Isc Projects PVT. LTD. vs. Haryana Rail Infr. Development Corp. LTD.

Facts

The petitioner, ISC Projects Pvt. Ltd., filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an independent Arbitrator. A contract agreement dated 15.07.2021 was entered into between the petitioner and the respondent, Haryana Rail Infra. Development Corp. Ltd., for construction work. A dispute arose concerning liability for an increase in GST rates from 12% to 18% during the execution of the work. The petitioner invoked the arbitration clause, and the respondent provided a panel of eight retired railway officials. The petitioner objected to these officials, deeming them ineligible. The respondent contended that the contract terms stipulate the petitioner bears any tax increases and that retired railway officials are eligible arbitrators as per Clause 64.3 of the General Conditions of Contract (GCC).

Held

The Court held that the objection of the petitioner to the appointment of retired railway officials cannot be accepted, in view of the dictum of the Supreme Court in Central Organization for Railway Electrification Vs. Eci-Spic-Smo-Mcml (JV). The Supreme Court had interpreted Clause 64.3 of the GCC, specifically the modified clause 64(3)(b), and held that when the agreement specifically provides for the appointment of an Arbitral Tribunal consisting of three arbitrators from a panel of serving or retired railway officers, the appointment must be in terms of the agreement. The High Court was not justified in appointing an independent sole arbitrator ignoring these clauses. Consequently, the Court appointed three individuals from the panel provided by the respondent: Mr. Surender Kaul, Mr. Parmod Kumar, and Mr. Ravinder Kumar, as Arbitrators. They are required to make a declaration under Section 12 of the Act regarding their independence and impartiality. The Arbitrators will decide amongst themselves who will be the Presiding Arbitrator. The proceedings are to be completed within the time limit specified under Section 29-A of the Act, and their fees will be as per the Fourth Schedule of the Act. All questions arising between the parties are left open for determination by the Arbitral Tribunal.

Key Issues

1. Whether retired railway officials are eligible to be appointed as Arbitrators in terms of Clause 64.3 of the General Conditions of Contract (GCC) and the arbitration agreement between the parties? The petitioner argued that the retired railway officials provided by the respondent were not eligible. The respondent, relying on Clause 64.3 of the GCC and the Supreme Court judgment in Central Organization for Railway Electrification Vs. Eci-Spic-Smo-Mcml (JV), argued that retired railway officials are eligible and that the appointment must be in accordance with the agreed terms. 2. Whether the High Court is justified in appointing an independent sole arbitrator, ignoring the specific clauses of the General Conditions of Contract regarding the constitution of the Arbitral Tribunal? This issue stems from the petitioner's initial request for an independent arbitrator and the respondent's insistence on adhering to the GCC's provisions for appointing a tribunal from a panel of railway officials.