Business At 11Th Floor vs The Union Of India And 5 Ors
2023 Latest Caselaw 1386 Gua

                                                                 Page No.# 1/5

GAHC010073462023




                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                         Case No. : WP(C)/1908/2023

         ECI- SANJOSE (JV)
         A JOINT VENTURE BETWEEN ECI ENGINEERING AND CONSTRUCTION
         COMPANY LIMITED, HAVING ITS REGISTERED OFFICE AT PLOT NO. A12
         AND A13, PANCHAVATI TOWNSHIP, MANIKONDA, RAJENDRA NAGAR
         MANDAL, DIST-RANGA REDDY, HYDERABAD-500089, TELANGANA AND
         M/S CONSTRUCTOR A SANJOSE, S.A. HAVING ITS REGISTERED OFFICE AT
         ROSALIA DE CASTRO, 44, PONTEVEDRA, SPAIN AND ITS INDIAN OFFICE
         AT UNIT 602, GLOBAL FOYER BUILDING, GOLF COURSE ROAD, SECTOR-
         43, GURGAON-122002, HARYANA AND HAVING ITS PRINCIPAL PLACE OF
         BUSINESS AT 11TH FLOOR, HIRANANDANI, KNOWLEDGE PARK,
         TECHNOLOGY STREET, POWAI, MUMBAI-76 AND IS REPRESENTED
         THROUGH ITS AUTHORISED REPRESENTATIVE MR. P.M.V. RAGHUNADH
         BABU, S/O P. KOTESWARA RAO, R/O FLAT NO. 111, JALVAYUVIHAR,
         OPPOSITE JNTU KUKTPALLY, HYDERABAD, 500072, TELENGANA



         VERSUS

         THE UNION OF INDIA AND 5 ORS
         REPRESENTED BY THE SECRETARY TO THE GOVT. OF INDIA, MINISTRY
         OF RAILWAYS, NEW DELHI-110001

         2:NORTHEAST FRONTIER RAILWAY
          REPRESENTED BY ITS GENERAL MANAGER
          NF RAILWAY H.Q.
          MALIGAON
          GUWAHATI-781011

         3:GENERAL MANAGER (CONSTRUCTION)
          NORTHEAST FRONTIER RAILWAY
          NF RAILWAY HQ
          MALIGAON
          GUWAHATI-781011
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            4:PRESIDING ARBITRATOR SHRI A.K. MITTAL
             EX. ME
             RAILWAY BOARD AND FLAT C-2/10 (3102)
            VANSHREE PLOT 1 AND 2 SECTOR 58A PALM BEACH ROAD
             NEAR SEAWOODS ESTATE
             NERUL
             NAVI MUMBAI-400706
             MAHARASHTRA

            5:CO-ARBITRATOR SHRI AKHIL AGARWAL
             EX-DG/S AND T/RAILWAY BOARD
             K-122
             GULSHAN VIVANTE
             SECTOR-137
             NOIDA-201304
             U.P

            6:CO-ARBITRATOR SHRI HARSH KUMAR
             EX-FA AND CAO/NORTHERN RAILWAY
             HOUSE NO. G-1001
             NBCC HEIGHTS
             SECTOR-89
             PATAUDI ROAD
             GURUGRAM-122505
             HARYAN

Advocate for the Petitioner   : MR G N SAHEWALLA

Advocate for the Respondent : DY.S.G.I.




                                  BEFORE
                HONOURABLE MR. JUSTICE MICHAEL ZOTHANKHUMA

                                          ORDER

Date : 03-04-2023

Heard Mr. GN Sahewalla, learned senior counsel for the petitioner, who submits that the appointment of the 3 (three) Arbitrators, who are retired Railway Employees vide the impugned order dated 19.07.2022 should be set aside as the same is not in conformity with the judgment of the 2 (two) Judges Bench of the Supreme Court in Perkins Eastman Architects DPC Page No.# 3/5

& Anr. -vs- HSCC (India) Limited, reported in (2020) 2 SCC 760. The learned senior counsel submits that as per the judgment of the Apex Court in Perkins Eastman Architects DPC (supra), the Apex Court has held that when the Managing Director of one of the parties to the dispute is ineligible by operation of law to act as an Arbitrator, the empowering of any other person by the Managing Director as an Arbitrator will also be invalid.

