Madras High Court
Also At vs The Integral Coach Factory on 21 April, 2022
Arb.O.P (Com.Div.) Nos.167 to 182 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.04.2022
CORAM
THE HON'BLE MR. JUSTICE M.SUNDAR
Arb.O.P (Com.Div.) Nos.167 to 182 of 2022
Pennar Industries Ltd.,
rep by its Authorised Signatory K.Lavanya Kumar
3rd Floor (west wing),
DHFLVC Silicon towers,
Kondapur, Hyderabad.
Also at:
Patta No.452/7,
Periyapalayam Road,
Kannigaipair Village,
Thiruvallur District-601102.
... Petitioner in all Arb.OPs
Vs.
The Integral Coach Factory,
Admin Building, Dr.Ambedkar Road,
Chennai, Tamil Nadu 600 038
Rep.by its General Manager.
... Respondent in all Arb.OPs
Common prayer: Arbitration Original Petition filed under Section 11 (5) of
the Arbitration and Conciliation Act, 1996 to appoint an independent sole
arbitrator to adjudicate upon the disputes between the petitioner and the
respondent.
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For Petitioner in all Arb.OPs : Mr.Adithya Reddy
For Respondent in all Arb.OPs : Mr.P.T.Ramkumar
Standing Counsel for Railways
COMMON ORDER
This common order will govern and dispose of all the captioned 16
'Arbitration Original Petitions' ['Arb.OPs']
2. Captioned 16 Arb.OPs have been presented in this Court on
28.03.2022 under Section 11 of 'The Arbitration and Conciliation Act, 1996
(Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience
and clarity] with a prayer for appointment of a sole Arbitrator.
3. When the captioned 16 Arb.OPs were first listed before this Court
in the Admission Board (Motion List) on 11.04.2022, the following
proceedings were made:
'Mr.Adithya Reddy, learned counsel for petitioner in all the
16 captioned Arb.OP is before this Court.
2. Learned counsel submits that each of the captioned
Arb.OP is predicated on a Purchase Order and an arbitration
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clause which is construed as part of the Purchase Order. Learned
counsel submitted that a common trigger notice dated 21.12.2021
was issued and there is no response from the respondent (ICF)
regarding this trigger notice i.e., notice invoking the arbitration
clause.
3. Learned counsel submits that increase in tax component
by 7% is the central theme of the lis.
4. Learned counsel is permitted to serve Mr.P.T.Ramkumar,
learned Standing Counsel for Southern Railway (this Court is
informed that learned Standing Counsel accepts notice for ICF
also). Registry to show the name of Mr.P.T.Ramkumar, Standing
Counsel from the next listing. List all the 16 captioned Arb.OPs on
Monday in the Admission Board.
List on 18.04.2022.'
4. Thereafter, there was one more listing on 18.04.2022 and on that
day, the following proceedings were made:
'Read this in conjunction with and in continuation of earlier
proceedings made in the previous listing on 11.04.2022.
2. Mr.Adithya Reddy, learned counsel on record for
petitioner in all the sixteen captioned Arb OPs is before this
Court.
3. Adverting to the aforementioned earlier proceedings,
Ms.G.Shankardevi, learned counsel representing
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Mr.P.T.Ramkumar, learned standing counsel for Southern
Railways requests for a short accommodation to get instructions
and revert to this Court.
4. Registry to show the name of learned standing counsel
for Southern Railways in all these sixteen captioned Arb OPs in
the next listing.
5. List in the Admission Board on Thursday. List on
21.04.2022'.
5. In continuation of the aforementioned proceedings made in the
earlier two listings, Mr.Adithya Reddy, learned counsel for petitioner in all
16 captioned Arb.OPs and Mr.P.T.Ramkumar (learned standing counsel for
Southern Railways) on behalf of 'lone respondent' in the captioned 16
Arb.OPs ['The Integral Coach Factory' ('ICF' for the sake of brevity)] are
before this Court.
