Madhya Pradesh High Court
Surya Alloy Industries Limited vs West Central Railway on 10 November, 2014
10.11.2014 A.C. No.23/2013
Mr. Shashank Verma, learned counsel for the
petitioner.
Mr. Atul Choudharyu, learned counsel for the
respondent.
Heard.
By means of this application under Section 11 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to
as 'the Act'), the petitioner seeks appointment of an Arbitrator
to adjudicate the dispute which have arisen between the
parties.
Facts giving rise to filing of this application briefly
stated are that the petitioner is a company engaged in the business of manufacture and supply of diverse Railway stores. The respondent floated a tender on 4.1.2012 pursuant to which the petitioner submitted the bid. The bid of the petitioner was accepted and an agreement dated 9.1.2013 was executed between the parties for supply of elastic railway clips. Clause 2900 contains arbitration clause, which reads as under:-
"Arbitration -
(a) In the event of any question, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitrator of a Gazetted Railway Officer appointed to be the arbitrator, by the General Manager in the case of contracts entered into by the Zonal Railways and Production Units; by any Member of the Railway Board, in the case of contracts entered into by the Railway Board and by the Head of the Organisation in respect of contracts entered into by the other Organisations under the Ministry of Railways. The Gazetted Railway Officer to be appointed as arbitrator however will not be one of those who had an opportunity to deal with the matters to which the contracts relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference.
The award of the arbitrator shall be final and binding on the parties to this contract.
(b) In the event of the arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the court for any reason, it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid.
(c) It is further a term of this contract that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all.
(d) The arbitrator may from time-to-time with the consent of all the parties to the contract enlarge the time for making the award.
(e) Upon every and any such reference, the assessment of the cost incidental to the reference and award respectively shall be in the discretion of the arbitrator.
(f) Subject as aforesaid, the Arbitration Act, 1940 and the rules there under and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.
(g) The venue of arbitration shall be the place from which the acceptance note is issued or such other place as the arbitrator at his discretion may determine.
(h) In this clause the authority, to appoint the arbitrator includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise".
The dispute arose between the parties to the agreement. Thereafter, the petitioner sent a notice to the respondent seeking appointment of an Arbitrator. The aforesaid notice was served on the respondent on 17.6.2013. Despite a effl ux of 30 days after receipt of the notice, the respondent did not take any action for appointment of an Arbitrator. Thereafter, the petitioner fi led this application before this Court on 18.7.2013.
Learned counsel for the petitioner submitted that in terms of the arbitration clause, the respondent was required to appoint an Arbitrator within a period of 30 days from the date of receipt of notice. However, having failed to do so, the respondent has forfeited the right to appoint an Arbitrator under the agreement. While inviting the attention of this Court to Section 11(8) of the Act, it was submitted that the Court should appoint an independent Arbitrator. In support of aforesaid submission, learned counsel for the petitioner has placed reliance on decisions of Supreme Court in the cases of Deep Trading Company Vs. Indian Oil Corporation and others (2013) 4 SCC 35, Dakshin Shelters Private Limited Vs. Geeta S. Johari , (2012) 5 SCC 152 and ACE Pipeline Contracts (P) Ltd., Vs. Bharat Petroleum Corpn., Ltd., (2007) 5 SCC 304.
On the other hand, learned counsel for the respondent fairly submitted that though the respondent has forfeited the right to appoint the Arbitrator yet the Court would make the appointment of an Arbitrator in accordance with the procedure agreed to by the parties. In support of his submission, learned counsel for the respondent has placed reliance on decisions of Supreme Court in ACE Pipeline Contracts (P) Ltd., (supra) and Indian Oil Corporation Limited and others Vs. Raja Transport Private Limited, (2009) 8 SCC
520. Learned counsel for the respondent has also referred to an order dated 12.2.2014 passed by this Court in Arbitration Case No.53/2012.
I have considered the respective submissions made by learned counsel for the parties. At this stage, it is appropriate to notice Section 11(8) of the Act, which reads as under:-
"11. Appointment of arbitrators - (8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to -
(a) any qualifi cations required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator."
A Three Judge Bench of the Supreme Court while taking into account the requirement contained under Section 11(8) of the Act in para 20 in the case of Deep Trading Company Vs. Indian Oil Corporation and others (supra), has held as under:-
"20. Section 11(8) does not help the Corporation at all in the fact situation. Firstly, there is no qualifi cation for the arbitrator prescribed in the agreement. Secondly, to secure the appointment of an independent and impartial arbitrator, it is rather necessary that some one other than an off icer of the Corporation is appointed as arbitrator once the Corporation has forfeited its right to appoint the arbitrator under Clause 29 of the agreement."
It is pertinent to mention here that the decision rendered by the Supreme Court in the case of ACE Pipeline Contracts (P) Ltd., (supra), is a decision by a Two Judge Bench of the Supreme Court whereas, the case of Deep Trading Company Vs. Indian Oil Corporation and others (supra) is a decision rendered by Three Judge Bench of the Supreme Court, which binds this Court. Admittedly, the respondent has forfeited the right to appoint an Arbitrator. In view of the principles laid down in the case of Deep Trading Company Vs. Indian Oil Corporation and others (supra) and to ensure the appointment of an independent and impartial Arbitrator, as laid down in Section 11(8) of the Act and taking into account the fact that the venue of arbitration is at Jabalpur, I deem it appropriate to appoint Mr. Justice S.C. Pandey (Retd.), as an Arbitrator to arbitrate the dispute between the parties. Learned counsel for the parties have submitted that they have no objection with regard to appointment of Mr. Justice S.C. Pandey as an Arbitrator to arbitrate the dispute between them.
Off ice is directed to send a copy of this order to Mr. Justice S.C. Pandey.
Accordingly, the arbitration case is disposed of.
C.C. as per rules.
(Alok Aradhe )
a Judge