Amitava Lala, J.-- Since the issue involved in all the aforesaid arbitration applications are same and all are between the same parties, the applications have been heard analogously and are being decided by this common judgment having binding effect in all the applications, however, taking the Arbitration Application No. 26 of 2006 as leading one.
This is an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter in short called as the 'Act'). Initially, Justice K.L. Sharma, a former Judge of this High Court, was appointed as an arbitrator by an order dated 21st July, 2006 of the then Hon'ble Chief Justice. He has entered upon reference on 08th August, 2006. The respondent had submitted to the jurisdiction of the arbitrator. The respondent has not only participated in framing the issues but the cross-examination with regard to the witness of the petitioner was concluded by the respondent. In the counter affidavit there is no denial on the part of the respondent authority in respect of the aforesaid facts. However, in spite of the same, the respondent had challenged the order/s of the then Chief Justice dated 21st July, 2006 passed in Arbitration Application Nos. 26 of 2006, 27 of 2006 and 28 of 2006 before the Supreme Court by filing Civil Appeal Nos. 7919 of 2009, 7920 of 2009 and 7921 of 2009 (General Manager, N.E. Rly, Gorakhpur, U.P. Vs. M/s. Lall Constn. Company) and obtained an order of remand from the Supreme Court on 25th November, 2009. In such matters, the Supreme Court was of the view that the point involved in the appeals is covered by three Judges' Bench decision of the Supreme Court in the case of Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Limited, reported in 2008 (10) SCC 240. Accordingly, the impugned orders in the appeals were set aside and the matters have been remitted back to the High Court for a fresh decision in accordance with law. The Supreme Court wanted disposal of the matters as expeditiously as possible.
I have come across three Judges' Bench judgment of the Supreme Court in Northern Railway Administration (supra) and gone through the relevant part of this judgment i.e. paragraph-14, where it has been held that the High Court does not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other considerations necessary to secure the appointment of an independent and impartial arbitrator. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements of sub-section 8 of Section 11 of the Act have to be kept in view, considered and taken into account. If it is not done, the appointment becomes vulnerable. From a perusal of sub-section 8 of Section 11 of the Act, as aforesaid, I find that it requires consideration on two parts:
(a) any qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.
In respect of the contract between the contractors and railway authorities, especially with the Northern Railways, there are two clauses in the general conditions of contract, being Claus-63 and 64, regarding arbitration. The contention of the petitioner is that after submission of claim to the Chief Administrative Officer vide its letter dated 02nd April, 2005, nothing was responded by the respondent-railway authority. Therefore, after waiting for more than 120 days, the petitioner finally served notice dated 03rd September, 2005 upon the General Manager calling upon him to invoke the arbitration clause to appoint an arbitrator within 30 days, otherwise right of appointment of arbitrator by the railways as per the general conditions of contract will be forfeited and the petitioner will be free to approach the appropriate legal forum for appointment of arbitrator under the Act. The respondent in its reply dated 17th September, 2005 given to the letter of the petitioner dated 02nd April, 2005 has not stated anything with regard to the reference to the arbitrator. On the other hand, it has been stated that the petitioner has given 'no claim certificate' (copy enclosed), therefore, in view of the above giving of letter dated 02nd April, 2005 by the petitioner for reference to the arbitrator is not understood and should not be taken cognizance of. But no copy of the 'no claim certificate' is available to us in the record. However, we find from the annexure-9 to the counter affidavit filed in Arbitration Application No. 5 of 2010 that the Deputy Chief Engineer, North East Railway, Lucknow itself has issued no claim certificate by saying that the work has been completed satisfactorily and nothing is due with the contractor. The petitioner has made an application for refund of the security money due to completion of the work. It has been stated therein that the petitioner has no claim against the railway administration except security money. However, the main contention of the petitioner in its statement of facts and claims is not with regard to bill amount but with regard to value of the work it has done in excess and earth work and cutting as recorded. According to the petitioner, it is based on measurement as on the particular day.
It is true to say that if there is no element of dispute in existence, what is required to be arbitrated is otherwise a question. But the Court at the time of appointing arbitrator judicially considers whether the element of dispute is available or not and leaves it open for the arbitrator to decide the same. Under the Act, scope and ambit of arbitration proceeding are much superior than under the earlier Act i.e. the Arbitration Act, 1940, and even the arbitrator himself can adjudicate the question of jurisdiction. Against this background, it is not proper for the respondent to say whether the dispute was existing for the entire work under the contract or for additional work or for compensation or for any other relief in connection thereto. The Court is required to consider the element of appointing an arbitrator, provided the agreement speaks for a named or designated officer. Moreover, if the conditions are fulfilled and yet one party has not adhered to within the time prescribed, it is always open for the other party to approach the Court for appointment of an independent arbitrator. In this case, probably no body has stated before the Supreme Court that when upon being called for appointing a named or designated arbitrator the other party failed, first party invoked the jurisdiction of the Court and the arbitrator so appointed entered into the reference where contesting party submitted to the jurisdiction of the arbitrator, that too not formally but upto the extent of framing of issues and cross-examination of witness of the petitioner, therefore, it is not proper for the Court to interfere with the order of appointment of arbitrator at that belated stage. In spite of making efforts for appointment of arbitrator departmentally, upon being failed, an arbitrator has been appointed with the intervention of the Court. It is further to be remembered that scheme of the Act is made to dispose of the commercial disputes by this alternative forum for adjudication as expeditiously as possible to keep pace with the fast improving economical globalization. Concept of the United Nations Commission on International Trade Law (UNCITRAL) has been applied in the domestic arbitration and both are part and parcel of the scheme.
Against this background, following points, as formulated by the Supreme Court in 2009 (8) SCC 520 (Indian Oil Corporation Limited and others Vs. Raja Transport Private Limited), have been considered by the Court:
"(i) Whether the Chief Justice was justified in assuming that when an employee of one of the parties to the dispute is appointed as an arbitrator, he will not act independently or impartially?
(ii) In what circumstances, can the Chief Justice or his designate ignore the appointment procedure or the named arbitrator in the arbitration agreement, to appoint an arbitrator of his choice?
(iii) Whether the respondent herein had taken necessary steps for appointment of an arbitrator in terms of the agreement, and had the appellant failed to act in terms of the agreed procedure, by not referring the dispute to its [Director (Marketing) (as in the referred case)] [Chief Administrative Officer/General Manager (as in the present case)] for arbitration?"
Having so, it would be improper not to pass a fresh order appointing arbitrator to proceed in accordance with law. I have called upon the respondent to know whether they have any difficulty not to proceed before Justice K.L. Sharma on account of misconduct or biasness etc., but no negative answer has been given by the respondent on that score. Against this background, I appoint Justice K.L. Sharma, a former Judge of this High Court, as sole arbitrator afresh, with a request to proceed with the matter as expeditiously as possible from the stage, where it has been stopped, so that an effective adjudication can come out from him within a shortest possible time preferably within a period of four months from the date of communication of this order. Remuneration of the arbitrator as well as other costs and expenses shall be borne by the parties in equal share.
With the above observations and order, all the arbitration applications are disposed of, however, without imposing any cost.
(Justice Amitava Lala) Dated:04th October, 2010.
SKT/-