Delhi High Court
Cg Tollway Limited vs National Highway Authority Of ... on 28 October, 2021
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: October 07, 2021
Pronounced on: October 28, 2021
(i) + ARB.P. 888/2021
CG TOLLWAY LIMITED ..... Petitioner
Through: Mr. Vikram Nankani, Senior
Advocate with Mr. Ashish Batra,
Mr. Sarthak Sachdev & Ms. Terresa
R. Daulat, Advocates
Versus
NATIONAL HIGHWAY AUTHORITY OF INDIA
& ANR. .... Respondents
Through: Mr. Sudhir Gupta, Senior Advocate
with Mr. Amarjit Singh Bedi,
Mr. Umang Gupta & Ms. Shweta
Chauhan, Advocates for respondent
No.1
(ii) + ARB.P. 889/2021
KISHANGARH GULABPURA TOLLWAY
LIMITED ..... Petitioner
Through: Mr. Vikram Nankani, Senior
Advocate with Mr. Ashish Batra,
Mr. Sarthak Sachdev & Ms. Terresa
R. Daulat, Advocates
Versus
NATIONAL HIGHWAY AUTHORITY OF INDIA
& ANR. .... Respondents
Through: Mr. Sudhir Gupta, Senior Advocate
with Mr. Amarjit Singh Bedi,
Mr. Umang Gupta & Ms. Shweta
Chauhan, Advocates for respondent
No.1
ARB.P. 888/2021; 889/2021 & 892/2021 Page 1 of 24
(iii) + ARB.P. 892/2021
UDAIPUR TOLLWAY LIMITED ..... Petitioner
Through: Mr. Vikram Nankani, Senior
Advocate with Mr. Ashish Batra,
Mr. Sarthak Sachdev & Ms. Terresa
R. Daulat, Advocates
Versus
NATIONAL HIGHWAY AUTHORITY OF INDIA
& ANR. .... Respondents
Through: Mr. Sudhir Gupta, Senior Advocate
with Mr. Amarjit Singh Bedi,
Mr. Umang Gupta & Ms. Shweta
Chauhan, Advocates for respondent
No.1
CORAM:
HON'BLE MR. JUSTICE SURESH KUMAR KAIT
JUDGMENT
1. Petitioners in the above captioned three petitions are companies
incorporated under the provisions of Companies Act, 1956 and are
subsidiary of M/s IRB Infrastructure Developers Limited, who claims to be
the largest infrastructure developers in India with vast experience in
construction, operation & maintenance of highway projects. Respondent is a
statutory body constituted under the National Highways Authority of India
Act, 1988 (NHAI) and respondent No. 2 has been incorporated under
Societies Registration Act, 1860 formed by NHAI along with NHBF for
settlement of disputes through arbitration.
2. Since similar relief has been sought in these petitions, therefore, with
the consent of learned counsel for the parties, these petitions were heard
together and are being disposed of by this common judgment.
3. In the above captioned first petition [ARB.P.888/2021], the petitioner-
Company was awarded a project of six laning of Kishangarh Udaipur
Ahmedabad Section from Km. 90.000 (near Gulabpura) to Km. 214.870
(end of Chittorgarh bypass) of NH-79 in the State of Rajasthan package - 2
under NHDP Phase-Von BOT (Toll) for which a Concession Agreement
dated 09.12.2016 was executed between petitioner and respondent No.1-
NHAI.
4. In the above captioned second petition [ARB.P.889/2021], the
petitioner-Company was awarded a project of six laning of Kishangarh to
Gulabpura section of NH-79A and NH-79 in the State of Rajasthan (Length
90.000km) on DBFOT (Toll) under NHDP Phase-V Package-1, for which a
Concession Agreement dated 22.02.2017 was executed between the
petitioner and respondent- NHAI.
5. In the above captioned third petition [ARB.P.892/2021], the
petitioner- Company was awarded the Project of six laning from Km
287.400 to Km 401.200 Section of NH-8 in the state of Rajasthan & Gujarat
(Approx length 113.800 Km.) on DBFOT (Toll) under NHDP Phase-V
(Package-V) i.e. on "Design Build Finance Operate Transfer Basis" ("the
said Project"), for which a Concession Agreement dated 09.12.2016 was
executed between petitioner and respondent, National Highways Authority
of India (NHAI).
