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TMI Blog2017 (7) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... der any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator: Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing." The Seventh Schedule to the Act specifies certain relationships. If a person who is intended to be appointed as an arbitrator falls in that relationship with a party he is ineligible to be appointed. The exact scope and implication of this provision has been recently explained in detail by the Supreme Court in the case of Voestalpine Schienen Gmbh. v. Delhi Metro Rail Corporation Ltd. decided by it on 10th February, 2017. Delivering the judgment of the Court Mr. Justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to act as an arbitrator. Likewise, that person is treated as incompetent to perform the role of arbitrator, who is a manager, director or part of the management or has a single controlling influence in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. Likewise, persons who regularly advised the appointing party or affiliate of the appointing party are incapacitated. A comprehensive list is enumerated in Schedule 5 and Schedule 7 and admittedly the persons empanelled by the Respondent are not covered by any of the items in the said list. 25. It cannot be said that simply because the person is retired officer who retired from the government of other statutory corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Seventh Schedule. In my opinion, if after appointment of an eligible person it is found that the arbitrator is biased in favour of his previous employer or is not impartial or that a doubt occurs in the minds of reasonable persons that the arbitrator is not independent or is biased or is partial, or circumstances as mentioned in the fifth schedule exist then the procedure under Section 12 & 13 is open to a party to challenge him, asking him to withdraw from office or for ask for his removal by the Court under Section 14 of the said Act. 4. Now, very briefly I come to the facts of this case. 5. On 3rd June, 2011 the parties executed a formal agreement under which the petitioner was to supply, install and commission internet protocol bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to send a panel more than three names of gazetted railway officers of one or more departments including the names of retired railway officers empanelled to work as railway arbitrators to the contractor within sixty days from the day a written and valid demand for the arbitration is received by the General Manager. The contractor would be asked to suggest at least two names out of the panel for appointment as contractor's nominee arbitrator, out of which the General Manager would have to appoint one. The General Manager would simultaneously appoint the balance number of arbitrators either from the panel or from outside the panel. 7. I need not recount the details of the proceedings taken before this Court by the petitioner for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother list was furnished to the petitioner where the number of empanelled candidates was increased to about 31. In those circumstances the Supreme Court felt that when the petitioner was given a wider choice to choose their nominee from those 31 odd persons, the standards of independence and impartiality expected of arbitrators was not sacrificed. 12. The arbitration clause in the general conditions of contract is not in compatible with the above decision of the Supreme Court in as much as under those conditions, a contractor is required to be given a list of more than three names out of which he is required to choose two and the railways are to select one out of those two as the contractor's nominee. Thereafter the railways are requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m page 68 of the petition) by directing the respondent railways to forward a panel of at least 30 names, of persons of different backgrounds and professional avocations and attainments to the petitioner. It may include serving or retired officers of other organisations. From this panel the petitioner will be required to choose two. Thereafter, the railways can select one to be the contractor's nominee arbitrator. 17. I recommend that the arbitration clause in the general condition of contract of the railways be amended in accordance with the above Supreme Court decision read with the observations made by this Court following that decision. A copy of this order be sent by the Registrar Original Side to the Railway Board for doing the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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