Delhi High Court - Orders
Woodhill-Rahee (Jv), vs Dedicated Freight Corridor ... on 22 July, 2022
Author: Prateek Jalan
Bench: Prateek Jalan
$~30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 304/2022
WOODHILL-RAHEE (JV), ..... Petitioner
Through: Mr. Narendra Hooda, Sr. Adv.
with Ms. Pallavi Hooda, Mr. Prem
Prakash, Mr. Parivesh Singh, Ms.
Seema Sindhu, Mr. Shaurya
Lamba, Advocates.
versus
DEDICATED FREIGHT
CORRIDOR CORPORATION ..... Respondent
Through: Mr. Ashutosh Jha, Advocate
[9911588191].
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
% 22.07.2022 I.A. 11391/2022 (for exemption) Exemption allowed, subject to all just exceptions. The application stands disposed of.
O.M.P. (COMM) 304/2022 & I.A. 11392/2022
1. Issue notice. Mr. Ashutosh Jha, learned counsel, accepts notice on behalf of the respondent.
2. The respondent is at liberty to place an affidavit of reply on record within four weeks, and also file such documents upon which it wishes to rely, provided that the documents were a part of the arbitral record.
3. The impugned arbitral award dated 20.04.2020, was published on 04.07.2020, by two members of a three member tribunal constituted to Signature Not Verified Digitally signed O.M.P. (COMM) 304/2022 Page 1 of 5 By:SHITU NAGPAL Signing Date:26.07.2022 17:53:02 adjudicate the disputes arising between the parties under a contract dated 12.06.2018 ["the Contract"], for construction of railway overbridges.
4. The principal ground urged by Mr. Narendra Hooda, learned Senior Counsel for the petitioner, at this stage, concerns the constitution of the Arbitral Tribunal ["the Tribunal"] itself.
5. The Contract contains an arbitration clause in Article 64 thereof. It is not disputed that, keeping in mind the value of the claims asserted, the Tribunal was to be constituted in terms of Clause 64(3)(a)(ii) of the Contract which provides for a panel of three officials to act as the arbitrators. The respondent was obliged to send a panel of more than three names to the contractor [petitioner herein], from which the petitioner would suggest at least two names for appointment as its nominee. The Managing Director ["MD"] of the respondent was entitled to appoint one of the persons suggested as the petitioner's nominee, and also to appoint the other members of the Tribunal.
6. Clause 64(3)(a)(iii) of the Contract further provides as follows:-
"If one or more of the arbitrators appointed as above refuses to as arbitrator, withdraws from his office as arbitrator, or vacates his/their office/offices or is/ are unable or unwilling to perform his functions as arbitrator for any reasons whatsoever or dies or in the opinion of the MD/DFCCIL fails to act without undue delay, the MD/DFCCIL shall appoint new arbitrator/arbitrators to act in his/their place in the same manner in which the earlier arbitrator/arbitrators had been appointed. Such re-constitued Tribunal may, at its discretion, proceed with the reference from the state at which it was left by the previous arbitrators(s)."
7. In the present case, the Tribunal was constituted in terms of Clause 64(3)(a)(ii) of the Contract. As far as the petitioner's nominee is Signature Not Verified Digitally signed O.M.P. (COMM) 304/2022 Page 2 of 5 By:SHITU NAGPAL Signing Date:26.07.2022 17:53:02 concerned, the respondent suggested a panel of names, out of which the petitioner opted for either Mr. Rajiv Chaudhary or Mr. B.P. Khare. The MD of the respondent appointed Mr. Rajiv Chaudhary to act as the petitioner's nominee on the Tribunal, and also appointed Ms. Chetna Kumar as the respondent's nominee, and Mr. Rakesh Goyal as the Presiding Arbitrator of the Tribunal. The Tribunal entered into the reference, and also passed an order dated 28.09.2021 on the petitioner's application under Section 17 of the Arbitration and Conciliation Act, 1996 ["the Act"], directing the parties to keep the Bank Guarantees ["BGs"] and Fixed Deposit Receipts ["FDRs"], furnished by the petitioner to the respondent, alive and valid for a period of six months.
