APR CONSTRUCTIONS LTD Vs. UNION OF INDIA REP BY CHIEF ADMINISTRATIVE OFFICER (CONST ) SOUTH WESTERN RAILWAY

JUDGEMENT

(1.) This petition is filed by the petitioner/contractor under Section 11(6) of the Arbitration and Conciliation Act, 1996 ('Act' for short) seeking for appointment of a sole arbitrator to resolve the disputes and outstanding issues between the parties in respect of the agreement bearing No.CAO/CN/BNC/73610/A/19/11/2013 dated 19.2.2013. The petitioner, a limited Company registered under the Companies Act, 1956 was awarded with the work "Bagalkot-Kudachi New BG Line- Earthwork and construction of Bridges between KM 10.0 to 16.70 KM including shifting of electrical lines etc, (Reach-II)" by the 1st respondent through Acceptance letter No.W.496/BKKD/02 with a completion period of 12 months reckoned from 15.11.2012. An agreement entered into by the parties on 19.02.2013 governs various conditions appended to it in addition to the general conditions of contract [GCC] governing the South Western Railway. Clause (63) of the GCC marked at Annexure-D to the petition deals with settlement of disputes. All disputes and differences of any kind whatsoever arising out of or in connection with the contract shall be referred by contractor to the General Manager and the General Manager shall within 120 days after the receipt of the contractor's representation make and notify decisions for referring the matter to the Arbitrator. However, certain matters are categorized as "excepted matters" specifically excluded from the purview of the arbitration clause. It was alleged by the petitioner that when he entered proposed site to carry out the work along with men and machinery, the land owners did not permit the petitioner to proceed with the work on the ground that they were not paid the compensation and hence, the petitioner addressed a letter to the respondents to attend the matter and to take remedial measures which was not responded to. The dispute arose between the parties relating to the agreement dated 19.02.2013, subsequent to which the petitioner invoked arbitration clause and demanded the dispute to be referred to the Arbitral Tribunal in terms of the arbitral clause as agreed. As per the application dated 30.7.2014 (Annexure-W), six claims were made by the petitioner which are as under:

(2.) On the demand made by the petitioner, Respondent No.3 constituted Arbitral Tribunal with the sole Arbitrator and referred the claim Nos. 5 and 6 for adjudication as per the letter dated 27.11.2014 (Annexure-Y) to which petitioner requested to include claim Nos.1 to 4 and to refer the matter to the Arbitral Tribunal in terms of clause 63 and 64 of the GCC. Respondent No.3 rejected the request of the petitioner to include claims No.1 to 4 in terms of reference for the reason that the said claims (1) to (4) are covered under clause (2) of SCC and clause 62(1) of GCC, classified as 'excepted matters'. Aggrieved by the same, petitioner has preferred this petition.

(3.) Learned Senior counsel Sri.V.Prasad Rao, appearing for the petitioner would contend that the petition has been filed under Section 11[6] of the Act for appointing Sole Arbitral Tribunal to resolve the dispute and outstanding issues between the parties in respect of the agreement dated 19.02.2013, owing to failure of the General Manager i.e., respondent No.3 to act as required under appointment procedure prescribed under the GCC, which squarely falls under Clause [a] of Sub-section [6] of Section 11. Elaborating the arguments on this point, learned counsel submitted that in terms of Clause 64[3] [a] [i] of the GCC, 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 in that behalf. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by the General Manager. In terms of Clause [ii] of 64[3][a], 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 JA grade or two 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 General Manager. The Contractor will be asked to suggest to the General Manager up to 2 names out of the panel for appointment as the 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. The claims made by the Contractor was 6 in number which establishes that the value of all claims in question required to be referred to the Arbitral Tribunal is more than Rs. 10,00,000/-. It was mandatory on the part of the respondent No.3 to invoke Clause 64[3][a][ii] of the GCC and to appoint the Arbitral Tribunal consisting of panel of 3 Arbitrators. These claims were referred to the respondent No.3 vide letter of the petitioner dated 27.06.2014 [Annexure-T]. However, surprisingly, respondent No.3 constituted Arbitral Tribunal, appointing the sole Arbitrator.