# Tata Projects Ltd v. Central Organisation for Railway Electrification Opp. Party

- **Citation:** (2021) 2 ILRA 662
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-02-02
- **Bench:** Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/tata-projects-ltd-v-central-organisation-for-railway-electrification-opp-party-46862
- **Pages:** 19

## Headnote

A. Civil Law - Arbitration and Conciliation
Act,
1996-Section 11(4)-challenge
toappointment
of
arbitrator-seeking
appointment of arbitrator in respect of
payment
dispute-applicant
successfully
executed the work but aggrieved by the
full
payment
have
not
been
madeapplicant issued a notice to appoint the
arbitrator but the respondent refused to
appoint-applicant was within it's right to
approach the Court for appointment of
independent arbitrator-claim made is not
time barred-proposed arbitrator is eligible
as he was appointed Presiding Officer of
the SAT before enforcement of the 2020
Rules dated 12.02.2020-those rules do not
apply to proposed arbitrator-no legal
impediment in his continuance as an
arbitrator-neither on ground of legality
nor of propriety, the proposed arbitrator is
inconvenienced.(Para 1 to 38)

The application is allowed. ( E-5)

List of Cases cited:-

## Text

_Characters 0–39,831 of 66,206. This is a partial read: ask again with offset=39831 for what follows._

662 INDIAN LAW REPORTS ALLAHABAD SERIES
show-cause notice is file within stipulated
period, the petitioner-Corporation will pass
appropriate orders on the same in accordance
with law within further period of one month,
after providing opportunity of hearing to the
plaintiffs-respondents.

25. With the aforesaid direction, the
petition is allowed.
----------
(2021)02ILR A662
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.02.2021

BEFORE

THE HON'BLE SAUMITRA DAYAL SINGH, J.

Arbitration and Conciliation Appl. U/S 11(4) No.
68 OF 2019

Tata Projects Ltd. ...Applicant
Versus
Central
Organisation
for
Railway
Electrification ...Opp. Party

Counsel for the Applicant:
Sri Rahul Agarwal

Counsel for the Opp. Party:
Sri Navneet Chandra Tripathi

A. Civil Law - Arbitration and Conciliation
Act,
1996-Section 11(4)-challenge
toappointment
of
arbitrator-seeking
appointment of arbitrator in respect of
payment
dispute-applicant
successfully
executed the work but aggrieved by the
full
payment
have
not
been
madeapplicant issued a notice to appoint the
arbitrator but the respondent refused to
appoint-applicant was within it's right to
approach the Court for appointment of
independent arbitrator-claim made is not
time barred-proposed arbitrator is eligible
as he was appointed Presiding Officer of
the SAT before enforcement of the 2020
Rules dated 12.02.2020-those rules do not
apply to proposed arbitrator-no legal
impediment in his continuance as an
arbitrator-neither on ground of legality
nor of propriety, the proposed arbitrator is
inconvenienced.(Para 1 to 38)

The application is allowed. ( E-5)

List of Cases cited:-

1.
Central
Organization
for
Railway
Electrification Vs M/S ECISPIC -SMO-MCML
(JV) A joint Venture Comp.; (2019) SCC
Online 1635,

2. Beghar Foundation Vs K.S. Puttaswamy
(Retd. ); (2021) 123 taxman. Com 344 SC

3. U.O.I . Vs M/S Tantia Construction Ltd.(
S.L.P.(C) Nos. 12670/2020)

4. Build India Construction System Vs U.O.I
(2002) 5 SCC 433

5. Bharat Broadband Network Ltd. Vs United
Telecoms Ltd. (2019) 5 SCC 755

6. Madras Bar Association Vs U.O.I. & anr.(
2020) SCC Online SC 962

(Delivered by Hon'ble Saumitra Dayal Singh, J.)

1. Heard Sri Rahul Agarwal, learned
counsel for the applicant and Sri Navneet
Chandra Tripathi, learned counsel for the
opposite party.

2. Present is an application filed under
Section 11 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the 'Act').
The application was filed on 12.07.2019 with
a prayer to appoint an independent arbitrator,
to adjudicate the disputes that have arisen
between the parties under a written contract
dated 01.03.2010 entered into between the
applicant and the Chief Project Manager,
Railway Electrification for the work "Design,
Supply, Erection, Testing & Commissioning
of 25 KV, AC, 50 Hz, Single Phase, Traction
Overhead Equipments, Switching Stations,
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
663
Booster Transformer Stations, LT Supply
Transformer Stations and All Ancillary
Equipments
Madurai
(Excl.)-TuticorinVanchimaniyanchi-Nagercoil
(Excl.)
of
Southern
Railway",
valued
at
Rs.
24,97,54,357/- (Rupees Twenty Four Crores
Ninety Seven Lakhs Fifty Four Thousand
Three Hundred Fifty Seven only).

