A person with an interest in the dispute or outcome of the decision is ineligible to act as an arbitrator.

ORDER :

Sanjeev Prakash Sharma, J.

1. The applicants have moved applications under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred as 'the Act of 1996') for appointment of an arbitrator for settlement of disputes and differences which have arisen between the parties. The applicants are the partnership firms, which state to have participated in bid offered by the Railways for the purpose of contract for various type of works. After completion of work, disputes have arisen with regard to the payment of final bill and release of security deposits for which the applicants claim interest and also claim release of the amount of final bill.

2. Notices were sent raising claims to the respondent-Railways and the arbitration clause existing in the agreement, namely, Clause 64(1) was invoked vide notice dated 26.12.2017.

3. Reply to the notice was sent by the Railways giving a consent for waiver of applicability of Sections 12(5) and 31-A(5) of the Arbitration and Conciliation Amendment Act, 2015 whereafter the applicants refusing to the same have moved the present applications under Section 11(6) of the Act of 1996.

4. Reply to these applications have been filed by the Railways and stated that so far as security deposit amount is concerned, the same has already been released. While there are disputes with regard to release of final bill, it is stated that the applicants have already submitted their no claim certificate and they are thus estopped to take up the present applications. Further, it is stated that period of 90 days was over for raising of claims after the final bill was prepared.

5. This court is of the view that that there is a dispute existing between the parties. Defence as noticed above, cannot always be taken by the concerned respondent-railways before the arbitrator who shall consider all the submissions of both the parties and decide the dispute in terms of the Act of 1996. Learned counsel submits that as per the terms of the contract particularly Clause 34.5.4, the arbitrator stood already designated as an Officer of the Railways. In view of the judgment in the case of Perkins Eastman Architect DPC & Others Versus HSCC (India) Ltd. reported in 2019 (17) SCALE 139, a person having an interest in the dispute or in the outcome of decision shall be held to be ineligible to act as an arbitrator and learned counsel, therefore, submits that the appointment may be made of an independent person. Learned counsel for the respondent-Railways has passed over to this Court a list of Retired Railway Officers, who have been nominated for arbitration cases in the Western Railways.

6. I have considered the submissions.

7. Admittedly, there is a dispute pending between the parties. In Perkins Eastman Architect DPC & Others (supra), it was observed as under:-

"13. However, the point that has been urged, relying upon the decision of this Court in Walter Bau AG (2015) 3 SCC 800 and TRF Limited (2017) 8 SCC 377, requires consideration. In the present case Clause 24 empowers the Chairman and Managing Director of the Respondent to make the appointment of a sole arbitrator and said Clause also stipulates that no person other than a person appointed by such Chairman and Managing Director of the Respondent would act as an arbitrator. In TRF Limited (2017) 8 SCC 377, a Bench of three Judges of this Court, was called upon to consider whether the appointment of an arbitrator made by the Managing Director of the Respondent therein was a valid one and whether at that stage an application moved Under Section 11(6) of the Act could be entertained by the Court. The relevant Clause, namely, Clause 33 which provided for resolution of disputes in that case was under:

33. Resolution of dispute/arbitration

(a) In case any disagreement or dispute arises between the buyer and the seller under or in connection with the PO, both shall make every effort to resolve it amicably by direct informal negotiation.

(b) If, even after 30 days from th