Bela M. Trivedi, J. - (1.) THE present arbitration application has been filed by the applicant seeking appointment of an independent Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the said Act").
(2.) THE short facts necessary for the purpose of deciding the present application are that the applicant was awarded the contract pursuant to the tender invited by the respondent in respect of the residual composite work for the construction of 36 units type IV and 36 units type V quarters in multi storied towers for North Western Railway Officers Colony, in connection with setting up of the North Western Railway, at Jaipur. The said contract was awarded for the total cost of Rs. 27,25,46,971.55/ - on 08.05.2012. It appears that after the submission of performance bank guarantee and completion of other formalities, the petitioner had started work at the site, however the petitioner was informed to stop the work by the respondent, vide the letter dated 13.08.2012, on account of some order passed by the Apex Court in the petition filed by the land owners challenging the acquisition of the lands in question. The said order was vacated subsequently by the Apex Court and the work was restarted. However, certain disputes arose between the petitioner and the respondent. The respondent thereafter had issued the notice dated 09.04.2013 calling upon the petitioner to show cause as to why the contract of the petitioner should not be terminated. The petitioner therefore had filed the petition under Section 9 of the said Act in the Court of Additional District Judge, Jaipur. The petitioner also invoked the arbitration clause as contained in the agreement in question vide the letter dated 14.04.2014 (Annexure -P/16). The said letter was replied by the respondent vide the letter dated 13.06.2014 (Annexure -P/17) requesting the petitioner to give item wise claim for all the items as per GCC Clause 64(1)(ii). Since the petitioner did not respond to the said letter, the respondent again wrote the letter dated 03.07.2014 (Annexure -P/18) requesting the petitioner to submit the requisite information. The petitioner thereafter vide the letter dated 15.07.2014 (Annexure -P/19) furnished the details of claims and requested the respondent to provide list of Arbitrators as per Clause 64 of the contract agreement. In response thereto, the respondent informed the petitioner vide the letter dated 20.08.2014 (Annexure -P/20) inter alia that the total amount of claims submitted by the petitioner was more than 20% of the contract value and therefore the provision of Clauses 63, 64 and other Clauses of GCC would not be applicable for settlement of such disputes in view of Clause 38.3 and 81 of the special condition/specification of the contract (part -I) non technical. The petitioner in response to the said letter therefore submitted the revised claims confining them to the extent of 20% of the contract value, as per the letter dated 05.09.2014 (Annexure -P/21). However, the respondent did not appoint the Arbitrator and therefore the petitioner has filed the present application. The application has been resisted by the respondents by filing the reply contending inter alia that the demand for appointment of Arbitrator was prematured, as the petitioner had not waited for the period as contained in Clause 64(1)(i) of the GCC. It is further contended that after the submission of the revised claims, the respondent had proceeded with the appointment of Arbitral Tribunal on 04.02.2015 and informed the petitioner vide the letter dated 24.12.2014 to suggest the two names, however the petitioner had not responded, and therefore the competent authority of the respondent had constituted the Arbitral Tribunal. The respondent has also submitted that no outsider could be appointed as the Arbitrator in violation of the agreed conditions of the GCC and therefore the application deserves to be dismissed. The applicant has filed the rejoinder to the reply filed by the respondent by submitting that the respondent had failed to appoint the Arbitrator within the prescribed time limit, and therefore the application for appointment of independent Arbitrator under Section 11 (6) of the said Act was filed. It is also contended that the respondent could not have appointed or nominated the Arbitrator when the matter was subjudice before the Court.
(3.) BEFORE appreciating the submissions made by the learned counsels for the parties, it would be apposite to reproduce the relevant clauses of the General Conditions of the Contract: - - "64.(1) Demand For Arbitration : 64.(1)(i) - In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the "excepted matters" referred to in Clause 63 of these Conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration. 64.(1)(ii) - The demand for arbitration shall specify the matters which are in question, or subject of the dispute or difference as also the amount of claim item -wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railway, shall be referred to arbitration and other matters shall not be included in the reference. 64.(1)(iii) - (a) The Arbitration Proceedings shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway. (b) - - - - - - - - - - - - (c) - - - - - - - - - - - - (d) - - - - - - - - - - - - 64.(2) - - - - - - - - - - 64.(3) Appointment of Arbitrator : 64.(3)(a)(i) - In cases where the total value of all claims in question added together does not exceed Rs. 10,00,000 (Rupees ten lakh only), the Arbitral Tribunal shall consist of a Sole Arbitrator who shall be a Gazetted Officer of Railway not below JA Grade, nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by GM. 64.(3)(a)(ii) - In cases not covered by the Clause 64(3)(a)(i), the Arbitral Tribunal shall consist of a Panel of three Gazetted Railway Officers not below JA Grade or 2 Railway Gazetted Officers not below JA Grade and a retired Railway Officer, retired not below the rank of SAG Officer, as the arbitrators. For this purpose, the Railway will send a panel of more than 3 names of Gazetted Railway Officers of one or more departments of the Railway which may also include the name(s) of retired Railway Officer(s) empanelled to work as Railway Arbitrator to the contractor within 60 days from the day when a written and valid demand for arbitration is received by the GM. Contractor will be asked to suggest to General Manager at least 2 names out of the panel for appointment as contractor's nominee within 30 days from the date of dispatch of the request by Railway. 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 outside the panel, duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed. GM shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of contractor's nominees. While nominating the arbitrators, it will be necessary to ensure that 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 Railway for the purpose of appointment of arbitrator.";