M/S Brandavan Food Products vs Union Of India
2022 Latest Caselaw 1461 Raj/2

       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

            S.B. Arbitration Application No. 109/2019

M/s Brandavan Food Products, Having Its Office At N-22, 3Rd
Floor, Jangpura Extension New Delhi-110014, Also At D-187,
Okhla Industrial Area Phase I, New Delhi 110020, Through Its
Authorized Representative
                                                                   ----Petitioner
                                   Versus
1.     Union Of India, Through Chief Commercial Manager, North
       Western Railway, Jaipur, Rajasthan
2.     Indian Railway Catering And Tourism Corporation Limited
       (Irctc), Having Its Registered Office At B-148, 11Th Floor,
       Statesman House, Barakhamba Road, New Delhi-110001.
                                                                ----Respondents

For Petitioner(s) : Mr. Sandeep Taneja through VC For Respondent(s) : Mr. P.C. Sharma through VC

HON'BLE MR. JUSTICE PANKAJ BHANDARI

Order

ORDER RESERVED ON :: 27/01/2022 ORDER PRONOUNCED ON :: 11/02/2022

1. The applicant has preferred this arbitration application for

appointment of an independent sole arbitrator.

2. It is contended by learned counsel for the applicant that as

per Arbitration Clause 20.1 of the agreement, first an attempt was

to be made for amicable settlement of the dispute between the

parties. As per Clause 20.2, in the event that a dispute between

the parties subsists beyond 30 days of negotiations between the

parties, then the dispute shall be settled as per the provisions of

Arbitration and Conciliation Act, 1996 (hereinafter referred to as

(2 of 7) [ARBAP-109/2019]

"the Act of 1996"). The dispute shall be referred to sole arbitration

of Gazetted Railway Officer appointed to be an arbitrator by the

General Manager of the Zonal Manager awarding the license and

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.

3. It is contended that the applicant vide letter dated

12.11.2016 (Annexure-9) requested for appointment of an

arbitrator. The authorities appointed Mr. Manoj Kumar Jain as

arbitrator vide letter dated 14.2.2017. Mr. Manoj Kumar Jain

recused himself on which another application was given to the

authorities on 27.7.2017 for appointment of an arbitrator. No

arbitrator was appointed, therefore, Arbitration Application

No.103/2017 was filed before the High Court. During the

pendency of this application, the non-applicant - respondent

appointed Mr. C.R. Kumawat as arbitrator. The applicant has given

his no objection to the appointment of Mr. C.R. Kumawat as

arbitrator. Mr. C.R. Kumawat was a Railway Representative in

another arbitration proceeding against the present applicant and

when this fact was brought to his notice, he also recused himself.

After filing of the present arbitration application, notices were

issued to the Union. Union sought time to file reply and thereafter,

they appointed Mr. Y.P. Singh as arbitrator, however, this Court

directed Mr. Y.P. Singh not to proceed in the matter as he was

already arbitrator in 5-6 cases. Mr. Y.P. Singh also recused himself

on 15.6.2020.

(3 of 7) [ARBAP-109/2019]

4. It is contended by learned counsel for the applicant that in

view of the judgments of the Apex Court in Perkins Eastman

Architects DPF & Anr. Versus HSCC (India) Ltd.: AIR 2020 SC 59

and TRF Limited Versus Energo Engineering Projects Limited:

(2017) 8 SCC 377, a person, who cannot himself arbitrate in a

matter, cannot appoint an arbitrator. It is contended that since the

Zonal Manager or the General Manager cannot arbitrate, they

cannot appoint an arbitrator. It is, therefore, prayed by the

counsel that an independent arbitrator be appointed by the Court.

5. Learned counsel appearing for the Union of India has

objected to the appointment of an independent arbitrator.

Attention of this Court was drawn to sub-clause (c) of Clause 20.2,

which reads as under:

"It is further a term of this contract that no person other than 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 arbitrator at all".

6. It is contended that since the applicant is not agreeable to

the list provided by the Union, an arbitrator cannot be appointed

and in term of sub-clause (c) of Clause 20.2, matter cannot be

referred to arbitrator at all. To buttress his argument, counsel for

the Union of India has placed reliance on Union of India & Anr.

Versus M.P. Gupta: (2004) 10 SCC 504.

7. Counsel has also placed reliance on Sanjay Matai Versus

Senior Divisional Commercial Manager & Anr.: S.B. Arbitration

Application No.133/2017 decided by the Rajasthan High Court

wherein it was held that clause 1 of Seventh Schedule of the Act

does not debar appointment of a retired employee. The Court

(4 of 7) [ARBAP-109/2019]

further held that there is no illegality for appointment of the

retired employee having no past or present business relationship

with the party. Further, it is contended that SLP preferred by

Sanjay Matai was dismissed by the Apex Court.

