# M/s. Neelkanth Construction v. U.O.I. & Ors

- **Citation:** (2024) 2 ILRA 9
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-19
- **Case number:** A.C.J. Arbitration and Conciliation Application U/S 11(4) No. 42 of 2023
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-neelkanth-construction-v-u-o-i-ors-51508
- **Pages:** 6

## Headnote

Civil Law - Arbitration and Conciliation
Act, 1996 - Section 11(6) - Instant
application u/s 11(6) of Act, 1996 filed by
applicant
seeking
appointment
of
Arbitrator in terms of Clauses 63 and 64 of
General Conditions of Contract, 2014 of
Indian Railways, in relation to disputes
arising from contract - Record reveals that
on 04.07.2022, applicant issued notice to
opposite parties, detailing claims and
seeking release of payments towards
losses
and
damages,
along
with
performance guarantee, EMD, security
deposits,
etc.,
further
prayed
for
appointment
of
arbitrator
for
consideration of claims without delay -
Opposite
parties,
vide
reply
dated
23.09.2022, referred applicant's claims
and
observed
that
same
was
not
sustainable in view of cancellation of
contract under Clause 61(1) - It is evident
from respondents' stand that they flatly
refused reference of dispute to arbitrator,
treating claim as 'excepted matter' - In
such circumstances, applicant's prayer for
appointment of arbitrator cannot be
rejected on ground of non-compliance
with prescribed procedure for invoking
arbitration clause - Application allowed,
arbitrator appointed. (Para 2, 21 to 23)

Writ petition allowed. (E-13)

List of Cases cited:

## Text

2 All. M/s. Neelkanth Construction Vs. U.O.I. & Ors.
9
(2024) 2 ILRA 9
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.01.2024

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA,
A.C.J.

Arbitration and Conciliation Application U/S
11(4) No. 42 of 2023

M/s. Neelkanth Construction ...Applicant
Versus
U.O.I. & Ors. ...Opposite Parties

Counsel for the Applicant:
Sri Chandra Shekhar Singh

Counsel for the Opposite Parties:
A.S.G.I., Sri A.K. Saxena, Sri Awadhesh
Kumar Saxena, Sri Abhijeet Saxena

Civil Law - Arbitration and Conciliation
Act, 1996 - Section 11(6) - Instant
application u/s 11(6) of Act, 1996 filed by
applicant
seeking
appointment
of
Arbitrator in terms of Clauses 63 and 64 of
General Conditions of Contract, 2014 of
Indian Railways, in relation to disputes
arising from contract - Record reveals that
on 04.07.2022, applicant issued notice to
opposite parties, detailing claims and
seeking release of payments towards
losses
and
damages,
along
with
performance guarantee, EMD, security
deposits,
etc.,
further
prayed
for
appointment
of
arbitrator
for
consideration of claims without delay -
Opposite
parties,
vide
reply
dated
23.09.2022, referred applicant's claims
and
observed
that
same
was
not
sustainable in view of cancellation of
contract under Clause 61(1) - It is evident
from respondents' stand that they flatly
refused reference of dispute to arbitrator,
treating claim as 'excepted matter' - In
such circumstances, applicant's prayer for
appointment of arbitrator cannot be
rejected on ground of non-compliance
with prescribed procedure for invoking
arbitration clause - Application allowed,
arbitrator appointed. (Para 2, 21 to 23)

Writ petition allowed. (E-13)

List of Cases cited:

1. Vidya Drolia & ors. Vs Guj. Informatics Ltd.,
(2021) 2 SCC 1, (Paras 153, 154)

(Delivered by Hon'ble Manoj Kumar
Gupta, A.C.J.)

1. Heard Sri Chandra Shekhar Singh,
learned counsel for the applicant and Sri
Abhijeet Saxena, Advocate holding brief of
Sri Awadhesh Kumar Saxena, for the
opposite parties.

2. The instant application under
Section 11(6) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred
to as 'the Act') has been filed by the
applicant
for
appointment
of
an
Arbitrator in terms of Clauses 63 & 64
of the General Conditions of Contract
2014, Indian Railways, in respect of
disputes and differences arising out of
the contract dated 07.08.2017.

3. The letter of acceptance dated
03.04.2017, accepting the proposal of
the applicant stipulated that General
Conditions of Contract 2014 and Indian
Railways
Unified
Standard
Specification (materials and works)
(Vol. I & II) 2010 Rules, up to date
special conditions attached shall apply to
the contract.

