2014 (8) TMI 1236 - SC - Indian Laws

Filling of vacancy in the panel of arbitrators - Former Chief Justice of the Sikkim High Court had been appointed as the arbitrator to resolve the disputes and differences between the parties - HELD THAT - In the present case Clauses 64(3)(a)(ii) and (iii) of the General Conditions of Contract do not prescribe any specific qualification of the arbitrators that are to be appointed under the agreement except that they should be railway officers. Even if the arbitration agreement was to specifically provide for any particular qualification(s) of an arbitrator the same would not denude the power of the Court acting Under Section 11(6) in an appropriate case to depart therefrom. A period of nearly two decades has elapsed since the contractor had raised his claims for alleged wrongful termination of the two contracts. The situation is distressing and to say the least disturbing. The power of the Court under the Act has to be exercised to effectuate the remedy provided thereunder and to facilitate the mechanism contemplated therein. In a situation where the procedure and process under the Act has been rendered futile the power of the Court to depart from the agreed terms of appointment of arbitrators must be acknowledged. Thus no infirmity much less any illegality or failure of justice can be said to be occasioned by the order passed by the High Court so as to warrant any interference - appeal dismissed.

Summary

Issues:
Challenge to the appointment of arbitrator by the High Court based on delays in arbitration proceedings and failure to pass awards for disputes arising from two contracts.

Analysis:
The appeal challenges the order of the Patna High Court appointing a former Chief Justice as the arbitrator to resolve disputes from two terminated contracts. The General Conditions of Contract governed the parties, including an arbitration clause. The Respondent-contractor's writ petition challenging terminations was dismissed, leading to unresolved disputes. Despite a panel of arbitrators being appointed in 1996, no awards have been passed. The Appellant claims completion of arbitration for one contract but lacks evidence. The East Central Railway's lack of response hinders arbitration for the second contract. The blame for delays in arbitration is disputed, with no clear responsibility identified. The High Court appointed a retired Chief Justice as arbitrator due to prolonged delays beyond contractual clauses.

The legal discourse delves into the interpretation of Clauses 64(3)(a)(ii) and (iii) of the General Conditions of Contract. These clauses mandate Gazetted Railway Officers as arbitrators and outline procedures for panel constitution and filling vacancies. Previous court decisions have addressed deviations from contract terms in exceptional circumstances. The appointment of a retired Judge as arbitrator was upheld in cases of prolonged arbitration delays, emphasizing the need for professionalism in arbitration.

Recent judgments have solidified the forfeiture of a party's right to appoint an arbitrator once court proceedings under Section 11(6) of the Arbitration and Conciliation Act have commenced. The absence of specific arbitrator qualifications in the contract does not restrict the Court's power to deviate from agreed terms in cases of prolonged arbitration delays. The Court's duty is to ensure the efficacy of the arbitration process and provide remedies when procedures become futile. In this case, the High Court's appointment of a retired Chief Justice as arbitrator was deemed appropriate given the extensive delays and lack of progress in arbitration proceedings. The appeal by the Appellant-railways was dismissed without imposing costs due to the exceptional circumstances and the need to facilitate the arbitration process effectively.