(Prayer: This petition is filed under Sec.11(6) of the Arbitration and Conciliation Act, 1996, praying to a fit person be selected as sole arbitrator for arbitrating the controversies/ disputes emerging from the agreement vide Annexure A1 and made his award, etc.)
1. A petition u/S 11 of the Arbitration and Conciliation Act, 1996 by a contractor who had undertaken to execute certain works in favour of the respondent Chief Engineer, South Central Railway, and his colleagues in the Railway Department in terms of an agreement dated 20.06.2008.
2. It appears the execution of the work by the contractor was not the satisfaction of the client and the Railways terminated the contract as per notice 05.02.2009 after the same was preceded by a 7 days notice issued on 24.01.2009 and a 48 hours notice issued on 03.02.2009. The contractor responded to the termination, disputing the same as per his communication dated 22.09.2009, copy produced at Annexure-R to the petition and also called upon the respondents to appoint an Arbitration Tribunal in terms of Clause 64 of the General conditions of the contract, to adjudicate the claims of the contractor raised in his communication dated 22.09.2009.
3. The Respondent-Railways replied as per communication dated 16.08.2010, copy produced at Annexure-V to the petition, pointing out that the demand for appointment of Arbitrator was also not justified in terms of the contract and therefore did not choose to act on the request of the contractor.
4. A further reminder by the contractor as per his communication dated 22.09.2010, copy produced at Annexure-W having elicited the response of letter dated 11.01.2011, copy produced at Annexure-A apprising the contractor that the subject matter of the dispute as indicated by the contractor were out of the scope for arbitration being excepted matters as per clause 62 of the G.C.C, there was no scope for referring the matter to the Arbitrator and having declined the request for referring the matter to the Arbitration Tribunal, the present petition by the contractor seeking the following reliefs.
(a) A fit person be selected as sole Arbitrator for arbitrating the controversies/ disputes emerging from the agreement vide Annexure A1 and make his award;
(b) Costs of this application become costs in the arbitration proceedings;
(c) Subsequent orders be passed and instructions be given as this Hon Tale Court may consider proper and fit for giving complete relief to petitioner.
5. Appearing on behalf of the petitioner submission of Mr. Budihal, learned counsel, is that the General Manager of the Railways, a party to the contract by himself could not have decided as to whether the matter should go to the Arbitration Tribunal or not and also as to whether it is a dispute which was required to be examined: that it was virtually sitting in judgment over his own decision, particularly as the contract does provide for an arbitration clause and dispute if not resolved to be referred to an Arbitration Tribunal. As per the reply of the General Manager the Railways can be taken before the Arbitration Tribunal and therefore the rejection of the request for appointment of an Arbitrator is not tenable, is contrary to the very terms of the agreement and this Court should appoint an Arbitrator in terms of the provisions of Sec. 11(6) of the Act reading as under:
(6) Where, under an appointment procedure agreed upon by the parties,-
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure.
A party may request the Chief justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
6. Mr. Budihal has also taken me through the General Conditions of the Contract and the terms of the agreement. A perusal of the general conditions of the contract, particularly Clause 62 indicates that certain matters described as "excepted matters" are kept out of the purview of Arbitration and they are all indicated to be matters which are covered as mentioned in clause enumerated in 63 of the G.C.C. reading as under:
63. Matters finally determined by the Railway
All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the Contractor to the General Manager and the General Manager shall within 120 days after receipt of the Contractor's representation make and notify decisions on all matters referred to by the Contractor in writing provided that matters for which provision has been made in Clauses 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57-A, 61(1), 61(2) and 62(1) to (xiii) (B) of the General Conditions of Contract or in any clause of the special conditions of contract shall be deemed as "excepted matters" (matters not arbitrable) and decisions of the Railway authority, thereon shall be final and binding on the Contractor; provided further that "excepted matters" shall stand specifically excluded from the purview of the arbitration clause"
7. On a perusal of the material placed before the Court, agreement and on consideration of the submission, in the light of the provision of Sec. 11 of the Act, I find the petitioner has not made out a case to invoke the jurisdiction of this Court u/S 11 of the Act for directing the respondent to nominate an Arbitrator and I find so for the simple reason that the situations covered by the Clause 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57-A, 61(1), 61(2) and 62(1) to (xiii)(B) of the General Conditions of Contract and these are all expressly enumerated as "excepted matters" from the scope of arbitration. Implication of this clause on "excepted matters" is that "they are disputes of the nature in respect of which parties have agreed not to go before the Arbitrator".