6. The Concession Agreements in question required the petitioners to
undertake the entire cost of projects and in addition, to pay fixed premium of
Rs.228.60 crores, Rs.186.30 crores and Rs.163.80 crores respectively to the
respondent each year, with annual increase @3% p.a. till the subsistence of
the agreement. In lieu of the above, petitioner was entitled to collect and
retain toll, from which petitioner could satisfy the project costs, reasonable
returns etc. The Appointed Date / Commercial Operation Date (COD) under
the Concession Agreements in respect of the project of the petitioner were
04.11.2017, 21.02.2018 and 03.09.2017 respectively. Petitioners were,
therefore, entitled to recover toll fee from the road users in accordance with
the law for use of the subject section of National Highways as per "National
Highways Fee (Determination of Rates and Collection) Rules, 2008" and the
right of way in respect of concerned land was to be provided by respondent
-NHAI to petitioner within 120 days of respective COD.
7. According to petitioners, the originally scheduled "Completion Dates"
on 910th day from COD was extended by NHAI to 31.01.2020, 09.09.2021
and 30.11.2020 respectively. However, in the wake of various instructions
issued from time to time due to Covid pandemic, construing the same as a
Force Majeure Event, the completion date was further extended till
30.07.2021 (in Arb.P. 888/2021); 31.05.2021 (in Arb.P.892/2021) and
09.09.2021 (ARB.P. 889/2021) respectively. Petitioners notified the
occurrence of Force Majeure under Political Event in terms of Clause 34.5
in Article 34 of the MCA on account of the State-wide complete lockdown
w.e.f. 22.03.2020 and submitted their claims for reimbursement of
losses/costs directly attributable to such political force majeure event from
22.03.2020 to 03.05.2020 in all these petitions and consequential extension
of concession period as per Article 34 of the MCA.
8. On 18.05.2020, the Office Memorandum was issued by the Central
Government for implementation inter alia by the respondent-NHAI.
Thereafter, on 26.05.2020, the "Policy Guidelines 1BOT (Toll) 12020" was
issued by respondent- NHAI particularly for covid related reliefs and
further, a letter dated 26/27.05.2020 was issued intimating the amendment in
toll fee notification.
9. It is averred in the petition that Clause - 44 of the Concession
Agreement contained the Dispute Resolution mechanism. Further Clause -
44.3 of the Concession Agreement contained the Arbitration Agreement,
which reads as under:-
"44.3 Arbitration
44.3.1 Any Dispute which is not resolved amicably
by conciliation, as provided in Clause 44.2, shall be
finally settled by arbitration as set forth below:
i. The Dispute shall be finally referred to Society
for Affordable Resolution of Disputes (hereinafter
called as SAROD), a Society registered under
Society's Act, 1860 vide Registration No.
SIRSISW104912013 duly represented by
Authority and National Highways Builders
Federation (NHBF). The dispute shall be dealt
with in terms of Rules of SAROD. The detailed
procedure for conducting Arbitration shall be
governed by the Rules of SAROD and provisions of
Arbitration & Conciliation Act, 1996, as amended
from time to time. The Dispute shall be governed by
Substantive Law of India.
ii. The appointment of Tribunal, code of conduct
for Arbitrators and fees and expenses of SAROD
and Arbitral Tribunal shall also be governed by the
Rules of SAROD as amended from time to time. The
rules of SAROD are placed at Appendix- III.
iii. Arbitration may be commenced during or after
the Concession Period, provided that the
obligations of Authority and the Concessionaire
shall not be altered by reason of the Arbitration
being conducted during the Concession Period.
iv. The seat of Arbitration shall be New Delhi or a
place selected by governing body of SAROD and
the language for all documents and
communications between the parties shall be
English.
The expenses incurred by each party in connection
with the preparation, presentation, etc. of arbitral
proceedings shall be shared by each party itself.
44.3.2. There shall be a Board of three arbitrators
of whom each party shall select one, and the third
arbitrator shall be appointed by the two arbitrators
so selected, and in the event of disagreement
between the two arbitrators, the appointment shall
be made in accordance with the Rules.
