The main legal principle established in the judgment is the procedure for appointing arbitrators under the amended Act and the modified Clause 64 of the GCC, emphasizing the ineligibility of certain individuals as arbitrators and the specific process for appointing arbitrators in railway-related disputes.

ORDER :

Mohammad Rafiq, CJ.

1. This application has been filed by applicant - M/s. Vijay Energy Equipments under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short "the Act") with the prayer that this Court may appoint an independent Arbitrator as the applicable clause in the agreement between the parties is in conflict with the prevailing law.

2. According to the case set up by the applicant in the application, the respondent-Railways issued a tender on 05.07.2013 inviting bids for construction of ROB No. 152/2 at Ch 152550 (New No. 150/3 Ch 150627) with 2 x 18 m + 1 x 36 m composite girder including sub-structure and superstructure over NH-75 and allied works in connection with LAR-KHJB new B.G. Rail line project with approximate cost Rs. 599 Lakhs. The applicant also participated in the process of tender and was eventually awarded the work. The applicant submitted a bank guarantee of Rs. 31,24,550/- before the respondent. An agreement was executed between the parties on 16.06.2014. However, the respondent failed to provide the approved drawing in time despite his several requests. The applicant sent a letter on 28.07.2016 requesting that the drawing may be sent so that the work can commence. The applicant further sent reminder letters on 06.09.2016 and 08.10.2016 so much so that applicant finally requested the respondent to close the work and refund the expenditure incurred due to the tender process. Thereafter, yet another reminder was sent by the applicant on 30.11.2016.

3. The respondent by letter dated 07.12.2016 denied the claim of the applicant and stated that the contract is under process of short closure. Aggrieved thereby, the applicant wrote a further letter on 22.12.2016 invoking the arbitration clause 64 under the General Conditions of Contract (in short "the GCC"). The respondent vide letter dated 30.12.2016 advised the applicant to waive off the applicability of Sections 12(5) and 31-A(5) of the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016). However, the applicant vide letter dated 28.03.2017 requested for appointment of retired High Court Judge as independent arbitrator. The Chief Engineer-II(C), in the meantime, vide order dated 18.05.2017 closed the contract. The applicant thereafter sent multiple letters requesting the respondent for return of bank guarantee as well as for appointment of impartial arbitrator. Suddenly, the respondent vide letter dated 21.03.2018 informed the applicant that its claims are not arbitrable and therefore, no arbitrator can be appointed.

4. Shri Tabrez Sheikh, learned counsel for the applicant referring to Clause 64 of the GCC contended that in view of Section 12(5) and Seventh Schedule appended to the amended Act, a serving officer of the Railways cannot be appointed as arbitrator. Sub-section (5) of Section 12 of the amended Act stipulates that "Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator". In view of the said amendment in the Act and the decision of the Hon'ble Supreme Court in the case of TRF Limited vs. Energo Engineer Project Ltd., reported in (2017) 8 SCC 377, the respondent cannot appoint its serving officer or even retired Railway officer as the arbitrator.

5. Shri Atul Choudhari, learned counsel for the respondent-Railways submits that after the aforesaid 2015 amendment in the Act under Subsection (5) of Section 12 and Seventh Schedule thereof, the respondent-Railways have also suitably amended Clause 64(3) of the GCC. Now if the claimant does not waive the applicability of Section 12(5) of the Act, the Railway Board will offer him panel of three retired Railway personnel out of whom he has to choose two. Thereafter, one out of them shall be appointed as his nominee arbitrator. The respondent-Railways are ready to i