MISC. Petition No. 495 of 2024 · The High Court
Case Details
- 1 - NC: 2025:KHC:17682 CMP No. 495 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE ASHOK S.KINAGI CIVIL MISC. PETITION NO. 495 OF 2024 BETWEEN: M/S SRC COMPANY INFRA PVT. LTD. PLOT NO. 42, GANESH NAGAR, WEST MAREDDPALLI, SECUNDERABAD 500 026. ALSO AT, FLAT NO. 704, 7TH FLOOR A BLOCK, THE PLATINA BUILDING, BESIDES RADISSON HOTEL, GACHIBOWLI, HYDERABAD 500 002. REPRESENTED BY ITS DIRECTOR AUTHORISED SIGNATORY. SRI A V ANJANEYA PRASAD (BY SRI. KRISHNA MURTHY V., ADVOCATE) AND: 1. THE UNION OF INDIA SOUTH WESTERN RAILWAYS, RAIL SOUDHA GADAG ROAD, HUBLI - 580 020. REPRESENTED BY ITS GENERAL MANAGER. 2. THE CHIEF ENGINEER CONSTRUCTION, S W RAILWAYS, NEAR GOLF LINK RAILWAY COLONY, HUBLI 580 020 Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA …PETITIONER - 2 - NC: 2025:KHC:17682 CMP No. 495 of 2024 3. THE DEPUTY CHIEF ENGINEER CONSTRUCTION III, S W RAILWAYS, NEAR GOLF LINK RAILWAYS COLONY, HUBLI - 580 020. 4. THE CHIEF ADMINISTRATIVE OFFICER CONSTRUCTION, S W RAILWAYS, NO. 18, MILLERS ROAD, BENGALURU - 560 052. (BY SMT/MISS. RESHMA K T., ADVOCATE) …RESPONDENTS THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) (6) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO A. TO APPOINT AN INDEPENDENT ARBITRATOR AND TO REFER ALL THE CLAIMS AND DISPUTES ARISING OUT OF THE CONTRACT AGREEMENT CAO/CN/BNC/72986/A/30/VIII/10 DATED 09.08.2010 CLAUSE 27 BETWEEN THE PARTIES TO ARBITRATION (ANNEXURE-A) B. DIRECT THE RESPONDENT TO PAY THE COST OF THE PETITION AND C. PASS SUCH FURTHER ORDERS AS THIS HON’BLE COURT MAY DEEM FIT. BEARING THE THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI ORAL ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (‘the Act, 1996’ for brevity) for the appointment of an arbitrator to resolve the dispute between the parties in terms of - 3 - NC: 2025:KHC:17682 CMP No. 495 of 2024 clause 27 of the special conditions of the Contract vide Annexure-A. 2. Brief facts leading rise to the filing of this petition are as follows: The agreement was entered into between the petitioner and respondent vide dated 09.08.2010 for the work including earthwork, track work etc, for the Koppal- Ginigera Additional Crossing Station between Koppal and Ginigera, and the value of the contract was Rs.6,03,66,972/-, and the revised value was Rs.7,91,04,609.50/-. A contract was awarded to the petitioner- company through a letter of acceptance dated 29.12.2008, with an extended period up to 30.04.2011 on 24.03.2009. The petitioner- company issued a notice on 04.12.2023 stating that it has lost 10% expected profit on the balance work which it has not been allowed to complete and the respondent – Railway is liable to pay Rs.4,17,98,916/- with an interest of 18% per annum. However, the respondent – Railway never replied to the - 4 - NC: 2025:KHC:17682 CMP No. 495 of 2024 notice issued by the petitioner- company. The petitioner- company, left with no other alternative, hence, invoked the arbitration clause under Section 21 of the Act, 1996 vide notice dated 13.06.2024 requesting the respondents to appoint an arbitrator, failing to which, it would approach the Courts of law for the appointment of an arbitrator. Hence, the petitioner is constrained to file this petition. 3. The respondents filed a statement of objections contending that the claim made by the petitioner is barred by limitation and prays to dismiss the petition.