6. There is no disputation about the existence of arbitration agreement
between the petitioner and ICF in all / each of the 16 matters in hand. In
other words, clause 2900 of 'Indian Railway Standard Conditions of
Contract' ['IRSCC'] serves as arbitration agreement between the petitioner
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and ICF in each of the 16 captioned Arb.OPs is the common say of both
learned counsel. To be noted, this clause 2900 captioned 'Arbitration', reads
as follows:
'2900. Arbitration.
(a) In the event of any question, dispute or difference
arising under these conditions or any special conditions of
contract, or in connection with this contract (except as to any
matters the decision of which is specially provided for by these or
the special conditions) the same shall be referred to the sole
arbitration of a Gazetted Railway Officer appointed to the Zonal
Railways and Production Units; by any Member of the Railway
Board, in the case of contracts entered into by the Railway Board
and by the Head of the Organisation in respect of contracts
entered into by the other Organisations under the Ministry of
Railways. The Gazetted Railway Officer to be appointed as
arbitrator however will not be one of those who had an
opportunity to deal with the matters to which the contract relates
or who in the course of their duties as railway servant have
expressed views on all or any of the matters under dispute or
difference. The award of the arbitrator shall be final and binding
on the parties to this contract.
(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
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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 contract that no person other
that 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 to be referred to arbitration at all.
(d) The arbitrator may from time-to-time with the consent of
all the parties to the contract enlarge the time for making the
award.
(e) Upon every and any such references, the assessment of
the cost incidental to the reference and award respectively shall be
in the discretion of the arbitrator.
(f) Subject as aforesaid, the Arbitration Act, 1940 and the
rules thereunder and any statutory modifications thereof for the
time being in force shall be deemed to apply to the arbitration
proceedings under this clause.
(g) The venue of arbitration shall be the place from which
the acceptance note is issued or such other place as the arbitrator
at his discretion may determine.
(h) In this clause the authority, to appoint the arbitrator
includes, if there be no such authority,the officer who is for the
time being discharging the functions of that authority, whether in
addition to other functions or otherwise.'
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7. Aforementioned clause 2900 in IRSCC serves as arbitration
agreement between the parties within the meaning of Section 2(1)(b) read
with Section 7 of A and C Act in each of the 16 matters on hand is further
common say of both learned counsel. This Court is informed that reference
to 'General Manager' in aforementioned clause 2900 now stands amended
as 'Retired General Manager'. This submission is also recorded.
8. There is no disputation or disagreement that all the 16 arbitration
agreements were invoked by the petitioner in and by notice dated
21.12.2021 (to be noted this arbitration agreement invocation notice was
received by ICF on 27.12.2021). There is also no contestation or disputation
that ICF has neither replied nor appointed an Arbitrator as per the
arbitration agreements (aforementioned clause 2900 of IRSCC). This has
necessitated the presentation of captioned 16 Arb.OPs on 28.03.2022 in this
Court with a prayer for appointment of a sole Arbitratoras already alluded to
supra.
9. Learned counsel for petitioner draws the attention of this Court to
an order dated 17.02.2022 made in Arb.O.P.(Com.Div.)No.205 of 2021,
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which reads as follows:
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb
OP' for the sake of brevity] has been presented in this Court on
07.10.2021 under Section 11(6) of 'The Arbitration and
Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C
Act' for the sake of convenience and clarity] with a prayer for
appointment of an Arbitrator.
2. Aforementioned prayer is predicated on an arbitration
clause in an 'agreement dated 26.08.2016 bearing reference
09/Dy.CE/N/I/MDU/AIC/2016 between the petitioner and
respondents' [hereinafter 'said contract' for the sake of
convenience and clarity].
3. In the said contract, petitioner is the contractor and the
respondents shall be collectively referred to as Southern Railway.
4. In the captioned matter, Ms.K.Aparna Devi, counsel on
record for petitioner and Mr.P.T.Ramkumar, learned standing
counsel for Southern Railway on behalf of both the respondents
(Southern Railway) are before this Court.
