Delhi High Court - Orders
Il&Fs Engineering And Construction ... vs Rail Vikas Nigam Limited on 15 July, 2021
Author: Sanjeev Narula
Bench: Sanjeev Narula
$~2 (2020)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB. P. 599/2020
IL&FS ENGINEERING AND CONSTRUCTION COMPANY
LIMITED ..... Petitioner
Through: Mr. Arun Kathpalia, Senior Advocate
with Mr. Kaushik Laik & Mr. Angad
Mehta, Advocates.
versus
RAIL VIKAS NIGAM LIMITED ..... Respondent
Through: Mr. Saurabh Mishra & Mr. Aditya
Mishra, Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER
% 15.07.2021 [VIA VIDEO CONFERENCING]
1. The present petition under Section 11(6)(a) of the Arbitration and Conciliation Act, 1996, seeks appointment of nominee Arbitrator on behalf of the Respondent or alternatively, appointment of an independent sole Arbitrator to adjudicate upon and decide the disputes between the parties in connection with and under the Contract Agreement dated 27.03.2014.
2. The arbitration agreement contained in Clause 17.3 of the General Conditions of Contract, incorporated by reference under the afore-noted contract is extracted hereinbelow:
"Any dispute in respect of which amicable settlement has not been reached arising between the Employer and the Domestic or Foreign Contractor related ARB. P. 599/2020 Page 1 of 5 to any matter arising out of or connected with this contract, the disputes shall be settled in accordance with the Indian Arbitration Act, 1996 and any statutory modification or re-enactment thereof. Further, it is agreed between the parties as under:
(i) Number of Arbitrators: The arbitral tribunal shall consist of 3 (Three) arbitrators.
(ii) Procedure for Appointment of Arbitrators: The arbitrators shall be appointed as per following procedure:
(a) Employer will forward a panel of 5 names to the contractor and contractor will give his consent for any one name out of the panel to be appointed as one of the Arbitrators.
(b) Employer will decide the second Arbitrator out of the remaining four names in the panel as mentioned in Para (a) above.
(c) The third Arbitrator shall be chosen by the two Arbitrators so appointed by the parties and shall act as Presiding Arbitrator. In case of failure of the two Arbitrators appointed by the parties to reach upon consensus within a period of 30 days from the appointment of the Arbitrators subsequently appointed, then, upon the request of either or both parties, the presiding Arbitrator shall be appointed by the Managing Director, Rail Vikas Nigam Limited, New Delhi.
(iii) Qualification and Experience of Arbitrators: The arbitrators to be appointed shall have minimum qualification and experience as under.
(a) One member of the tribunal shall be necessarily a working (not below the rank of SAG) or a retired officer (retired not below the rank of SAG, age not exceeding 70 years and in reasonably good mental and physical fitness) of Indian Railway Accounts Service having experience in financial matters related to construction contracts.
(b) One member shall be a technical person having degree in Engineering and may be working (not below the rank of SAG) or retired officer (retired not below the rank of SAG, age not exceeding 70 years and in reasonably good mental and physical fitness) of any Engineering service of Indian Railways or equivalent service in RVNL, and having knowledge and experience of the Railway working.
(c) The Presiding Arbitrator shall necessarily be a serving railway/RVNL officer and he shall have same minimum qualification and experience as specified above for either of the two arbitrators.
(d) Out of 3 Arbitrators not more than one shall be a retired officer.
(iv) No person other than the persons appointed as per above procedure and having above qualification and experience shall act as arbitrator.
(v) Neither party shall be limited in the proceedings before such arbitrators to the evidence nor did arguments previously put before.
(vi) The reference to arbitration may proceed, notwithstanding that the ARB. P. 599/2020 Page 2 of 5 Works shall not then be or be alleged to be complete, provided always that the obligations of the Employer, the Engineer and the Contractor shall not be altered by the reason of the arbitration being conducted during the progress of the Works. Neither party shall be entitled to suspend the Works, nor shall payment to the Contractor be continued to be made as provided by the Contract.
(vii) Arbitration proceedings shall be held at New Delhi, India and the language of the arbitration proceedings and that of all documents and communications between the parties shall be in English.
(viii) The decision of the majority of arbitrators shall be final and binding upon both parties. The expenses of the conciliator/arbitrators shall be as per the scales fixed by the employer from time to time and shall be shared equally by the Employer and the Contractor. However, the expenses incurred by each party in connection with the preparation, presentation will be borne by itself.
(ix) All arbitration awards shall be in writing and shall state the reasons for the award. However, in case the contractor is a Public Sector Enterprise/ Govt. Department, the dispute arising between the Employer and the contractor shall be settled through Permanent Arbitration Machinery (PMA) of the Department of Public Enterprise, Govt. of India as per prevailing rules, as stated in Sub-Clause 17.3."
3. While the Respondent had raised several objections on the issue of maintainability in its reply of the petition; however, during the course of arguments, Mr. Saurabh Mishra, learned counsel for the Respondent, very fairly does not dispute the existence of the agreement. Pointing to the Petitioner's notice invoking arbitration dated 10th September, 2020 wherein (Retd.) Mr. Justice G. B. Pattanaik was nominated as its arbitrator, Mr. Mishra submits that, although the invocation and nomination was not in terms of the arbitration clause, the Respondent is willing to agree to the constitution of the Arbitral Tribunal if the Respondent is also given an opportunity to make a nomination.
4. Mr. Kathpalia, Senior Counsel for the Petitioner on the other hand, proposes that though the arbitration clause provides for a three-member ARB. P. 599/2020 Page 3 of 5 Arbitral Tribunal, the parties can agree upon a Sole Arbitrator in order to minimise costs. The Respondent, however, is not agreeable to deviate from the agreed procedure. In these circumstances, Mr. Kathpalia on instructions, agrees to the suggestion made by the Respondent and states that he has no objection to the Respondent nominating its arbitrator even at this stage. Thus, keeping in view the technical nature of the disputes, the Respondent nominates Mr. S.P.S. Jain, former Member Engineer, Railway Board as an Arbitrator.
5. Accordingly, a three-member Arbitral Tribunal is directed to be constituted, comprising of: (i) Justice G. B. Pattanaik (Retd.), former Chief Justice of India as the nominee arbitrator of the Petitioner; (ii) Mr. S.P.S. Jain, former Member Engineer, Railway Board, as the nominee arbitrator on behalf of the Respondent; and (iii) the third presiding Arbitrator, to be appointed mutually by the two arbitrators; to adjudicate the disputes stated to have arisen between the parties arising out of the Contract agreement dated 27th March, 2014.
6. In the event the two arbitrators fail to agree on the presiding arbitrator within thirty days from today, the parties shall be at liberty to approach this Court for the same under Section 11(4)(b).
7. The parties are directed to appear before the learned Tribunal so constituted, as and when notified. This is subject to the learned Arbitrators making the necessary disclosure under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act.
ARB. P. 599/2020 Page 4 of 58. It is made clear that the Court has not examined the merits of the claims of either party. Both the parties shall be free to file their claims/ counter claims before the Arbitral Tribunal which shall be decided in accordance with law. All the rights and contentions of the parties are left open.
9. With the above directions, the petition stands disposed of.
SANJEEV NARULA, J JULY 15, 2021 as ARB. P. 599/2020 Page 5 of 5