The main legal point established in the judgment is the ineligibility of the appointed arbitrator under Section 12(5) read with Schedule VII of the Arbitration Act and the requirement for a panel of three arbitrators if the cumulative value of claims exceeds Rs.50 lakhs under the amended Clause 2900.

ORDER :

PRAYER: Arbitration Original Petition filed under Section 11(6) and 14(2) of the Arbitration and Conciliation Act, 1996, praying to (i) pass order and directions terminating the appointment of the Sole Arbitrator, 2nd respondent by the first respondent vide letter No.G.16/DGM/ARB/2012/39 (E.117350) dated 07.03.2022 under Section 14(2) of the Arbitration and Conciliation Act, 1996; (ii) Pass order and directions to appoint an Independent and Sole Arbitrator to adjudicate upon all disputes and differences between the petitioner and the first respondent arising out of Agreement bearing No.CE/2/CS of 2010 dated 20.02.2010.

This petition is presented as a composite petition under Section 11(6) and 14(2) of the Arbitration and Conciliation Act, 1996 (the Arbitration Act). Upon disputes arising between the parties under the Agreement dated 20.02.2010, an arbitral tribunal was constituted. The said tribunal pronounced an arbitral award dated 03.03.2014. Such award was challenged by filing O.P.No.185 of 2015. The said O.P. was allowed by order dated 06.12.2021. While allowing the petition, the Court left it open to the petitioner to institute de novo arbitral proceedings in accordance with the relevant contract as regards refusal of interest as per the Micro, Small and Medium Enterprises Development Act, 2006(the MSMED Act), the grant of liquidated damages and forfeiture of security deposit.

2. Pursuant to the above order, the petitioner issued a communication dated 02.02.2022 and requested the first respondent to agree upon an arbitrator for the resolution of disputes pertaining to the three issues referred to above. By reply dated 07.03.2022, the first respondent appointed the second respondent as the sole arbitrator under Clause 2900 of the IRS Conditions of Contract. Such appointment is assailed and the petitioner seeks the appointment of an arbitrator by this Court.

3. Learned counsel for the petitioner submits that the appointment under communication of 07.03.2022 is not in accordance with the arbitration clause. By drawing reference to the amended Clause 2900, it is submitted that the said clause provides for a panel of arbitrators to be appointed as per prescribed procedure. It is further submitted that an arbitral tribunal consisting of three arbitrators should be appointed if the cumulative value of the claim exceeds Rs.50 lakhs. The second submission is that the first respondent did not provide a panel within 60 days of the receipt of the communication dated 02.02.2022. Consequently, the first respondent has forfeited the right to appoint arbitrators. In support of this contention, learned counsel for the petitioner relied on the judgment of the Hon’ble Supreme Court in Deep Trading Company v. Indian Oil Corporation and Others (2013) 4 SCC 35, particularly paragraph 22 thereof.

4. These contentions were refuted by learned counsel for the first respondent. The first submission is that this is the second round of dispute resolution and the first round was in accordance with unamended clause 2900. Therefore, the unamended Clause 2900 applies to the second round also. As per the unamended Clause 2900, a Gazetted Railway Officer should be appointed by the General Manager as the sole arbitrator. In view of the fact that a Gazetted Railway Officer is ineligible after the amendment to Section 12(5) of the Arbitration Act, an ex-employee was appointed under communication dated 07.03.2022. By relying upon the orders of this Court in M/s.Nellai Concrete Products & Construction Co. (P) Ltd. v. Union of India, order dated 05.09.2014 in O.P.No.173 of 2014, and Offshore Infrastructure Limited v. Bharat Heavy Electricals Limited, 2017 (6) CTC 301, particularly paragraphs 26 to 28 thereof, it is contended that there is no prohibition under Schedule VII of the Arbitration Act for the appointment of an ex-employee. It is further submitted that the request for appointment of an arbitrator was not addressed to the General Manager.

5. In respon