The learned senior counsel also submits that though the law laid down by the 2 (two) Judges Bench of the Apex Court in Central Organisation for Railway Electrification -vs- ECI-SPIC-SMO-MCML (JV) a Joint Venture Company, reported in (2020) 14 SCC 712, wherein it was held that the Managing Director of one of the parties to the case was ineligible by operation of law to act as an Arbitrator was upheld, the second portion of the said judgment was not upheld. The 3 (three) Judges Bench in the latter judgment held that the Managing Director could appoint Arbitrators, after a panel of at least 4 (four) names of retired Railway Officials had been sent to the other party for appointment as an Arbitrator. Thereafter, the other party was to suggest at least 2 (two) names out of the panel of 4 (four) names and the General Manager was thereafter to appoint 3 (three) Arbitrators to form the Arbitral Tribunal.

The learned senior counsel submits that the decision of the 3 (three) Judges Bench in Central Organisation for Railway Electrification (supra), was not agreed with by another 3 (three) Judges Bench of the Apex Court in Union of India -vs- M/S Tantia Constructions Limited , (Special Leave to Appeal (C) No. 12670/2020) wherein in its order dated 11.01.2021, it requested a constitution of a larger Bench to look into the correctness of the judgment passed in Central Organisation for Railway Electrification (supra).

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Thereafter, another 3 (three) Judges Bench in the case of JSW Steel Limited

-vs- South Western Railway & Another (Special Leave to Appeal (C) No. 9462/2022), requested the Chief Justice of India for constituting a larger Bench in view of the disagreement between the two 3 (three) Judges Bench in Central Organisation for Railway Electrification (supra) and Union of India -vs- M/S Tantia Constructions Limited (supra).

The petitioner's counsel submits that the respondents had sent the names of 4 (four) retired Railway Officers to the petitioner requesting the petitioner to nominate at least 2 (two) names out of the 4 (four), for appointment as Arbitrators from their side, vide letter dated 18.05.2022 issued by the respondent No. 3. The petitioner thereafter selected 2 (two) out of the 4 (four) names for appointment of Arbitrators, vide letter dated 15.06.2022. Thereafter, the impugned letter dated 19.07.2022 was issued by the respondent No. 3, constituting the Arbitral Tribunal consisting of 3 (three) Arbitrators, in terms of Clause 64 of the General Conditions of Contract, for deciding the dispute between the parties.

The learned senior counsel for the petitioner prays that though the Arbitration proceeding has started, the same should be kept in abeyance till a decision with regard to the issue of constitution of an Arbitral Tribunal is decided by a larger Bench of the Apex Court.

Mr. B Chakraborty, learned CGC submits that there is no stay on the impugned letter dated 19.07.2022 constituting the Arbitral Tribunal. Further, the same has been made in consonance with the judgment of the 3 (three) Judges Bench of the Apex Court in Central Organisation for Railway Electrification (supra). He also submits that the petitioner has submitted a statement of claim before the Arbitral Tribunal on 12.09.2022 and the Page No.# 5/5

respondents have submitted their statement of defense. He submits that as the petitioner had accepted the jurisdiction of the Arbitral Tribunal earlier, he cannot turn around now and make a challenge to the same, just because a larger Bench of the Apex Court is to decide the question as to whether the Arbitral Tribunal consisting of Railway Officials could form a part of the Arbitral Tribunal, on being appointed by the respondent No. 3. He further submits that 2 (two) out of the 3 (three) Arbitrators, who form the Arbitral Tribunal, have been nominated by the petitioner.

Mr. B Chakraborty, learned CGC submits that he would like to obtain instructions in the matter.

List the matter on 20.04.2023, on which date an attempt to decide the interim prayer shall be made.

JUDGE

Comparing Assistant