Gauhati High Court
M/S V.K. Sood Engineers And Contractors ... vs Union Of India on 19 December, 2024
Author: Soumitra Saikia
Bench: Soumitra Saikia
Page No.# 1/9
GAHC010079032021
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THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : Arb.P./10/2021
M/S V.K. SOOD ENGINEERS AND CONTRACTORS PVT. LTD.
HOUSE NO. 20, SECTOR-6, PANCHKULA, HARYANA, PIN-134109,
AUTHORISED OFFICIAL OF THE PETITIONER COMPANIES, SRI JATINDRA
KUMAR AGED ABOUT 56 YEARS
VERSUS
UNION OF INDIA, MINISTRY OF RAILWAYS AND 2 ORS.
TO BE REPRESENTED BY THE GENERAL MANAGER (CONSTRUCTION),
NORTHEAST FRONTIER RAILWAY (NFR), T.N. TOWER, 114, ASSAM TRUNK
RD, MALIGAON GATE NO. 4, GUWAHATI, ASSAM-781011
2:THE CHIEF ENGINEER (CONSTRUCTION)
NORTHEAST FRONTIER RAILWAYS
MALIGAON
GUWAHATI-781011 (ASSAM)
3:THE DEPUTY CHIEF ENGINEER (CONSTRUCTION)
NORTHEAST FRONTIER RAILWAYS
NEW JALPAIGURI
WEST BENGAL-73400
Advocate for the Petitioner : MR. A THAKUR, MR H MEDHI,MS. J R THAKUR
Advocate for the Respondent : SC, RAILWAY, MR H GUPTA,DY.S.G.I.,MR. R K D
CHOUDHURY,MR. J P MORE
Page No.# 2/9
BEFORE
HONOURABLE MR. JUSTICE SOUMITRA SAIKIA
ORDER
19.12.2024 Heard Mr. A. Thakur, learned Senior Counsel assisted by Ms. J. R. Thakur, learned counsel for the petitioner. Also heard Mr. H. Gupta, learned counsel appearing for the respondents.
This application is filed under Section 11 of the Arbitration and Conciliation Act. 1996, whereby the demand for appointment of an arbitrator by the petitioner in respect of disputes arising between the parties in respect of the contract awarded to the petitioner was not acceded to by the respondents. Being aggrieved the present petition has been filed.
The petitioner was awarded the contract work on 19.01.2017 for the work of Transportation of bridge girder from Manmad workshop to work site including erection, field rivet, welding and other ancillary works in between Raninagar Jalpaiguri to Maynaguir in connection with ABFC-NMX Doubling Project (Two Packet System) (Tender No.CE/CON//ABFC-NMX/Bridge Work/2018/03). Pursuant thereto, an agreement was executed by and between the petitioner and the respondents on 17.05.2017. Although the petitioner carried on the work, the same was terminated by the respondents. Being aggrieved, they represented before the respondents in an attempt to resolve the disputes and upon failure to reach a resolution, the matter be referred to arbitration for a final determination.
The learned counsel for the petitioner refers to Clause 64 of the contract agreement, which provides for arbitration, a provision that was agreed upon by both the petitioner and the respondent authorities. In terms of this clause, the petitioner filed an application before the authorities on 21.04.2018, requesting Page No.# 3/9 the General Manager of Northeast Frontier Railway, Maligaon, to resolve the disputes. In the application, the petitioner highlighted the ongoing issues and urged the railway authorities to address and resolve the disputes. Furthermore, the petitioner requested that, in the event of failure to resolve the disputes, an arbitrator be appointed as per Clause 64 of Chapter X of the contract agreement, invoking the provision for arbitration outlined in the agreement.
However, pursuant thereto, the railway authorities did not respond to the said communication. As no response was received, a further notice was issued by the advocates and consultants representing the writ petitioner, by a communication dated 23.10.2020. As no response was received from the respondents, the petitioner filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking the appointment of an arbitrator to resolve the dispute, as the respondents have failed to act on the request for arbitration within the stipulated time frame compelling the petitioner to approach the court for appointment of an arbitrator.