3. Before approaching this Court, the
applicant had issued the statutory notice
dated 31.12.2018, invoking arbitration.
Referring to Section 12(5) of the Act (as
enforced w.e.f. 23.10.2015), the applicant
expressed its desire for appointment of an
independent arbitral tribunal and for that
purpose nominated a retired Judge of this
Court. It required the opposite party to
nominate an arbitrator of its choice so that
the two arbitrators (thus appointed), may
nominate a third arbitrator. The three
arbitrators together were to constitute the
arbitral tribunal.

4. In response to the above notice, on
21.01.2019, the opposite party denied the
request for arbitration. It stated, under
Clause 1.2.54(b)(i), the arbitration could be
sought only after 120 days and before
completion of 180 days from the date of
presentation of the final bill. Since, the
final bill payment was made on 13.06.2016,
the request for arbitration first made on
31.12.2018, was outside the said period.
Therefore, it was stated to be lacking in
'locus standi'. Second, it was stated that the
'No Claim Certificate' issued by the
applicant while obtaining the final payment
contained an undertaking to the following
effect:

"1. The undersigned is in receipt of the
above referred letter in connection with the
subject matter. Your attention is invited to
Tender Clause No. 1.2.54(b)(i) wherein it is
clearly stated that after 120 days but within
180 days of his presenting final claim on
disputed matters shall demand in writing
that the dispute or difference be referred to
arbitration. But it is to inform that you had
advised
vide
your
letter
No.
TPL/RLY/VPT/019/3006-2
dated
30.06.2016 that you had received the final
Bill payment on 13 June, 2016. As you have
failed to seek any redressal of grievance
within the aforesaid period, your demand
for arbitration does not have any locusstandi at this distant date.

2. It shall be also noted that you have
submitted a "No Claim Certificate" under
Signature and seal of firm, in which it
states "should any claim be raised by us in
future under this agreement, the same shall
be nullified by virtue of this indenture".

3. Similarly, your attention is invited
to Clause No. 17 of the "Preamble" (Page
No.8 of the tender paper) which states that
General
Conditions
of
Contract
of
concerned
Railway
as
amended
for
advance correction slips issued up to date
shall be part of the contract. The clause no.
63 of latest GCC provies that no such
notice of dispute shall be served later than
30 days after the date of issue of
completion certificate by the Engineer. The
Completion Certificate was issued on
15.03.2015. Hence, it is regretted to inform
you that Railway is not in a position to
entertain your demand for arbitration at
this farthest date as the same is not
admissible at this juncture."

Third, referring to Clause 17 of the
Preamble to the agreement and thereby
invoking Clause 63 of the General
Conditions of Contract (hereinafter referred
to as the 'GCC'), it was further objected that
no dispute could be raised for adjudication
through arbitration, later than 30 days after
the date of issuance of the Completion
Certificate
which
in
this
case
was
664 INDIAN LAW REPORTS ALLAHABAD SERIES
15.3.2015. Further, communications dated
22.1.2019 and 10.1.2019 appear to have
been issued by other authorities of the
opposite party, again taking an objection as
to limitation, and no other.

5. It is at that stage that the present
application
was
filed
wherein,
upon
exchange of pleadings, the matter was
heard
on
24.10.2019
and
an
order
proposing to appoint an independent
arbitrator was passed on that date. It reads:

"1. Present application has been filed
under Section 11 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred
to Arbitration Act) seeking appointment of
independent arbitrator with respect to
payment dispute that are claimed to be
existing between the parties under a written
agreement dated 01.3.2010 between the
Chief
Project
Manager,
Railway
Electrification, Chennai of the Ministry of
Railways,
Railway
Board
and
the
applicants for design, supply, erection,
testing and commissioning of 25 KV, A.C.
Single phase 50 Hz, Traction Overhead
Equipments, Switching Stations, Booster
Transformer
Stations and LT
supply
Transformer Stations in Madurai (Excl)-
Tuticorin-Vanchimaniyachi-Nagercoil
(Excl) Gr. 154 of Southern Railway under
RE-project Chennai.

