'BLE MR. JUSTICE VIBHU BAKHRU
                    ORDER

       %            01.12.2016
VIBHU BAKHRU, J

1. The petitioner (hereafter ‗TCJV') has filed the present petition under Section 11 of the Arbitration and Conciliation, Act, 1996, inter alia, praying that a Sole Arbitrator or a panel of three Arbitrators be appointed to adjudicate the disputes between the parties.

2. TCJV is a joint venture between M/s Tantia Constructions Ltd. and Continental Construction Infrastructure Limited for construction of 1.80 kms. long tunnel on realigned path in Udhampur-Katra Section in connection with Udhampur-Srinagar-Baramulla Rail Link Project. The tender for the aforesaid works were invited by the respondent in Udhampur and in response thereto TCJV submitted its tender. The said tender was

accepted, and the respondent communicated the acceptance to TCJV by its letter dated 04.01.2010. Subsequently, a formal contract was executed between the parties on 02.03.2010.

3. The General Conditions of Contract (hereafter ‗GCC') - which is, admittedly, a part of the contract between the parties - includes an arbitration clause. The said clause is set out below:-

       ―64.(3 )     Appointment of Arbitrator:

       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 GM.

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 name(s) of retired Railway Officer(s) 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 arbitrator (s).

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 proceedings shall normally be conducted on the basis of documents and written statements.

64.(3) (a)(v) While appointing arbitrator(s) under Sub- Clause (i), (ii) & (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 servant(s) 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 arbitrator(s), 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 arbitrator(s) would be governed by the instructions issued on the subject by Railway Board from time to time irrespective of the fact whether the arbitrator(s) 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.‖

4. It is stated that certain disputes have arisen between the parties in relation to the said contract and, accordingly, TCJV invoked the arbitration clause. In terms of the arbitration clause, an Arbitral Tribunal of three members was constituted on 10.07.2013 by the General Manager, Northern Railways. The Tribunal consisted of the following three members:-

       (i)        Mr. Vijay Pratap Singh, CE/C/Survey
       (ii)       Mr. S. Bandyopandhyay, CSTE/Plg.
       (iii)      Mr. Diptiman Das, FA&CAO/BD-Presiding Arbitrator.

5. TCJV submitted its claim before the Arbitral Tribunal and certain arbitration hearings were also held. However, on 31.07.2015, the remaining arbitrators of the Arbitral Tribunal noted that the Presiding Arbitrator, Mr. Diptiman Das had resigned and, therefore, another Arbitrator was required to be appointed in his place. TCJV sent several letters requesting for appointment of the Presiding Arbitrator in place of Mr Das. However, the General Manager, Northern Railways (appointing authority) failed and neglected to appoint the Presiding Arbitrator and therefore, TCJV was constrained to file the present petition.

6. Mr Singh, learned counsel appearing for the respondent states that on 25.11.2016, the General Manager, Northern Railways has appointed Mr S.

K. Kaushik, Chief Project Manager/AR as the Presiding Arbitrator. He further submits that the files relating to the disputes between the parties had been seized by the Vigilance Department and, therefore, even if a Presiding Arbitrator had been appointed, the Arbitral Tribunal would have made no progress since the necessary files are not available with the respondent.

7. Mr Chakraborty, the learned senior counsel appearing for TCJV drew the attention of this Court to Clause 64.(7) of the GCC and contended that the Arbitration and Conciliation Act, 1996 (hereafter ‗the Act') and any statutory modifications thereof would apply to the arbitration proceedings. He referred to schedule V and VII of the Act and submitted that in view of the Arbitration and Conciliation (Amendment) Act, 2015, the General Manager, Northern Railways could not appoint a serving employee of the respondent as an Arbitrator.

8. Mr Chakraborty further submitted that the General Manager, Northern Railways had failed and neglected to appoint the Presiding Arbitrator prior to TCJV approaching this Court and, therefore, had forfeited its right to do so.

