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IN THE HIGH COURT OF ORISSA AT CUTTACK ARBP No.22 of 2024 ARSS-SIPS (JV) …. Petitioner Mr. Sidhant Dwibedi, Advocate -versus- Union of India, Represented by the Chief Engineer (Con.)/HQ/ E. Co. Railway, Bhubaneswar; At-Rail Sadan, Chandrasekharpur, Bhubaneswar …. Opposite Party Mr. P.K. Parhi, DSGI along with Mr. S.S. Kashyap, CGC Order No. CORAM: HON’BLE THE CHIEF JUSTICE ORDER 08.01.2025 09. This matter is taken up through Hybrid mode. I.A. No.23 of 2024 2. ARBP No.22 of 2024 was filed seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as „the Act‟) for resolution of
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dispute arising out of an agreement dated 10.08.2016 for the work of “Khurda Road-Bolangir New B.G. Link Project-Execution of Earthwork in formation, Minor bridges and other allied works from Km.80.00 to Km.93.00 from Khurda end in between Nayagarh-Nuagaon and Daspalla of East Coast Railway”. Clause 64 of the said agreement contains the arbitration clause. Page 1 of 8 Admittedly, as per Clause 64(3)(a)(i) of the general conditions of contract, in the cases where the total value of all claims in question added together does not exceed Rs.25,00,000/-, the Arbitral Tribunal is to consist of a sole Arbitrator, who shall be a „Gazetted Officer in Railway‟ and not below JA Grade, nominated by the General Manger. 3. Clause 64(3)(a)(ii) of the agreement provides that those cases not covered by Clause 64(3)(a)(i) of the agreement, the Arbitral Tribunal shall consist of „three Gazetted Railway Officers not below JA Grade‟ or two „Railway Gazetted Officers not below JA Grade and a retired Railway Officer, retired not below the rank of SAG Officer‟, as the Arbitrators. 3.1. The Clause, further, provides that for the said purpose, the Railway shall send a panel of more than 3 names of Gazetted Railway Officers of one or more departments of the Railway, which may include the name(s) of retired Railway Officer(s) empaneled 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. Page 2 of 8 3.2. It further provides that the contractor will be asked to suggest to the General Manager at least two names out of the panel for appointment as contractor‟s nominee within 30 days from the date of dispatch of the request by the Railway. The General Manager shall then appoint at least one of them as the contractor‟s nominee and will, also simultaneously appoint the balanced number of Arbitrators either from the panel or from the outside panel, duly indicating the „Presiding Arbitrator‟ from amongst the three Arbitrators so appointed. Further, the General Manager shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of contractor‟s nominees. This Clause also stipulates while nominating the Arbitrators, it will be necessary to ensure that one of them is from the Accounts Department. „An officer of the 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 Arbitrator. 4. The dispute raised by the petitioner, the contractor was to the tune of Rs.25,84,51,862.72, thus above Rs.25,00,000/-. Page 3 of 8 5. ARBP No.22 of 2024 was taken up on 04.09.2024 and by an
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order on the said date, Mr. Justice C.R. Dash, a former Judge of this Court, has been appointed as the sole Arbitrator to adjudicate the dispute between the parties, in exercise of power under Section 11(6) of the Act. 6. This I.A. has been filed for modification of the said order dated 04.09.2024. Paragraph 7 of this application reads as under:- the above noted “7. That under fact and circumstance it is prayed that the order dated 04.09.2024 may be modified to the extent that Name: Shri Ranjit Kumar Sahu, Designation: Chief Engineer, NH, Odisha (Retd.) Address: House No 229/D,N-6, IRC Village, Nayapali, Bhubaneswar- 751015 Contract Number: 9437001992, 9439455730 E-Mall IDs: [email protected], be appointed as the Arbitrator from the side of the petitioner and Hon’ble Justice Chittaranjan Dash, Former Judge, Orissa High Court be appointed as an Arbitrator from the side of the Opp. Party and as per process enumerated they may be directed to nominate name of Presiding Arbitrator to lead the panel as per the provisions of Arbitration and Conciliation Act, 1996 in the interest of justice.” 7. Mr. P. K. Parhi, learned Deputy Solicitor General of India appearing on behalf of the Union of India-opposite party has submitted that as the Arbitration Clause stipulates constitution of Arbitral Tribunal with three Arbitrators, since the disputed amount Page 4 of 8 is more than Rs.25,00,000/-, this Court‟s order appointing the sole Arbitrator may be modified. 