2. The applicant claims to have
successfully executed that work but is
aggrieved by the fact that full payments
have not been made to it. Relying on the
arbitration clause 1.2.54 of the general
terms of the contract, it has been submitted
that in the first place, the applicant had
issued a notice dated 8.8.2018 (Annexure-4
to the application) in terms of Clause
1.2.54 (a). The railways did not offer any
resolution of that dispute within the
prescribed period of 120 days. Therefore,
again in accordance with Clause 1.2.54 (d)
(i), the applicant issued a further notice to
the respondent addressed to the Chief
Project Manager, Railway Electrification,
Chennai for appointment of an arbitrator.
By means of paragraph-11, the applicant
also proposed the name of an arbitrator
proposed to be appointed.

3. As a fact, the respondent did not
appoint any arbitrator and did not offer
any panel of arbitrators to the applicants.
In fact, by a communication dated
22.1.2019 issued by the Deputy CEE (PSI),
the applicant was informed that no claim
certificate had been issued by it on
26.5.2016, copy of the same was also
annexed. In addition, it was mentioned that
the notice dated 31.12.2018 should have
been
addressed
to
the
General
Manager/CORE, Allahabad as the dispute
may have been referred only by the General
Manager.

4.
In
such
facts,
the
present
application has been filed by the applicant
claiming, in the first place, existence of
arbitration clause whereunder the payment
dispute is required to the resolution.
Further, it has been claimed that despite all
efforts made by the applicant and despite
procedure having been followed, the
respondents have failed to constitute the
arbitral Tribunal and therefore, this Court
may appoint an independent arbitrator in
terms of Section 11 of the Act.

5. Heard Sri Varad Nath, Advocate
holding brief for Sri Rahul Agarwal,
learned counsel for the applicant and Sri
N.C. Tripathi, learned counsel for the
respondent.

6. Pleadings have been exchanged and
the matter has been heard. At the outset,
objections have been raised as to the
maintainability of the present case. In that
regard, it has been submitted that the work
was executed at Chennai, though the
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
665
headquarter of the respondent is at
Allahabad, however, no part of the cause of
action had arisen at Allahabad. In short, it
is submitted that this Court does not have
territorial jurisdiction to interfere the
present application under Section 11 of the
Act. The aforesaid preliminary objections
has been met by the learned counsel for the
applicant by placing reliance on a recent
decision of Supreme Court in Brahmani
River Pellets Ltd. Vs. Kamachi Industries
Ltd., AIR 2019 SC 3658 wherein it has been
observed as below:

"16. Where the contract specified the
jurisdiction of the court at a particular place,
only such court will have the jurisdiction to
deal with the matter and parties intended to
exclude all other courts. In the present case,
the parties have agreed that the 'venue' of
arbitration
shall
be
at
Bhubaneswar.
Considering the agreement of the parties
having Bhubaneswar as the venue of
arbitration, the intention of the parties is to
exclude all other courts. As held in Swastik,
non-use of words like 'exclusive jurisdiction',
'only', 'exclusive', 'alone' is not decisive and
does not make any material difference.

17. When the parties have agreed to
have
the
'venue'
of
arbitration
at
Bhubaneswar, the Madras High Court erred
in assuming the jurisdiction under Section
11(6) of the Act, Since only Orrisa High
Court will have the jurisdiction to entertain
the petition filed under Section 11 (6) of the
Act, the impugned order is liable to set
aside."

7. In that case, the relevant clause with
regard to venue was clause 18 between those
parties which read as below:

"18. Arbitration shall be under Indian
Arbitration and Conciliation Law 1996 and
the
Venue
of
Arbitration
shall
be
Bhubaneswar".

8. Thus, in view of the fact that the
parties had agreed to provide for venue of
arbitration at Bhubaneswar, the Supreme
Court has laid down the law that the
jurisdiction to entertain an application under
Section 11 (6) of the Act would have been
with the High Court having jurisdiction over
Bhubaneswar and not the High Court of
Madras which has not jurisdiction over
Bhubaneswar.

9. In the present case, the venue clause
is contained in Clause 1.2.54(k) which is
quoted below: .

" The venue for an arbitration shall be
the place from which the Letter of Acceptance
of Tender is issued or such other place as the
purchaser at his discretion may determine."

10.
Undisputedly,
the
letter
of
acceptance of tender which would, in the first
place, constitute venue of arbitration is at
Allahabad. That letter of acceptance is dated
2.2.2010 (Annexure-1 to the application).

