IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 12 of 2017 --- M/s Sahil Projects and Planning Private Limited --- ---- Petitioner Versus The Eastern Railway through Chief Administrative Officer (Con), Construction Department --- --- Respondent --- CORAM:The Hon’ble Mr. Justice Aparesh Kumar Singh For the Petitioner: Mr. Indrajit Sinha, Advocate For the Respondent: Mr. Gautam Rakesh, Advocate --- 07/ 11.08.2017 The order dated 04.08.2017 reads as under: “Heard learned counsel for the parties.
2. Under Clause 64 of the agreement dated 21.1.2007, the Respondent- Railways had appointed an Arbitral Tribunal comprising 3 Arbitrators to adjudicate on the disputes raised by the petitioner. The proceedings however did not reached to finality and the panel was revised twice thereafter. The third panel also got terminated. As per the petitioner, term of the third Tribunal terminated on issuance of the letter dated 23.5.2016 requesting the petitioner to suggest two names out of the panel named in the said letter to act as their nominee arbitrators. All four names were of the serving gazetted Railway Officers. There after, respondents have nominated 3 persons who are serving officers of Railway to constitute Arbitral Tribunal, one of them being Presiding Arbitrator by the order contained in Annexure-9 dated 31.1.2017.
3. In terms of Clause 64(7) of the agreement parties have agreed that provisions of Arbitration and Conciliation Act, 1996 and the rules there under and any statutory modification thereof shall apply to the arbitration proceedings under this clause. Provisions of Section 12(5) Amended Act, 2015 however proscribe any person who has relationship with the parties or counsel or the subject matter of the dispute from being eligible to be appointed as an arbitrator. In view of Clause 64(7) of the arbitration agreement read with Section 12(5) of the Amended Act, 2015 brought into effect on 23.10.2015, Respondents could not have appointed officers of Railways themselves to constitute the Arbitral Tribunal.
4. Learned counsel for the petitioner has placed the judgment rendered by learned Single Judge of Delhi High Court, Hon'ble Mr. Justice S. Murlidhar in the case of Ratna Intrastructure Projects Pvt. Ltd. Vrs. Meja Urja Nigam Private Limited (MUNPL) passed in Arbitration Petition No. 537 of 2016 dated 11.4.2017 where under it has been held that Section 12(5) of the Amended Act, 2015 would apply in cases where parties have agreed to be governed by the the statutory modifications or re-enactment thereof and the Rules made under the Act of 1996.
5. The sublime principle behind incorporating such a neutrality clause has been explained in the judgment rendered by the Hon'ble Supreme Court in the case of Voestalpine Schienen GMBH Vrs. Delhi Metro Rail Corporation Limited reported in (2017) 4 SCC665 para 15 to 25.
6. Learned counsel for the petitioner has also relied upon order dated 3.2.2017 passed in Arbitration Application No. 20 of 2016 and Arbitration Application No. 24 of 2016 where, under the default procedure, fresh Tribunal comprising independent arbitrators have been constituted by this Court. The judgment rendered by the Hon'ble Supreme Court in the case of Union of India and others Vrs. Uttar Pradesh State Bridge Corporation Limited reported in (2015) 2 SCC52at para 16, 17, 19, 20 have also been profitably quoted, which serve as a guidance in the matter of appointment 2. of fresh panel of arbitrator.
7. Railways have in their counter affidavit sought to defend their action stating that petitioner has no occasion to seek constitution of a fresh Tribunal once the Tribunal have been nominated though for the fourth consecutive times by the order dated 31.1.2017.
8. Such a plea however cannot be countenanced in view of the discussion made herein above. In the aforesaid facts and circumstances and the legal position, a fresh Tribunal is to be constituted which is in consonance with the agreement between the parties and in the spirit of Amended Act 3 of 2016 to which they have agreed to governed by as well under Clause 64(7).
9. In that view of the matter, post the case on next Friday i.e. 11.8.2017 as unfixed case for further order and appointment of arbitrators.