44.3.3 The arbitrators shall make a reasoned
award (the „Award‟). Any award made in any
arbitration held pursuant to this Article 44 shall be
final and binding on the Parties as from the date it
is made, and the Concessionaire and the Authority
agree and undertake to carry out such Award
without delay.
44.3.4 The Concessionaire and the Authority agree
the an Award may be enforced against the
Concessionaire and/or the Authority, as the case
may be, and their respective assets wherever
situated.
44.3.5. This Agreement and the rights and
obligations of the Parties shall remain in full force
and effect, pending the Award in any arbitration
proceedings hereunder."
10. For adjudication of certain disputes with respondents, petitioner is
said to have approached the Rajasthan High Court and vide Judgment dated
25.08.2021, it was held as under:-
"38. Accordingly, we pass the following order:-
(i) The challenge of the petitioners to Rule 4(9) of
the National Highways Fee (Determination of
Rates and Collection) Rules, 2008 is dismissed.
(ii) Challenge to the Office Memorandum dated
18.05.2020 and Policy Guidelines dated
26.05.2020 is dismissed.
(iv) The petitioners are permitted to invoke
arbitration proceedings within a period of four
weeks, and parties are free to raise all contractual
disputes before the Arbitral Tribunal for their
decision on merits.
(v) NHAI shall within two weeks
communicate to the petitioners their decision on
petitioners' claim for compensation for force
majeure or extension. If aggrieved with the same,
the petitioners would have remedy in arbitration,
wherein all contentions of the parties in this regard
would remain open.
(v) Considering prima facie case, for a limited
period of three months from issuance of this order
or till the date of completion of the project
whichever is earlier, the alleged obligation of the
petitioners to pay premium under Article 26.2.1
shall remain stayed. This stay is subject to the
petitioners furnishing undertaking to this Court
within a period of one week that in the event the
petitioners are unsuccessful in the Even though the
clause of the Concession Agreement states
arbitration, the disputed premium shall be payable
by the petitioners with interest on the principle of
"premium deferment scheme " (referred in the
aforesaid order dated 16.04.2019 of the Bombay
High Court in Writ Petition No.3415/2019, upheld
by the Hon'ble Supreme Court vide order dated
11.09.2019 dismissing SLP(C) NO.21315/2019
filed by NHAI. The petitioners would also
undertake that after appropriating the monthly
liabilities sequentially towards taxes, payment
towards construction, O&M Expenses and Debt
Servicing in the order already given in Article 31,
entire balance amount from the Toll Fee collected
would remain available in the Escrow Account,
which would be subject to the decision in Section 9
and/or 17 of the Arbitration & Conciliation Act,
1996, as the case may be.
(vi) Needless to state that the petitioner would be
entitled to claim further appropriate interim relief
under the provisions of Section 9 and/or 17 of the
Arbitration & Conciliation Act, 1996.
39. We make it absolutely clear that the
observations made hereinabove are only prima
facie and we have not deliberated on the issue on
the merits of the matter. The Arbitral Tribunal
would resolve the disputes in accordance with law
and the observations made herein would not bind
the Arbitral Tribunal."
11. The petitioners and their group of companies had also approached the
Hon'ble Supreme Court vide W.P. (C) 923/2021 seeking restraint of
respondent-NHAI in dominant position in empanelling arbitrators on
SAROD panel and quashing and setting aside the formation of the four
member Committee for empanelment/ re-empanelment of Arbitrators to
resolve disputes concerning NHAI as well as seeking setting aside or
modifying the eligibility criteria for empanelment of arbitrators on SAROD,
to bring it under the Schedule to the Arbitration and Conciliation Act,
"General Norms" of the "Eighth 1996 (though now omitted in 2021) to
ensure independent and impartial arbitration by SAROD". However, the said
petition was dismissed as withdrawn with liberty to petitioners to approach
the competent court of law.
