Madras High Court
S.Selvaraj vs The Union Of India on 15 September, 2022
Arb.O.P.(Comm.Div.) No.249 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 15.09.2022
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR
RAMAMOORTHY
Arb.O.P.(Comm.Div.) No.249 of 2022
S.Selvaraj
Railway Contractor
No.186, Main Road
Gujiliamparai, Vedasandur (TK)
Dindigul-624 703. ... Petitioner
vs.
1. The Union of India,
Represented by the General Manager,
Southern Railway, Headquarters Office,
Park Town, Chennai-600 003.
2. The Chief Administrative Officer/CN,
Construction,
No.183, E.V.R.Periyar High Road,
Egmore, Chennai-600 008. ... Respondents
PRAYER: Arbitration Original Petition filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 as amended by the Arbitration and
Conciliation (Amendment) Act, 2015, praying (a) to appoint an independent
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Arb.O.P.(Comm.Div.) No.249 of 2022
and impartial arbitrator to adjudicate the disputes between the petitioner and
the respondents in terms of the Contract Agreement having AGREEMENT
No.12/DY.CE/GC-I/TPJ-AGZ/H.Q DATED 24.12.2018 as set out under
details of claims in Para No.5 above; and (b) Direct the Respondents to pay
the costs of the petition.
For Petitioner : Mr.A.Vikash
For Respondents : Mr.P.T.Ramkumar, Standing Counsel
(Railways)
**********
ORDER
The petitioner seeks constitution of an arbitration tribunal on the
ground that the respondents failed to act in accordance with the appointment
procedure prescribed by the relevant contract.
2. Learned counsel for the petitioner states that the notice under
Clause 64(3)(b) of the General Conditions of Contract (the GCC) was issued
to the respondents on 01.04.2022. After waiting for the stipulated period of
60 days, it is stated that the Section 11 petition was presented on
06.06.2022. Once such petition is filed, learned counsel contends that the
respondents do not have the right to nominate a panel as per the law laid
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Arb.O.P.(Comm.Div.) No.249 of 2022
down in paragraph 19 of the judgment of the Hon'ble Supreme Court in
Datar Switchgears Ltd. v. Tata Finance Ltd. (Datar Switchgears) (2000) 8
SCC 151.
3. This contention is refuted by learned standing counsel for the
respondents. By drawing reference to the communication under which the
panel was communicated to the petitioner, learned counsel points out that
the said communication was issued on 31.05.2022. He also points out that
the communication was dispatched on the very next day, as evidenced by the
dispatch register. If reckoned either from the date of the petitioner's letter
dated 01.04.2022 or the date of receipt thereof (04.04.2022), the panel was
communicated within the 60 day period. By referring to the track
consignment report, he stated that the communication could not be delivered
between 04.06.2022 and 09.06.2022 because the petitioner's premises were
locked. According to learned counsel, the above facts indicate beyond doubt
that the respondents acted in accordance with clause 64(3)(b) of the GCC.
Since the respondents adhered to the appointment procedure in the contract,
it is contended that the petitioner is not entitled to maintain this petition
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Arb.O.P.(Comm.Div.) No.249 of 2022
under Section 11(6) of the Arbitration and Conciliation Act 1996 (the
Arbitration Act). In support of this contention, learned counsel relies on the
judgment of the Hon'ble Supreme Court in Union of India v. Premco-
DKSPL (JV) (Premco-DKSPL)(2016) 14 SCC 651 and, in particular,
paragraph 8 thereof.
4. Section 11(6)(a) of the Arbitration Act reads as under:
“Where, under an appointment procedure
agreed upon by the parties,--
(a) a party fails to act as required under
that procedure;”
Therefore, the mandatory pre-requisite for the institution of a petition under
Section 11(6) is the failure of the party concerned to act in accordance with
the procedure prescribed by the contract. In this case, the Clause 64 (3)(b)
of the GCC reads as under:
“Appointment of Arbitrator where
applicability of section 12(5) of A&C Act has not
been waived off:
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Arb.O.P.(Comm.Div.) No.249 of 2022
The Arbitral Tribunal shall consist of a Panel of
three (3) retired Railway Officer, retired not below
the rank of SAG Officer, as the arbitrators. For this
purpose, the Railway will send a panel of at least
four (4) names of retired Railway Officer(s)
empanelled to work as Railway Arbitrator duly
indicating their retirement date 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 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
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Arb.O.P.(Comm.Div.) No.249 of 2022
nominees. While nominating the arbitrators, it will
be necessary to ensure that one of them has served
in the Accounts Department.”
5. The above clause provides that the respondents should send a panel
of at least four names of retired railway officers within 60 days from the day
when a written and valid demand for arbitration is received by the GM. The
documents on record disclose that the request for arbitration was received by
the respondents on 04.04.2022. The communication providing the panel of
four arbitrators was dispatched on 01.06.2022 as evidenced by the dispatch
register. This is clearly within the 60 day time limit specified in clause 64 (3)
(b). Learned counsel for the petitioner relied on Datar Switchgears,
particularly paragraph 19 thereof. In paragraph 19 of Datar Switchgears,
the Hon'ble Supreme Court considered the fact that Section 11(6), unlike
Section 11(4) and 11(5), does not stipulate a time limit for the respondent
concerned to act. In that context, the Hon'ble Supreme Court concluded that
the right of appointment would be lost once the Section 11 petition is filed.
In the case at hand, the relevant contract contains an appointment procedure
which provides 60 days from the date of receipt of the request for arbitration
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Arb.O.P.(Comm.Div.) No.249 of 2022
for the communication of a panel of arbitrators. When the contract specifies
a procedure and time limit, the said procedure and time limit governs the
situation. This aspect was considered by the Hon'ble Supreme Court in the
subsequent judgment in Premco-DKSPL, wherein, at paragraph 8, the
Hon'ble Supreme Court concluded that Datar Switchgears was a judgment
in a factual context where the relevant contract did not specify a time limit.
Therefore, the petitioner cannot succeed on the basis of Datar Switchgears.
6. In the result, the petitioner has failed to establish that the
respondents failed to act in accordance with the appointment procedure
prescribed by the contract. Consequently, this petition is dismissed without
any order as to costs. However, the petitioner is granted leave to respond to
the communication and select two names from such panel, as per clause
64(3)(b) of the GCC, within 30 days from the date of receipt of a copy of
this order.
15.09.2022
Index : Yes / No
Internet : Yes / No
kal
SENTHILKUMAR RAMAMOORTHY,J
https://www.mhc.tn.gov.in/judis
Arb.O.P.(Comm.Div.) No.249 of 2022
kal
Arb.O.P.(Comm.Div.) No.249 of 2022
15.09.2022
https://www.mhc.tn.gov.in/judis
