Disposed

M/S.Coastal Engineering, v. the Union of India

Kerala HC8 Aug 2022AR/22/2021

Case brief

AI extract

What is this about?

The High Court of Kerala disposed of an arbitration request regarding the appointment of an arbitrator for a railway track doubling project. The Court held that serving officers cannot be arbitrators under Section 12(5) and ruled that a modified contract clause introduced after the original agreement does not apply. The Court provisionally nominated a retired justice.

What did the court decide?

Provisional nomination of Retired Justice R. Bhaskaran as the Sole Arbitrator; directions regarding disclosure statements and fee payment.

M/S.Coastal Engineering, Vs the Union of India — Arbitration | Kerala HC (2022)

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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 SATHISH NINAN MONDAY, THE 8^TH DAY OF AUGUST 2022 / 17TH SRAVANA, 1944 AR NO. 22 OF 2021

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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. BY ADVS. K.L.VARGHESE (SR.) SMT.SANTHA VARGHESE SRI.RAHUL VARGHESE SRI.RANJITH VARGHESE

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RESPONDENTS:

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1 THE UNION OF INDIA, REPRESENTED BY THE GENERAL MANAGER, HEADQUARTERS OFFICE SOUTHERN RAILWAY, CHENNAI-600 003. 2 THE CHIEF ENGINEER (SOUTH), CONSTRUCTION, SOUTHERN RAILWAY, KOCHI-682 016. 3 DEPUTY CHIEF ENGINEER, CONSTRUCTION, SOUTHERN RAILWAY, KOCHI-682 016. BY ADVS. SRI.A.DINESH RAO, SC, RAILWAYS SRI.S. BIJU

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THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 08.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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SATHISH NINAN, J.

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= = = = = = = = = = = = = = = = = = Arbitration Request No.22 of 2021 = = = = = = = = = = = = = = = = = = Dated this the 8^th day of August, 2022

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O R D E R

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The applicant was awarded the work of, doubling of Kuruppanthara-Chingavanam Railway track. Annexure-A1 is the contract dated 30.01.2016 entered into between the

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parties in the said regard. Annexure-A16 is the General Conditions of Contract. It is not in dispute that the general conditions formed part of the contract between the parties. There has arisen disputes between the parties. Clause 64(3)(a)(i) of the General Conditions of Contract provides for appointment of serving officers of the department as Arbitrators. In view of Section 12(5) of the Arbitration and Conciliation Act and the law laid down by the Apex Court in a series of judgments, the serving officers cannot be appointed as Arbitrators and an impartial Arbitrator is to be appointed, contends the applicant. Since the parties were not able to arrive at

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a consensus with regard to the appointment of an

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AR No.22 of 2021

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-: 2 :-

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Arbitrator, the applicant has approached this Court by way of this Arbitration Request.

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The respondents have filed a counter affidavit. They essentially rely on Annexure-R2(d) modified General Conditions of Contract which stipulate for appointment of retired officers of the Railway as Arbitrators. It is contended that the appointment could be made only in terms thereof.

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Heard Sri.K.L. Varghese, learned Senior Counsel appearing on behalf of the applicant and Sri.S.Biju, learned CGC, appearing on behalf of the respondents.

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The existence of an Arbitration Clause in the agreement between the parties, providing for resolution of disputes by Arbitrator, is not in dispute. The only dispute is with regard to the naming/nomination of the Arbitrator. Clause 64 of Annexure-A16 General Conditions of Contract though provide for appointments of serving officers of the Railway to be Arbitrators, the same cannot be resorted to in the light of Section 12(5) of

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AR No.22 of 2021

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-: 3 :-

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the Arbitration and Conciliation Act and as laid down by

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the Apex Court in T.R.F. Limited v. ENERGO Engineering Projects Ltd. [(2017) 8 SCC 377], Bharat Broadband Network Limited v. United Telecoms Limited [(2019) 5 SCC 755] , Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. [(2020) 20 SCC 760] , Ellora Paper Mills Ltd. v. State of Madhya Pradesh [(2022) 3 SCC 1] . In the light of the above, it could not be contended that only the officers named under Clause-64 of Annexure-A16 General Conditions of Contract could be appointed as Arbitrators, is unsustainable.

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The learned counsel for the respondents would

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then contend that, the General Conditions of Contract has been modified as per Annexure-R2(d), and that in terms thereof, retired Railway Officers are to be appointed as Arbitrators. Noticeably, Annexure-R2(d) modified General Conditions of Contract is dated 11.11.2016 whereas the work in question was awarded on 11.05.2015. Annexure-A1 contract was executed on

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AR No.22 of 2021

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-: 4 :-

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30.01.2016. The modified general conditions of contract

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was not in force at the time when Annexure-A1 contract was entered into. It came into effect much later. At the

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time of award of the contract and entering into Annexure-A1 contract, Annexure-A16 was the General Conditions of Contract in force and it formed part of Annexure-A1 contract. The respondents cannot unilaterally seek to impose the terms of the modified General Conditions of Contract into a pre-existing contract, unless assented to by the other party. There is no case for the respondents that the applicant had agreed to and accepted the modified General Conditions of Contract as part of the agreement between the parties. In the light thereof, it could only be held that the parties are bound by Annexure-A1 contract read with Annexure-A16 General Conditions of Contract, and that Annexure-R2(d) modified General Conditions of Contract does not apply.