12. At the hearing, learned senior counsel appearing on behalf of
petitioners submitted that the Hon'ble Rajasthan High Court vide Judgment
dated 25.08.2021 in DB CWP 11042/2020 has directed parties to invoke
arbitration and Clause-44 of the Concession Agreement mandates that any
dispute between the parties has to be referred to SAROD for redressal,
which shall thereafter be dealt with by Arbitral Tribunal to be constituted in
terms of Arbitration Rules of SAROD particularly Rule 11.4, from the list of
empanelled Arbitrators to be empanelled/ re-empanelled in terms of the
rules, regulations, terms, conditions, guidelines and procedures, as per
Article 2(h) of Memorandum of Association by SAROD. The concerned
Rule 11 reads as under:-
"Rule 11- Appointment of Tribunal
11. 1 The disputes shall be decided by a
Sole Arbitrator when the total claim of dispute
is Rs. 3 Crores or less.
11.2 In all cases of disputes claimed for
more than Rs. 3 Crores, the tribunal shall
consist of odd number of Arbitrators to be
nominated by the patties. The Presiding
Arbitrator shall be appointed by the
Arbitrators nominated by the patties from
amongst the panel maintained by SAROD.
For deciding the Presiding Arbitrator, a draw
of lots can be carried out from amongst the
names suggested by the Arbitrators
nominated by the Parties. The eligibility
criteria for empanelment of Arbitrators will
be decided by the Governing Body.
11.3 If a Sole Arbitrator is to be appointed,
the Governing Body will appoint the
Arbitrator within 21 days from the date the
Respondent's Statement of Defence and
Counterclaim (if any) is filed or falls due,
whichever is earlier. The Governing Body will
appoint the Arbitrator from the panel of
Arbitrators by draw of lots.
11.4 An Arbitrator/Presiding Arbitrator to
be appointed under these Rules shall be a
person on the SAROD Arbitration Panel as at
the date of the appointment.
11.5 In the event of any patty failing to
appoint Arbitrator within 30 days of receipt of
the notice of Arbitration, the Governing Body
shall appoint the Arbitrator or Presiding
Arbitrator as the case may be by a draw of
lots."
13. The grievance raised on behalf of petitioners is that even though
Article 2(h) of the Memorandum of Association of SAROD formulates
selection/ appointment of panel of Arbitrators, but till date it has not been
formulated by SAROD. Learned senior counsel appearing on behalf of
petitioners drew attention of this Court that even NHBF has raised grievance
and lack of faith in the selection process of SAROD for its empanelment
being dominated by the NHAI. Moreover, NHBF vide letter dated
21.07.2020 addressed to the President, Society for Affordable Redressal of
Disputes-Ports (SAROD) informed its inability to fulfil the aspirations of
members NHBF and stated that future disputes may have to be settled under
ad hoc arbitration under the Arbitration and Conciliation Act, 1996.
14. Petitioner claims that the governing body of SAROD is mainly
controlled by respondent No.1 and the key positions such as President,
Secretary and Treasurer of SAROD are under the aegis of respondent No.1.
Further, as per minutes of meeting of committee for empanelment/ re-
empanelment of Arbitrators in SAROD held on 03.11.2020 and 09.11.2020,
three out of four participants in the Committee are from NHAI and one is
from NHBF.
15. Lastly, learned senior counsel submitted that ex facie the institution
SAROD has failed to perform its functions with fairness, reasonableness and
in accordance with law. The entire procedure adopted by the said Arbitral
Institution is opaque, discriminatory, manifestly arbitrary and lacking in
impartiality and independence and thus, petitioners are constrained to reach
this Court seeking appointment of Arbitrator for adjudication of disputes.
16. To the contrary, the stand of respondent-NHAI is that these petitions
have been filed contrary to the Concession Agreements dated 09.12.2016 (in
ARB.P. 888 & 892 of 2021) and 22.02.2017 (in ARB.P.892.2021),
whereunder the parties had agreed on a procedure for appointment of
Arbitrator under Clause-44, sub-clause (3) of which provides that disputes
have to be referred to SAROD. It further provides for appointment of
Tribunal, code of conduct for Arbitrators and fees and expenses of Arbitral
Tribunal to be governed by Rules of SAROD. Also, Clause 44.3.2 provides
that there shall be a Board of three Arbitrators of whom each party shall
select one and the third Arbitrator, to be appointed by the two Arbitrators so
selected, and in the event of disagreement, for the appointment to be made in
accordance with the Rules of SAROD and sub-rule 11.4 of Rule 11 provides
that the Arbitrator/Presiding Arbitrator has to be a person of "SAROD
Arbitration Panel".