4. It is not in dispute between the
parties that Clause 64.(3) regulates the
appointment of Arbitrator and the same is
extracted below: -
10 INDIAN LAW REPORTS ALLAHABAD SERIES

"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 ₹ 25,00,000/-
(Rupees twenty five 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
three 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 eneral 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.

5. Clause 63, which is also relevant, is
as follows:-

"63.
Matters
Finally
Determined By The Railway : All
disputes and differences of any kind
whatsoever arising out of or in connection
with the contract, whether during the
progress of the work or after its completion
and
whether
before
or
after
the
determination of the contract, shall be
referred by the contractor to the GM and
the GM shall, within 120 days after receipt
of the contractor's representation, make and
notify decisions on all matters referred to
by the contractor in writing provided that
matters for which provision has been made
in Clauses 8, 18, 22(5), 39, 43(2), 45(a), 55,
55-A(5), 57, 57A, 61(1), 61(2) and 62(1) to
(xiii)(B) of Standard General Conditions of
Contract or in any Clause of the Special
Conditions of the Contract shall be deemed
as
'excepted
matters'
(matters
not
arbitrable) and decisions of the Railway
authority, thereon shall be final and binding
on the contractor; provided further that
'excepted matters' shall stand specifically
excluded
from
the
purview
of
the
Arbitration Clause."

6. The main objection of opposite
parties is that the contract was determined
under Clause 61.1 and since the matter is
not referable to Arbitrator being 'excepted
2 All. M/s. Neelkanth Construction Vs. U.O.I. & Ors.
11
matter', therefore, the application deserves
to be rejected.

7. Clause 61.(1) is as follows:

"61.(1) Right Of Railway To
Determine The Contract : The Railway
shall be entitled to determine and terminate
the contract at any time should, in the
Railway's opinion, the cessation of work
becomes necessary owing to paucity of
funds or from any other cause whatever, in
which case the value of approved materials
at site and of work done to date by the
Contractor will be paid for in full at the
rate specified in the contract. Notice in
writing
from
the
Railway
of
such
determination and the reasons therefor
shall be conclusive evidence thereof."

8. Along with the counter affidavit,
the opposite parties have brought on record
a letter dated 30.09.2020 issued by
Assistant Divisional Engineer, Chhapra.
The subject matter of the letter is the letter
of Principal Chief Engineer, Eastern
Railways dated 17.08.2020. It states that
the site at which the applicant was given
contract for construction of limited height
subway (LHSW), the water table is high,
therefore, it was not possible to execute the
work. Therefore, the applicant was called
upon to stop the work. It is also mentioned
that he may submit his final bill as per the
contract so that the claim can be disposed
of.

9. It is contended on the basis of the
aforesaid communication that there was
determination of contract under Clause
61.(1).

10. Learned counsel for the applicant
submitted that under the contract, the
power to determine the contract was with
Divisional Railway Manager and not with
the Assistant Divisional Engineer Chhapra,
who had issued the communication. It is
also
submitted
that
after
the
said
communication,
the
opposite
parties
themselves required the applicant to
complete the work of launching by
09.06.2022 and 14.06.2022 and therefore, it
amounts to waiver of the notice. In support
of his statement, he has placed reliance on a
communication dated 19.09.2022 by Senior
Divisional Manager-II, Varanasi addressed
to the applicant.

11. Learned counsel for the opposite
parties submitted that firstly the said
communication does not amount to waiver
of notice as the applicant was repeatedly
asked to stop the work. Alternatively, it is
submitted that the applicant had not laid
claim before the General Manager in terms
of the conditions of the contract and had
straightway invoked the arbitration clause,
therefore, the application deserves to be
rejected.

12. On the other hand, learned
counsel for the applicant submits that the
claim was duly made before the Chief
General
Manager
vide
notice
dated
04.07.2022 but the same was rejected by
the opposite parties by communication
dated 23.09.2022. They also declined to
refer the matter to the arbitrator on the
ground that it was 'excepted matter' under
Paragraph 64.(1).

13. Learned counsel for the applicant
submitted that the respondents themselves
waived the notice under Clause 61.(1),
inasmuch as, they not only extended the
period for completion of work, but also
issued specific directions to the applicant to
undertake various works under the contract
on specified dates. In this regard, it is
12 INDIAN LAW REPORTS ALLAHABAD SERIES
submitted that by letter dated 17.9.2021,
the contract was extended from 1.4.2021 to
31.12.2021. By letter dated 6.4.2021, the
Senior Section Engineer (Works), North
Eastern Railway, Chapra, directed the
applicant to get soil testing done. By letter
dated 19.9.2022, the applicant was directed
to undertake the launching work which was
one of the important stages of construction
of LHSW. It is urged that the aforesaid act
of the respondents clearly amounts to
waiver of notice under Clause 61.(1).

