Madras High Court
C.A.Abdulkhader vs Union Of India on 14 August, 2014
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
In the High Court of Judicature at Madras Dated : 14.08.2014 Coram : The Hon'ble Mr.Sanjay Kishan Kaul, Chief Justice O.P.No.769 of 2010 C.A.Abdulkhader .. Petitioner -vs- 1.Union of India, Rep. By The Secretary, Ministry of Railways, Rail Bhavan, New Delhi. 2.The General Manager, Southern Railway, Headquarters Office, Part Town, Chennai. 3.The Deputy Chief Engineer, Gauge Conversion, Southern Railway, Manamadurai @ Madurai (Arasareddy). .. Respondents Petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 to appoint a sole Arbitrator to resolve the disputes and adjudicate upon all the claims of the petitioner under the Agreement No.01/DYCE/GC/PCO/03, dated 30.01.2003. For Petitioner : Mr.V.J.Joseph For Respondents : Mr.V.G.Sureshkumar * * * * * O R D E R
The tender submitted by the petitioner for the work of gauge conversion between Tiruchendur Section: Prov.Construction of low level platform at Palayamkottai and Rail level platform of Seydunganallur, Thathankulam, Srivaikuntam, Alwartirunagari and Nazareth stations, was accepted by respondent No.3 resulting in an agreement dated 30.01.2003 for the work valued at Rs.17,88,296/-. It is in pursuance to the execution and implementation of this agreement that disputes have arisen inter se the parties. The agreement contains an arbitration clause requiring the General Manager to suggest a panel of three names for the Contractor to select two out of the same and the balance to be appointed by the General Manager. The relevant clause in this behalf, i.e. Clause 64 (3) (a) (ii) reads as under:
"(ii) In cases not covered by Clause 64 (3) (a) (i), the Arbitral Tribunal shall consist of a panel of three Gazetted Railway Officers not below J A grade, as the arbitrators. For this purpose, the Railway wills end a panel of more than 3 names of Gazetted Railway Officers of one or more departments, of the Railway to the Contractor who will be asked to suggest to General Manager nominee. The General Manager shall appoint at least one out of them as the contractor's nominee and will also simultaneously appoint the balance number of arbitrators either, from the panel or from outisde the panel, duly indicating the presiding arbitrator from amongst the 3 arbitrators so appointed. While nominating the arbitrators it will be necessary to ensure thatn one of them is from the Accounts Department. An officer of Selection Grade of the Accounts department shall be considered of equal status to the Officers in SA grade of other departments of the Railways for the purpose of appointment of Arbitrators.
(iii)If one or more of the arbitrators appointed as above refuses to act 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 reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay, the General Manager 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-constituted Tribunal may, at its discretion, proceed with the reference from the stage at which it was left by the previous arbitrator(s)."
2.A panel of three Arbitrators was constituted in pursuance of the disputes, but their mandate was terminated as per order dated 31.12.2009 passed in O.P.No.158 of 2009 by the learned Principal District Judge, Tirunelveli.
3.The respondents took no steps to appoint substituted Arbitrators, resulting in the petitioner addressing a communication dated 06.07.2010 calling upon the Designated Authority to appoint the Arbitrators. This letter, however, remained unaddressed, even though it was served on the respondents on 12.07.2010. The petitioner was, thus, compelled to file the present petition on 19.08.2010.
4.It appears that the respondents awoke to the situation only thereafter, when on 02.09.2010 they sent a panel of three Arbitrators for the petitioner to nominate two of them. The remaining Arbitrator was to be appointed by the General Manager.
5.Learned counsel for the petitioner relies upon the judgment of the Hon'ble Supreme Court in Datar Switchgears Ltd. vs. Tata Finance Ltd., 2000 (8) SCC 151, to contend that the respondents had lost the opportunity to appoint the Arbitrators in terms of the arbitration clause, as neither did the respondents within thirty days from service of notice nor right till filing of the present petition appoint anyone. He submits that apart from the fact that this judgment has been followed subsequently in National Insurance Co. Ltd. vs. Mastan, 2006 (2) SCC 641, a Division Bench of this Court also elucidated the position in The General Manager (Telecom) Madurai Secondary Switching Area, Department of Telecommunication vs. Sesa Seat Information Systems Ltd., 2005 4 MLJ 210. The principles were culled out by the Division Bench in para 23 of the judgment. Had the respondent appointed the Arbitrator prior to filing of the petition under Section 11 of the said Act, its legality would not have been questioned; but, once the petition for appointment is filed before the Court, the other party abdicates his right to appoint the Arbitrator as per the provision stipulated in the agreement or in terms of the arbitration clause and the Court alone has the power to appoint.
6.On the other hand, learned counsel for the respondents referred to the judgment of Northern Railway Administration, Ministry of Railway, New Delhi vs. Patel Engineering Company Limited, 2008 10 SCC 240 and Indian Oil Corporation Limited vs. Raja Transport Private Limited, 2009 8 SCC 520 to emphasize that in case of invocation of provision of Section 11(6) of the said Act, it has to be seen whether the appointing authority failed to exercise jurisdiction within a reasonable period of time, as thirty days time period is not stipulated unlike Section 11(5) of the said Act. He submits that the intent is to give effect to the arbitration clause.
7.In my view, the legal principle is quite clear given that the petition in the present case is one under Section 11(6) of the said Act in view of what is stated aforesaid. The cut-off point for the respondents to exercise the jurisdiction squarely arises when the petition is filed before the Court invoking this jurisdiction and not the expiry period of thirty days. Unfortunately for the respondents, they slept over the matter for quite some time and the petitioner filed the petition before this Court, whereafter the respondents awoke to the situation, thus losing out their right to appoint the Arbitrator. Learned counsel for the petitioner is quite clear that he does not want to elect an Arbitrator from the panel suggested by the respondents and requests that a retired District Judge may be appointed as the Arbitrator, as the total quantum in lis is not very high.
8.Accordingly, the petition is allowed and I appoint Mr.S.Somasundaram, a retired Judicial Officer, as the Arbitrator to enter upon the reference and after issuing notice to the parties and upon hearing them, pass an award as expeditiously as possible, preferably within a period of six months from the date of receipt of this order. The learned Arbitrator is at liberty to fix the remuneration and other incidental expenses, which shall be borne equally by both the parties.
(S.K.K., CJ.) 14.08.2014 sra The Hon'ble Chief Justice (sra) O.P.No.769 of 2010 14.08.2014