5. There is no disputation or disagreement about the
existence of the arbitration clause. To put it differently, there is no
disputation or disagreement about the existence of an arbitration
agreement between the contractor and Southern Railway i.e., an
arbitration agreement within the meaning of 2(1)(b) read with
Section 7 of A and C Act, which is in the form of a clause in said
contract.
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6. Short facts are, the contractor triggered the arbitration
agreement by a notice dated 04.03.2021 which was received by
Southern Railway on 09.03.2021. Under clause 64.(3) (a)(ii) of
'General Conditions of Contract' (hereinafter 'GCC' for the sake of
convenience and clarity) which admittedly forms part of the said
contract, Southern Railway should have sent a panel of three
names of Gazetted Railway officers to the contractor within 60 days
from the date of receipt of this trigger notice. In this case, as the
trigger notice was received by Southern Railway on 09.03.2021, 60
days elapsed on 09.05.2021. Admittedly, Southern Railway did not
send a panel of names in accordance with Clause 64.(3) (a)(ii) of
GCC. Learned counsel for Southern Railway submits that
respondents i.e., Southern Railway could not send the panel owing
to pandemic and lock down and it is not deliberate. It may not be
necessary to dilate much on the reasons as Southern Railway
deemed to have waived its rights in the light of Datar Switchgears
Ltd., Vs. Tata Finance Ltd., and another reported in (2000) 8 SCC
151, Punj Lloyd Ltd., Vs. Petronet MHB Ltd., reported in (2006) 2
SCC 638 and Union of India Vs. Bharat Battery Manufacturing
Co (P) Ltd., reported in (2007) 7 SCC 684. Relevant paragraphs
in these three case laws are as follows:
'Para 19 in Datar Switchgears case:
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
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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.
Para 5 in Punj Lloyd case:
5. Having heard the learned counsel for the parties, we
are satisfied that the appeal deserves to be allowed. The learned
counsel for the appellant has placed reliance on the law laid
down by this Court in the case of Datar Switchgears Ltd. v. Tata
Finance Ltd. [(2000) 8 SCC 151] (SCC p. 158, para 19) wherein
this Court has held as under:
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“[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 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.'
Para 12 in Bharat Battery case:
12. A three-Judge Bench of this Court in Punj Lloyd
Ltd. v. Petronet MHB Ltd. [(2006) 2 SCC 638] considered the
applicability of Section 11(6) petition and considered the facts
which are similar to the facts of the present case and held that
once notice period of 30 days had lapsed, and the party had
moved the Chief Justice under Section 11(6), the other party
having right to appoint arbitrator under arbitral agreement loses
the right to do so. While taking this view, the Court had referred
to the judgment rendered in Datar Switchgears Ltd. v. Tata
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Finance Ltd. [(2000) 8 SCC 151] wherein at SCC p. 158, para
19, this Court held as under:
“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.”
(emphasis in original)
As already noticed, the respondent filed Section 11(6) petition on
30-3-2006 seeking appointment of an arbitrator. The appellant,
thereafter, said to have appointed one Dr. Gita Rawat on 15-5-
2006 as a sole arbitrator, purportedly in terms of Clause 24 of
the agreement. Once a party files an application under Section
11(6) of the Act, the other party extinguishes its right to appoint
an arbitrator in terms of the clause of the agreement thereafter.
The right to appoint arbitrator under the clause of agreement
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ceases after Section 11(6) petition has been filed by the other
party before the Court seeking appointment of an arbitrator.'
7. This takes this Court to the scope of a legal drill under
Section 11 of A and C Act. The scope of a legal drill under Section
11 of A and C Act is within the legal landscape or legal perimeter
ingrained in sub-section (6A) of Section 11 of A and C Act. This
has ben highlighted by the Hon'ble Supreme Court in what has now
come to stay as in Mayavati principle in litigation parlance, ratio
of Hon'ble Supreme Court laid down in Mayavati Trading Pvt.