11. Therefore, in view of the law laid
down by the Supreme Court, the preliminary
objection raised by Sri Tripathi, learned
counsel for the respondents cannot be
accepted. Sri Tripathi has placed reliance on
the orders of two learned Single Judges of
this Court, passed in Arbitration and
Conciliation Application U/s 11 (4) Nos.39 of
2012 and 148 of 2018 decided on 19.7.2017
and 29.4.2019 respectively which are no
longer good law in view of the decision of the
Supreme Court in Brahmani River Pellets
Ltd. (supra).

12. In the present case, the venue
clause clearly provides that venue of
arbitration would be at Allahabad in view
of the letter acceptance having been issued
from Allahabad. The further stipulation in
venue clause providing for any other venue
at the discretion of the respondent may not
bar the jurisdiction of this Court, inasmuch
as, no other place of arbitration has yet
been provided or specified.

13. Then, second objection has been
raised by Sri N.C. Tripathi of procedure for
666 INDIAN LAW REPORTS ALLAHABAD SERIES
appointment
of
arbitrator
being
not
complied with. In that regard, it has been
submitted, under Clause 1.2.54 d (ii), the
notice, seeking appointment of arbitration
should have been issued to the General
Manager. Inasmuch as, the notice was not
issued to that authority, the procedure was
not complied with to any extent. Second, it
has been stated that in any case if at all,
any arbitrator was to be appointed, it had
to be in accordance with law, from the
panel prepared by the respondent. The
applicant had itself appointed an arbitrator
suo moto, outside such panel, therefore, the
procedure stood violated. In that regard,
reliance has been placed on the decision of
the Supreme Court in the case of Union of
India Vs. Parmar Construction Company
(2019) 5 SCALE 453.

14. The aforesaid objection has been
met by learned counsel for the applicant
who would submit that as the applicant
had fully complied with the procedure by
first issuing the notice dated 8.8.2018
seeking resolution of the dispute by the
Railway Authority themselves. Admittedly,
that resolution was never offered by the
Railway
Authority.
Accordingly,
the
applicant
issued
the
notice
dated
31.12.2018 after expiry of 120 days time
period prescribed under Clause 1.2.54 (b)
(i) of the general terms. Since the contract
had been signed by the Chief Project
Manager,
Railway
Electrification,
Chennai, the notice was issued, addressed
to him. Referring to Clause 1.2.54 (d) (ii),
it has been submitted that the said clause
does not stipulate issuance of notice to the
General Manager. In so far as the
applicant had issued the notice to the
authority who had executed the contract
on behalf of the Railway and who was the
Chief
Project
Manager,
Railway
Electrification, there was no defect in
issuance of the notice.

15. Referring to various clauses of
the notice, it has then been submitted that
clearly, the applicant had brought out the
existence of unresolved dispute between
the parties and sought appointment of
arbitrator. Merely because the applicant
had proposed the name of arbitrator, did
not introduce an invalidity in the notice as
may lead to the inference that the
prescribed procedure for appointment of
arbitrator had been violated. In face of
that notice, it was clear that the applicant
was
seeking
arbitration
under
the
agreement for resolution of the dispute. It
cannot be denied that there exists a
dispute at least on a prima facie, basis. It
would have remained for the respondent to
omit the name of the arbitrator proposed
by the applicant and in his place to
propose the names of arbitrator as
contained in the general terms and
conditions.

16. In so far as the respondents did
not give any such reply and did not
propose any panel of arbitration, they
cannot be heard to say that the procedure
had been violated. In fact, referring to the
reply dated 22.1.2019, it has been
submitted that the arbitration was refused
mainly not on account of the fact that the
procedure
prescribed
had
not
been
followed but on an understanding of the
respondent that no dispute survived in face
of no claim certificate dated 26.5.2016
having been issued.

17. Having heard learned counsel for
the parties, in so far as the procedure
prescribed
is
concerned,
clearly
the
Railways did not respond to the first notice
dated 8.8.2018 issued under Clause 1.2.54
(b) (i). To that extent, undisputedly, the
procedure stood complied. Coming to the
notice seeking appointment for arbitration,
again
perusal
of
the
notice
dated
31.12.2018 brings out the grievance of the
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
667
applicant with respect to non-payment
(claimed) and further non resolution of that
dispute within a period of 120 days from
the notice dated 8.8.2018.

18. Thereafter, though the applicant
proposed the name of an arbitrator which it
sought to appoint yet, in paragraph-12 of
the same, notice had addressed the
respondent to appoint its arbitrator in
terms of the Act.