17. Learned senior counsel appearing on behalf of respondents submitted
that in fact no disputes with petitioners subsists and all disputes inter se
parties were settled vide Settlement Agreement dated 04.11.2020,
26.08.2020 and 04.02.2020 executed between NHAI and the petitioners
respectively, wherein petitioners have agreed upon not to raise any claims
under the Concession Agreements in question. It was also submitted that
these petitions under the provisions of Section 11(6) of the Act are not
maintainable, as this Court can appoint Arbitrator only in the event when the
party or a person including an institution fails to perform any function
entrusted to it under the procedure agreed, as provided under Section 11(2)
of the Act.
18. It was also submitted on behalf of respondents that according to
petitioners, even if disputes, if any, remain to be adjudicated, the same shall
be governed under the procedure prescribed in Concession Agreement,
which further stipulates that the disputes shall be dealt in accordance with
SAROD and the persons to be appointed as Arbitrators have to be from the
panel of SAROD only. It was also submitted that the allegations raised
against SAROD are totally baseless, as the Society has a specific "eligibility
criteria" depending on the qualification and experience for empanelling the
Arbitrators for redressal of the disputes and the current panel of Arbitrators
of SAROD are from various fields and backgrounds i.e. technical, former
Judges of the High Court and the Supreme Court, Chief Engineers,
Secretaries to Government of India, etc. So far as the plea that NHBF doubts
the credibility of panel of Arbitrators of SAROD, learned senior counsel
submitted that in the meetings held on 03.11.2020 and 09.11.2020, NHBF
itself has advised for inclusion of renowned persons from construction
industry/ Judges in the empanelment list and 15 fresh names considered for
empanelment, which shows its fair and transparent functioning. To
strengthen the above argument that where the appointment has been
specifically agreed between the parties by an agreement, the Arbitrators
have to be appointed as per the terms of Agreement, reliance was placed
upon decisions in:-
i. NHAI & Anr. Vs. Bumihiway DDB Ltd. (JV) & Ors. (2006)
10 SCC 763;
ii. UOI & Anr. Vs. MP Gupta (2004) 10 SCC 504
iii. You One Engg. & Const. Co. Ltd. & Anr. Vs. NHAI (2006) 4
SCC 372 &
iv. IOCL & Ors. Vs. Raja Transport Private Limited (2009) 8
SCC 520.
v. SBP & Co. Vs. Patel Engineering Ltd. & Anr. (2005) 8 SCC
19. It was next submitted that vide judgment dated 25.08.2021, the High
Court of Rajasthan had permitted the petitioners to invoke Arbitration,
however, till today, petitioners have not invoked the arbitration clause.
Further contended that against the judgment dated 25.08.2021, petitioners
had reached the Hon'ble Supreme Court by filing a Special Leave Petition,
which was dismissed vide its order dated 03.09.2021. Also submitted that
petitioners' writ petition [W.P.(C) 923/2021] filed before the Hon'ble
Supreme Court seeking quashing SAROD Arbitration Panel and for
permitting persons outside the said list, was dismissed as withdrawn vide
order dated 27.08.2021 with liberty to file appropriate petition before
competent court, but the same cannot be construed as having granted
permission to file petition under Section 11(6) of the Act. Lastly, it was
submitted that SAROD is well equipped to resolve all disputes arising
between the parties and therefore, these petitions deserve dismissal.
20. In rebuttal, learned senior counsel for petitioners submitted that
SAROD has failed to perform the functions entrusted to it as per the
Arbitration Agreement and also it has failed to formulate any such Rules
guidelines and procedures for selection/ empanelment of Arbitrators and the
manner in which the institution has drastically reduced the total number of
empanelled Arbitrators, it is in such circumstances the present petition has
been filed.