8. A petition u/S 11 of the Act can succeed if there is an agreement between the parties and the agreement provides for appointment of an Arbitrator for resolving the dispute of the nature mentioned in the contract.
9. In the instant case while there is an agreement between the parties and while there is also an Arbitration clause, the parties having expressly agreed, in fact not to go before an Arbitrator in respect of certain types of disputes and the dispute as raised by the petitioner-contractor in the opinion of the General Manager coming within the scope of an excepted matter, meaning, thereby there is no agreement between the parties to go before an Arbitrator for resolving such disputes. It only amounts there is no arbitration clause in the agreement in so far as such disputes are concerned.
10. Arbitration proceedings are informal alternative dispute resolution proceedings, which the parties choose for themselves and voluntarily and consciously opt out of the regular fora for resolving their disputes within the forum for redressal of their disputes as is made available by the law of the land.
11. Before whom the parties choose to go with what expertise the person as subject to all the terms and conditions are all within the volition of the parties, the statutory provision of like Sec. 11 of the Act is only to remedy a situation where all parties by agreement agree to go before an Arbitrator in specified situation and one of the parties to the agreement failing to abide by that agreement and instead of on a demand by one party declines to agree for an Arbitrator or to agree for the appointment of an Arbitrator or declines to nominate a Arbitrator on his part, another party to the contract who is aggrieved by such inaction or disinclination on the part of contracting party can approach the Court for ensuring that the dispute which is otherwise referable to the Arbitration is made or so referred and the non willingness of one of the party does frustrate the contract and the right of the willing party.
12. If parties to a contract, by themselves had agreed that certain situations are not disputing arising under certain situations are arbitrary and as to the decision whether such dispute is within the scope of excepted matters that is not accepted from the scope of arbitration is left to the discretion of one of the contracting parties namely General Manager of the Railways and when once such an accepted nominated authority namely General Manager has opined that the subject matter is within the scope of an "excepted matter" there is no clause for arbitration in respect of such matters and therefore in the absence of a clause for referring the dispute to Arbitration in the agreement, the High Court exercising jurisdiction u/S 11 of the Act cannot and will not call upon the respondent to appoint or nominate an Arbitrator.
13. It is not the function of this Court to sit in judgment over the decision of General Manager, as Sec. 11 proceedings are neither in the nature of such appeal nor can this Court substitute the terms of the contract between the parties by incorporating a particular clause in the agreement between the parties.
14. The arguments of Mr. Budihal, learned counsel that as to whether the matter can go before the Arbitrator is itself a matter to be resolved by the Arbitrator. In fact it is nothing but begging the question. When the terms of the contract are very clear that what the 'excepted matters' are as enumerated and if there is a dispute as to whether it is an excepted matter or not, the decision of the General Manager being not only final but having been expressly provided for keeping out of the purview of arbitration even such a decision from the purview of Arbitration, there is absolutely no scope for referring even the question of the General Manager opining the dispute is one within the scope of excepted matters and even assuming that the petitioner is not agreeing that such decision of the General Manager and there is a dispute even as to whether the decision of the General Manager is right or wrong and the decision is excepted or not.
15. 1 am of the considered and certain opinion that a dispute of the nature as has arisen in this case is not provided for being referred to arbitration under the terms of agreement, cannot be referred to arbitration through a petition u/S 11 of the Act, of which is existence of an agreement providing containing the clause for referring the matter to the Arbitrator or not when the clause is not referring to the arbitrator. Therefore this petition is rejected.