19. Accordingly, it has to be accepted
that the arbitration had been sought by the
applicant in terms of the Act and also it had
exercised its objection permissible to be
raised under Section 12 (5) of the Act. The
fact that it had proposed the name of
independent arbitrator may, therefore,
remain a proposal made by the applicant
but not a conduct as may be read to have
violated the procedure itself. The railwayrespondent may have been within its rights
to oppose the name proposed by the
applicant, however, they cannot claim that
by proposing such name, the applicant had
violated the procedure. Therefore, the
second objection as to violation of
procedure also does not merit acceptance.

20. Third, in view of the observation
made above, the objection raised by Sri
Tripathi
to
proposal
to
appoint
an
independent arbitrator outside the panel of
arbitrators available with the respondent,
also cannot be accepted. In the first place,
the applicant had exercised its right to
object to the appointment as arbitrator, any
person who may have been a railway
employee. Second, the railway never
proposed any names to the applicant for
appointment of arbitrator. Therefore, it has
to be accepted that it remained from the
parties to appoint the consented arbitrator.

21. Present application has been filed
after expiry of statutory period from the
issuance of notice dated 31.12.2018,
therefore, in that regard, the application
does not suffer from any infirmity. Last, it
has been submitted that the applicant had
submitted his no claim certificate in
unequivocal terms. Though, prima facie, it
appears that such no claim certificate had
been issued, however, that issue pertains to
merits of the claim proposed to be filed and
not to the maintainability or merits of the
present application which has to remain
confined to provide for a forum where a
claim may arise. Therefore, leaving all
rights open to the respondent to object to
the claim that is proposed to be filed before
the learned arbitrator proposed to be
appointed,
that
objection
cannot
be
entertained at this stage.

22. In this context, it has been stated
by learned counsel for the applicant that
three other similar applications involving
similar nature of disputes arising interparties, matters have been referred to
arbitration to Mr. Justice Tarun Agarwala,
Chief Justice (Retired) Meghalaya High
Court, residing at Delhi/NCR: A-5, Sector
14, NOIDA, Tel. (0120) 2510066, 1515596
(Mob. No. 9415307976, 7705007976). In
view of such facts, it is desirable that the
parties may be at convenience, if they, are
offered the same learned arbitrator.

23. In view of the above, this Court
proposes to appoint Mr Justice Tarun
Agarwala,
Chief
Justice
(Retired)
Meghalaya High Court, as the sole
Arbitrator, subject to his consent under
Section 11(8) of the Arbitration and
Conciliation Act, 1996.

24. The Registry is directed to obtain
consent of the proposed Arbitrator, in terms
of Section 11(8) of the aforesaid Act within
three weeks.

25. List after four weeks."

6. Thus, the objections raised by the
opposite party (at that stage) were rejected
and a named arbitrator was proposed to be
668 INDIAN LAW REPORTS ALLAHABAD SERIES
appointed. His consent was sought. It is a
matter of record that the consent of the
named arbitrator has been received.

7. In the meanwhile, the opposite
party has filed Application No. 6 of 2020,
in these proceedings (Arbitration And
Conciliation Application u/s-11(4) No. - 68
of 2019) and has prayed for modification
and/or recall of the order dated 24.10.2019.
The said application has been pressed on
two grounds only. First, relying on a later
decision of the Supreme Court in Central
Organization for Railway Electrification
Vs. M/S ECI-SPIC-SMO-MCML (JV) A
Joint Venture Company; 2019 SCC
OnLine 1635, it has been submitted that
the Court may appoint an arbitrator/arbitral
tribunal only in accordance with the terms
of the contract and not otherwise i.e. the
arbitrator, if any, may be appointed from
the panel of arbitrators of the said opposite
party only. Second, relying on Appellate
Tribunal
and
Other
Authorities
(Qualifications,
Experience
and
other
Conditions of Service of Member) Rules,
2020, it has been submitted, the named
arbitrator, proposed by the order dated
24.10.2019,
has
incurred
a
legal
ineligibility,
to
arbitrate
the
dispute
between the parties.

8. Opposing the said objections /recall
/review sought, Sri Rahul Agarwal has first
invoked the principle that a later decision
may never offer a ground to review any
order. He relied a decision of the Supreme
Court
(majority
view)
in
Beghar
Foundation
Vs.
K.S.
Puttaswamy
(Retd.); (2021) 123 taxman.com 344
(SC). He has also relied on a later order of
the Supreme Court passed in Special
Leave to Appeal (C) Nos. 12670/2020
(Union
of
India
Vs.
M/S
Tantia
Constructions
Limited),
dated
11.01.2021, whereby the correctness of the
decision of the Supreme Court in Central
Organization for Railway Electrification
(supra) has been doubted and referred to a
larger Bench of the Supreme Court.