8. Mr. Gourav Khana, learned counsel appearing on behalf of the petitioner has submitted that this Court‟s order dated 04.09.2024 does not require any modification and this Court has, after having noticed the Arbitration Clause has rightly appointed a retired Hon‟ble Judge of this Court as the sole Arbitrator. He has relied on the Supreme Court‟s decisions in the cases of Union of India v. BESCO Limited reported in (2017) 14 SCC 187, Perkins Eastman Architects DPC v. HSCC (India) Limited reported in (2020) 20 SCC 760, North Eastern Railway v. Tripple Engineering Works reported in (2014) 9 SCC 288 and Union of India v. Singh Builders Syndicate, reported in (2009) 4 SCC 523. Reliance has also been placed on a decision of Delhi High Court dated 22.05.2024 in ARBP No.24 of 2024 (M/s. Twenty-Four Secure Services Pvt. Ltd. v. M/s. Competent Automobiles Company Limited). 9. I am of the opinion that this application seeking modification filed on behalf of Union of India has no merit in the light of well settled legal position on the point of power of the Page 5 of 8 Chief Justice to appoint Arbitrator / Arbitrators under Section 11 of the Act. In the case of Singh Builders (supra), the Supreme Court, taking into account the decision in the case of Northern Railway Administration, Ministry of Railway, New Delhi v. Patel Engineering Company Limited reported in (2008) 10 SCC 240, has held that invariably the Court should first appoint the Arbitrators in the manner provided for in the arbitration agreement. But where the independence and impartiality of the Arbitrator(s) appointed/nominated in terms of the arbitration agreement is in doubt, or where the Arbitral Tribunal appointed in the manner provided in the arbitration agreement has not functioned and it becomes necessary to make fresh appointment, the Chief Justice or his designate is not powerless to make appropriate alternative arrangements to give effect to the provision for arbitration. 10. In the case of Tripple Engineering Works (supra), the Supreme Court, while discussing the law elaborately on the point of power of the Chief Justice to appoint Arbitrators dealing with the same Clauses i.e. Clauses 64(3)(a)(i) and 64(3)(a)(ii) and (iii) of the General Conditions of Contract, the Supreme Court Page 6 of 8 observed that it was clear from the said provisions that the panel of Arbitrators as per the agreement between the parties necessarily has to be Gazetted Railway Officers. In the case of Union of India v. Bharat Battery Manufacturing Co. (P) Ltd., reported in (2007) 7 SCC 684, the Supreme Court, relying on a three-Judge Bench decision in Punj Lloyd Ltd. v. Petronet MHB Ltd. reported in (2006) 2 SCC 638, has held that once an aggrieved party files an application under Section 11(6) of the Act to the High Court, the opposite party would lose its right of appointment of Arbitrator as per the terms of the contract. The implication that the Court would be free to deviate from the terms of contract is obvious, the Supreme Court held. 11. It is worthwhile mentioning that, in the present case, the appointment of Arbitrator(s) strictly in terms of Clauses 64(3)(a)(i) and 64(3)(a)(ii) of the agreement is not advisable also in view of the 5th Schedule to the Arbitration and Conciliation Act, which delineates the grounds giving rise to justifiable doubts as to the independence or impartiality of the Arbitrators for the purpose of Section 12(1)(b) of the Act. Section 12(3) of the Act provides that an Arbitrator may be challenged, inter alia, if circumstances exist Page 7 of 8 that give rise to justifiable doubts as to his independence or impartiality, which includes “if an Arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party”. 12. In such view of the matter, the procedure for appointment of Arbitrator stipulated under Clauses 64(3)(a)(i) and 64(3)(a)(ii) of the agreement as discussed above cannot be adhered to. 13. In the facts and circumstances, in my considered view, the appointment of Mr. Justice C.R. Dash as the sole Arbitrator does not require any modification. 14. This application is accordingly dismissed. Chief Justice (Chakradhari Sharan Singh) M. Panda/ S.K. Behera Signature Not Verified Digitally Signed Signed by: SISIRA KUMAR BEHERA Designation: Junior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 13-Jan-2025 17:05:34 Page 8 of 8