14. I have considered the rival
submissions and perused the material on
record.

15. It is clear from the rival
contentions that the main dispute between
the parties is - whether the claim of the
applicant is arbitrable or not; whether it
would fall under the 'excepted matter' as
notice under Clause 61 was duly given or
the said notice having been waived, the bar
relating to non-arbitrability of certain
matters under Clause 63 would not apply.

16. It is not disputed that the
respondents served the applicant with
notice dated 30.9.2020. Although it does
not specifically refers to Clause 61.(1), but
its tenor would definitely bring it within the
ambit of Clause 61.(1). The respondents,
however, have not disputed that after
service of the said notice, they themselves
extended the period for completion of work
from 1.4.2021 to 31.12.2021 by letter dated
17.9.2021. It is also not disputed that by
letter dated 6.4.2021, the Senior Section
Engineer (Works), North Eastern Railway,
Chapra required the applicant to get the soil
tested. The specific case of the applicant is
that the opposite parties themselves kept on
issuing directions from time to time to the
applicant to execute various works under
the contract. On 5.5.2022, the opposite
parties informed the applicant that he can
carry out launching work at the site on
9.6.2022 and 14.6.2022. This fact is
admitted to the respondents in their letter
dated 19.9.2022. The opposite parties also
asked for evidence from the applicant to
prove
payment
of
any
money
for
mobilizing machinery and workmen for the
said purpose to consider his claim in this
behalf. The opposite parties at the same
time, have also taken a stand that despite
their repeated reminders to the applicant
not to carry on further work at the site, the
applicant himself insisted on doing the
work.

17. The rival contentions regarding
arbitrability, in my view, cannot be
decided in the instant proceedings. Its
adjudication requires appreciation of
evidence. The scope of judicial review
in deciding issue of arbitrability is very
limited. The position of law in this
regard has been succinctly laid down by
Supreme Court in Vidya Drolia and
Others
vs.
Gujarat
Informatics
Limited1. The principles laid down
therein are as follows: -

"153. Accordingly, we hold that
the expression "existence of an arbitration
agreement" in Section 11 of the Arbitration
Act, would include aspect of validity of an
arbitration agreement, albeit the Court at
the referral stage would apply the prima
facie test on the basis of principles set out
in this judgment. In cases of debatable and
disputable facts, and good reasonable
arguable case, etc., the Court would force
the parties to abide by the arbitration
agreement as the Arbitral Tribunal has
primary jurisdiction and authority to
decide the disputes including the question
of jurisdiction and non-arbitrability.
2 All. M/s. Neelkanth Construction Vs. U.O.I. & Ors.
13

154.
Discussion
under
the
heading "Who Decides Arbitrability?" can
be crystallised as under:

154.1. Ratio of the decision in
Patel Engg. Ltd. on the scope of judicial
review by the Court while deciding an
application under Sections 8 or 11 of the
Arbitration Act, post the amendments by
Act 3 of 2016 (with retrospective effect from
23-10-2015) and even post the amendments
vide Act 33 of 2019 (with effect from 9-82019), is no longer applicable.

154.2. Scope of judicial review
and jurisdiction of the Court under
Sections 8 and 11 of the Arbitration Act is
identical
but
extremely
limited
and
restricted.

154.3. The general rule and
principle, in view of the legislative mandate
clear from Act 3 of 2016 and Act 33 of
2019, and the principle of severability and
competence-competence,
is
that
the
Arbitral Tribunal is the preferred first
authority to determine and decide all
questions of non-arbitrability. The Court
has been conferred power of "second look"
on aspects of non-arbitrability post the
award in terms of sub-clauses (i), (ii) or
(iv) of Section 34(2)(a) or sub-clause (i) of
Section 34(2)(b) of the Arbitration Act.