The respondents have filed their objections, raising two points: first, they contend that, in accordance with the agreement, the arbitration must be conducted by a panel of three gazetted Railway Officers not below the rank of J.A. grade, or by two gazetted Railway Officers of the same rank, along with a retired Officer not below the rank of SAG Officer, as arbitrators. The respondents further objected, stating that the panel of arbitrators must be chosen by them, after which the arbitration proceedings can be initiated. Additionally, they raised the objection that, as mandated under Section 21 of the Arbitration and Conciliation Act, no notice was served on them by the petitioner, thereby contesting the claims of the petitioner that the respondents had failed to respond to notice under Section 21 issued by the petitioner. The learned counsel Page No.# 4/9 for the respondents submits that it is the contractor, and not the advocate or consultant of the petitioner, who is required to issue the notice under Section 21 of the Arbitration and Conciliation Act. Since the notice was not issued by the contractor, the respondents contend that the notice was not required to be replied to.
The learned counsel for the petitioner has cited several judgments, particularly the ruling by the larger bench of the Apex Court in Central Organisation for Railway Electrification (CoRE) Vs. M/s. ECI SPIC SMO MCML (JV) A Joint Venture Company reported in (2020) 14 SCC 712. In this case, the majority view held that the panel maintained by the railways mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counter balance because the parties do not participate equally in the process of appointment of arbitrators. The process of appointing the arbitrators in CoRE (supra) is unequal and prejudiced in favour of Railways. The learned counsel for the petitioner further disputed the contentions of the respondents, asserting that the notice was duly issued which clearly referred to the dispute including a specific prayer for its resolution. He emphasized that, in the event of failure to resolve the matter, a reference to arbitration in terms of Clause 64 of the agreement was required to be made, thereby initiating the Arbitration process. As the communication did not receive any response, the advocates and consultants issued a subsequent notice. The learned counsel further submits that since an advocate represents the petitioner, the advocate is to be considered an agent of the petitioner, and therefore, any act done by the advocate, including the issuance of the notice, is deemed to be an act done by the petitioner itself.
Page No.# 5/9 The learned counsel for the respondents, on the other hand, relied on the judgment in Banarasi Krishna Committee and Others reported in 2012 9 SCC 496, as well as the judgment in Union of India Vs. Tecco Trichy Engineers & Contractors reported in 2005 4 SCC 239. The learned counsel submits that these judgments have interpreted the term "parties" and should be considered in the present case to support their arguments. The learned counsel for the respondents submits that in the matter dealt with by the Apex Court regarding the delivery of the signed copy of the award under Section 31 of the Arbitration and Conciliation Act, 1996, the Apex Court interpreted that such delivery of the award must be done in accordance with the mandate of the Act, primarily focusing on the party, as defined under Section 2(8) of the Act. He argues that the same interpretation to be applied to the present proceedings, as it aligns with the legislative intent and procedural requirements of the Act. The demand for arbitration must be understood to be required to have been made by the party to the contract. The communication dated 21.04.2018 cannot be construed as a demand for arbitration, as its tenor is primarily focused on resolving the disputes, with reference for arbitration being mentioned only in the penultimate part of the said communication. Additionally, the communication issued by the advocates and received on 23.10.2020, in the context of Section 21, cannot be treated as a valid notice under Section 21, in light of the judgment pressed into service by the respondents.
The learned counsel for the parties have been heard. Pleadings available on records have been carefully perused as well as the judgment cited at the bar has also been carefully perused.
The Apex Court in Union of India Vs. Tecco Trichy Engineers & Contractors reported in (2005) 4 SCC 239 has interpreted the terms in respect of Page No.# 6/9 Section 31 where the mandate of the Act is very clear. Section 31 of the Act reads as under:
"Section 31: Form and contents of arbitral award.--(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is based, unless-- (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under section 30.
(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered to each party. (6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award.
(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.
