Indian Kanoon - Search engine for Indian Law

2.2 On 29.05.2023, the respondent issued a notice under Section 21 of the Act and vide letter dated 11.08.2023 proposed the name of one arbitrator. Petition filed by the respondent under Section 11 of the Act was withdrawn on 03.10.2023. The respondent on 17.10.2023 consented for fast-track arbitration as provided in clause 2905(c)(ii)(a) of the Indian Railway Standard Conditions of Contract (for short „IRS‟). On 16.11.2023, the petitioner proposed four names of its serving employees for appointment as arbitrator and asked the respondent to suggest two names from the proposed list. On 24.01.2024, the respondent shortlisted two names. The petitioner on 30.01.2024 appointed its serving employee to be a sole arbitrator. 2.3 The award was passed allowing the claim of the respondent. The petitioner was directed to refund LD to the extent of Rs.5,19,15,870/- for supply of 272 wagons after 29.03.2022. The respondent was held entitled to price variation upto the date of actual supply with base month as May, 2019. The cancellation of the contract was set aside and the respondent was to supply the balance 390 wagons with price variation of such supply with the base month as May, 2019. Hence, the present petition.

4. Per contra by proposing four names of its serving employees and proceeding under clause 2905(a) of IRS which is only applicable in cases where Section 12(5) of the Act is waived, the petitioner agreed not to be subjected to rigours of Section 12(5) of the Act. The submission is by short listing two names from the proposed list and by consenting for adoption of the fast-track arbitration, the respondent also waived applicability of Section 12(5) of the Act. It is submitted that there is no prescribed language for waiver. The emphasis is that the petitioner was well-aware of the provisions of Section 12(5) of the Act and after appointing arbitrator under clause 2905(a) of IRS, on being unsuccessful in the arbitration proceedings is now taking a u- turn.

9.1 Sub-clause (a)(ii) deals with the cases of claim exceeding rupees one crore. The tribunal shall consist of three Gazetted Railway Officers not below the rank of JAG or of two Gazette Railway Officers and a Retired Officer of the Railway having served not below the rank of Senior Administrative Grade Officer (for short „SAG‟). The Railways within sixty days of the demand for the arbitration shall send to contractor the names of at least four Gazetted Railways Officer which may include name(s) of Retired Officer(s). The contractor had to within thirty days shortlist at least two names out of the panel. The GM was obligated to appoint at least one of the nominee of the contractor, the balance arbitrators were to be appointed either from the panel or outside the panel and the presiding arbitrator was to be indicated. The exercise was to be completed within thirty days of the receipt of the names from the contractor. 9.2 Sub-Clause (b) lays down the procedure for appointment of arbitrator in case the applicability of Section 12(5) of the Act is not waived. In cases involving claim upto Rs. 50 lakhs, the tribunal shall consist of a Retired Officer of the Railways not below the rank of SAG. The Railway within sixty days of receipt of the demand for arbitration has to propose to contractor at least four names of Retired Railway Officers for appointment as arbitrators. Within thirty days contractor has to suggest two names from proposed names and GM is to appoint at least one arbitrator out of nominees of the contractor. In cases involving claim of more than Rs.50 lakhs the tribunal shall consist of at least three retired Railways Officers not below the rank of SAG and a similar procedure as in clause 2905(b)(i) of IRS of sending four names and nomination by contractor was to be followed. 9.3 Clause 2905 (c)(ii)(a) provides that the parties by agreement in writing either before or at the time of the appointment of the arbitrator can agree for fast-track procedure of arbitration to be adopted for dispute resolution.

10. It is an admitted position of the parties that the serving employee of the Railways appointed as arbitrator was ineligible under Section 12(5) read with Schedule VII of the Act for appointment except by an express written agreement between the parties.

11. The respondent issued a notice dated 29.05.2023 for appointment of the arbitrator and stated that "Titagarh does not waive the provisions of Section 12(5) of the Arbitration and Conciliation Act, 1996". While proposing the name of one arbitrator vide communication dated 11.08.2023, it was reiterated that "Titagarh does not waive the provisions of Section 12 (5) of the Arbitration and Conciliation Act, 1996". The petition under Section 11 of the Act filed by respondent was withdrawn on 03.10.2023. The respondent by letter dated 17.10.2023 consented for fast-track arbitration as provided under clause 2905(c)(ii)(a) of IRS. In none of the documents relied upon there is an express agreement in writing waiving the rigours of Section 12(5). There is no requirement under clause 2905(c)(ii)(a) of IRS that for fast-track arbitration, there has to be unilateral appointment of the arbitrator. The short-listing of two names from the four names proposed by the petitioner cannot be considered to be compliance of proviso to Section 12(5) of the Act, the waiver has to be specific and not to be implied from conduct.