The appointment of an arbitrator must comply with the Arbitration and Conciliation Act, particularly Section 12(5), which disqualifies certain individuals from serving as arbitrators.

ORDER :

Heard Mr. Avinash Desai learned senior counsel representing Mr. T.P.S. Harsha learned counsel for the Applicant, Mr. M Ramakrishna, learned counsel representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India for Respondent.

2. This Arbitration Application is filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act’) read with the Scheme for Appointment of Arbitrator, 1996, for appointment of independent Arbitrator to adjudicate the dispute between the parties.

FACTS:-

3. The Applicant herein is a company incorporated under the Companies Act, and inter alia engaged in the business of manufacturing and supply of various types of cables. Respondent has invited tender bearing No.56185427 for supply of PVC insulated armoured, unscreened, underground railways signaling cable, copper conductor, size 30 core x 1.5sq. MM confirming to specification No.IRS: 63/2014 REV 4 in drums of 500 mts, length (for short, ‘the product’). The applicant has participated in the said tender and was declared as successful bidder to purchase orders bearing No.36.18, 5427.1.03360 dated 23.08.2019 for supply of 45.3 KM of product of the cable and purchase order No.56.18.5427.1.03361 for supply of 38.46 KM of product was placed on the applicant. The tender was governed by the Indian Railways Standard Conditions of Contract (for short ‘IRSCC’) which contains an arbitration clause for resolution of disputes. On receipt of purchase order, the Applicant immediately procured the requisite raw material and started the process to manufacturing the product and was subsequently delivered by the applicant without any delay and in time.

4. Vide letter dated 18.11.2019, applicant intimated Deputy CMM/Signal of respondent that entire ordered quantity in terms of both the purchase orders have been manufactured and offered to RDSO for inspection. The Applicant informed that product under purchase orders has been delivered to the consignees warehouse.

5. According to the applicant, there are disputes between the applicant and respondent with regard to supply, value, lower price said to have been supplied by third party, reduction rate for product and supply by the Applicant etc., sought to be invoked. There is correspondence between the applicant and the respondent. The Applicant had explained the same in detail the present application.

6. It is further contended by the applicant that in spite of repeated intimation with regard to reduction of price as allegedly offered by third party is not applicable on the supplies made by the Applicant and invocation of fall clause is based on mis-application and mis-interpretation. The respondent with an intention to unjustly enrich themselves at the cost of the Applicant and while exploiting its dominant position, issued a letter on 01.06.2020 to all the Zonal railways requesting the said Zones to deduct a sum of Rs.83,13,426/- from outstanding bills of the applicant. On receipt of the same, the Applicant through its Counsel got issued a legal notice dated 17.06.2020 to the respondent to desist from taking any coercive steps against the Applicant, and invoking the Arbitration Clause. In spite of receipt of the said notice, dated 17.06.2020, the respondent failed to withdraw the letter dated 01.06.2020. The respondent, instead of complying with the requisitions of the legal notice issued by the Applicant, vide communication dated 28.09.2020 sought waiver of applicability of Section 12(5) of the Act from the Applicant. The Applicant vide letter dated 01.10.2020 denied to waive applicability of Section 12(5) of the Act and intimated the respondent that the disputes are required to be adjudicated by a sole Arbitrator to be appointed in accordance of the Act.

7. Thus, according to the Applicant, disputes arose with the respondent arbitrarily, illegally, while misinterpreting the IRSCC invoked various Clauses with the intention to cause unwarranted loss to the Applicant. In spite of