Explanation.--The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978).
(8) The costs of an arbitration shall be fixed by the arbitral tribunal in accordance with section 31A.
Explanation.--For the purpose of clause (a), "costs" means reasonable costs relating to--
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award."
It is also necessary to refer to section 2(8) as well as section 21 of the Act, the same are extracted as below:
"Section 2(8) Where this Part-- (a) refers to the fact that the parties have agreed or that they may agree, or (b) in any other way refers to an agreement of the parties, that agreement shall include any arbitration rules referred to in that agreement."
"21. Commencement of arbitral proceedings.--Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is Page No.# 7/9 received by the respondent."
Having considered the submissions made and the Judgments cited at the Bar, it is evident that the Apex Court was considering the term "party" in the context of Section 31 of the Arbitration and Conciliation Act, 1996, which includes a specific requirement for a signed copy of the award to be delivered the each party. This ensures that both parties are duly informed of the award and that the process of enforcing the award can proceed in accordance with the provisions of the Act. This provision ensures that the party receiving the award is formally notified, allowing for proper legal procedures to follow. In contrast, Section 21 of the Arbitration and Conciliation Act, 1996 does not specifically require the notice to be served by the party initiating arbitration; instead, the emphasis is on the notice being received by the respondent, ordinarily the employer. This ensures that the respondent is properly informed of the intention of one party that disputes between them had arisen and that such disputes are required to be referred to Arbitration as per the Arbitration Agreement and thereby marking the commencement of the arbitration process. This question was addressed by this Court on a previous occasion, where a Co-ordinate Bench by its order dated 07.09.2017 rendered in SLT INFRACON (P.) LTD. Vs. UNION OF INDIA AND ANR., reported in (2018) 5 GLR 226, elaborately considered and answered this issue. The Bench held that any action undertaken by a counsel, in accordance with the instructions of the party concerned, must be considered as an act undertaken by the party itself.
In the facts of the present case, the question of whether the notice in the present proceedings issued can be considered by his advocate need not be delved into, as there is already a communication dated 21.04.2018 issued by the contractor, namely the petitioner, to the N.F. Railway Authorities. This Page No.# 8/9 communication clearly contains a demand for referring the matter/dispute to arbitration, which addresses the core issue in the present case. Though this communication is not happily awarded, but it does call upon the respondents to refer the matter to arbitration. There is no dispute that there is an Arbitration Clause in the agreement executed by and between the petitioner and the respondents. It is also not questioned by the respondents that there arises some dispute between the parties or that there was failure on the part of the respondents to respond to the notice issued by the petitioner. Also in view of the law laid down by the Apex Court in CoRE Judgment (Supra) that mandating the other party to select an arbitrator from a curated panel of potential arbitrators maintained is against the equal treatment of parties, it has to be hald that the respondents cannot now appoint any arbitrator from the panel maintained by them. In Datar Switchgears Ltd that the Apex Court held that if the party having responsibility of appointing an arbitrator does not do so within 30 (thirty) days of the demand made the right automatically is not forfeited but which however ceases to exist once the other party moves the Court under Section 11 of the Act of 1996.
Under such circumstances, this court is of the view that the respondents having failed to appoint an arbitrator and the petitioner having moved the Court seeking appointment of an arbitrator, it is now for the court to invoke its jurisdiction under section 11(6) of the Arbitration and Conciliation Act, 1996 and appoint an arbitrator.
The Court therefore proceeds to appoint the Justice Amitabh Roy, former Judge of the Supreme Court of India as the sole arbitrator to arbitrate and decide on the disputes between the parties. This appointment is subject to the written declaration required to be submitted under 12(5) of the Arbitration and Page No.# 9/9 Conciliation Act, 1996. The parties will approach the learned proposed Arbitrator on 11.01.2025 and thereafter any declaration that may be issued by the proposed learned arbitrator be placed before the Court for due confirmation by this Court.
Ordered accordingly.
Matter to be listed on 24.01.2025.
JUDGE Comparing Assistant