Jammu & Kashmir High Court
Jmd Constructions vs Northern Railways on 21 February, 2023
Author: Tashi Rabstan
Bench: Tashi Rabstan
Sr. No. 06
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
Reserved on: 03.02.2023.
Pronounced on: 21 .02.2023.
AP No. 22/2015
CM No. 1053/2021
JMD Constructions ....Petitioner(s)/Appellant(s)
Through :- Mr. Vikram Pangotra, Advocate.
V/s
Northern Railways ....Respondent(s)
Through :- Mr. Harshwardhan Gupta, Advocate.
Coram:
HON'BLE MR. JUSTICE TASHI RABSTAN, JUDGE
ORDER
1. This is an application under Section 11(6) of the J&K Arbitration and Conciliation Act, 1997 for appointment of Arbitrator.
2. The applicant was allotted contract by the respondent vide Acceptance Letter dated 01.06.2011 (Annexure-A).
3. In pursuance of acceptance of offer/tender of the applicant, contract no.602/ADEN/JAT dated 08.11.2011 came to be executed between the parties which is annexure-B of the application. The total costs for the work was Rs.54,84,893/-, the applicant incurred substantial expenses from his own pocket. The petitioner has repeatedly requested the respondent on 01.08.2011; 25.08.2011l 16.09.2011; 03.10.2011 and 24.01.2011, who failed to discharge its obligation. Vide communication dated 28.09.2011 (Annexure-C), the respondent disputed the claim of the applicant.
2 AA No.22/2015
4. In view of the aforesaid backdrop, the petitioner was left with no option but to claim the damages and also for appointment of the arbitrator by way of the notice/demand dated 07.07.2014 (Annexure-D).
5. Learned counsel for the petitioner has submitted that in order to redress his grievances, the petitioner has approached the Senior Divisional Engineer II, Northern Railway, Firozpur Division, Firozpur Cantt (Punjab)- 152001 vide its communication dated 07.07.2014 for appointment of the arbitrator. On the other hand, learned counsel for the respondent has drawn our attention to Annexure-II (appended with the objections of the respondent) which is a communication dated 28.04.2016 addressed by Senior Divisional Engineer to the petitioner in which the petitioner has been informed to approach the General Manager for filing application for appointment of arbitrator. Learned counsel for the respondent has submitted that the petitioner has not filed the application for appointment of arbitrator in terms of Clause 63 of the General Conditions of Contract but his application for appointment of arbitrator is made to the Senior Divisional Engineer, and, therefore the present petition is not maintainable.
6. Per contra, on the contentions of learned counsel for the respondent regarding the plea that applicant did not apply for arbitration to the General Manager in terms of Clause 63 of General Conditional of Contract, learned counsel for the petitioner submitted that bare perusal of clause 1.1 of Part 1 of these General Conditional of Contract says these General Conditions of Contract are subject to modifications additions and suppression by special conditions of contract. It is further submitted by the learned counsel for the petitioner that in the present case, letter of acceptance dated 01.06.2011 with the petition was issued by respondent i.e. Senior Divisional Engineer II Northern Railway Firozpur and contract agreement Annexure B with the petition was also executed 3 AA No.22/2015 by respondent i.e. Senior Divisional Engineer Northern Railway Firozpur, so the General Manager provided as in GCC for execution of contract was modified /substituted while incorporating special conditions to this contract and issuance of LOI and execution of contract agreement. And hence, the petitioner has made request to the competent authority i.e. respondent in the present petition.
7. In support of his contentions, learned counsel for the petitioner has relied on a decision of the Supreme Court in the case of Central Organization For Railway Electrification v. ECI-SPIC-SMO-MCML (JV) A Joint Venture Company reported at 2019 Legal Eagle (SC) 1359.
8. On the other hand, learned counsel for the respondent Mr. Harshwardhan Gupta, in support of his contentions has relied upon the decision of the Coordinate Bench of this court dated 24.09.2021 in the case of M/s R K Verma v. M/s Sterlite Technologies Ltd. & Anr;, wherein the Court has dismissed the case of the applicant therein in view of not following the mandatory procedure for appointment of arbitrator.
