Amit Engineers Vs Modern Coach Factory

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Court No. - 8

Case :- CIVIL MISC. ARBITRATION APPLICATION No. - 23 of 2024

Applicant :- Amit Engineers Opposite Party :- Modern Coach Factory Counsel for Applicant :- Shailendra Kumar Misra,Shailendra Kumar Misra Counsel for Opposite Party :- Varun Pandey,Ashwani Kumar Singh

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Hon'ble Jaspreet Singh,J.

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Heard Ms. Minakshi Jyoti, learned counsel for the petitioner and Shri Ashwani Kumar Singh, learned counsel for the respondent.

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The instant petition has been preferred under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, 'the Act of 1996) for seeking appointment of a sole Arbitrator by the Court.

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The submission of the learned counsel for the petitioner is that the respondent floated a Tender bearing No.05211421 for procurement of 838 numbers of Switch Board Cabinets (SBC) 184 Rev. for LHB EOG AC Coaches. The quantity of work was 299 numbers of SBC for LHB EOG AC Coaches. The petitioner had submitted its bid which later on came to be decided in favour of the petitioner and the same culminated in a binding contract.

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Later, certain disputes occurred in pursuance whereof the petitioner made its correspondence claiming certain amounts which were disputed by the respondent. It is urged that instead of adopting a confrontanist approach, the petitioner required the response to appoint a conciliator. However, the same did not materialize, accordingly, the petitioner thereafter issued a letter dated 28.06.2023 and offered to nominate Mr. Kameshwar Chaudhary, Retired Controller of Stores, Indian Railways to be

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appointed as a sole Arbitrator and the respondent was requested to give its consent.

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It is further pointed out that the said request was turned down, however, the Railways advised the petitioner to follow the railways guidelines as mentioned in the Indian Railway Board letter and respond so that the Tribunal could be constituted expeditiously.

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It is further urged that the petitioner had earlier preferred a petition before this Court bearing Civil Misc. Arbitration Application No.71/2023, which came to be dismissed as withdrawn by the petitioner by means of the order dated 20.11.2023 with liberty that the petitioner may invoke the arbitration clause appropriately and in case if any cause arose to approach the Court then the petitioner be permitted to do so.

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It is further pointed out that thereafter the petitioner sent a notice to the respondent dated 24.11.2023 calling upon the respondent to cooperate in early constitution of the Tribunal, but the same did not evoke any response. The petitioner had thereafter sent another reminder that too did not evoke any response, hence, the petitioner had to approach this Court by means of the instant petition to get a sole arbitrator appointed.

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Learned counsel for the respondent has refuted the aforesaid submissions and it has been urged that this petition deserves to be dismissed on the following grounds:-

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(i) This being the second petition and a similar petition having been dismissed, consequently, this too deserves to be dismissed as not maintainable.

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(ii) Notice which is said to have been issued by the petitioner and has been brought on record as Annexure No.21 was not received by the respondent.

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(iii) In light of the objections raised by the respondent in Para-15 and 18, the petition is not maintainable and even the arbitration clause has not been appropriately invoked.

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(iv) The arbitration clause provides for constitution of a Tribunal of three Members, who would be the retired officers of the Railways, hence, the demand for appointment of a sole Arbitrator cannot be sustained.

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The Court has heard learned counsel for the parties and also perused the material on record. 10. The undisputed facts are that the petitioner and the respondent entered in an agreement. The said agreement does contain an arbitration clause. It is also an undisputed fact that the petitioner had earlier preferred a petition under Section 11(6) of the Act of 1996 bearing Civil Misc. Arbitration Application No.71/2023, but the same was dismissed as withdrawn with liberty in terms of the order passed by the Court dated 20.11.2023. It is also an undisputed fact that subsequent to the order passed by this Court, the petitioner had submitted an application before the respondent for getting the sole Arbitrator appointed but on account of differences between the contracting parties, the Tribunal could not be constituted. It is also an undisputed fact that earlier the petitioner had offered to appoint Mr. Kameshwar Chaudhary, Retired Controller of Stores, Indian Railways to be appointed as a sole Arbitrator and this was also

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turned down by the respondent vide its letter dated 10.07.2023.

