UNION OF INDIA Vs. GSR VENTURES PVT. LTD

JUDGEMENT

(1.) This writ petition has been filed under Article 227 of the Constitution of India by the Union of India as the writ petitioners. By the instant writ proceedings, the Union of India as the writ petitioners is put into challenge the orders dtd. 11/11/2023 passed by the learned Arbitrator in Arbitration Proceeding No. AH-02/2022 and the arbitration proceeding No. AH-03/2022.

(2.) The respondent was allotted two contracts relating to Earthwork Filling to Form Embankment/Sub-Bank and construction of Minor Bridges, Retaining Wall, Pucca Approach Road, Alignment and other Ancillary Works in connection with Construction of the New BG Railway line from Bairabi to Sairang (Miroram) under contract Agreement bearing No. CON/B-S/1917 dtd. 2/3/2015 and Contract Agreement No. CON/B-S/2079 dtd. 24/11/2015. The said works were terminated by the writ petitioners/Railways leading to the disputes arising between the petitioners/Railways and the respondent. The respondent issued a notice for arbitration as per clause 64 (1)(i) of the Arbitration Clause. The said notice was replied to by the Railway authorities rejecting the demand for arbitration on the ground that Clause 47 of the Contract Agreement bars claims for arbitration beyond 20% of the SCA. Similar reply was issued by the Railways in respect of both the contracts. Thereafter, the respondent submitted a second notice demanding arbitration purportedly under arbitration Clause 48 and 49 of the Agreement treating the same to be additional special conditions or contract. The second notice however was issued only in respect of one contract work namely, CON/B-S/1917 dtd. 2/3/2015. Since the Railways declined to refer the matter to the arbitration, the respondent approached this Court by filing Arbitration Petition No. 20/2021; Arbitration Petition No. 22/2021 and Arbitration Petition No. 28/2021 in respect of each of the contract. The petitions were filed under Sec. 11(6) of the Arbitration and Conciliation Act and accordingly the matter was urged before the Court seeking appointment of an arbitrator in respect both the arbitrations relating to both the contract works. While opposing the maintainability of the petitions filed under Sec. 11(6) of the Arbitration and Conciliation Act, 1996 by the respondent, it was urged by the Railways before the Co-ordinate Bench, the arbitration proceedings sought for is not maintainable in view of the specific clause No. 47 of the agreement which bars arbitration. It was submitted that as per Clause 47 of the agreement, settlement of claims of dispute between the parties by ways of arbitration is permissible only where the value is less than or equal to 20% of the value of the contract and when the claims of dispute are of value more than 20% of the value of the contract, provisions of Clause 63 and 64 and other relevant clauses of the general conditions of the contract will not be applicable and arbitration will not be a remedy for settlement of such disputes. It was submitted that since the dispute itself is not open to arbitration in terms of the specific provisions contained in the agreement, there was no question for appointment of an arbitrator under Sec. 11(6) of the Arbitration and Conciliation Act, 1996. Accordingly, it was submitted by the Railways before the Co-ordinate Bench that the petitions filed by the respondent under Sec. 11(6) of the Arbitration and Conciliation Act, 1996 are not maintainable and the same should therefore be dismissed.

(3.) The Co-ordinate Bench by the order dtd. 18/11/2022 disposed of these three applications. The Co-ordinate Bench by order dtd. 18/11/2022 came to the conclusion that where the contentious issued have arisen because of incorrect use of clauses which are admitted by the Railway authorities himself, Court was of the view that it would be best left to be decided by the Arbitral Tribunal and as to whether the claim raised before is arbitrable or not and not by this Court at the referral stage. The Co-ordinate Bench held that as per the terms of the contract between the parties, two views are possible. In view of the contentions raised before the Court by the respondent that Clause 47 will not operate as a bar as individual items of work where disputes arise are required to be considered independently by referring the same to arbitration and the bar of 20% of the value of contract is not to operate on the aggregate value of all the items but it has to be decided individually item-wise, the Co-ordinate Bench by referring to several Judgments of the Apex Court held that the question of arbitrability can be decided by the Court only where the facts are very clear and glaring. The Co-ordinate Bench concluded that in the proceedings before it, the facts are not clear and glaring so as to warrant intervention by the Court at the referral stage and accordingly, the Court proceeded to appoint Hon'ble Mrs. Justice Anima Hazarika (Retired), Former Judge of this Court to act as a sole arbitrator to decide the disputes including the issue of arbitrability in respect of Arbitration Petition No. 20/2021; Arbitration Petition No. 22/2021 and Arbitration Petition No. 28/2021 subject to her willingness and disclosure and/or absence of any impediment as contemplated under Sec. 12 of the Arbitration and Conciliation Act, 1996.