8. It appears form the impugned award that the petitioner thereafter moved a further application under Section 17 of the Act on 11.02.2022. The Award records that the Tribunal, in a virtual meeting held on 16.02.2022, ordered that it would decide this matter in the final award, and directed the parties to submit a joint signed statement by 23.02.2022, whereafter the Tribunal would consider whether or not an oral hearing on this application was required. Certain other applications were also made by the parties thereafter but, in the meanwhile, on 22.02.2022, Mr. Chaudhary resigned from the Tribunal with immediate effect.
9. As the interim order with regard to the BGs and the FDRs, furnished by the petitioner was about to expire, the petitioner approached this Court under Section 9 of the Act, by way of O.M.P.(I)(COMM) 91/2022. The Court, in an order dated 22.03.2022, noted the submission on behalf of respondent that the BGs and the FDRs would be kept alive.
10. The petitioner, thereafter, by a communication dated 14.03.2022, Signature Not Verified Digitally signed O.M.P. (COMM) 304/2022 Page 3 of 5 By:SHITU NAGPAL Signing Date:26.07.2022 17:53:02 nominated a retired Judge of the Punjab & Haryana High Court as its nominee arbitrator in place of Mr. Chaudhary. Mr. Goyal, the Presiding Arbitrator, suggested to Mr. Chaudhary on 19.04.2022, that he may reconsider his resignation, but Mr. Chaudhary was unable to do so. The respondent was not agreeable to the appointment of the arbitrator suggested by the petitioner, and instead, by a communication dated 19.05.2022, appointed Mr. B.P. Khare as the petitioner's nominee.
11. In this state of affairs, the petitioner again approached this Court by way of O.M.P.(T) (COMM) 56/2022, seeking termination of the mandate of the Tribunal. The petitioner also filed Arbitration Petition No. 649/2022 for appointment of the third Arbitrator. This Court, by order dated 23.06.2022, directed status quo to be maintained with regard to the BGs and the FDRs. The petitions were ultimately disposed of on 06.07.2022, as Mr. Goyal and Ms. Kumar had published the impugned award on 04.07.2022. However, the interim order dated 20.06.2022, to keep the BGs and the FDRs alive, was continued until 20.07.2022.
12. In these circumstances, I am of the view that the petitioner's contention regarding the constitution of the Tribunal merits further consideration. The impugned award has been signed and made only by two members of the Tribunal, after the resignation of the third member. Mr. Jha has cited the judgment of a Co-ordinate Bench in CIMMCO Ltd. vs. Union of India (2019) 261 DLT (CN 4) 4 [judgment dated 15.03.2019 in O.M.P (COMM) 297/2016], wherein this Court has held that resignation of one member of a three-member tribunal at the fag end of the arbitration proceedings would not require reconstitution of the arbitral tribunal, and an award signed by the other two members would be legal Signature Not Verified Digitally signed O.M.P. (COMM) 304/2022 Page 4 of 5 By:SHITU NAGPAL Signing Date:26.07.2022 17:53:02 and valid. Mr. Hooda seeks to distinguish this judgment on various grounds, including the fact that the award, in the case of CIMMCO Ltd. (supra), had already been prepared, whereas in the present case, the communication of the Presiding Arbitrator dated 19.04.2022, shows that the award had not been finalised prior to the resignation of Mr. Chaudhary. In the present case also, as noticed in the award itself, the parties were to file certain additional documents by 23.02.2022, which was after the resignation of Mr. Chaudhary. I am also prima facie of the view that, in the present case, parties were ad idem that a substitute arbitrator has to be appointed in place of Mr. Chaudhary. This is reflected in clause 64(3)(a)(iii) of the contract, and in the communication dated 19.05.2022 of the respondent itself.
13. In these circumstances, the petitioner has made out a prima facie case for an ad interim order. For the reasons aforesaid, the execution of the award dated 22.04.2022, published on 04.07.2022, by two members of the Tribunal, shall remain stayed until the next date of hearing, subject to the petitioner keeping the BGs and the FDRs furnished by it in favour of the respondent alive. The respondent is also directed to maintain status quo with regard to the BGs and the FDRs, subject to the above.
14. List on 21.11.2022.
PRATEEK JALAN, J JULY 22, 2022 'Bhupi'/ Click here to check corrigendum, if any Signature Not Verified Digitally signed O.M.P. (COMM) 304/2022 Page 5 of 5 By:SHITU NAGPAL Signing Date:26.07.2022 17:53:02