G H CENTRAL ORGANISATION FOR RAILWAY ELECTRIFICATION versus M/S ECI-SPIC-SMO-MCML (JV)JOINT VENTURE COMPANY

Citation: [2019] 16 S.C.R. 1234 · Decided: 17-12-2019 · Supreme Court of India · Bench: R. BANUMATHI, A.S. BOPANNA, HRISHIKESH ROY · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 16 S.C.R.
CENTRAL ORGANISATION FOR
RAILWAY ELECTRIFICATION
v.
M/S ECI-SPIC-SMO-MCML (JV)
A JOINT VENTURE COMPANY
(Civil Appeal Nos. 9486-9487 of 2019)
DECEMBER 17, 2019
[R. BANUMATHI, A. S. BOPANNA AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996:
s.11(6) – Application under – Seeking appointment of sole
arbitrator – High Court appointed a sole Arbitrator – Appeal to
Supreme Court – Held: High Court was not justified in appointing
an independent sole arbitrator ignoring Clauses 64(3)(a)(ii) and
64(3)(b) of General Conditions of Contract whereby it was
specifically provided that Arbitral Tribunal would consist of three
arbitrators from out of the panel of serving or retired Railway
Officers – The appointment of the Arbitrators should have been
in terms of the agreement between the parties.
Allowing the appeals, the Court
HELD: 1.1 Clause 64 of the General Conditions of
Contract (GCC) deals with the procedure for resolution of the
disputes and provides for “Demand for arbitration” and
appointment of the arbitrators. After coming into force of
Arbitration and Conciliation (Amendment) Act, 2015, the
Government of India, Ministry of Railways made a modification
to Clause 64 of the General Conditions of Contract and the
Railway Board issued a notification dated 16.11.2016 in this
regard. The modified Clause 64(3)(a)(i) (where applicability of
Section 12(5) of the Arbitration and Conciliation Act, 1996 has
been waived off inter alia provided that in case where the total
value of all claims in question added together does not exceed
rupees one crore, the arbitral tribunal shall consist of a sole
arbitrator who shall be a Gazetted Officer of Railways not below
JA Grade nominated by the General Manager. In terms of Clause
   [2019] 16 S.C.R. 1234
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64(3)(a)(i), the sole arbitrator shall be appointed within sixty days
from the day when a written and valid demand for arbitration is
received by the General Manager. In the present case, since
the value of the work contract is worth more than Rs.165 crores,
Clause 64(3)(a)(i) is not applicable. Clause 64(3)(a)(ii) of GCC
deals with cases not covered by Clause 64(3)(a)(i) where
applicability of Section 12(5) of the Act has been waived off.
[Paras 15-17] [1245-A-G-H; 1246-A-B]
1.2 Clause 64(3)(b) of GCC deals with appointment of
arbitrator where applicability of Section 12(5) of the Act has not
been waived off. The modified Clause 64(3)(b) inter alia provided
that the arbitral tribunal shall consist of a panel of three retired
railway officers not below the rank of SAO officer as arbitrator.
For this purpose, the Railway will send a panel of at least four
names of retired railway officer(s) empanelled. The contractor
will be asked to suggest to the General Manager at least two
names out of the panel for appointment as the contractor’s
nominee and the General Manager shall appoint at least one out
of them as the contractor’s nominee. The General Manager will
also simultaneously appoint the balance number of arbitrators
from the panel or from outside the panel. [Para 18] [1246-F-H]
1.3 After coming into force of the Arbitration and
Conciliation (Amendment) Act, 2015, when Clause 64 of the
General Conditions of Contract was modified inter alia providing
for constitution of Arbitral Tribunal consisting of three arbitrators
either serving or retired railway officers, the High Court is not
justified in appointing an independent sole arbitrator without
resorting to the procedure for appointment of the arbitrator as
prescribed under Clause 64(3)(b) of the General Conditions of
Contract. [Para 19] [1247-E-F]
1.4 Even in the application filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996, the respondent prayed
for appointment of a sole arbitrator in terms of Clause 1.2.54(b)(i)
of the Tender Agreement/Clause 64 of the General Conditions
of Contract for adjudicating the disputes which have arisen
between the parties. The respondent itself sought for
appointment of arbitrator in terms of Clause 64 of the General
Conditions of Contract. As the value of the work contract was
CENTRAL ORG FOR RAILWAY ELECTRIFICATION v. M/S
ECI-SPIC-SMO-MCML (JV)
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SUPREME COURT REPORTS
[2019] 16 S.C.R.
worth more than Rs.165 crores, the dispute can be resolved only
by a panel of three arbitrators in terms of Clause 64(3)(b) of the
General Conditions of Contract. The respondent was not right

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