UNION OF INDIA Vs. PANIHATI RUBBER LIMITED

JUDGEMENT

(1.) The common question of law that arises in these two petitions may have to be differently answered in the light of a perceived judicial aberration. The primary ground urged by the railways in challenging the arbitral award in either case is that the constitution of the arbitral tribunal was at variance with the arbitration agreement and, as such, upon objection taken in such regard, the concerned arbitrator ought to have relinquished the authority to adjudicate upon the disputes that had arisen under the arbitration agreement.

(2.) The arbitration agreement in either case is similar. Since the agreements in these two matters were executed at different points of time, the earlier agreement is governed by the old set of general conditions governing railway contracts. But the relevant sub-clauses of the arbitration clauses in both sets of general conditions governing railway contracts are identical. Sub-clause (c) of clause 2900 of the present set of general conditions governing railway contracts is set out:

(3.) In the earlier of the two petitions, a request under Section 11 of the Arbitration and Conciliation Act, 1996 was carried to the Chief Justice of this court or his designate in 2010 upon the apparent failure of the appointing authority designated under the arbitration agreement to constitute an arbitral tribunal. As was the practice in this court at the relevant point of time, the adjudication of the request was made by the arbitration Judge and the naming of the arbitrator was by the Chief Justice or another designate of the Chief Justice. The arbitration Judge found the request to be in order and the appointing authority having forfeited the right to constitute the arbitral tribunal. By an order of November 13, 2010 the matter was referred to the other designate of the Chief Justice for constituting the arbitral tribunal. On January 14, 2011, a retired judicial officer was appointed arbitrator to adjudicate upon the disputes between the parties covered by the arbitration agreement. An objection was taken before the arbitrator by the railways on the ground that the appointment of the arbitrator was not in consonance with clause 2900 of the general conditions governing railway contracts. It was pointed out that the appointing authority could only appoint a gazetted railway officer as arbitrator and since the appointment in that case was to a person other than a gazetted railway officer, such arbitrator did not have the authority to take up the reference. The arbitrator noticed such objection and held, upon referring to the Constitution Bench judgment in SBP & Co. v. Patel Engineering Ltd, 2005 8 SCC 618, that an appointment made by the Chief Justice or his designate under Section 11 of the 1996 Act could not be challenged before the arbitrator so appointed.