Ltd., Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714)] is
contained in paragraph 10, which reads as follows:
'10. This being the position, it is clear that the law prior to
the 2015 Amendment that has been laid down by this Court, which
would have included going into whether accord and satisfaction
has taken place, has now been legislatively overruled. This being
the position, it is difficult to agree with the reasoning contained in
the aforesaid judgments, as Section 11(6-A) is confined to the
examination of the existence of an arbitration agreement and is to
be understood in the narrow sense as has been laid down in the
judgment in Duro Felguera SA.'
(underlining made by this Court to supply
emphasis and highlight)
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8. In the light of the narrative thus far, this Court proceeds
to appoint Mr.M.Sricharan Rangarajan, Advocate at New No.20A,
Luz Avenue, 5th Street, Mylapore, Chennai-600 004 (Telephone
No.2498 7863) as Sole Arbitrator to enter upon reference,
adjudicate the arbitral disputes between the parties and make an
award. Sole Arbitrator now appointed shall conduct arbitration in
Madras High Court Arbitration Centre under the aegis of this
Court [MHAC] in accordance with Madras High Court Arbitration
Proceedings Rules, 2017 and Hon'ble Arbitrator's fee shall be as
per Madras High Court Arbitration Centre (MHCAC)
(Administrative Cost and Arbitrator's Fees), Rules 2017.
9. Captioned OP is disposed of in the aforesaid manner.'
10. Learned counsel for petitioner submits that the captioned matters
are directly and squarely covered by the principle in the aforementioned
order in Arb.O.P.(Com.Div.)No.205 of 2021 [Mr.S.Selvaraj Vs. Union of
India and another].
11. Learned counsel for ICF points out that clause 64 more
particularly, clause 64.(3) (a)(ii) of 'General Conditions of Contract' (hereinafter
'GCC' for the sake of convenience and clarity) in aforementioned Selvaraj's case
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talks about Southern Railway giving a panel of Arbitrator within 60 days
but no such time frame has been prescribed in the cases on hand. In the
considered view of this Court, this hardly makes a difference when it comes
to applying ratios in Datar Switchgears Ltd., Vs. Tata Finance Ltd., and
another reported in (2000) 8 SCC 151, Punj Lloyd Ltd., Vs. Petronet MHB Ltd.,
reported in (2006) 2 SCC 638 and Union of India Vs. Bharat Battery
Manufacturing Co (P) Ltd., reported in (2007) 7 SCC 684 which have been
followed in the aforementioned Selvaraj's case in Arb.O.P.No.205 of 2021
(order dated 17.02.2022, extracted and reproduced supra). To be noted, the
ratio in simple terms is that a party which does not respond qua arbitration
agreement mechanism is deemed to have waived its right and in the cases on
hand ICF has admittedly not responded until this day.
12. This makes the task of disposal of captioned 16 Arb.OPs fairly
simple.
13. A Section 11 legal drill has to perambulate within the statutory
perimeter sketched by sub-section (6A) thereat. This is Mayavati Trading
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case law [Mayavati Trading Private Limited Vs. Pradyuat Deb Burman
reported in (2019) 8 SCC 714] has also been alluded to in the
aforementioned Selvaraj's case. To be noted, paragraph No.10 of
Mayavati Trading case law has also been extracted and reproduced in the
earlier order and this paragraph No.10 of Mayavati Trading case law refers
to Duro Felguera, S.A [Duro Felguera, S.A. Vs. Gangavaram Port
Limited reported in (2017) 9 SCC 729], relevant Paragraphs in Duro
Felguera case law are paragraphs 47, 59 and the same read as follows:
'47. What is the effects of the change introduced by the
Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter
referred to as 'the 2015 Amendment' ) with particular reference to
Section 11(6) and the newly added Section 11(6-A) of the
Arbitration and Conciliation Act, 1996, (hereinafter referred to as
“the 1996 Act”) is the crucial question arising for consideration
in this case.'