21. Learned senior counsel for petitioners further submitted that originally
SAROD had consisted equal members of NHAI and NHBF, so as to
maintain impartiality and independence of the arbitral process, however,
presently SAROD has become a sole custodian of the interests of NHAI and
even NHBF itself has lost all confidence in SAROD. It was submitted that
due to majority of NHAI representation on the Committee, NHAI has
selected majority of Arbitrators of its choice on the panel and therefore,
NHBF has considered itself disassociating with SAROD and in such
circumstances, appointment of Arbitrator from the panel of Arbitrators
maintained by SAROD would defeat the purpose of fair and transparent
redressal of disputes between the parties. Also submitted that the stand of
respondents that all the disputes have been amicably resolved in terms of
Settlement Agreements, is erroneous, as the subject matter of disputes herein
is regarding illegal demand of premium by the respondent in contravention
of 06 month time gap contemplated under the Concession Agreement
between completion of construction and commencement of premium
payment thereunder, which was not considered then. Further, the petitioners
have claimed the specific contractual remedies regarding compensation and
extension of the concession period, which is disputed by respondents and the
Settlement Agreements in question were part of conciliation proceedings
between the parties and the disputes are still pending, which are required to
be adjudicated. Lastly, it was submitted that to seek impartial and
independent arbitral process, petitioners have approached this Court seeking
appointment of Arbitrators and these petitions, therefore, deserve to be
allowed.
22. The arguments advanced by learned senior counsel representing both
the sides were heard at length and the record of this case has been carefully
perused.
23. During the course of hearing, it transpired that the basic dispute
between the parties is not collection of toll fees but is regarding payment of
premium to be payable to respondent-NHAI by the petitioners, which was to
commence from the Scheduled Toll Tariff Revision/Scheduled completion
date. The claim of respondent-NHAI is that petitioners are trying to link
between the collection of fee and payment of premium. It was submitted on
behalf of respondents that petitioners have not placed before this court the
complete Concession Agreement, wherein terms of concession fee have
been enumerated in Para-26.2. However, this Court is not required to
adjudicate the disputes between the parties but the question for
determination is as to whether the present petitions invoking jurisdiction of
this Court seeking appointment of Arbitrators, are maintainable or the
Arbitrators have to be appointed in terms of SAROD.
24. It is not disputed that the Rajasthan High Court vide Judgment dated
25.08.2021 had permitted petitioners to invoke arbitration and also held that
Arbitral Tribunal would resolve the disputes in accordance with law. Also,
the petition filed by the petitioners before the Hon'ble Supreme Court [W.P.
(C) 923/2021] seeking restraint of respondent-NHAI in dominant position in
empanelling arbitrators on SAROD panel, was dismissed as withdrawn with
liberty to petitioners to approach the competent court of law. However,
petitioners have not yet invoked the arbitration clause but have approached
this Court seeking appointment of sole Arbitrator.
25. The relevant Section 11(6) in The Arbitration And Conciliation Act,
1996 reads as under:-
"(6) Where, under an appointment procedure agreed
upon by the parties,-
(a) a party fails to act as required under that
procedure; or
(b) the parties, or the two appointed arbitrators, fail to
reach an agreement expected of them under that
procedure; or
(c) a person, including an institution, fails to perform
any function entrusted to him or it under that
procedure, a party may request the Chief Justice or
any person or institution designated by him to take
the necessary measure, unless the agreement on the
appointment procedure provides other means for
securing the appointment."
26. During the course of hearing, reliance was also placed upon decision
in Central Organization for Railway Electrification Vs. M/S ECI-SPIC-
SMO-MCML (JV) A Joint Venture Company 2019 SCC Online SC 1635.
27. This Court is conscious that decision of Hon'ble Supreme Court in
Central Organization for Railway Electrification (Supra) has been referred
to the Larger Bench for consideration, however, it is still pending
adjudication and, therefore, holds the field and so, has been relied upon by
different Coordinate Benches of this Court in various decisions.
28. Pertinently, the Hon'ble Supreme Court in Central Organization for
Railway Electrification (Supra) while dealing with a case of appointment of
Arbitrator in terms of arbitration agreement, as opposed to the appointment
of an independent Arbitrator, observed and held that the jurisdiction of this
Court under Section 11(6) of the Act can be invoked only once the
procedure for appointment of the Presiding Arbitrator provided in the
contract has been exhausted and has failed.
