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IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.T. ASHA, J.
M/s. JV Engineering Associate, Civil Engineering Contractors, Represented by its Partner, S. Jaikumar - Petitioner
Versus
General Manager, CORE, Allahabad, Represented by Deputy Chief Engineer, Railway Electrification, Chennai, Egmore - Respondent
O.P. Nos. 446 to 449 of 2019
Decided On : 10-02-2020
Arbitration - Ineligibility of Arbitrator - Arbitration and Conciliation Act, 1996, Section 34(2)(b)(iii) - Section 12(5) - Schedule VII(1)
Fact of the Case:
The claimant invoked the Arbitration clause for recovery of amounts due to them under price escalation for various construction projects awarded by the respondent Railways. The respondent contested the claims, and the Arbitrator dismissed the claims filed by the claimant. The claimant challenged the awards on various grounds, including the ineligibility of the Arbitrator.
Finding of the Court:
The court found that the Arbitrator was ineligible to act as per Section 12(5) of the Arbitration and Conciliation Act, 1996, and the awards were set aside. The court did not delve into the merits of the case.
Issues: Validity of Arbitral Tribunal's appointment, Ineligibility of Arbitrator, Compliance with arbitration rules, Waiver of ineligibility
Ratio Decidendi: The court held that the Arbitrator's ineligibility, as per Section 12(5) of the Act, rendered the awards invalid. The absence of an express waiver in writing by the claimant further supported setting aside the awards.
Final Decision: The court allowed the original petitions and set aside the arbitral awards without imposing costs.
JUDGMENT :
Prayer: Original Petitions are filed under Section 34(2)(b)(iii) of the Arbitration and Conciliation Act, 1996 to set aside the Awards dated 07.11.2018 passed by Shri V.K. Manoharan, the Sole Arbitrator.
1. The issue involved in all the petitions involves the validity of an Arbitral award passed by a Arbitrator who is ineligible to be appointed as per the provisions of Section 12 (5) read with schedule VII (1) of the Arbitration and Conciliation Act, 1996, hereinafter called the 1996 Act. The arbitral proceedings is also questioned in the light of the Chief Engineer of the respondent Railways being the authority nominating the Arbitrator which according to the petitioner / claimant, once again attracts the mischief of Schedule VII (1) of the 1996 Act. It is necessary to briefly touch upon the facts which have preceded the filing of the above Petitions under Section 34 of the 1996 Act before proceeding to discuss the issue in detail. Since the issue involved in all the OPs are one and the same a common order is given.
O.P.No.446 of 2019:
2. The claimant who is the petitioner before this Court had invoked the Arbitration clause under the agreement entered into between them and the respondent for recovery of a sum of Rs.3,26,470/- which the petitioner claims is due to them towards price escalation. The petitioner was awarded the contract for the construction of the control room for Traction Sub-Station including earth filling and retaining wall in the Kumbla-Uppala in Palghat Division of Southern Railway. Although the work was supposed to have been completed within a period of 15 months, the same had been delayed and nearly 5 extensions had been granted. The petitioner would contend that these delays were on account of certain procedural delays on the part of the respondent. For 4 of the extensions, the respondent had granted the extension with PVC by entering into Rider Agreements. However with regard to the disputed claim, the respondent did not allow the escalation and therefore left with no other alternative the claimant had to invoke the Arbitral proceedings. The petitioner had himself represented the case before the Arbitral Tribunal.
O.P.No.447 of 2019:
3. The claimant who is the petitioner before this Court had invoked the Arbitration clause under the agreement entered into between them and the respondent for recovery of amounts which the petitioner claims is due to them under the price escalation. The petitioner was awarded the construction of the Staff Quarters Type II - 4 units in GF, Type III - 1 Unit in SF and Type IV - i unit in GF at Tirunelveli Junction in Madurai Division of Southern Railway. Although the work was supposed to have been completed within a period of 15 months, the same had been delayed and nearly 5 extension had been granted. The petitioner would contend that these delays were on account of certain procedural delays on the part of the respondent. The respondent did not allow the price escalation for the extensions though in the other contracts the respondent had granted four extensions with PVC and therefore left with no other alternative the claimant had to invoke the Arbitral proceedings. The petitioner had himself represented the case before the Arbitral Tribunal.
O.P.No.448 of 2019:
4. The claimant who is the petitioner before this Court had invoked the Arbitration clause under the agreement entered into between them and the respondent for recovery of amounts which the petitioner claims is due to them under the price escalation. The petitioner was awarded the construction of Staff Quarter Type II - 20 units, Type III - 9 units and Type IV - 3 units (in ground / first floor) at Various stations between kannur in Palghat Division of Southern Railway. Although the work was supposed to have been completed within a period of 15 months, the same had been delayed and nearly 5 extension had been granted. The petitioner would contend that these delays were on account of certain procedural delays on t
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