Rakesh Kumar v. Union of India through General Manager Northern Railways and Anr.

3. Debarment from participating in new tender invited under CPLP-2014 by Delhi division for a period of five (05) years. This is issued with the approval of competent authority. (Dinesh Sharma) ACM/Freight Delhi Division.”

5. Consequently, the petitioner vide letter dated 20.02.2024 invoked the arbitration clause contained in the relevant conditions of contract and proposed the name of a person who could be appointed as a Sole Arbitrator.

6. No response thereto was sent by the petitioner.

7. Consequently, the present petition has come to be filed.

8. Admittedly, the contract between the parties contains an arbitration clause as under: “ (ii) (a) The demand for arbitration shall specify the mattes which are in 26.[4] ARBITRATION (A) (i) In the event of any dispute or difference 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, of if the Railway fails to make a decision within 120 days, then in any such, but except in any of the “excepted matters” referred to in Clause 63 of these conditions the contract, after 120 days within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute of difference be referred to arbitration. question, or subject of the dispute or difference as also the amount of claim item wise. Only such dispute or difference, 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. (ii) (b) The parties may waive off the applicability of sub-section 12 (5) of Arbitration and Conciliation (Amendment) Act 2015 if they agree for such waiver, in writing, after dispute having arisen between them in the format given under Annexure XII of these conditions. (iii) (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. (III) (B) The claimant shall submit his claim stating the fact supporting the claims alongwith all the relevant documents and the relief sought against each claim within a period of 30 days from the date of appointment of the Arbitral Tribunal. (iii) (c) The Railway shall submit its defence statements and counter claim (a), if any, within a period of 60 days of receipt of copy of claims from Tribunal thereafter unless otherwise extension has been granted by Tribunal. (iii) (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 the Headquarters of the concerned Railway of any other place with the written consent of both the parties.

(iv) 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 Tribunal having due regard to the delay in marking it.

(v) 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 Railways that the final bill is ready for payment he / they will be deemed to have waived his / their claim (s) and the Railway shall be discharged and released of all liabilities under the contract in respect of these claims. (B) Appointment of arbitrator: Appointment of Arbitrator where applicability of section 12 (5) of Arbitration and Conciliation Act has been waived off:

(i) In cases where the total value of all claims in question added together does not exceed Rs.1,00,00,000/- (Rupees One Crore 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. The sole arbitrator shall be appointed within 80 days from the day when a written and valid demand for arbitration is receive by GM. In cases not covered by the above clause, the Arbitral Tribunal shall consist of a Panel of these Gazetted Railway Officer, retired not below the rank of SAC Officer, as the arbitrators. For this purpose, the Railway will send a panel of at least four (4) 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 80 days from the day when a written and valid demand for arbitration is received by the GM. Contractor will be asked to suggest to General Manager at least 3 names out of the panel for appointment as contractor’s nominee within 30 days from the date of dispatch of the request by Railway. The General Manager shall appoint atleast one out of them as the contractor’s nominee and will also simultaneously 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. GM shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of contractor’s nominees. While nominating the arbitrator, it will be necessary to ensure that one of them is from the 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 arbitrator. (C)Appointment of Arbitrator where applicability of section 12(5) of A&C Act has not been waived off

(i) The Arbitral Tribunal shall consist of a Panel of three (3) retired

Railway Officers retired not below the rank of SAG Officer, as the: arbitration. For this purpose, the Railway will send a panel of at least four (4) names of retired Railway Officer(s) empanelled to work as Railway Arbitrator duly indicating their retirement date to the contractor within 60 days from the day when a written and valid demand for arbitrator is received by the CM. Contractor will be asked to suggest to General Manager at least 2 names out of the panel for appointment as contractor’s nominee within 30 days from the date of dispatch of the request by Railway. The General Manager shall appoint at least one out of them as the contractor’s nominee and will also simultaneously 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. CM 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 has served in the Accounts Department. (ii)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 or willing 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 same manner in which the earliest arbitrator/arbitrators had been appointed. Such re-constituted Tribunal may, as its discretion, proceed with the reference from the stage at which it was left by the previous arbitrator(s).

(D) Where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made. The venue of arbitration shall be the place from which the acceptance note is issued. (E) The cost of arbitration shall be borne by respective parties. The cost shall inter-alia include fee of the arbitrator(s) as per the rates fixed by Railway Board from time to time and the fee shall be borne equally by both the parties, provided parties sign agreement in the format given at annexure II to these conditions after/while referring these disputes to Arbitration. Further the fee payable to the arbitrator(s) would be governed by the instruction issued on subject by the 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. (F) (i) Sole arbitrator shall be entitled for 25% extra fee over the described by Railway Board from time to time.

(ii) Arbitrator tribunal shall be entitled 50% extra fee if award is decided within six months. (G) Subject to the provision of the aforesaid arbitration and conciliation Act 1996 and the rules there under and relevant para of general conditions of contract (GCC) and any statutory modification thereof shall apply to the appointed of arbitrators and arbitration proceedings under the clause.

9. Undeniably the procedure for appointment as contemplated in the aforesaid clause is no longer valid in view of the authoritative pronouncement of the judgment of Supreme Court in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A Joint Venture Company 2024 SCC OnLine SC 3219. As such, it is incumbent on this Court to appoint an independent arbitral tribunal to adjudicate the disputes between the parties.

10. Learned counsel for the respondent accedes that an independent Sole Arbitrator be appointed to adjudicate the disputes between the parties.

11. Accordingly, Ms. Shreya Singhal, Advocate (Mob.: 9811747392) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties under the aforesaid agreements.

12. Respondents shall be entitled to raise appropriate objections as regards jurisdiction, if any, before the learned Sole Arbitrator which shall be duly considered by the learned sole arbitrator on merits

13. The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosure as required under Section 12 of the A&C Act; and in the event there is any impediment to the appointment on that count, the parties are given liberty to file an appropriate application in this court.

14. The learned Sole Arbitrator shall be entitled to fee in accordance with IVth

15. Parties shall share the arbitrator’s fee and arbitral costs, equally. Schedule to the A&C Act; or as may otherwise be agreed to between the parties and the learned Sole Arbitrator.

16. All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.

17. Needless to say, nothing in this order shall be construed as an expression of this court on the merits of the case.

18. The present petition stands disposed of in the above terms.

SACHIN DATTA, J NOVEMBER 20, 2024