9. Having heard learned counsel for
the parties, first, the objection being raised
by Sri Rahul Agarwal is found to be too
technical to merit acceptance. By the order
dated 24.10.2019, no final decision had
been made by the Court. Only a named
arbitrator had been proposed to be
appointed after hearing the parties on the
submissions as had been made, at that
stage.
However,
the
proceeding
for
appointment of the arbitrator has remained
pending, as before.

10. Neither under the Act nor under
the Rules of the Court, there is any
stipulation as may require the Court to
decide all objections to an application
(moved under Section 11 of the Act), by
one order and to appoint the arbitrator by
another order. It is a rule of convenience
adopted by the Court while dealing with
such applications that first, upon any such
application being filed, disclosing existence
of arbitration agreement between the
parties, prima facie existence of an
arbitrable dispute and failure to constitute
an arbitral tribunal in accordance with the
procedure agreed to between the parties, a
notice
is
issued
to
the
opposite
party/parties. At the second stage, any
objection that is raised to the application is
dealt with and thereafter consent of the
proposed arbitrator is sought. At the third
stage, after receipt of that consent, and
normally, in the absence of any further
objection, the appointment is made and the
application disposed of. If, however, any
other or further objection arises, then, there
is nothing, either under Section 11 of the
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
669
Act or otherwise, to prevent the Court from
dealing with that objection at the third
stage. Before any order could be passed to
confirm the order dated 24.10.2019 and
thus appoint the proposed arbitrator and
decide finally the proceeding, the opposite
party filed Application No. 6 of 2020.
Though titled - application for review/recall
the order dated 24.10.2019, in effect, and
for all legal consequences, it is an
application praying to the Court to not
confirm its order dated 24.10.2019. Looked
at in the context of the scope and the
current status of the proceeding, the order
dated 24.10.2019 is no better than a pure
interlocutory/procedural
order
in
a
proceeding that is still pending. It is an
order that neither decides the point in
dispute finally nor it otherwise hinders the
Court from passing a final order contrary to
any observation made in it, on the basis of
any
further
objection
now
raised.
Accordingly, the matter has been heard
again at length, at the stage of confirmation
of the order dated 24.10.2019.

11. Then, learned counsel for the
applicant submits that the applicant had
been awarded a contract for the work -
"Design, Supply, Erection, Testing &
Commissioning of 25 KV, AC, 50 Hz,
Single
Phase,
Traction
Overhead
Equipments, Switching Stations, Booster
Transformer
Stations,
LT
Supply
Transformer Stations and All Ancillary
Equipments
Madurai
(Excl.)-TuticorinVanchimaniyanchi-Nagercoil
(Excl.)
of
Southern Railway", on 1.3.2010. The said
agreement contained General Conditions of
Contract 1.2.2, which reads as below:

"Conditions of Contract : 1.2.2

If the Tender submitted by a Tenderer
is accepted and the contract awarded to the
Tenderer, the various works coming under
the purview of the contract shall be
governed by the terms and conditions
included in the Tender papers covering the
following :

(i) Preamble to the Tender Papers.

(ii) Instructions to Tenderers and
conditions of Tendering, as included in
Part-I, Chapter-I.

(iii)
Conditions
of
contract,
as
included in this chapter.

(iv) Prices and Payments, as included
in Part-I Chapter-III.

(v) Explanatory notes of Schedule 1,
Schedule of prices, Part-I, Chapter-IV. .

(vi)
General
specifications,
as
included or referred to in Part-II and

(vii)
Particular
specifications,
as
included or referred to in Part-III, and

(viii) Annexures under Part-IV and
Forms under Part-V and as modified or
amended by the letter of acceptance of the
tender.

12. The arbitration clause is found
contained
in
Clause
1.2.54
of
that
agreement. It reads as under:

"ARBITRATION: 1.2.54

(a)
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 Railway
Electrification
and
the
Railway
Electrification 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 specific
provision has been made in clauses
1.1.10(b), 1.2.9, 1.2.14(a)(v), 1.2.14(d)(i),
670 INDIAN LAW REPORTS ALLAHABAD SERIES
1.2.14(d)(ii), 1.2.23, 1.2.29, 1.2.57, 1.2.59,
1.2.60, 1.2.61, 1.2.62, 1.3.2(j) and 1.3.17(c)
of this tender paper shall be deemed as
'excepted matters' and decisions of the
Railway Electrification 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 and not
be referred to arbitration.

