Gujarat High Court
Ashish Construction Company vs General Manager, on 27 April, 2018
Author: M.R. Shah
Bench: M.R. Shah
C/IAAP/1/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/PETN. UNDER ARBITRATION ACT NO. 1 of 2018
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ASHISH CONSTRUCTION COMPANY
Versus
GENERAL MANAGER,
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Appearance:
MR ARPIT P PATEL(5497) for the PETITIONER(s) No. 1
MR RAVI KARNAVAT(1650) for the RESPONDENT(s) No. 1,2,3
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
Date : 27/04/2018
ORAL ORDER
[1.0] An objection is raised by Shri Karnavat, learned Advocate appearing on behalf of the respondents that in view of the special conditions of contract more particularly clause 37.3 which would have an overriding effect over the general conditions of contract upon which the petitioner has relied upon and has requested to refer the dispute to arbitration and as the dispute between the parties is for the value above 20% of the value of the contract, such claim / dispute which is of the value more than 20% of the value of the contract, provision of clauses 63 and 64 and other relevant clauses of general conditions of contract will not be the remedy for settlement of such disputes and therefore, the dispute is not required to be referred to arbitration. One another object which is raised by Shri Karnavat, learned Advocate appearing on behalf of the respondents that even otherwise as per the terms and conditions of the contract the Officer of the Railway shall be the Arbitrator to resolve the dispute between the parties and/or to adjudicate the dispute between the parties.
[2.0] To the aforesaid, Shri Patel, learned Advocate appearing on Page 1 of 4 C/IAAP/1/2018 ORDER behalf of the petitioner has vehemently submitted that as such the respondent Authorities have served their objection to refer the dispute between the parties to arbitration and infact they never raised any objection invoking clause 37.3 of the special conditions of the contract. It is submitted that therefore in view of section 4 of the Arbitration Act, the objection raised on behalf of the respondent is required to be overruled.
[3.0] Now, so far as the objection raised on behalf of the respondent Authorities that even as per the terms and conditions of the contract, in case of any dispute between the parties, the dispute is required to be referred to the Arbitrator who shall be the Officer of the Railway Authorities is concerned, it is submitted that as per section 12(5) of the Arbitration Act, 1996 as amended vide Act No.3 of 2016, such an officer shall be ineligible to be appointed as an Arbitrator. It is submitted that in the present case as such the respondent Authorities asked the undertaking from the petitioner for waiver of section 12(5) of the Arbitration Act, however the petitioner had not given such undertaking and had insisted for section 12(5) of the Arbitration Act. Therefore, it is requested to dispose of the objection to the Arbitrator by appointing the sole Arbitrator.
[4.0] Heard learned Advocates appearing for respective parties on the objection raised by Shri Karnavat, learned Advocate appearing on behalf of the respondent Authorities raised against referring the dispute to arbitration.
[4.1] Now, so far as the objection raised by the respondent Railway Authorities invoking Clause 37.3 of the special conditions of contract is concerned, at the outset it is required to be noted that Page 2 of 4 C/IAAP/1/2018 ORDER after the petitioner served a notice under Section 21 of the Arbitration Act, 1996 invoking arbitration, the respondent Authority did not raise any objection invoking Clause 37.3 of the special conditions of the contract. On the contrary vide communications dated 16.10.2017 and 03.01.2018 asked an undertaking and called upon the petitioner to submit an agreement as per AnnexureXII, towards waiver under Section 12(5) and section 31A(5) of the Arbitration Act, 1996 to the effect that the applicant waives section 12(5) of the Arbitration Act, 1996 by which the Officers of Railway Authorities can be said to be ineligible to become an Arbitrator. As such, such insistence / agreement on the part of the Railway Authorities is absolutely uncalled for. Be that as it may, even the petitioner did not specifically stated that he is not agreeable to waiver of section 12(5) of the Arbitration Act, 1996. As observed herein above, as such no other objections were raised more particularly invoking Clause 37.3 of special conditions of contract and did not raise any objection that the dispute is not arbitrable, in view of Clause 37.3 of the special conditions of the contract. Therefore, considering section 4 of the Arbitration Act, 1996, it can be said that there is a waiver of the objection on the part of the respondent Railway Authorities.
[4.2] Now, so far as the submission on behalf of the Railway Authorities that as per the contract only the Officers of the Railway Authorities is required to act as Arbitrator is concerned, in view of section 12(5) of the Arbitration Act, 1996, same is not sustainable. Section 12(5) of the Arbitration Act, 1996 as amended by Act No.3 of 2016 provides that notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subjectmatter of the dispute, fails under any of the Page 3 of 4 C/IAAP/1/2018 ORDER categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. However, the parties may, subsequent to disputes having arisen between them, waive the applicability of subsection (5) of section 12 by an express agreement in writing, which in the present case the petitioner has not agreed to waive. Under the circumstances, section 12(5) of the Arbitration Act, 1996 shall be applicable and the Officer of the Railway Authorities shall be ineligible to be appointed as an Arbitrator.
[5.0] For the reasons stated above, the objection raised on behalf of the Railway Authorities against referring the dispute to the arbitration is hereby overruled. Now, the dispute is required to be referred to the Arbitrator.
Stand over to 04.05.2018.
(M.R. SHAH, J.) Ajay** Page 4 of 4