154.4. Rarely as a demurrer the
Court may interfere at Section 8 or 11 stage
when it is manifestly and ex facie certain
that the arbitration agreement is nonexistent, invalid or the disputes are nonarbitrable, though the nature and facet of
non-arbitrability would, to some extent,
determine the level and nature of judicial
scrutiny. The restricted and limited review
is to check and protect parties from being
forced to arbitrate when the matter is
demonstrably "non-arbitrable" and to cut
off the deadwood. The Court by default
would refer the matter when contentions
relating to non-arbitrability are plainly
arguable; when consideration in summary
proceedings would be insufficient and
inconclusive; when facts are contested;
when the party opposing arbitration adopts
delaying tactics or impairs conduct of
arbitration proceedings. This is not the
stage for the Court to enter into a mini trial
or elaborate review so as to usurp the
jurisdiction of the Arbitral Tribunal but to
affirm and uphold integrity and efficacy of
arbitration as an alternative dispute
resolution mechanism."
(emphasis in original and supplied)

18. In the said judgment, it has been
observed that while deciding issue of
arbitrability, the Court under Section 11(6)
has a very limited power, confined to cases
where there is not even a vestige of doubt
that the claim is non-arbitrable2.

19. In the instant case, having regard
to the nature of rival contentions and the
evidence before me, it cannot be said that
the claim is outrightly non-arbitrable. In my
view, it cannot be decided at this stage, as it
involves deciding debatable questions of
fact, therefore, the issue should be left open
to be decided by the arbitrator.

20. One more contention of the
opposite parties is that the applicant has not
invoked the mechanism provided under the
agreement and had straightaway sought
appointment of arbitrator. Therefore, the
application deserves to be rejected.

21. The record reveals that the
applicant had given notice on 4.7.2022 to
the opposite parties, specifying each claim
and requesting the respondents to honour
the same and release not only the payment
for the loss and damages suffered by the
applicant, but also release performance
guarantee, EMD, security deposits, etc. It
14 INDIAN LAW REPORTS ALLAHABAD SERIES
was further prayed that an arbitrator be
appointed at the earliest to consider the
claims without delay.

22. The said notice was replied to
by the opposite parties on 23.09.2022
wherein they have referred to all the
claims made by the applicant and
thereafter observed that the aforesaid
claims are not sustainable in view of the
fact that the contract was cancelled
under Clause 61.(1).

23. It is clear from the stand of the
respondents that the opposite parties had
flatly refused to refer the dispute to the
arbitrator as in their view, the claim fell
under the 'excepted matter'. Once that was
the stand of the opposite parties, the prayer
of the applicant for appointment of
arbitrator by this Court cannot be rejected
on the ground that the applicant has not
followed the procedure prescribed for
invoking the arbitration clause.

24. Accordingly, the application is
allowed.

25. This Court proposes the name of
Sri Shashi Kant Gupta, retired Judge of this
Court, for being appointed as Arbitrator.
His address is 9, Elgin Road (in front of
Heart Line Hospital), Civil Lines, Prayagraj
(U.P.), Mobile No. 9415216833.

26. Let the consent of Sri Shashi Kant
Gupta be obtained by the office in terms of
the provisions contained in Section 11(8),
read with Section 12(1) of the Act by
sending a letter to him.

27. In case, the proposed arbitrator
does not give his consent or makes
disclosures in terms of sub-section (1) of
Section 12, the application will be listed
before the Court for the limited purpose of
proposing name of alternate arbitrator.

28. The arbitrator shall be entitled to
fees and expenses as per IV Schedule of the
Act.
----------
(2024) 2 ILRA 14
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 23.02.2024
BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Criminal Revision No. 494 of 2013

Om Prakash ...Revisionist
Versus
State of U.P. ...Opposite Party

Counsel for the Revisionist:
R.P. Mishra, Sushil Kumar Singh

Counsel for the Opposite Party:
Govt. Advocate, Alok Singh, Uma Kant
Pandey

Criminal Law - Indian Penal Code, 1860 -
Sections 302/34, 323/34 & 504 - Juvenile
Justice (Care and Protection of Children)
Rules, 2007 - Rule 12(3)(a)(iii) - F.I.R.
named four accused including revisionist,
who
are
pattidars
of
complainant
-
Incident arose out of petty dispute when,
upon
altercation,
accused
assaulted
complainant's father and grandfather -
Revisionist, armed with pistol, fired at
complainant's father with intention to kill,
causing injury on his neck, due to which
he died - When complainant attempted to
apprehend him, revisionist struck him
with butt of pistol and fled inside his
house - Co-accused, armed with sticks,
assaulted complainant & ors., during
which revisionist sustained injuries - Trial
court
framed
charges
-
Revisionist's
St.ment recorded wherein he disclosed his
age
28
years
-
Defence
evidence