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In light of the aforesaid admitted facts, it will be appropriate to consider the objections raised by the respondent. (i) The first objection regarding maintainability of the instant petition as the earlier petition preferred under Section 11(6) of the Act of 1996 was dismissed is misconceived for the reasons that earlier petition filed by the petitioner was not adjudicated on merits rather it was dismissed as withdrawn with liberty which was granted by the Court for approaching the Court in case if any cause arose in future. This is clear from the order of this Court dated 20.11.2023 which is on record as Annexure No.30 and the petitioner having availed the liberty will not impact the instant petition. Hence, the objection is rejected.

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(ii) Secondly, so far as the contention that the respondent did not receive a copy of the application which has been brought on record as Annexure No.23 is concerned, the same is also misconceived for the reason that the respondent vide its letter dated 17.06.2023 had responded to the said letter of the petitioner and instead of complying with the said notice sent a list of retired railways' officers to act as Arbitrators (a copy of which has been brought on record as Annexure No.24. Since, the respondent had replied to the said letter and now to state that they had not received the letter does not reflect well, hence, the said submission is also turned down.

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(iii) and (iv) Thirdly, the objections raised by the respondent in reference to his objections taken in Para-15 and 18 of its reply in case the same are noticed, Para-15 refers to the filing of earlier petition by the petitioner, which has already been dealt with hereinabove. So far as the Para-18 is

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concerned, it is urged that the Arbitral Tribunal must consist of a panel of three Arbitrators as per Clause 2905 [Clause (a)(ii) of the IRS Conditions] and there can be appointment of a sole Arbitrator. This objection in Para18, filed by the respondent, is practically what has been argued against the petitioner so far as the (iv) objection regarding constitution of the arbitral Tribunal is concerned. Hence, the third and fourth objections are being considered together.

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In this regard, the record indicates that the tender document contains an arbitration clause in Clause 18. Relying upon the aforesaid clause, it has been pointed out that any dispute between the contractor and the respondent is to be referred to a sole Arbitrator. It has also been pointed out that Clause 2905 which is part of the Indian Railways Standard Condition of Contract, wherein it provides a procedure that in case if the applicability of Section 12(5) of the Act of 1996 is not waived and the total value of claims do not exceed Rs.50,00,000/- then the Arbitral Tribunal shall consist of retired Railways Officer. However, where the value of total claim exceed Rs.50,00,000/- then the arbitral Tribunal shall consists of three retired Railways Officers. It is this clause which is pressed by the respondent and it is urged that for the said reason the demand made by the petitioner for appointment of a sole Arbitrator cannot be sustained.

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Having taken note of the aforesaid submissions, this Court finds that there is inconsistency between the arbitration clause as contained in the Indian Railways Standard Condition of Contract (Clause 2905) and Clause 18 of the General Instruction which speaks of appointment of a sole Arbitrator. In order to reconcile the clause for the purposes of ascertaining

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the strength of the respective submissions made by the learned counsel for the parties, this Court finds that the tender document which has been brought on record indicates the documents which are attached with the tender which includes MCF instructions to tenderers Rev 20. This would indicate that the instructions to tenderers being part of the tender document is applicable to the parties.

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Clause 1.6 of these general instructions clearly states that in case of any contradiction in the terms and conditions appearing in IRS Conditions of contract and general condition specified in the tender document. It is the general conditions specified in the tender documents which would prevail. In case any contradiction between the general condition and special conditions as specified in the tender document is concerned then the special conditions in the tender document will prevail.

