The court emphasized the importance of the arbitration clause entered into between the parties and held that a person ineligible to arbitrate cannot nominate an arbitrator, and if such ineligibility arises, the court is competent to appoint an arbitrator.

ORDER

1. The applicant has preferred this arbitration application for appointment of an independent sole arbitrator.

2. It is contended by learned counsel for the applicant that as per Arbitration Clause 20.1 of the agreement, first an attempt was to be made for amicable settlement of the dispute between the parties. As per Clause 20.2, in the event that a dispute between the parties subsists beyond 30 days of negotiations between the parties, then the dispute shall be settled as per the provisions of Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996'). The dispute shall be referred to sole arbitration of Gazetted Railway Officer appointed to be an arbitrator by the General Manager of the Zonal Manager awarding the license and the Gazetted Railway Officer to be appointed as arbitrator, however, will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference.

3. It is contended that the applicant vide letter dated 12.11.2016 (Annexure-9) requested for appointment of an arbitrator. The authorities appointed Mr. Manoj Kumar Jain as arbitrator vide letter dated 14.2.2017. Mr. Manoj Kumar Jain recused himself on which another application was given to the authorities on 27.7.2017 for appointment of an arbitrator. No arbitrator was appointed, therefore, Arbitration Application No.103/2017 was filed before the High Court. During the pendency of this application, the non-applicant - respondent appointed Mr. C.R. Kumawat as arbitrator. The applicant has given his no objection to the appointment of Mr. C.R. Kumawat as arbitrator. Mr. C.R. Kumawat was a Railway Representative in another arbitration proceeding against the present applicant and when this fact was brought to his notice, he also recused himself. After filing of the present arbitration application, notices were issued to the Union. Union sought time to file reply and thereafter, they appointed Mr. Y.P. Singh as arbitrator, however, this Court directed Mr. Y.P. Singh not to proceed in the matter as he was already arbitrator in 5-6 cases. Mr. Y.P. Singh also recused himself on 15.6.2020.

4. It is contended by learned counsel for the applicant that in view of the judgments of the Apex Court in Perkins Eastman Architects DPF & Anr. Versus HSCC (India) Ltd.: AIR 2020 SC 59 and TRF Limited Versus Energo Engineering Projects Limited: (2017) 8 SCC 377, a person, who cannot himself arbitrate in a matter, cannot appoint an arbitrator. It is contended that since the Zonal Manager or the General Manager cannot arbitrate, they cannot appoint an arbitrator. It is, therefore, prayed by the counsel that an independent arbitrator be appointed by the Court.

5. Learned counsel appearing for the Union of India has objected to the appointment of an independent arbitrator. Attention of this Court was drawn to sub-clause (c) of Clause 20.2, which reads as under:

'It is further a term of this contract that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitrator at all'.

6. It is contended that since the applicant is not agreeable to the list provided by the Union, an arbitrator cannot be appointed and in term of sub-clause (c) of Clause 20.2, matter cannot be referred to arbitrator at all. To buttress his argument, counsel for the Union of India has placed reliance on Union of India & Anr. Versus M.P. Gupta: (2004) 10 SCC 504.

7. Counsel has also placed reliance on Sanjay Matai Versus Senior Divisional Commercial Manager & Anr.: S.B. Arbitration Application No.133/2017 decided by the Rajasthan High Court wherein it was held that clause 1 of Seventh Schedule of the Act does not debar appointment of a retired employee. The Court further held that there is no illegali