Judgment · High Court · 2009

THOTTATHIL B.RADHAKRISHNAN, J.-------------------------------------------A.R.No.10 OF 2008 ------------------------------------------- Dated this the 25th day of June, 2009O R D E R1.This is a request made under Section 11(6) of the ArbitrationConciliation Act, 1996. The request is filed and registeredwith this Court on 7.3.2008.2.There is no dispute between the parties that there is anarbitration agreement between them as defined in Section 2(1)(b) of the Act. The arbitration clause classifies the contractson the basis of the value of the claims in relation to whicharbitration is sought for. If the claims are above Rs.10 lakhs, the agreement provides for an Arbitral Tribunal consisting ofa panel of three Gazetted Railway Officers, not below JA gradeor two Gazetted Railway Officials not below JA grade and aRailway Officer retired not below the rank of SAG officer asthe arbitrators. For that purpose, the Railways have to send apanel of more than three names of Gazetted Railway Officersof one or more departments of the Railways, which may also AR.10/08Page numbersinclude the name(s) of retired Railway Officer(s) empaneled towork as Railway Arbitrator to the Contractor within 60 daysfrom the date when a written and valid demand for arbitrationis received by the General Manager. The Contractor will beasked to suggest to the General Manager up to two names outof the panel for appointment as Contractor's nominees within30 days from the date of dispatch of the request by theRailways. The General Manager has to appoint at least oneout of them as the Contractor's nominee and will alsosimultaneously appoint the balance number of arbitratorseither from the panel or from the Presiding Arbitrator fromamongst the three arbitrators so appointed. The GeneralManager shall complete this exercise of appointing theArbitral Tribunal within 30 days from the receipt of the namesof the Contractor's nominees.3.On 21.5.2007, the petitioner placed his claims before theGeneral Manager. Though the opening clause in thearbitration agreement provides for the Railways to give its AR.10/08Page numbersreply to it and the entitlement of the Contractor to claim forappointments of arbitrator and for recourse to arbitration, either on being dissatisfied by the reply of the Railways or onthe failure of the Railways to answer, what was done followingthe raising of claims on 7.12.2007 was that the list of names offour officers of the Railways was forwarded to the Contractorfor him to select two of them. Following that, on 31.12.2007,the Contractor notified the names of Sri.A.K.Sinha andSri.V.G.Suresh Kumar, two among those who were included inthe list given by the Railways on 7.12.2007. Thereafter, nothing happened till the institution of this arbitration requeston 7.3.2008. After this request was registered with this Courton 7.3.2008, the Railways appointed a three member ArbitralTribunal on 2.4.2008.4.With the aforesaid facts, the petitioner stands to say thatfollowing the judgment of the Apex Court in Datar SwitchGears Ltd. v. TATA Finance Ltd. [(2000) 8 SCC 151] and theDivision Bench of this Court in Divisional Railway Manger v. AR.10/08Page numbersWest Cost Agencies [2005(2) KLT 734], the Railways did nothave the right to make any appointment of arbitrator on2.4.2008 after the registration of this arbitration request on7.3.2008 and any right to make appointment had ceased by theinstitution of this arbitration request. In West CostAgencies(supra), this Court specifically dealt with theprovisions in the General Conditions of contract of theRailways, particularly clause 64, which is the arbitrationagreement in the case in hand also. Following the enunciationof law in paragraphs 11 and 12 of that judgment and the ratioof Datar Switch Gears Ltd (supra), quoted and relied on bythis Court in West Cost Agencies, the submission of thepetitioner stands. Under such circumstances, the appointmentpurported to have been made by the Railways on 2.4.2008 isno appointment and that exercise is one without authority in asmuch as the appointment was made after the power to do sohas ceased in terms of the law laid in Datar Switch GearsLtd . AR.10/08Page numbers5.With the aforesaid, the appointment procedure agreed upon bythe parties has failed and necessary measure in terms ofSection 11(6) of the Act needs to be taken as the guideline forthe choice of the arbitrator being that provided in Sub section8 of Section 11. The appointment procedure in clause 64 ofthe General Conditions of contract of the Railways does notinsist appointment of any person with any specified specilisedqualification or expertise in the filed of Engineering, Accounting etc. It only insists on the appointment of aGazetted Railway Officer of a particular rank. That issufficient guideline to hold that no expertise of any peculiarnature is required for the appointment. The subject matter ofthe contract is the work of doubling of railway line betweenKollam and Trivandrum. I do not find any ground as to why aformer Judge of this Court is not to be appointed as anarbitrator. AR.10/08Page numbers6. For the aforesaid reasons, this arbitration request is allowedappointing Mr.Justice T.V.Ramakrishnan, former Judge of thisCourt as the arbitrator. Sd/- THOTTATHIL B.RADHAKRISHNAN,Judge.kkb.30/6.