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For ease of reference, Clause 1.6 is being reproduced as under:-

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"1.6 In case of any contradiction in the terms and condition appearing in IRS Conditions of Contract and General Conditions specified in the tender documents, the latter will prevail. In case of any contradiction between the General Conditions and Special Conditions specified in the tender documents, the latter will prevail."

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Taking note of the aforesaid clause and examining the tender documents, it would reveal that Clause 18 of the tender conditions contained an arbitration clause which reads as under:-

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" 18.0 Arbitration Clause:

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18.1.1(a)(i) In the event of any dispute or difference of opinion between the Modem Coach Factor administration and Contractor(s) as to respective right and obligation of the parties hereunder or of onus to the true intent and meaning of these present and of any articles of conditions thereof such dispute of difference of opinion (except the matter regarding which the decision has been specifically provided for in the terms of the contact) shall be referred to the sole arbitration. Arbitrator shall be a person possessing qualification laic down in Para 18.1.1(a)(ii) of this Bid Document shall be appointed by the General Manager in the case of

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contracts entered into by Modem Coach Factory, Raebareli.

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18.1.1(a)(ii) Qualification for appointment as Sole Arbitrator:

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a) Retired Railway Officer not below SAG level 3 years after his date of retirement.

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b) Age of Arbitrator at the time of appointment shall not exceed 70 years.

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18.1.1(a)(iii) An Arbitrator may be appointed notwithstanding the total no. of arbitration cases in which he has been appointed in the past. Retired Railway officer being appointed as arbitrator, however, will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference.

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18.1.1(a)(iv) The award of the Arbitrator shall be final and binding on the parties to this contract.

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18.1.1(b) In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the court for any reason, it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator on the manner aforesaid.

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18.1.1(c) It is further a term of this contract that no person other than the person appointed by the authority as aforesaid should act as Arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all.

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18.1.1(d)(i) The cost of arbitration shall be borne by the concerned parties in terms of section 31(A) of Arbitration and Conciliation Act, 1996, as amended by Arbitration and Conciliation (Amendment) Act, 2015. The cost shall inter-alia include fee of the Arbitrator, as per the rates fixed by Railway Board from time to time, Further, the fee payable to the Arbitrator would be governed by instruction issued on the subject by Railway Board from time to time irrespective of the fact whether the Arbitrator is appointed by the Railway administration under this clause or by any court of law unless specifically directed by Hon able court otherwise on the matter.

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18.1.1(d)(ii) Arbitrator shall be entitled to 50 percent extra fee, if award is made within 6 months in terms of provision contained in section 29(A)(2) of the Arbitration and Conciliation Act, 1996 as amended by Arbitration and Conciliation (Amendment) Act, 2015.

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Besides above, Arbitrator shall also be entitled for this extra fee, in cases, where Fast Track Procedure in terms of section 29(B) of the Arbitration and Conciliation (Amendment) Act, 2015 is followed.

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18.1.1(e) Subject to as aforesaid, the Arbitration and Conciliation (Amendment) Act, 2015 and the rules there under and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.

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18.1.1(f) The venue of arbitration shall be the place from which the acceptance note is issued or such other place as the arbitrator at his discretion may determine in terms of section 20 of the Arbitration and Conciliation Act, 1996, as amended by Arbitration and Conciliation (Amendment) Act, 2015.

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18.1.1(g) In this clause the authority, to appoint the arbitrator includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise.

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18.1.1(h) It is further a term of this contract that where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made in terms of Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, as amended by Arbitration and Conciliation (Amendment) Act, 2015."

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Now, it will be worthwhile to notice Clause 2905(a) which as per the

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respondent is applicable and the same read as under:-

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"2905 (a) Appointment of Arbitrator where applicability of section 12(5) of Arbitration and Conciliation Act has been waived off:

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i. In cases where the total value of all claims in question added together does not exceed Rs.1,00,00,000/- (Rupees One Crore only), the Arbitral Tribunal shall consist of a Sole Arbitrator who shall be a Gazetted Officer of Railway not below Junior Administrative Grade, nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by General Manager.