'59. The scope of the power under Section 11 (6) of the
1996 Act was considerably wide in view of the decisions in SBP
and Co. (supra) and Boghara Polyfab (supra). This position
continued till the amendment brought about in 2015. After the
amendment, all that the Courts need to see is whether an
arbitration agreement exists - nothing more, nothing less. The
legislative policy and purpose is essentially to minimize the
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Court’s intervention at the stage of appointing the arbitrator and
this intention as incorporated in Section 11 (6A) ought to be
respected. '
14. The narrative thus far will make it clear that there is no
disputation or contestation regarding existence of arbitration agreement,
eruption of arbitrable disputes which need to be adjudicated upon and
therefore the need for appointment of a sole Arbitrator in each of the
captioned Arb.OPs is an inevitable statutory sequitur qua Section 11 of A
and C Act.
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15. On this Court taking the aforementioned view, both learned
counsel submitted that owing to the view taken by this Court it would be
desirable to appoint a sole Arbitrator. This request is acceded to. Hon'ble
Mr.Justice K.Ravichandrabaabu (Retd.), a former Judge of Madras High
Court, residing at 1D, Crescent Castle, 13/6 II Cresent Park Road, Gandhi
Nagar, Adyar, Chennai-600 020 (Mobile: 94980 33336, 94440 11433) is
appointed as sole Arbitrator in each of the captioned 16 Arb.OPs. Hon'ble
sole Arbitrator is requested to enter upon reference qua arbitrable disputes
between the petitioner and ICF that have erupted qua 16 separate purchase
orders, details of which have been set out infra, adjudicate upon the same
and make awards. It is made clear that this common order means that 16
separate 'Arbitral Tribunals' ['ATs' in plural and 'AT' in singular for the sake
of convenience] have been constituted and it is only a case where the
Hon'ble Arbitrator is the same person in all 16 matters. This is permissible.
To be noted as regards choice of Hon'ble Arbitrator, there is consensus and
consent as between the petitioner and ICF.
S.No. Purchase orders PO Date
1 02/17/2294/2715/S 18.11.2017
2 02/17/3640/1446/S 01.03.2018
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S.No. Purchase orders PO Date
3 02190015100103 25.05.2019
4 02191912100811 22.07.2019
5 03191502102242 08.11.2019
6 02/17/2225/2476/S 24.10.2017
7 02/18/0042/1945/S 23.05.2018
8 02/18/2123/2973/S 07.12.2018
9 02/18/2369/2482/S 08.09.2018
10 02/18/2568/1092/S 30.01.2019
11 02/18/3624/1148/S 09.02.2019
12 02/18/3930/1225/S 01.03.2019
13 02/17/2382/1247/S 01.02.2018
14 02/17/2432/2787/S 01.12.2017
15 02/17/3342/1177/S 23.01.2018
16 02/17/4004/1607/S 26.03.2018
16. This common order has been made only in Section 11 proceedings
for the sake of convenience and clarity. Therefore 16 ATs will enter upon
reference and adjudicate upon arbitrable disputes arising out of each of the
purchase orders in each of the captioned Arb.OPs. The arbitration
proceedings shall be held by holding sittings in the 'Madras High Court
Arbitration and Conciliation Centre under the aegis of this Court'
(MHCAC) and in accordance with the Madras High Court Arbitration
Proceedings Rules 2017. Fee of the Hon'ble Arbitrator shall be in
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accordance with the Madras High Court Arbitration Centre (MHCAC)
(Administrative Cost and Arbitrator's Fees) Rules 2017.
17. All captioned 16 Arb.OPs are disposed of in the aforesaid manner.
There shall be no order as to costs.
21.04.2022
Speaking/Non-speaking order
Index : Yes / No
gpa/nsa
Note: The Registry is directed to communicate this order forthwith to
1.Hon'ble Mr.Justice K.Ravichandrabaabu (Retd.),
1D, Crescent Castle,
13/6 II Cresent Park Road, Gandhi Nagar,
Adyar, Chennai-600 020
(Mobile: 94980 33336, 94440 11433)
2.The Director
Tamil Nadu Mediation and conciliation Centre
-cum-
Ex Officio Member,
Madras High Court Arbitration Centre
Madras High Court, Chennai – 600 104.
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M.SUNDAR.J.,
gpa/nsa
Arb.O.P (Com.Div.) Nos.167 to 182 of 2022
21.04.2022
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