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AR No.22 of 2021

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-: 5 :-

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It is next contended by the learned Standing

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Counsel for the respondents that the issue involved requires technical expertise and hence it is only appropriate to nominate former officers of the Railway as Arbitrators. In this context Section 26 of the Arbitration and Conciliation Act is of relevance. The provision gives due authority to the Arbitrator to call for expert opinion. It shall always be open for the Arbitrator to appoint an expert for technical assistance and information.

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Resultantly, the Arbitration Request is disposed of with the following directions:-

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(a) Retired Justice R. Bhaskaran, Sreekrishna Kripa, Kaloor, Kochi-682017, is nominated provisionally

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as the Sole Arbitrator to adjudicate upon the disputes between the parties.

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(b) A copy of this order shall be communicated to the learned Sole Arbitrator by the Advocate of the applicant within a period of one week from today. A copy

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AR No.22 of 2021

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-: 6 :-

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of the order shall also be forwarded to the learned Sole

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Arbitrator by the Registry.

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statement of disclosure under Section 11(8) r/w Section 12(1) of the Arbitration and Conciliation Act, 1996.

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(d) The registry shall place the disclosure

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statement before this Court, for confirmation of the appointment of the Arbitrator.

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(e) The Arbitrator's fees shall be payable as per

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IV^th Schedule to the Arbitration and Conciliation Act, 1996.

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(f) The arbitration costs and fees shall be shared

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equally.

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Sd/- SATHISH NINAN JUDGE

kns/-

//True Copy//

P.S. to Judge

AR NO. 22 OF 2021

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APPENDIX

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PETITIONER'S ANNEXURES :-

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ANNEXURE-A1	TRUE COPY OF THE FACING SHEET OF THE AGREEMENT EXECUTED BY THE APPLICANT AND THE RESPONDENTS.
ANNEXURE-A2	TRUE COPY OF THE SCOPE OF THE SUBJECT WORK.
ANNEXURE-A3	TRUE COPY OF THE INTERIM ORDER ORDERING STATUS QUO IN WPC 3201/2019
ANNEXURE-A4	TRUE COPY OF THE JUDGMENT DATED 07.02.2019 IN WPC 3201/2019.
ANNEXURE-A5	TRUE COPY OF THE REPRESENTATION DATED 26.02.2019 SUBMITTED TTHROUGH COVER OF LETTER DATED 27.02.2019 TO THE 2ND RESPONDENT.
ANNEXURE-A6	TRUE COPY OF THE LETTER DATED 06.08.2019 ISSUED BY THE 2ND RESPONDENT TO THE 3RD RESPONDENT.
ANNEXURE-A7	TRUE COPY OF THE LEGAL NOTICE DATED 12.08.2019 ISSUED BY THE APPLICANT'S LAWYERS TO THE 3RD RESPONDENT.
ANNEXURE-A8	TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT DATED 29.08.2019 IN WPC NO.22961/2019.
ANNEXURE-A9	TRUE COPY OF THE LETTER DATED 23.09.2019 ISSUED BY THE APPLICANT TO THE 2ND RESPONDENT.
ANNEXURE-A10	TRUE COPY OF THE LETTER DATED 31.01.2020 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT.
ANNEXURE-A11	TRUE COPY OF THE LETTER DATED 22.02.2020 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT.
ANNEXURE-A12	TRUE COPY OF THE LETTER DATED 03.08.2020 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT.
ANNEXURE-A13	TRUE COPY OF THE LETTER DATED 13.08.2020 ISSUED BY THE 1ST RESPONDENT TO THE APPLICANT.

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APPENDIX- AR NO. 22 OF 2021

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-2-

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ANNEXURE-A14	TRUE THE	COPY OF APPLICANT	THE LETTER DATED 11.09.2020 ISSUED BY TO THE 1ST RESPONDENT
ANNEXURE-A15	TRUE THE	COPY OF 1ST RESPO	THE LETTER DATED 30.10.2020 ISSUED BY NDENT TO THE APPLICANT.
ANNEXURE-A16	TRUE	COPY OF	THE ARBITRATION CLAUSE.
ADDL. ANNEXURE-A17	TRUE DT.	COPY OF 24.01.201	THE DESIGN SUBMITTED BY THE APPLICANT 9.
ADDL. ANNEXURE-A18	TRUE SPEC RELA	COPY OF IFICATION TION TO P	THE NEW TENDER PROCEEDINGS WITH NEW S ISSUED BY THE SOUTHERN RAILWAY IN ETITIONER'S FORECLOSED WORK.
ADDL. ANNEXURE-A19	TRUE 2ND	COPY OF RESPONDEN	THE LETTER DT. 10.02.2020 ISSUED BY TEH T TO THE APPLICANT.
RESPONDENTS	ANNEXU	RERS :-

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ANNEXURE- R2(a)	TRUE COPY OF THE REGULATIONS FOR TENDERERS AND CONTRACTOR'S AND INSTRUCTION TO THE TENDERES.
ANNEXURE- R2(b)	TRUE COPY OF THE ORDER DATED 20.03.2019 ISSUED BY THE 1ST RESPONDENT TO THE APPLICANT.
ANNEXURE- R2(c)	A TRUE COPY OF THE LETTER DATED 13.08.2020.
ANNEXURE- R2(d)	TRUE COPY OF THE NOTIFICATION ISSUED BY THE MINISTRY OF RAILWAY (RAILWAY BOARD) DATED 11.11.2016.

M/S.Coastal Engineering, v. the Union of India

Case brief

What is this about?

What did the court decide?

M/S.Coastal Engineering, v. the Union of India

Case brief

What is this about?

What did the court decide?

What the court decided

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