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ii. In cases where the total value of all claims in question added together exceeds Rs.1,00,00,000/- (Rupees One Crore only), the Arbitral Tribunal shall consist of a panel of three Gazetted Railway Officers not below Junior Administrative Grade or 2 Railway Gazetted Officers not below Junior Administrative Grade and a retired Railway Officer, retired not below the rank of Senior Administrative Grade Officer, as the arbitrators. For this purpose, the Railway will send a panel of at least four (4) names of Gazetted Railway Officers of one or more departments of the Railway which may also include the name(s) of retired Railway Officer(s) empanelled to work as Railway Arbitrator to the Contractor within 60 days from the day when a written and valid demand for arbitration is received by the General Manager.

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Contractor will be asked to suggest to General Manager at least 2 names out of the panel for appointment as Contractor's nominee within 30 days from the date of dispatch of the request by Railway. The General Manager shall appoint at least one out of them as the Contractor's nominee and will, also simultaneously appoint the balance number of arbitrators either from the panel or from outside the panel, duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed. General Manager shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of Contractor's nominees. While nominating the arbitrators, it will be necessary to ensure that one of them is from the Accounts Department. An officer of Selection Grade of the Accounts Department may be considered of equal status to the officers in Senior Administrative Grade of other departments of the Railway for the purpose of appointment of arbitrator."

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In the aforesaid light, it is clear that the Indian Railways Standard Conditions if are in conflict with the general conditions contained in the tender document then it is the tender document which is prevalent and for the said reason Clause 18 of the General Conditions as mentioned above

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would be applicable and would have an overriding effect to Clause 2905(a). Once, this position is obtained, it will be clear that the demand made by the petitioner for getting a sole Arbitrator appointed cannot be faulted.

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Prima-facie, this Court finds that insofar as the disputes are concerned, there is no denial that there is no live dispute between the parties. It is also not denied that the petitioner has approached the correct jurisdictional High Court for appointment of an Arbitrator. The nature of dispute which has been raised by the respondent is in respect of invocation of the arbitration clause and regarding the number of Arbitrators to be appointed as the respondent relied upon 2905(a). In this regard, as already noticed above, prima-facie , the Court finds that it is Clause 18 in the tender condition which is applicable over and above the Clause 2905 of Indian Railways Standard Condition of Contract, hence, the submission of the learned counsel for the respondent cannot be accepted.

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Another limb of the argument made by the learned counsel for the respondent regarding appointment of retired Railways Officers is concerned, the same is also not acceptable in light of the Constitution Bench decision of the Apex Court in Central Organisation for Railway Electrification v. ECI SPIC Smo MCML (JV) A Joint Venture Company, (2025) 4 SCC 641 (known as Core-II Case) .

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In light of the above, this Court finds that there are live disputes between the parties which can be resolved through arbitration and the petitioner had also invoked the arbitration clause appropriately, hence, for the reasons aforesaid, this Court finds that it is a fit case for appointment of an Arbitrator, leaving all contentious issues to be raised before the

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Arbitrator.

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The Court proposes the name of Hon'ble Mr. Justice Shashi Kant Gupta (Retd.), Judge of this Court, resident of 9, Elgin Road, Near Heart Line Hospital, Civil Lines, Prayagraj, Mobile No.9415216833 to act as an Arbitrator.

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Learned counsel for the petitioner shall provide a complete set of the pleadings to the office of the Court, who shall forward it to the proposed arbitrator to seek his consent under Section 12(5) of the Arbitration and Conciliation Act, 1996.

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24. List on 12.08.2025 for further orders.

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Order Date :- 10.07.2025 Rakesh/-

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Digitally signed by :- RAKESH PRAJAPAT High Court of Judicature at Allahabad, Lucknow Bench

Amit Engineers v. Modern Coach Factory

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Amit Engineers v. Modern Coach Factory

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