(b)(i)
DEMAND
FOR
ARBITRATION

In the event of any dispute or
difference between the parties hereto as to
the construction or operation of this
contract, or the respective rights and
liabilities of the parties or any matter in
question, dispute or difference on any
account or as to the withholding by the
Railway Electrification of any certificate to
which the contractor may claim to be
entitled to, or if the Railway Electrification
fails to make a decision within 120 days,
then and in any such case, but except in
any of the 'excepted matters' referred to in
clause 1.2.54(a) above of these conditions,
the contractor, after 120 days but within
180 days of his presenting his final claim
on disputed matters, shall demand in
writing that the dispute or difference be
referred to arbitration.

(b) (ii) The demand for arbitration
shall specify the matters which are in
question or subject of the dispute or
difference as also the amount of claim
itemwise.
Only
such
dispute(s)
or
difference(s) in respect of which the
demand has been made together with
counter claims or set off shall be referred to
arbitration and other matters shall not be
included in the reference.

(A) The Arbitration proceedings shall
be assumed to have commenced from the
day a written and valid demand for
arbitration is received by the Railway.

(B) The claimant shall submit his
claim stating the facts supporting the
claims along with all relevant documents
and the relief or remedy sought against
each claim within a period of 30 days from
the date of appointment of the arbitral
tribunal.

(C) The Railway Electrification shall
submit its defence statement and counter
claim(s), if any, within a period of 60 days
of receipt of copy of claims from Tribunal
thereafter, unless otherwise extension has
been granted by Tribunal.

(b) (iii) No new claim shall be added
during
proceedings
by
either
party.
However,
a
party
may
amend
or
supplement the original claim or defence
thereof during the course of arbitration
proceedings subject to acceptance by
Tribunal having due regard to the delay in
making it.

(b) (iv) If the contractor(s) does/do not
prefer his/their specific and final claims in
writing, within a period of 90 days of
receiving the intimation from the Railway
Electrification that the final bill is ready for
payment, he/they will be deemed to have
waived his/their claim(s) and the Railway
Electrification shall be discharged and
released of all liabilities under the contract
in respect of these claims.

(c) Obligation during pendency of
arbitration Work under the contract shall
unless otherwise directed by the engineer,
continue
during
the
arbitration
proceedings, and no payment due or
payable by the Railway Electrification shall
be
withheld
on
account
of
such
proceedings, provided, however, it shall be
open for arbitral tribunal to consider and
decide whether or not such work should
continue during arbitration proceedings.

(d)(i) In cases where the total value of
all claims in question added together does
not exceed Rs.10,00,000/- (Rupees ten
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
671
lakhs only), the arbitral tribunal consist of
a sole arbitrator who shall be either the
General Manager or a gazetted officer of
Railway not below the grade of 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 Railway.

(d)(ii) In cases not covered by clause
1.2.54 (d)(i), the arbitral tribunal shall
consist of a panel of three Gazetted
Railway Electrification Officers not below
JA grade, as the arbitrators. For this
purpose, the Railway Electrification will
send a panel of more than 3 names of
Gazetted Railway Officers of one or more
departments, of the Railway Electrification
to the contractor who will be asked to
suggest to General Manager upto 2 names
out of the panel for appointment as
contractor's
nominee.
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, within 60 days.
While nominating the arbitrators it will be
necessary to ensure that one of them is from
the Accounts department. As 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 Railways for the
purpose of appointment of arbitrators.

(d)(iii) If one or more of the
arbitrators appointed as above refuses to
act as arbitrator, withdraws from his
office as arbitrator, or vacates his/their
office/offices
or
is/are
unable
or
unwilling to perform his functions as
arbitrator for any reason whatsoever or
dies or in the opinion of the General
Manager fails to act without undue delay,
the General Manager shall appoint new
arbitrator/arbitrators to act in his/their
place in the same manner in which the
earliest arbitrator/arbitrators had been
appointed. Such re-constituted Tribunal
may at its discretion, proceed with the
reference from the stage at which it was
left by the previous arbitrator(s).

(d)(iv) The arbitral tribunal shall
have power to call for such evidence by
way of affidavits or otherwise as the
arbitral tribunal shall think proper, and it
shall be the duty of the parties thereto to
do or cause to be done all such things as
be necessary to enable the arbitral
tribunal to make the award without any
delay.

