UNION OF INDIA Vs. B JANARDHANA REDDY

JUDGEMENT

(1.) The Union of India represented by the General Manager, South Central Railway, Secunderabad and two others invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India challenging the order dated 19-8-2002 made by the learned designated Judge in Arbitration Application No.28 of 2002 appointing the second respondent herein as sole arbitrator to resolve the disputes and claims raised by the first respondent herein, on various grounds. Before we proceed to consider as to whether the impugned order suffers from any legal infirmities requiring our interference in the matter, it is just and necessary to notice the relevant facts leading to filing of this writ petition: The first respondent herein was awarded a contract by the petitioners-Railways for the work of "33/WS/98, Renigunta - Repairs to Jumbo Rake siding and Goods shed circulating area and their approach road" vide acceptance letter No.G/W/496/TC/SW/4158, dated 11-9-1998. The value of the contract was Rs.12,79,677/- and the work was required to be completed within a period of six months. The first respondent entered into the requisite agreement with the petitioners-Railways on 28-1-1999.

(2.) The case set up by the first respondent is that during the course of execution of the work he faced certain difficulties, which he brought to the notice of the petitioners-railways by way of letters. The first respondent could not complete the work due to problems faced by him even though the contract period was extended by the petitioners-railways. Ultimately, the petitioners herein terminated the contract of the first respondent on 25-10-1999. The first respondent claims to have requested the petitioners through several letters requesting them to appoint an arbitrator to resolve the disputes raised by him in connection with the work earlier entrusted to him under the agreement referred to hereinabove.

(3.) The first respondent vide letter dated 12-7-2000 requested the second petitioner to refer the matter for arbitration in terms of Clause 64 of General Conditions of Contract and accordingly gave the list of his claims. Having waited for response of the petitioners herein, the first respondent got issued a legal notice dated 17-11-2000 to the first petitioner-General Manager and others to refer the claim for arbitration as per Clause 64 of the General Conditions of Contract. It may not be necessary to notice further details in this regard except to notice that the Railways by its letter dated 13-6-2001 requested the first respondent to select two names out of the panel of four Railway Officers, whose details are stated in the said letter. The first respondent by his letter dated 18-6-2001 addressed to the first petitioner-General Manager stated that he has chosen one A.Venkat Reddy as his nominee and accordingly requested the Railways to accept the same to constitute Arbitral Tribunal. The Railways vide its letter dated 17-8-2001 constituted Arbitral Tribunal with the Presiding Arbitrator and two joint arbitrators for adjudication of the claims. On 27-8-2001 one of the joint arbitrators, by name Sanjeev Agarwal, addressed a letter to the Deputy General Manager, South Central Railway to nominate somebody else in his place on the ground that he is having already eight cases wherein he is acting either as sole arbitrator or joint arbitrator and it would not be possible for him to function as a member of the Arbitral Tribunal in this case. By letter dated 10-9-2001, A.Venkat Reddy, another joint arbitrator of Arbitral Tribunal also addressed the Deputy General Manager to nominate another joint arbitrator in his place on the ground that he was a member of the Tender Committee, which finalises the very tenders out of which the present dispute arises. He expressed his inability to function as joint arbitrator in the matter. In such view of the matter, the Railways by letter dated 13-12-2001 required the first respondent herein to select "up to two officers" from out of the panel of the officers suggested by them. In response, the first respondent vide his letter dated 27-12-2001 duly informed the General Manager that he had chosen one E.V. Krishna Reddy as his arbitrator in the place of A.Venkat Reddy and accordingly requested to take further necessary action in the matter. The Railways vide its letter dated 1-3-2002, in partial modification of the appointment letter dated 17-8-2001, appointed one C.Chandra Sekhara Sastry and E.V. Krishna Reddy, as joint arbitrators in the place of Sanjeev Agarwal and A.Venkat Reddy respectively to adjudicate the claims preferred by the first respondent along with Mohanlal as presiding arbitrator. Both the said C.Chandra Sekhara Sastry and E.V. Krishna Reddy conveyed their acceptance vide their letters dated 11-7-2002 and 5-3-2002 respectively. That even before such conveyance of their acceptance, the first respondent got issued a legal notice dated 27-3-2002 requesting the petitioners herein to constitute a proper tribunal within 15 days from the date of receipt of the said notice. Since the origin for whole of the dispute centers around and emanates from the said legal notice, we consider it appropriate to notice the same: Mrs. Padmavathi Vemulapalli, Advocate Hyderabad. Sainadh Co./Arb/01 March 27, 2002R.P.A.D. The General Manager South Central Railway Rail Nilayam Secunderabad - 500 071. Sir, Sub: Constitution of arbitral tribunal Ref: 1. Agreement No.14/SW/GTL/99 dated 28-1-1999 2. Your Letter No.W.148/G/ARB/SNAC.14.S dated 17-3-2001 3. Presiding Arbitrator's Letter No.MLB/Jt.ARB/II/SAI dated 28-09-2001. With reference to the above, under instructions from our clients M/s. Sainadh Company, Vijayawada you are addressed as under. Upon a request made by our client an arbitral tribunal was constituted on 17-08-2001 vide reference 2nd cited. Thereafter vide reference 3rd cited our clients were called upon to file their claims statement. When our clients sought to file the claims statement they were told that the arbitrators constituted who gave their consent earlier are not interested to proceed with the matter and our clients should wait for some more time. For some reason or the other the arbitral tribunal is being changed and no tribunal exists on date. You are hereby called upon to constitute the proper tribunal within FIFTEEN (15) DAYS from the date of receipt of this notice failing which our clients would be constrained to proceed in terms of Section 11 (6) of Arbitration and Conciliation Act, 1996. Thanking you, Yours truly, Sd/-, (Padmavathi Vemulapalli)