The unilateral appointment of an arbitrator without mutual consent violates the Arbitration and Conciliation Act, necessitating a consensual arbitration mechanism.

JUDGMENT :

(Moushumi Bhattacharya, J.)

1. The petitioner seeks appointment of a sole arbitrator to adjudicate the disputes between the petitioner and the respondent. The prayer is made in an application filed under section 11 of The Arbitration and Conciliation Act, 1996.

2. The material placed before the court shows that the respondent, South Eastern Railway, engaged the petitioner for construction of a foot-over bridge in Jharsuguda, Odisha. The Notice Inviting Tender specifies that the dispute resolution would be governed by the Standard General Conditions of Contract dated 6.9.2019 for use in connection with works contracts. Disputes arose between the parties with regard to the price variation clause in the NIT. The petitioner sent several notices from 8.9.2021 to 5.8.2022 outlining various grievances of the petitioner and enclosing the petitioner’s invoices for the respondent’s approval. The petitioner issued a notice to the respondent on 13.1.2023 under Clause 63 of the GCC for conciliation of the disputes pre-arbitration. The petitioner sent a further notice on 28.2.2023 under clause 63.1 of the GCC in the form of a representation for deciding the disputes and differences between the parties on the petitioner’s claim for price variation in structural steel in the contract between the parties. The petitioner was finally constrained to invoke the arbitration clause by a notice dated 4.7.2023.

3. The respondent wrote several letters to the petitioner including a letter of 18.8.2023 forwarding 4 names of proposed arbitrators under Clause 64(3)(b)(ii) of the GCC.

4. Learned counsel appearing for the petitioner and the respondent have taken the court through the relevant documents. Counsel have not made any argument on the existence of a dispute between the parties; it is admitted that there are disputes which are required to the adjudicated by an arbitral tribunal.

5. The point which has been argued and falls for decision is whether the parties are bound by Clause 64(3)(b)(ii) of the GCC with regard to the arbitration mechanism provided under the said clause.

6. Clause 64(3)(b)(ii) provides for cases exceeding Rs. 50 lakhs in value (as the present case) and the arbitral tribunal to consist of a panel of 3 retired Railway Officers not below the rank of senior administrative grade officers. The clause further provides that the Railway will the send a panel of at least 4 names of retired Railway Officers to the contractor (petitioner in the present case) within 60 days from the day of a valid demand for arbitration being received by the General Manager of the respondent.

7. The above clause forms the pivot of the disputes. While the petitioner urges that the clause would be invalidated in view of the decisions of the Supreme Court and the High Courts on unilateral appointments, the respondent relies on Central Organisation for Railway Electrification vs. ECI-SPIC-SMO-MCML (JV); (2020) 14 SCC 712 to defend the clause.

8. A 3-judge Bench of the Supreme Court considered the very same clause, namely, clause 64(3)(b) of the GCC in Central Organisation to hold that the parties had consented to the conditions in the GCC and the High Court was not justified in appointing an independent sole arbitrator ignoring the said clause. The Supreme Court was of the view that the reason for empanelling retired Railway Officers is to ensure that the dispute is resolved by utilising their expertise as arbitrators. Central Organisation was referred to in Union of India vs. Tantia Constructions Limited; 2021 SCC OnLine SC 271 by another 3-judge Bench on 11.1.2021 where the Supreme Court disagreed with Central Organisation and referred the matter to a larger bench to look into the correctness of the decision. The issue again came before the Supreme Court on 17.2.2022 in Bangalore Metro Rail Corporation Limited vs. JMC ATEPL Joint Venture where the Supreme Court dwelt on Central Organisation as well as Tantia Constructions but proceeded, nonetheless, to constit