The arbitration clause must ensure independence and impartiality, and any clause favoring one party unduly is non-compliant with the Arbitration and Conciliation Act.

ORDER :

1. This is a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, “the Act’ 1996”) seeking for appointment of arbitrator in view of the arbitration clause as part of the EPC (Engineering, Procurement and Construction) Agreement dated 31.05.2021 executed between the Consortium of the petitioner Nos. 1 and 2 and the President of India acting through the Chief Project Director, read with the Subsidiary Agreement dated 09.05.2023 executed between the consortium of petitioner Nos. 1 and 2 and the respondent No.2 herein namely the Chief Project Director, Railway Electrification, Central Organization for Railway Electrification (CORE), having its Principal office at Ahmedabad, Gujarat.

2. The submission is that pursuant to the execution of the EPC Agreement, the supervision and overall management of the project work was entrusted to and the project work was being carried out under the supervision and control of CORE. However, during the execution of the work and vide Railway Board’s Office Memorandum dated 11.09.2023, the Ministry of Railways, Government of India has decided to close the operations of CORE and transfer all of CORE’s ongoing projects to the concerned Zonal railways. By virtue of the Circulars and guidelines and the resultant closure of CORE, the projects in question / EPC Agreement stands transferred to respondent No.1 namely the Western Railways within whose jurisdiction the project in question falls.

3. The contention is that by virtue of the said assignment, the respondent No.1 had became a party and is bound by the arbitration agreement contained in the EPC Agreement read with the Subsidiary Agreement, and all references to the respondent No.2 / CORE may, therefore, be understood and read as reference to respondent No.1.

4. On a dispute arose about the liability of the parties under the agreement, the petitioners wrote letters dated 25.11.2024, 12.12.2024 and 09.01.2025 invoking arbitration clause mention the name of their nominee arbitrator, calling upon the respondent to nominate their arbitrator. However, inspite of lapse of more than 30 days, the respondent have failed to nominate / appoint their arbitrator and hence, the cause of action for filing of the present petition has arisen, i.e. after a lapse of 30 days from the date of the notice invoking arbitration, which is dated 12.12.2024. The petitioners would submit that they are seeking for appointment of the arbitral tribunal for adjudication of their outstanding claims amount to INR 36,57,65,986 along with the interest and cost under Section 11 of the Act’ 1996.

5. Mr.Harsheel D. Shukla, the learned advocate had put in appearance on behalf of the respondent Nos.1 and 2. On a query made by the Court, the learned counsel for the respondent would submit that despite there is no dispute about the receipt of the notice invoking arbitration clause but, the said notice stands discharged with the Clause ‘24.1’ of the EPC Agreement, which reads as under:-

“24.1 Standing Arbitral Tribunal

24.1.1 The Arbitral Tribunal shall consist of a panel of three Retired Railway Officers not below JA grade. The Standing Arbitral Tribunal shall be formed within three months from the date of the execution of the Contract. For this purpose, the Authority will send a panel of 3 (Three) names of Retired Railway Officers of one or more departments of the Railway, within two weeks from the receipt of the list, the contractor shall intimate in writing two names from the said list to the Authority. The Authority shall appoint at least one out of them as the Contractor's nominee and will, also simultaneously appoint the balance number of arbitrators from the panel approved by Authority indicating the presiding arbitrator from amongst the 3 arbitrators so appointed. While nominating the Arbitrators, it will be necessary to ensure that one out of them is from the Accounts department.

24.1.2 If the Contractor fails to select the members from the approve