IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE THURSDAY, THE 13TH MARCH 2008 / 23RD PHALGUNA 1929 AR.No. 38 of 2007() ------------------- APPLICANT -------------- M/S .PRIME HABITATS PVT. LTD., V.K.COMPLEX, FORT ROAD, KANNUR-670001, REPRESENTED BY ITS DIRECTOR, RAVI GUPTA. BY ADV. SRI.RAJESH NAMBIAR RESPONDENTS: OPPOSITE PARTIES/RESPONDENTS ----------------------------------------- 1. THE UNION OF INDIA, REPRESENTED BY THE CHIEF ENGINEER(CONSTRUCTION), SOUTHERN RAILWAY, CHENNAI. 2. GENERAL MANAGER, SOUTHERN RAILWAY, HEAD QUARTERS OFFICE, CHENNAI-3. BY ADV. SRI.R.SATHISH KUMAR THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 13/03/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE,J. - - - - - - - - - - - - - - - - - - - - - - - - - Arbitration Request No.38 of 2007 - - - - - - - - - - - - - - - - - - - - - - - - - Dated: 13th March, 2008 ORDER The applicant, a Private Limited Company was awarded the work of doubling of the railway track between Shornur-Mangalore, Calicut-Cannanore Section and the work of construction of road over bridge at 1x20.00 m (sq) 1x 24.415 SK Span at km 732/4-5 in lieu of the existing bridge No.1083 - provision of superstructure with PSC Grider and slab. The work under the contract was ultimately completed and all extensions of time sought for completion of the work was granted till 31.12.2004 under clause 17(2) of the General Conditions of Contract. According to the applicant, the railway administration did not finalise the applicant's final bill and did not pay the dues to the applicant. The applicant preferred a detailed claim dated 1.10.2005 covering all payments due to them including compensation for breach of contract, interest etc. Even after lapse of 120 days, no orders were received from the respondents regarding the claim and the final bill. The applicant thereafter by petition dated 8.2.2006 demanded constitution of the Arbitration Tribunal as provided under clause 64 of the General Conditions of Contract to settle all the claims and to pay the legitimate amounts due to the A.R.No.38/07 - 2 - applicant. Pursuant to that demand, the Railway constituted an Arbitral Tribunal consisting of three members. According to the petitioner, though the Tribunal was constituted on 26.5.2006, no progress was being made even after lapse of 10 months and conflict of interest appears to exist regarding Presiding Arbitrator M.J.J.Jayaraj, Deputy Financial Advisor & Chief Accounts Officer (Constructions), Southern Railway, Chennai. The applicant approached the Tribunal by petition dated 4.4.2007 (Annexure A2) and requested the Presiding Arbitrator to recuse himself from the proceedings of arbitration as far as the above agreement is concerned since the Presiding Officer in his present occupation as Deputy FAO & CAO in the construction wing of the Southern Railway will have had occasion to deal with the file officially in the past and would also deal in future and therefore it was apprehended that an impartial view will not be possible if the Presiding Officer continues in the panel. Through Annexure A2 the petitioner had raised additional claims also for sum of Rs.73,693/-. Later by further petitions the claims were revised and as per the revised claim, the total claim stands to Rs.1,22,45,126.79. By Annexure A3 dated 9.6.2007 the applicant requested the railways to constitute an independent Arbitrator A.R.No.38/07 - 3 - outside the railways and thus raised a fresh demand for arbitration. The petitioner claims that the Railways by their letter Annexure A4 have expressed their request for changing the Presiding Officer. Thereafter by Annexure A5 dated 25.6.2007 the petitioner requested the Railways to offer a fresh panel of Officers belonging to HOD cadre or agreeing for independent Arbitrators outside the Railway hierarchy. The grievance of the petitioner is that no action has been taken on Annexure A5 request. According to the petitioner, failure on the part of the respondents to constitute fresh Arbitral Tribunal even after the lapse of three months from Annexure A5 results in forfeiture of the 2nd respondent's right to appoint Arbitrator and entitles the petitioner to approach this court under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act. The petitioner therefore prays in the A.R. that an independent and impartial Arbitrator be appointed for adjudication upon all the claims of the applicant against the respondents. 2. The Standing Counsel for the Railways has filed a detailed statement denying the contentions of the petitioner. It is pointed out that vide Annexure A4, the General Manager, Railways had informed the applicant that the Presiding Officer Arbitrator is not in any way A.R.No.38/07 - 4 - connected with the deputed matter and he is under the order of transfer to Chennai Division and expressed his unwillingness to change the proposed Arbitrator. The respondents contend that on the terms of clause 64(3) (a) (2) of General Conditions of Contract, the General Manager, Southern Railway does not have right to appoint officers outside the railway administration as Arbitrators and that there is absolutely no infirmity about the present Arbitral Tribunal. It is also contended that it is due to the non-co-operation of the applicant that the present Arbitral Tribunal proceedings are stalled. 3. I have heard the submissions of Mr.Rajesh Nambiar, learned counsel for the applicant and Mr.R.Sathish Kumar, learned Standing Counsel for the Railways. Mr.Rajesh Nambiar and Mr.Sathish Kumar would addressed submissions on the basis of the pleadings of their respective parties and the various annexures placed on record. It is not disputed that appointment of the Arbitral Tribunal is regulated by clause 64 of Ext.A6 agreenebt between the parties. It is also not disputed that it was by virtue of that clause that the Arbitral Tribunal was constituted by the respondents. The objection was taken by the applicant only regarding the Presiding Arbitrator Mr.M.J.J.Jayaraj. It is stated in Annexure A4 that Mr.Jayaraj is not dealing with any papers A.R.No.38/07 - 5 - pertaining to this agreement so far though he is working in construction organisation and he has not been in charge of any works related to Kerala region. It is also informed that Mr.Jayaraj did not have any occasion to deal with the case file of this agreement other than in the capacity of arbitrator. It is also stated that Mr.Jayaraj is presently under orders of transfer to Chennai Division as Senior Divisional Finance manager and that he will not have any opportunity to deal with this case any further other than as Arbitrator. I am not impressed by the contention of the applicant that Mr.Jayaraj will be biased in the matter. The order of the Supreme Court in SLP(Civil) No.14395/07 in G.M.Southern Railway v. Johny J.Vilangadan was relied on by the Standing Counsel for the Railways. That was a case where the Supreme Court held that the court should normally adhere to the terms of arbitration clause and appoint Arbitrator/Arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name. I do not find any exceptional circumstances attending on this case justifying appointment of any Arbitrator outside the Railway Administration. 4. The result of the above discussion is that the Arbitration Request will stand dismissed. The applicant is directed to participate A.R.No.38/07 - 6 - in the proceedings already commenced by the Arbitral Tribunal. The Arbitral Tribunal will complete the arbitration proceedings and pass award at the earliest. srd PIUS C.KURIAKOSE, JUDGE