The arbitration clause was deemed unenforceable due to disqualification under the amended Arbitration and Conciliation Act, 1996.

CAV JUDGMENT

Date : 06-12-2024 The identical petitioner herein had entered into an agreement pursuant to tender process initiated by the respondent. The separate agreements entered into contained Clause-25 for dispute resolution. The petitioner requests for appointment of an arbitrator under Clause-25 read with the provisions of the Arbitration and Conciliation Act , 1996.

2. The learned Senior Counsel appearing for the respondent, however, relied on the decision of this Court in C.Rev No. 181 and 182 of 2023 (The State of Bihar v. Kashish Developers Limited) dated 04.10.2024 wherein Clause-25 was interpreted to find that after the amendment of 2016 of the Arbitration and Conciliation Act , 1996, there would be no question of an arbitration going by the language employed in Clause-25.

3. It is also submitted that the said decision was taken up before the Hon'ble Supreme Court in SLP Nos. 25109-

25110 of 2024 which stood dismissed.

4. Clause-25 specifically indicates that no person other than the person appointed by the Engineer-in-Chief or administrative head should act as arbitrator and for any reason if that is not possible, the matter shall not be referred for arbitration at all.

5. We extract paragraph nos. 9 to 15 of the judgment in C.Rev Nos. 181 and 182 of 2023:

9. Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd. (2017) 4 SCC 665 held that though the nature and source of arbitrator’s appointment could be deduced from the agreement entered into between the parties, yet non-independence and non- impartiality of such arbitrator would render him ineligible to conduct the arbitration. TRF Ltd. v. Energo Engineering Projects Ltd. , (2017) 8 SCC 377, further held that the Managing Director of the awarder is rendered incapable of carrying out arbitration by virtue of Section 12 (5) of the Act of 1996, who would also be rendered ineligible to nominate another person as arbitrator. Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760 found that the logical deduction from TRF Ltd.(supra) would be that that Managing Director after becoming ineligible by operation of law, would also be ineligible to nominate an arbitrator. The ineligibility as a result of operation of law, would not only be the ineligibility to act as an arbitrator, but also to appoint anyone else as an arbitrator. Hence, as of now, the Engineer-in-Chief would not be entitled to appoint an arbitrator; the particular designate having been disqualified by operation of law.

10. Nirman Engicons Private Limited (supra) was a case in which reliance was placed on another judgment of the Hon’ble Supreme Court in Central Organisation for Railway Electrification v. ECI-SPIC- SMO-MCML(JV), (2020) 14 SCC 712 . Therein, a Co-ordinate Bench, after considering TRF Ltd. (supra), held that when a panel of retired employees is proffered by the Railways as per Clause 64(3)(b) of the General Conditions of Contract; with the details of those retired officers, and the contractor is required to nominate two persons from the list, then the further nomination made by the awarder gets counter balanced by the power of choice given to the contractor. The decision in TRF Ltd. (supra) was held to be not applicable to the General Conditions of Contract of the Railways; which enables the parties to choose two arbitrators. This Court is informed that the aforesaid decision has been referred by a Co-ordinate Bench to a Larger Bench. However, it has to be pertinently observed that there is no such distinguishing clause, in the present contract as is available in the General Conditions of Contract of the Railways.

11. Insofar as the present contract is concerned, what is relevant is the specific condition in Clause-25, which reads as under:-

“It is also a term of this contract