TMI Blog2009 (2) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... rving officers and encourage professionalism in arbitration. Appeal dismissed. - C.A. 3632 OF 2007 - - - Dated:- 26-2-2009 - R. V. Raveendran and H.L. Dattu, JJ. ORDER The appellant challenges the order of the Delhi High Court dated 27.3.2006 appointing a Retired Judge of the High Court as sole Arbitrator to decide the disputes arising in respect of a construction contract between the Northern Railways (appellant) and the respondent. 2. The appellant contends the appointment of arbitrators should be only in accordance with Clause 64 of the general terms and conditions contract which requires two serving Gazetted Railway officers of equal status being appointed as Arbitrators, one by the contractor from a panel made availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd consequently he tendered resignation in May, 2004. As the appellant failed to provide a fresh panel to enable the respondent to make a fresh nomination, the respondent again approached the High Court by filing AA No.240/2004. A fresh panel was made available thereafter from which the respondent nominated Shri Ashok Gupta as its Arbitrator. Hardly after one sitting of the Arbitral Tribunal, Shri Ashok Gupta was also transferred and he tendered his resignation on 21.7.2005. As appellant again failed to take steps for filling the vacancy, the respondent approached the Court again by filing IA No. 6511/2005 in AA 240/2004. In pursuance of an order dated 24.8.2005 passed by the High Court, again a panel was made available and the respondent m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sole Arbitrator. The question that arises for consideration in this appeal by special leave is whether the appointment of a the retired Judge of the High Court as sole Arbitrator should be set aside and an Arbitral Tribunal should again be constituted in the manner provided in terms of clause 64. 7. Dealing with a matter arising from the old Act (Arbitration Act, 1940), this Court, in Union of India v. M.P.Gupta [2004 (10) SCC 504], held that appointment of a retired Judge as sole Arbitrator contrary to clause 64 (which requiring serving Gazetted Railway Officers being appointed) was impermissible. The position after the new Act came into force, is different, as explained by this Court in Northern Railway Administration, Ministry of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, and such Tribunal is made non-functional on account of the action or inaction or delay of such party, either by frequent transfers of such members of the Arbitral Tribunal or by failing to take steps expeditiously to replace the arbitrators in terms of the Arbitration Agreement, the Chief Justice or his designate, required to exercise power under section 11 of the Act, can step in and pass appropriate orders. We fail to understand why the General Manager of the Railways repeatedly furnished panels containing names of officers who were due for transfer in the near future. We are conscious of the fact that a serving officer is transferred on account of exigencies of service and transfer policy of the employer and that merely because an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery low. On the other hand, the cost of arbitration can be high if the Arbitral Tribunal consists of retired Judge/s. When a retired Judge is appointed as Arbitrator in place of serving officers, the government is forced to bear the high cost of Arbitration by way of private arbitrator's fee even though it had not consented for the appointment of such non-technical non-serving persons as Arbitrator/s. There is no doubt a prevalent opinion that the cost of arbitration becomes very high in many cases where retired Judge/s are Arbitrators. The large number of sittings and charging of very high fees per sitting, with several add-ons, without any ceiling, have many a time resulted in the cost of arbitration approaching or even exceeding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive High Court so that the parties will have the choice of selecting an Arbitrator whose fees are in their `range' having regard to the stakes involved. What is found to be objectionable is parties being forced to go to an arbitrator appointed by the court and then being forced to agree for a fee fixed by such Arbitrator. It is unfortunate that delays, high cost, frequent and sometimes unwarranted judicial interruptions at different stages are seriously hampering the growth of arbitration as an effective dispute resolution process. Delay and high cost are two areas where the Arbitrators by self regulation can bring about marked improvement. 11. We find that a provision for serving officers of one party being appointed as arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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