29. Also, the Hon'ble Supreme Court in National Highways Authority Of
India And Another Vs. Bumihiway Ddb Ltd. (Jv) And Others (2006) 10
Supreme Court Cases 763, has observed and held as under:-
"30. It is pertinent to state that under Section 11(6) of the
Act, the Court has jurisdiction to make the appointment only
when the person including an institution, fails to perform
any function entrusted to it under that procedure. In the
present case, the relief claimed by the respondents by
invoking Section 11(6) is wholly erroneous as prior to the
order dated 1-7-2005, the respondents only sought a
clarification from IRC and without making a reference to
them, immediately filed the petition under Section 11(6) on
the purported ground that the Indian Roads Congress had
failed to make the appointment within the stipulated time.
Therefore, the reliance placed by the respondent on the
judgment of this Court in Punj Lloyd Ltd. v. Petronet MHB
Ltd. [(2006) 2 SCC 638] is wholly erroneous and is not
applicable to the facts of the present case.
XXXXX
XXXXX
XXXXX
XXXXX
46. In view of the order now passed setting aside the
appointment of the presiding arbitrator by the High Court,
the appointment of the presiding arbitrator as per the
procedure contemplated under the contract agreement has
to be followed and IRC, Ministry of Shipping, Road
Transport and Highways, R.K. Puram, New Delhi should be
approached. The parties are at liberty to approach the
arbitrators for any further interim directions."
30. This Court finds that respondent has rightly relied upon Hon'ble
Supreme Court decision in You One Engg. & Const. (Supra) wherein it is
held that if the parties have entered into an agreement with open eyes, it is
not open to ignore it and invoke exercise of powers in Section 11(6) of the
Act. However, reliance placed by respondent upon decisions in IOCL &
Ors. (Supra) and SBP & Co. (Supra), is of no help to respondent being
distinguishable on facts.
31. Applying the aforesaid provisions of Section 11(6) of the Act and
ratio of law laid down by the Hon'ble Supreme Court in respect thereof to
the case in hand, this Court finds that sub-clause (i) of Clause 44.3.1 of the
Contract Agreement set forth the arbitration clause and it specifically
enumerates that the disputes shall be dealt with in terms of Rules of SAROD
and provisions of Arbitration and Conciliation Act, 1996. Further, Clause
44.3.2 prescribes the mode of constitution of arbitral tribunal. Also, Rule 11
of Memorandum of Association by SAROD (as noted in Para-12 above),
stipulates that the Arbitrator appointed under the Rules shall be a person on
the panel of SAROD and Clause 11.2 prescribes the manner for appointment
of Presiding Arbitrator.
32. Also, a Coordinate Bench of this Court in ARB.P. 860/2019, titled as
IRB Ahmedabad Vadodara Super Express Tollway Private Limited Vs.
National Highways Authority of India, dated 27.08.2020 had dealt with
almost similar issue where the two nominee Arbitrators could not consent on
appointment of Presiding Officer from the panel of SAROD. In the said case
also the petitioner had raised concern about impartiality of Arbitrator to be
appointed from the panel of SAROD and to refute the apprehension of
petitioner, the Bench appointed the Presiding Officer from legal background
on the panel of SAROD itself. The present case is distinguishable on facts
that the parties have yet not nominated any of the Arbitrator, who shall
further appoint the Presiding Officer to complete the arbitral tribunal.
33. So far as objection of petitioners with regard to the credibility of panel
of SAROD is concerned, this Court has gone through the list of Arbitrators
on the panel of SAROD (Document-5) and finds that there are total 89
Arbitrators on the panel of SAROD, which includes Bureaucrats, Chief
Engineers, Secretaries to Government of India hailing from different
educational background and also Former Judges of the High Court and the
Supreme Court and their trustworthiness and integrity cannot in any way be
doubted.
34. In the aforesaid view of the matter, this Court is of the opinion that
these petitions under Section 11(6) of the Act seeking appointment of sole
Arbitrator are not maintainable and are hereby dismissed, while directing the
parties to nominate one Arbitrator each from the panel of SAROD having 89
Arbitrators (as per Document-5) and the two so appointed shall appoint the
third Arbitrator, strictly in terms spelt out in 44.3.2 of the Concession
Agreement.
35. In view of the above, these petitions are accordingly disposed of.
(SURESH KUMAR KAIT)
JUDGE
OCTOBER 28, 2021
r