8. Counsel for the Union of India has further placed reliance on

Ace Pipeline Contracts Private Limited Versus Bharat Petroleum

Corporation Limited: (2007) 5 SCC 304 wherein the Apex Court

held that if a party requests to the Court to appoint an arbitrator

other than that nominated in the agreement as the Arbitrator so

nominated will not be impartial, such request is not tenable. Once,

a party has entered into an agreement with eyes wide open, it

cannot wriggle out of the situation. If the party feels that the

arbitrator has not acted independently or impartially, or he has

suffered from any bias, it will always be open to the party to make

an application under Section 34.

9. I have considered the contentions of the parties and have

perused the arbitration clause.

10. In TRF Limited (supra), it was held that if a person, who is

ineligible to arbitrate, he cannot nominate a person to act as an

arbitrator. In Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited

Versus Ajay Sales & Suppliers & Ors.: SLP (Civil) No.13520 of

2021, the arbitration clause was to the effect that all disputes and

differences arising out of or in any way touching or concerning the

agreement, whatsoever shall be referred to the sole Arbitrator, the

Chairman, Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. and his

decision shall be final and binding for the parties. It was further

held by the Court that once, the Chairman is 'ineligible' to act as

an arbitrator to resolve the dispute between the parties in view of

sub-section (5) of Section 12 read with Seventh Schedule of the

(5 of 7) [ARBAP-109/2019]

Act, he loses mandate to continue as a sole arbitrator. Therefore,

it cannot be said that High Court has committed any error in

appointing the arbitrator other than the sole arbitrator-Chairman.

In view of the judgment in TRF Limited (supra), it is clear that a

person, who is himself ineligible to act an arbitrator, cannot

nominate someone as an arbitrator and if such ineligibility

accrues, then in view of Jaipur Zila Dugdh Utpadak Sahkari Sangh

Limited & Ors. (supra), the Court is competent to appoint an

arbitrator, but before appointing an arbitrator, it is important to

see the arbitration clause, which was entered into between the

parties.

11. In the present case, sub-clause (c) of Clause 20.2 of the

agreement specifically provides that no person other than 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 arbitrator at all. In M.P. Gupta

(supra), in the agreement there was Clause (3)(a)(iii), which

reads as under:

"(3)(a)(iii) It is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all."

The Apex Court in view of the express provision contained

therein that two gazetted railway officers shall be appointed as

arbitrators held that Justice P.K. Bahri could not be appointed by

the High Court as the sole arbitrator. On this sole ground alone,

the judgment and order under challenge to the extent it appoints

Justice P.K. Bahri as sole arbitrator was set aside. The Apex Court

(6 of 7) [ARBAP-109/2019]

directed the appellant to appoint two gazetted railway officers as

arbitrators. The newly appointed arbitrators were directed to enter

into reference within a period of another one month and thereafter

the arbitrators were directed to make the award within a period of

three months. This judgment was prior to the amendment in the

Arbitration act, but from the judgment, it can be deduced that the

Apex Court considered the expressed bar and the provision

provided that if arbitrator is not appointed for any reason, then

the matter is not to be referred to the arbitrator at all. In Sanjay

Matai (supra), it was held by the Rajasthan High Court that a

retired railway employee can be appointed as an arbitrator. In the

present case in hand also, a retired railway employee was

appointed as an arbitrator.

12. There being an express bar in the agreement that no person

other than the person appointed by the authority as aforesaid

should act as an arbitrator and if for any reason that is not

possible, the matter is not to be referred to the arbitrator at all,

this Court is not inclined to appoint an independent arbitrator.

However, in view of the fact that learned counsel for railway is

agreeable to appointment of retired railway employee and has

suggested to the Court that they would supply a list of retired

railway employees and applicant can choose from amongst them

to act as an arbitrator, this Court deems it proper to direct the

respondents to supply a list of retired railway employees within 15

days of receipt of copy of this order and the applicant should

within 15 days thereafter choose from the list an arbitrator and

inform the railway of the same. The railway should thereafter

appoint such person as an arbitrator and the arbitrator should

(7 of 7) [ARBAP-109/2019]

thereafter proceed to decide the dispute. The arbitration

application is accordingly disposed of.

13. The arbitrator shall be entitled to lay down fees as provided

under Manual of Procedure for Alternative Disputes Resolution,

2009, as amended from time to time.

(PANKAJ BHANDARI),J

SUNIL SOLANKI/PS

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