Interpretation of arbitration agreement in Clause 64 of GCC and applicability of Section 12(5) of the Arbitration and Conciliation Act, 1996

JUDGMENT

[VIA HYBRID MODE]

1. The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 [hereinafter "the Act"] has been filed seeking appointment of a Sole Arbitrator for adjudication of pertaining to the Letter of Award dated 18th/30th January, 2018. The Letter of Award incorporates the Indian Standard General Conditions of Contract [hereinafter "GCC"] (as amended) which includes the arbitration agreement in Clause 64 of GCC.^{1[As modified vide Notice No. 2015/CE-I/CT/ARB/18 dated 11th November, 2016.]}

2. The Petitioner has not waived of applicability of Section 12(5) of the Act and accordingly, the applicable Clause 64.(3) (b) of GCC reads as under:

"64.(3) (b): Appointment of Arbitrator where applicability of section 12 (5) of A&C Act has not been waived off:

The arbitral Tribunal shall consist of a Panel of three (3) retired Railway Officer, retired now below the rank of SAG Officer, as the arbitrators. Fort his purpose, the Railway will send a panel of at least four (4) names of retired Railway Officer(s) empanelled to work as Railway Arbitrator duly indicating their retirement date 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. 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 has served in the Accounts Department."

3. The existence of the arbitration agreement is not in dispute between the parties. Ms. Chetna Rai, counsel for the Respondent argues that the appointment of the Arbitral Tribunal should be in consonance with the afore-noted Clause and the Respondent should be allowed to make nominations. Reliance is placed on the judgment of the Supreme Court in Central Organisation for Railway Electrification v. M/s ECI-SPIC-SMO-MCML (JV), 2020(14) SCC 712.

4. This Court has considered the afore-noted clause in a recent judgment passed in ARB.P. 407/2020 dated 23rd August, 2021 titled - `M/s. CMM Infraprojects Ltd. v. IRCON International Ltd.', wherein an identical clause has been considered by this Court. The clause herein as worded, permits the Respondent to make nomination of 2/3rd strength of the Arbitral Tribunal, which tilts the scales in favour of the Respondent in the appointment process. For this reason and others as noted in the afore-noted judgment, the Court found the case of Central Organisation for Railway Electrification (supra) distinguishable. The said reasons apply to this case as well.

5. The Court therefore, does not find merit in the contention of the Respondent and accordingly, the petition is allowed. This brings us to the directions that are required to be passed in view of the arbitration clause between the parties.

6. As per Clause 64.(3) (b), a panel of three member Arbitral Tribunal is to be constituted. The Petitioner vide communication dated 28th May, 2021, proposed names to the Respondent; in response thereto, the Respondent vide reply dated 09th June, 2021 also suggested a panel of arbitrators. One of the names suggested by the Petitioner is found in common. Accordingly, Sh. Piyush Aggarwal [Contact No.: +91-9717643653] is appointed as the nominee Arbitrator of the Petitioner. Further, Sh. Ajay Vijayvargiya (Retd.), General Manager [Contact No.: +91-8800131132] is appointed as the nominee Arbitrator of the Respondent. The said two Arbitrators