(d)(v) While appointing arbitrator(s)
under sub-clause 1.2.54 d(i), d(ii) and
d(iii) above, due care shall be taken that
he/they is/are not the one/those who had
an opportunity to deal with the matters to
which the contract relates or who in the
course of his/their duties as Railway
servant(s) expressed views on all or any
of
the
matters
under
dispute
or
differences. The proceedings of the
arbitral tribunal or the award made by
such Tribunal will, however, not be
invalid merely for the reason that one or
more arbitrator had, in the course of his
service, opportunity to deal with the
matters to which the contract relates or
who in the course of his/their duties
expressed views on all or any of the
matters under dispute.

(e)(i) The arbitral award shall state
item wise, the sum and reasons upon
which it is based.

(e)(ii)
A
party
may
apply
for
corrections of any computational errors,
any typographical or clerical errors or any
other error of similar nature occurring in
the award and interpretation of a specific
672 INDIAN LAW REPORTS ALLAHABAD SERIES
point of award to tribunal within 30 days of
receipt of the award.

(e)(iii) A party may apply to tribunal
within 30 days of receipt of award to make
an additional award as to claims presented
in the arbitral proceedings but omitted from
the arbitral award.

(f) In case of the Tribunal, comprising
of three Members, any ruling or award
shall be made by a majority of Members of
Tribunal. In the absence of such a majority,
the views of the Presiding arbitrator shall
prevail.

(g) Where the arbitral award is for the
payment of money, no interest shall be
payable on whole or any part of the money
for any period till the date on which the
award is made.

(h) The cost of arbitration shall be
borne by the respective parties. The cost
shall
inter-alia
include
fee
of
the
arbitrator(s) as per the rates fixed by the
Railway Administration from time to time.

(i) Subject to the provisions of the
aforesaid Arbitration and Conciliation Act
1996 and the rules there under and any
statutory modification thereof shall apply
to the arbitration proceedings under this
clause.

(j) ASSESSMENT OF COST

Upon every and any such reference the
assessment of the cost incidental to the
reference and award respectively shall be
at the decision of the sole arbitrator or of
the presiding arbitrator as the case may be.

(k) VENUE

The venue for an arbitration shall be
the place from which the Letter of
Acceptance of Tender is issued or such
other place as the Purchaser at this
discretion may determine."

13. Referring to the aforesaid clause,
specifically Clause 1.2.54(d)(ii), it has been
submitted that the value of the dispute
being in excess of Rs. 1 crore, that clause
would govern the arbitration sought by the
applicant. Next, referring to the stipulation
in
the
aforesaid
sub-Clause
(d)(ii),
providing for a panel of three arbitrators -
all
Gazetted
Railway
Electrification
Officers, not below JA grade, it has been
submitted that the said clause falls foul
with Section 12(5) of the Act that came into
force w.e.f. 23.10.2015. Since, no arbitrator
could be appointed under that clause, it has
been submitted that the applicant had not
erred in seeking appointment of an
independent arbitral tribunal, as proposed
by the notice dated 31.12.2018. Further, the
present
application
is
also
wholly
maintainable and there is no error in the
order
dated
24.10.2019.
It
may
be
confirmed.

14. Also, it has been submitted, by
virtue of Clause 1.2.2 read with the Clause
17 of the Preamble to the Tender Papers to
the
contract,
as
was
executed
on
01.03.2010, the terms and conditions
contained in the GCC as they existed on the
date of the execution of the contract alone
would bind the parties. In that regard,
Clause 17 of the Preamble to the contract
entered into between the parties, is quoted
below:

"17. General Conditions of the
Contract
-
'General
Conditions
of
Contract'
of
concerned
Railway
as
amended for advance correction slips
issued upto date, shall be part of the
contract. This may be obtained by the
tenderer/contractor on payment from any
Divisional Railway Manager's office of
concerned Railway in which the present
section lies."

15. Then, referring to Clause
64(3)(a)(ii) of the GCC as was existing in
2 All. Tata Projects Ltd. Vs. Central Organisation for Railway Electrification
673
the year 2010, he would submit, the
invalidity in the arbitral tribunal proposed
by the railway by virtue of Section 12(5) of
the Act would attract to that clause as well.
Clause 64(3) of the GCC (2010), reads as
below:

"64(3)(a)(i) - In cases where the total
value of all claims in question added
together does not exceed Rs. 10,00,000/-
(Rupees ten lakhs 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
Rly. 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 3 names of
Gazetted Rly. Officers, of one or more
departments of the Rly. 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
General 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.