Dismissed

M/S.Coastal Engineering v. Southern Railway

Kerala HC24 Jul 2017AR/30/2017

Case brief

AI extract

What is this about?

The Court disposed of a request seeking appointment of an arbitrator under the post-2015 Amendment Act. The Court held that proceedings commenced before the Amendment, but granted liberty to the parties to mutually agree on appointing an independent arbitrator if they submit suitable representations.

What did the court decide?

Request dismissed; liberty granted to represent parties for appointing independent arbitrator if mutually agreed within two weeks.

M/S.Coastal Engineering Vs Southern Railway — Arbitration | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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MONDAY, THE 24TH DAY OF JULY 2017/2ND SRAVANA, 1939

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AR.No. 30 of 2017 ()

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APPLICANT:

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M/S COASTAL ENGINEERING, KONTHURUTHY KOCHI-682 013, REPRESENTED BY ITS MANAGING PARTNER, K.J JOHN, AGED 52 YEARS, S/O. K.J.JOSEPH, KOYITHARA HOUSE, KONTHURUTHY, KOCHI-682 013, ERNAKULAM DISTRICT.

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BY ADV. SRI.S.SHANAVAS KHAN

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OPPOSITE PARTIES:

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1. SOUTHERN RAILWAY, HEAD QUARTERS OFFICE, PART TOWN, CHENNAI-600 013, REPRESENTED BY THE GENERAL MANAGER.

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2. THE CHIEF ADMINISTRATIVE OFFICER, (CONSTRUCTION) SOUTHERN RAILWAY, EGMORE, CHENNAI-600 008.

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3. THE CHIEF ENGINEER (NORTH), CONSTRUCTION, SOUTHERN RAILWAY EGMORE, CHENNAI-600 008.

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4. THE DEPUTY CHIEF ENGINEER (CONSTRUCTION), SOUTHERN RAILWAY, KANNUR.

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5. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF RAILWAY RAIL BHAVAN, NEW DELHI-110 006.

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R1-R5 BY ADV. SRI.C.S.DIAS,SC, RAILWAYS

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THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 24-07-2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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AR.No. 30 of 2017 ()

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APPENDIX

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PETITIONER(S)' ANNEXURES

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A1 TRUE COPY OF THE AWARD DATED 23.6.2009 OF THE ABRITRAL TRIBUNAL

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A2 TRUE COPY OF THE ORDER DATED 15.7.2016 IN OP (ARB) NO.261/2009 OF THE HON'BLE DISTRICT COURT, THALASSERY

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A3 TRUE COPY OF THE LAWYER NOTICE ISSUED TO THE FIRST APPOSITE PARTY

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A4 TRUE COPY OF THE REPLY LETTER DATED 5.12.2016 OF THE FIRST OPPOSITE PARTY

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RESPONDENT(S)' ANNEXURES

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R4(1) TRUE COPY OF LETTER DATED 10.5.2017 ISSUED BY THE 1ST OPPOSITE PARTY TO THE APPLICANT AND THE OPPOSITE PARTIES 3 AND 4

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R4(2) TRUE COPY OF LETTER DATED 5.6.2017 ISSUED BY THE ARBITRAL TRIBUNAL

TRUE COPY

P.S. TO JUDGE

SHAJI P. CHALY, J.

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A.R.No.30 of 2017

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----------------------------------------------Dated this the 24^th day of July, 2017

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O R D E R

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This arbitration request is filed by the applicant seeking to appoint an Arbitral Tribunal to adjudicate upon the applicant's claim in Annexures A1 to A4. The subject matter of this case has a different factual background than the usual requests made to appoint the arbitrator under Sec.11 of the Arbitration and Conciliation Act, 1996. Material facts for the disposal of the arbitration request are as follows:

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The applicant undertook the work of opposite parties in respect of doubling of track between Shornur and Mangalore-Kannur-Uppala Section - Assembling and linking of permanent way for BG Track, points and crossings including dumping of stone ballast etc. and other connected works of Kannur Yard. According to the applicant, due to the nonproviding of facilities and non-handling of site after demolition of Goods Sheds etc., delay occasioned in completing the work, which resulted in rescinding of the same. In fact, at the time of rescission of contract, almost all the works were completed

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by the applicant, and hence due to the loss sustained, the applicant resorted to arbitral proceedings. However, the Arbitral Tribunal rejected most of the claims and awarded only an amount of Rs.52,245-30/- against the claim of Rs.1,38,41,765/-.

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Being aggrieved by the said award, applicant filed O.P. (Arb.) 261/2009 before the District Court, Thalassery. The District Court vide its order dated 15.07.2016, evident from Annexure-A2, allowed the original petition and directed the Arbitral Tribunal to decide the issue afresh.