9. Mr Singh, the learned counsel for the respondent countered the submissions made by Mr Chakraborty and contended that since the arbitral proceedings were commenced prior to 23.10.2015, the proceedings were governed by the un-amended Act.

10. I have heard the learned counsel for the parties.

11. At the outset, it is necessary to refer to Section 26 of the Arbitration

and Conciliation (Amendment) Act, 2015 (hereafter ‗ the Amendment Act'). The said section is set out below:-

―26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.‖

12. A plain reading of the Section 26 of the Amendment Act indicates that the Amendment Act does not apply to arbitral proceedings that had commenced in accordance with the provisions of Section 21 of the principal Act prior to the commencement of the Amendment Act. However, this is clearly qualified by the words ―unless the parties otherwise agreed‖. In the present case, clause 64.(7) of GCC clearly indicates that the parties had agreed that any statutory modification to the Act would be applicable. In view of this express agreement between the parties, Mr Singh's contention that the arbitral proceedings will be governed by the provisions of the Act as un-amended by the Amendment Act, is unmerited. Accordingly, the provisions of Section 12(1)(b) of the Act read with Fifth Schedule as well as the provisions of Section 12(5) of the Act are applicable to the arbitral proceedings. In the circumstances, the contention that a serving employee of the Railways could be appointed by the General Manager, Northern Railways to act as a Presiding Arbitrator is not sustainable.

13. Further, the contention that there is no delay in appointment of the Arbitrator since the relevant files relating to the disputes were seized by the Vigilance Department is wholly bereft of any merit. The files available with

the Vigilance Department, at best, are perhaps necessary for the respondent to submit its defence before the Arbitral Tribunal. However, that did not in any manner preclude the General Manager, Northern Railways from appointing the Presiding Arbitrator in substitute of the Presiding Officer who had demitted office. It is thus clear that General Manager, Northern Railways had failed to act in accordance with the terms of the arbitration clause as well as Section 15(2) of the Act.

14. There is also much merit in the contention that since the General Manager, Northern Railways had failed to appoint the Arbitrator prior to TCJV approaching this Court, it had forfeited the right to do so. This aspect has been explained by the Supreme Court in the case of Datar Switchgears Ltd v. Tata Finance Ltd and Anr.: (2000) 8 SCC 151. The relevant extract of the said decision is quoted below:-

―18. In the present case, the respondent made the appointment before the appellant filed the application under Section 11 but the said appointment was made beyond 30 days. Question is whether in a case falling under Section 11(6), the opposite party cannot appoint an arbitrator after the expiry of 30 days from the date of demand?

19. So far as cases falling under Section 11(6) are concerned -- such as the one before us -- no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so 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 cases 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. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited.‖

15. Any objection to the appointment of an Arbitrator under Section 12 of the Act does not warrant any interference by this Court and has to be pursued by the aggrieved party in accordance with Section 13 of the Act. However, in view of the fact that the General Manager, Northern Railways had not appointed the Presiding Arbitrator prior to TCJV approaching this Court, the said appointment would be of no effect. Accordingly, the Presiding Arbitrator is required to be appointed by this Court.

16. At this stage Mr Chakraborty submits that this Court should also appoint arbitrators in place of the two continuing arbitrators; however, this contention cannot be accepted. There is no provision in the Amended Act, which requires that an arbitrator appointed earlier be removed in view of the amendments introduced in the Act.

17. Accordingly, Mr Vijay Motwani, Former Special Director General, CPWD (Mobile No.9811793440) is proposed to be appointed as the

Presiding Arbitrator. The Registry is directed to communicate a copy of this order to the proposed Arbitrator for eliciting a disclosure under Section 12 of the Act. The parties are also at liberty to approach the proposed Arbitrator for obtaining the necessary disclosure.

18. List on 09.12.2016.

19. Order Dasti.

VIBHU BAKHRU, J DECEMBER 01, 2016 MK