9. Heard submissions of learned counsel for the parties and perused the file.
10. A perusal of the file would show that the petitioner has filed this petition on 12.06.2015. Annexure-II appended with objections filed by the respondent would show that the Senior Divisional Engineer-II, Northern Railways, Ferozpur had informed the petitioner to approach the competent authority i.e. the General Manager on 28.04.2016 for appointment of an arbitrator.
11. Paras 36 and 37 of the decision in the case of Central Organization For Railway Electrification (supra) are relevant and are reproduced below:
36. Clause 64(3)(b) of GCC deals with appointment of arbitrator where applicability of Section 12(5) of the Act has not been 4 AA No.22/2015 waived off. In terms of Clause 64(3)(b) of GCC, the Arbitral Tribunal shall consist of a panel of three retired Railway Officers retired not below the rank of Senior Administrative Grade Officers as the arbitrators. For this purpose, the Railway will send a panel of at least four names of retired Railway Officers empanelled to work as arbitrators indicating their retirement date to the contractor within sixty days from the date when a written and valid demand for arbitration is received by the General Manager. The contractor will be asked to suggest the General Manager at least two names out of the panel for appointment of contractor's nominees within thirty days from the date of dispatch of the request of the Railway. The General Manager shall appoint at least one out of them as the contractor's nominee and will simultaneously appoint the remaining arbitrators from the panel or from outside the panel, duly indicating the "Presiding Officer" from amongst the three arbitrators. The exercise of appointing Arbitral Tribunal shall be completed within thirty days from the receipt of names of contractor's nominees. Thus, the right of the General Manager in formation of Arbitral Tribunal is counterbalanced by respondent's power to choose any two from out of the four names and the General Manager shall appoint at least one out of them as the contractor's nominees.
37. In the present matter, after the respondent had sent the letter dated 27.07.2018 calling upon the appellant to constitute Arbitral Tribunal, the appellant sent the communication dated 24.09.2018 nominating the panel of serving officers of Junior Administrative Grade to act as arbitrators and asked the respondent to select any two from the list and communicate to the office of the General Manager. By the letter dated 26.09.2018, the respondent conveyed their disagreement in waiving the applicability of Section 12(5) of the Amendment Act, 2015. In response to the respondent's letter dated 26.09.2018, the appellant has sent a panel of four retired Railway Officers to act as arbitrators giving the details of those retired officers and requesting the respondent to select any two from the list and communicate to the office of the General Manager. Since the respondent has been given the power to select any of the two nominees from out of the four names suggested from the panel of the retired officers. In view of the modified Clauses 64(3)(a)(ii) and 64(3)(b) of GCC, it cannot therefore be said that the General Manager has become ineligible to act as the arbitrator. We do not find any merit in the contrary contention of the respondent.
The decision in TRF Limited is not applicable to the present case.
12. Clause 64(3)(a) (i) of the General Conditions of Contract is reproduced hereinblow:
"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, 5 AA No.22/2015 nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by GM."
13. A bare perusal of Clause 64(3)(a)(i) of the General Conditions of Contract would show that the decision of the Supreme Court relied on by the petitioner in the case of Central Organization For Railway Electrification (supra) is of no help to the petitioner as the work cost involved in the case of present petitioner is ₹54,84,893/-, whereas the Paras 36 and 37 of the aforesaid judgment merely delineate the role of General Manager in the appointment of the Arbitral Tribunal where the work cost involved is more than rupees one crore. But the fact remains that it is the General Manager who has to be approached as being competent authority for appointment of an arbitrator as provided in the General Conditions of Contract.
14. In the instant case, it is the admitted by the respondents that the petitioner has made a communication (Annexure-D) dated 07.07.2014 to Senior Divisional Engineer II, Northern Railway, Firozpur Division, Firozpur Cantt (Punjab) - 152001 though not the competent authority.
15. In view of the above, this petition is disposed of by directing the respondent Senior Divisional Engineer-II, Northern Railway Firozpur Division to forward the Annexure-D (communication) dated 07.07.2014 of the petitioner to the General Manager; with further direction to the General Manager who shall consider it and appoint arbitrator in the present case within a timeframe of one month from the date a copy of this order along with complete paper book is supplied on him.
(Tashi Rabstan) Judge Jammu:
21.02.2023 Raj Kumar Whether the order is speaking?: Yes/No. Whether the order is reportable?: Yes/No.