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The legal contention advanced by the applicant in this request is that by virtue of the provisions of Arbitration and Conciliation (Amendment) Act, 2015, the Arbitral Tribunal originally appointed by the 1st respondent is not competent to decide the issue, as they were officers of the Railway administration. In that constrained circumstances, the applicant caused to issue a notice requesting to appoint an Arbitral Tribunal, evident from Annexure-A3. To the same, the respondent Railway has sent Annexure-A4 reply during December, 2016, refuting the claims raised by the applicant and declining to appoint any arbitrator otherwise than the

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A.R.No.30 of 2017

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terms and conditions entered into by and between the parties. These are the background facts projected by the applicant to secure the relief of appointing an arbitrator in accordance with the Arbitration (Amendment) Act, 2015, by filing this request.

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The opposite parties have filed a counter affidavit disputing the claims and demands raised by the applicant. According to the opposite parties, the 1st opposite party has constituted the Arbitral Tribunal to adjudicate the disputes between the parties in accordance with Annexure-A3 letter and as directed by the District Court in Annexure-A2 order. The 1st opposite party by letter dated 10.05.2017 has directed the Presiding Arbitrator Sri. H. Elavarasan and two other members to adjudicate the disputes between the parties based on the terms of reference, evident from Annexure-R4(1). Thereupon, the Arbitral Tribunal entered upon reference on 22.05.2017 to adjudicate the disputes in connection with the subject agreement which are framed as “Terms of Reference” in General Manager, Southern Railway's letter dated 10.05.2017, evident from Annexure-R4(2).

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That apart, the contentions with respect to the earlier round of litigations are also recited to in the counter

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A.R.No.30 of 2017 4

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affidavit. Among other things, it is also stated that, even consequent to the amendment since the proceedings are already commenced, and attained a finality by passing the award, which in fact, was set aside by the District Court in the challenge made. Therefore, the applicant is not entitled to get the benefit of the provisions of the Amendment Act by appointing an independent and third person as arbitrator to decide the issue of disputes arisen by and between the parties and in the fact circumstances consequent to the setting aside of the same as per Annexure-A2 by the District Court in the challenge made.

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Heard learned counsel for the applicant and the learned Standing Counsel appearing for the opposite parties. Perused the documents on record and the pleadings put forth by the respective parties.

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The sole question remains to be considered in this request is whether the applicant is entitled to get the benefit of the provisions of Arbitration and Conciliation (Amendment) Act, 2015. According to the learned counsel for the applicant, consequent to the interference of the District Court in the award passed, as per Annexure-A2 order, the entire

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proceedings have given a go by and therefore, since the same is passed after the passage of the Amendment Act, applicant is also entitled to get the benefit of the same and consequentially the appointment of an arbitrator by this Court de hors the provisions contained in the agreement entered into by and between the parties is warranted.

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On the other hand, learned Standing Counsel appearing for the opposite parties has invited my attention to Sec.26 of the Amendment Act, 2015, and canvassed for the proposition that nothing contained in the provisions of the Amendment Act will come into play, if the arbitral proceedings have already commenced. In order to have an appreciation of the provisions and the parameters provided under Sec.26, the same is quoted hereunder:

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“ 26. Act not to apply to pending arbitral proceedings .--Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”

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Learned Standing Counsel has also pin-pointedly

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argued that Sec.21 of Act, 1996 will come into play, by virtue of Sec.26 of the Amendment Act, 2015. Section 21 of the Act

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A.R.No.30 of 2017

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deals with commencement of the proceedings, which read thus:

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“ 21. Commencement of arbitral proceedings. -- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”

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Therefore, it is categoric and clear, whenever a notice is issued requesting for reference of the disputed issue to an arbitrator, the proceedings will commence. The applicant is not having a case that a fresh notice was issued on the basis of any fresh cause of action. Therefore, commencement of the proceedings started when the applicant initially issued a notice in which an award is passed by the Arbitral Tribunal in accordance with the agreement entered into by and between the parties. In my considered opinion, by virtue of Sec.26 of the Amendment Act, 2015 read with Sec.21 of Act, 1996, the applicant is not entitled to get the benefit of the Amendment Act, 2015. Moreover, consequent to the issuance of AnnexureA3 notice, an Arbitral Tribunal has already entered on reference and the arbitration is being proceeded with. However, in view of the introduction of the amendment and

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the consequential changes made to Act, 1996, specifically

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A.R.No.30 of 2017

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under Sec.11(14), I think it is only appropriate, the applicant is given an opportunity to make a suitable representation to the opposite parties seeking to appoint an independent arbitrator to decide the issues. Why I say so is, because even as per Sec.26 of the Amendment Act, 2015, if the parties agree otherwise, an arbitrator can be appointed in accordance with the provisions of the Amendment Act, 2015.

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Therefore, even though the applicant is not entitled to succeed as is sought for in this request, applicant is given the liberty to approach the opposite parties with suitable representation, and if any such representation is submitted within two weeks from the date of receipt of a copy of this order, the same shall be finalized within two weeks thereafter.

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The arbitration request is disposed of accordingly, declining the request, however, subject to the above observation.

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Sd/- SHAJI P. CHALY

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JUDGE

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St/24.07.2017

M/S.Coastal Engineering v. Southern Railway

Case brief

What is this about?

What did the court decide?

M/S.Coastal Engineering v. Southern Railway

Case brief

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