3. In the aforesaid background, it is profitable to quote the opinion of the Hon'ble Supreme Court in the case Union of India & others vs. U.P. State Bridge Corporation Limited (2015) 2 SCC52para-16, 19 and 20 thereof, which reads as under:
“16. First and paramount principle of the first pillar is “fair, speedy and inexpensive trial by an Arbitral Tribunal”. Unnecessary delay or expense would frustrate the very purpose of arbitration. Interestingly, the second principle which is recognised in the Act is the party autonomy in the choice of procedure. This means that if a particular procedure is prescribed in the arbitration agreement which the parties have agreed to, that has to be generally resorted to. It is because of this reason, as a normal practice, the court will insist the parties to adhere to the procedure to which they have agreed upon. This would apply even while making the appointment of substitute arbitrator and the general rule is that such an appointment of a substitute arbitrator should also be done in accordance with the provisions of the original agreement applicable to the appointment of the arbitrator at the initial stage. [See Yashwith Constructions (P) Ltd. v. Simplex Concrete Piles India Ltd. However, this principle of party autonomy in the choice of procedure has been deviated from in those cases where one of the parties have committed default by not acting in accordance with the procedure prescribed. Many such instances where this course of action is taken and the Court appoint the arbitrator when the persona designata has failed to act, are taken note of in paras 6 and 7 of Tripple Engg. Works. We are conscious of the fact that these were the cases where appointment of the independent arbitrator made by the Court in exercise of powers under Section 11 of account of “default procedure”. We are, in the present case, concerned with the constitution of substitute Arbitral Tribunal where earlier Arbitral Tribunal has failed to perform. However, the above principle of default procedure is extended by this Court in such cases as well as is clear from the judgment in Singh Builders Syndicate.
19. The appointment of the arbitrator by the Court, of its own choice, departing from the arbitration clause, is therefore not unknown and has become an acceptable proposition of law which can be termed as a legal principle which has come to be established by a series of judgments of this Court. Reasons for debating such a course of action are not far to seek and already taken note of above.
20. In the present case, we find the fact situation almost same as in Tripple Engg. Works and Singh Builders Syndicate. If the contention of the appellant is allowed, it would amount to giving premium to the appellant for the fault of the Arbitral Tribunal’s members who were appointed by none else but by the appellant itself. As pointed above, the appellant has not questioned the order of the High Court insofar as it has terminated the mandate of the earlier Arbitral Tribunal because of their inability to perform the task assigned to them. In such a situation, leaving the respondent at the mercy of the appellant 3. thereby giving the power to the appellant to constitute another Arbitral Tribunal would amount to adding insult to the serious injury already suffered by the respondent because of non-conclusion of the arbitral proceedings even when the dispute was raised in the year 2007. In case, the cherished and benevolent purpose and objective of speedy resolution of the disputes by arbitral proceedings is to be accomplished, it becomes the bounden duty of the persona designata to appoint such arbitrator(s) who have sufficient time at their disposal to attend to this task assigned to them and to conclude the arbitral proceedings in a speedy manner. It is a common sight that the officers who are awfully busy in their other routine functions, because of their status and position, are made arbitrators. For them, discharge of their other duties assumes more importance (and naturally so) and their role as the arbitrators takes a back seat. This kind of behaviour showing casual approach in arbitration cases is anathema to the very genesis of arbitration. Therefore, where the Government assumes the authority and power to itself, in one-sided arbitration clause, to appoint the arbitrators in the case of disputes, it should be more vigilant and more responsible in choosing the arbitrators who are in a position to conduct the arbitral proceedings in an efficient manner, without compromising with their other duties. Time has come when the appointing authorities have to take call on such aspects failing which (as in the instant case), Courts are not powerless to remedy such situations by springing into action and exercising their powers as contained in Section 11 of the Act to constitute an Arbitral Tribunal, so that interest of the other side is equally protected.”
4. The arbitral Tribunal was revised thrice, but the proceedings remained inconclusive. In the aforesaid facts and circumstances therefore, this Court proposes to appoint former Judge of Patna High Court Hon'ble Mr. Justice Anil Kumar Sinha (Retired) as an Arbitrator to adjudicate the dispute between the parties. Registrar General of this Court is directed to apprise the proposed Arbitrator of the instant order for submission of a declaration in terms of section 12 of the Arbitration and Conciliation Act, 1996, as amended by the Act 3 of 2016. Let such declaration be furnished within a period of two weeks from the date of receipt of such communication.
5. Accordingly, let the matter be placed on 01.09.2017 under the same heading as an unfixed matter. (Aparesh Kumar Singh, J) Ranjeet/