Legal Reasoning
4. Heard the arguments of Sri. Krishna Murthy V., learned counsel for the petitioner and Smt. Reshma K.T., learned counsel for the respondents. 5. Learned counsel for the petitioner submits that an agreement was executed between the petitioner and the respondents on 09.08.2010. Work was awarded to the petitioner on 29.12.2008. He submits that the company has incurred a loss of expected profit of Rs.4,17,98,916/- issued to respondents, and is not allowing the petitioner to - 5 - NC: 2025:KHC:17682 CMP No. 495 of 2024 complete the said work. The petitioner invoked the arbitration clause by issuing a notice under Section 21 of the Arbitration and Conciliation Act, 1996. The respondents did not heed to the request of the petitioner. Hence, the petitioner is constrained to file this petition. 6. Learned counsel for the respondents submits no objection to allow the petition by reserving liberty to the respondents to raise the point of limitation before the Arbitral Tribunal. 7. Perused the records and considered the submissions of the learned counsel for the parties. The point that arises for consideration is as follows: “Whether the petitioner has made out a ground to refer the dispute to the Arbitrator in terms of clause 27 of the Agreement dated 09.08.2010, vide Annexure-A as per the Arbitration and Conciliation Act, 1996?” 8. The contract was entered between the petitioner and the respondents. The dispute has arisen between the petitioner and the respondents. There is an - 6 - NC: 2025:KHC:17682 CMP No. 495 of 2024 arbitration clause in the agreement vide Annexure-A which reads as follows: “27. SETTLEMENT OF DISPUTE - INDIAN RAILWAY ARBITRATION RULES: 27.1 The tenderer/contractor cannot claim any compensation in case any of his llabour, machinery etc. idle due to extigencies such as execution of contract, land acquisition etc. 27.2 (Clause 63 of GCC): Matters finally determined by the Railway. All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the Contractor to the General Manager and the General Manager shall within 120 days after receipt of the Contractor's representation make and notify decisions on all matters referred to by the Contractor in writing provided that matters for which provision has been made in Clauses 8,18, 22(5), 39,43(2), 45(a) 55, 55-A(5), 57, 57-A, 61(1), 61(2) and 62(1) to xiii) B of the General Conditions of contract or in any clause of the special conditions of contract shall be deemed as ‘excepted - 7 - NC: 2025:KHC:17682 CMP No. 495 of 2024 matters’ (matters not arbitrable) and decisions of the Railway authority, thereon shall be final and binding on the contractor provided further that "excepted matters" shall stand specifically excluded from the purview of the arbitration clause. 27.3 (Clause 64 (1) of GCC) Demand for Arbitration: In the event of any dispute or different between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account, or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the “excepted matters” referred to in clause 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or differences be referred to arbitration. The demand for arbitration shall specify the matters, which are in question or subject of the dispute or difference as also the amount of claim/itemwise. Only such dispute(s) or - 8 - NC: 2025:KHC:17682 CMP No. 495 of 2024 difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railway, shall be referred to arbitration and other matters shall not be included in the reference. (a) The Arbitration proceedings shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway. (b) The Claimant shall summit his claim stating the facts supporting the claim alongwith all relevant documents and the relief or remedy sought against each claim within a period of 30 days from the date of appointment of the Arbitral Tribunal (c) The railway shall submit its defence statement and counter claim(s), if any, within a period of 60 days of receipt of copy of claims from Tribunal, thereafter unless otherwise extension has been granted by the tribunal (d) Place of arbitration: The place of arbitration would be within the geographical limits of the division of the Railway where the cause of action arose or Headquarters of the concerned Railway or any other place with the written consent of both the parties. - 9 - NC: 2025:KHC:17682 CMP No. 495 of 2024 (iii) No new claim shall be added during proceedings by either party. However party may amend or supplement the original claim or defence thereof during the Course of arbitration proceedings subject to acceptance by the Tribunal having due regard to the delay in making it. (iv) if the contractor(s) does/do not prefer his/their specific and final claims in writing within a period of 90 days of receiving the intimation from the Railway that the final bill is ready for payment, he/they will be deemed to waived his/their claim(s) and the Railway shall be discharged and released of all liabilities under the contract is respect of these claims. 27.4 (Clause 64(2) of GCC) Obligation during pendency of arbitration: Work under the contract shall, unless otherwise directed by the Engineer, continue during the arbitration proceedings, and no payment due or payable by the Railway shall be withheld on account of such proceedings, provided, however, it shall be open for Arbitral Tribunal to consider and decide whether or not such work should continue during arbitration proceedings. - 10 - NC: 2025:KHC:17682 CMP No. 495 of 2024 27.5 (Clause 64(3) of GCC) Appointment of Arbitration Tribunal. (a)(1) In cases where the total value of all claims in question added together does not exceed Rs. 10,00,000/- (Rupees Ten lakh only), the Arbitral Tribunal shall consist of a sole arbitrator who shall be a gazetted officer of Railway not below JA grade nominated by the General Manager in that behalf. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by the General Manager. (ii) In case not covered by Clause 64(2)(a)(1), the Arbitral Tribunal shall consist of panel of three Gazetted Railway officers not below, JA grade оr two gazetted Officers not below JA grade and a retired Railway officer, retired not below the rank of SAG Officer, as the arbitrators. For this purpose, the Railway will send a panel of more than 3 names of Gazetted Railway officers of one or more departments, of the railway, which may also include the name(s) of retired Railway Officer (s) empanelled to work as Railway Arbitrator to the Contractor within 60 days from the day when a written and valid demand for arbitration is received by the General Manager. Contractor will be asked to suggest to the General Manager atleast 2 names out of the panel for appointment as the Contractors - 11 - NC: 2025:KHC:17682 CMP No. 495 of 2024 nominee within 30 days from the date of despatch of the request by Rai1way. The General manager shall appoint atleast one out of them as the contractors nominee and will, also simulataneously 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. General Manager shall complete the exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of Contractor's nominees. While nominating the arbitrators it will be necessary to ensure that one of them is from Accounts Department. An Officer of Selection Grade of the accounts Department shall be considered of equal status to the officers in SA grade of other Departments of the railway for the purpose of appointment of arbitrators. (iii) If one or more of the arbitrators appointed as above refuses to act as arbitrator, withdraws from his office as arbitrator, or vacates his / their office/offices or is/are unable to or unwilling to perform his functions as arbitrator for any reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay , the General Manager shall appoint new arbitrator/arbitrators to act in his/their place in the - 12 - NC: 2025:KHC:17682 CMP No. 495 of 2024 same manner in which the earlier arbitrator/arbitrators had been appointed. Such reconstituted Tribunal may at its discretion, proceed with the reference from the stage at which it was left by the previous arbitrator(s). (iv) The Arbitral Tribunal shall have power to call for such evidence by way of affidavits or otherwise as the Arbitral tribunal shall think proper, and it shall be the duty of the parties hereto to do or cause to be done all such things as may be necessary to enable the Arbitral Tribunal to make the award without any delay. The arbitral tribunal should record the day to day proceedings. The proceedings shall normally be conducted on the basis of documents and written statements. (v) While appointing arbitrator(s) under Sub-Clause (i), (ii) and (iii) above, due care shall be taken that he/they is/are not the one/those who had an opportunity to deal with the matters to which the contract relates or who in the course of his/their duties as railway servant(s) expressed views on all or any of the matters under dispute or differences. The proceedings of the Arbitral Tribunal or award made by such Tribunal will however, not be invalid merely for the reasons that one or more arbitrator had, in the course of his service, opportunity to deal with the matters to which the contract relates - 13 - NC: 2025:KHC:17682 CMP No. 495 of 2024 or who is in the course of his/their duties, expressed views on all or any of the matters under dispute. (b) (i) The arbitral award shall state itemwise, the sum and reasons upon which it is based. The analysis and reasons shall be detailed enough so that the award could be inferred therefrom. (ii)The party may apply for corrections of any computational errors, any typo-graphical or clerical errors or any other error of similar nature occurring in the award and interpretation of a specific point of award to tribunal within 60 days of receipt of the award. (iii)A party may apply to Tribunal within 60 days of receipt of award to make an additional award as to claims presented in the arbitral proceedings but omitted from the arbitral award. 27.6 Clause 64(4) of GCC: In case of the tribunal, comprising of three members, any ruling or award shall be made by a majority of members of the tribunal in the absence of such a majority, the views of the presiding Arbitrator shall prevail. 27.7 Clause 64(5) of GCC: Where the arbitral award is for the payment of Money, no interest shall - 14 - NC: 2025:KHC:17682 CMP No. 495 of 2024 be payable on whole or any part of the money for any period till the date on which the award is made. 27.8 Clause 64(6) of GCC: The cost of arbitration shall be borne by the respective parties. The cost shall inter-alia include fee of the arbitrator(s) as per the rates fixed by the railway Board from time to time and the fee shall be borne equally by both the parties. Further, the fee payable to the arbitrator(s) would be governed by the instructions issued on the subject by railway Board from time to time irrespective of the fact whether the arbitrator(s) is/are appointed by the railway Administration or by the court of law unless specifically directed by Hon'ble Court otherwise on the matter. 27.9 Clause 64(7) of GCC: Subject to the provisions of the aforesaid, arbitration and conciliation Act, 1996 and the rules thereunder and any statutory modifications thereof shall apply to the arbitration proceedings under this clause. 9. Perused clause No.27.3 of the special conditions of Contract vide Annexure-A, that in the event of any dispute or difference between the parties as to construction or operation by the contract, the dispute be resolved by the arbitration. The petitioner issued a notice, - 15 - NC: 2025:KHC:17682 CMP No. 495 of 2024 but the respondents did not heed to the request of the petitioner. As there is an arbitration clause, the dispute has to be resolved by the Arbitration. 10. Learned counsel for the respondents submitted no objection to allow the petition. In view of the above discussion, I answer the point for consideration in the affirmative. Accordingly, I proceed to pass the following: 11. Accordingly, I proceed to pass the following:
Decision
ORDER i. The Civil Miscellaneous Petition is allowed. ii. Hon’ble Justice Sri.A.N.Venugopala Gowda, Former Judge, High Court of Karnataka, is nominated as an Arbitrator to resolve the dispute between the petitioner and respondents as per the provisions of the Arbitration and Conciliation Act, 1996 and Rules. iii. The office is directed to communicate this order to the learned Arbitrator and the - 16 - NC: 2025:KHC:17682 CMP No. 495 of 2024 Arbitration and Conciliation Centre, Bengaluru. iv. All the contentions of the parties are kept open. Sd/- (ASHOK S.KINAGI) JUDGE SKS