TMI Blog2017 (3) TMI 1944X X X X Extracts X X X X X X X X Extracts X X X X ..... n the parties, it is clearly stipulated that the contract shall be governed by the General Conditions and Special Conditions of Contract. Thus, it is clear that there is no stipulation for appointment of a Railway Officer. It can be any person. The designated Judge of the High Court has only exercised his powers in terms of the agreement by nominating an independent arbitrator. There are no merit in this appeal and the same is accordingly dismissed. - HON'BLE MR. JUSTICE KURIAN JOSEPH, HON'BLE MRS. JUSTICE R. BANUMATHI For Petitioner(s) Mr. B. Krishna Prasad, Adv. And Mr. Shreekant N. Terdal, Adv. For Respondent(s) Mr. D. K. Thakur, Adv., Mr. Devendra Jha, Adv., Mr. Debasis Misra, Adv., Ms. Anne Mathew, Adv. And Mr. Suman Jyoti Khaitan, Adv. JUDGMENT KURIAN, J.: 1. Leave granted. 2. The short question arising for consideration in this case is whether the Chief Justice of a High Court or any person or institution designated by him, while exercising power under Section 11(6) of The Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ) is bound to nominate an arbitrator as specified in the agreement for arbitration. The designated Judge in the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... designated Judge was free to deviate from the terms of the contract. Paragraphs-6 and 7 read as follows: 6. The classical notion that the High Court while exercising its power under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter for short the Act ) must appoint the arbitrator as per the contract between the parties saw a significant erosion in ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn. Ltd. wherein this Court had taken the view that though the contract between the parties must be adhered to, deviations therefrom in exceptional circumstances would be permissible. A more significant development had come in a decision that followed soon thereafter in Union of India v. Bharat Battery Mfg. Co. (P) Ltd. wherein following a three-Judge Bench decision in Punj Lloyd Ltd. v. Petronet MHB Ltd. it was held that once an aggrieved party files an application under Section 11(6) of the Act to the High Court, the opposite party would lose its right of appointment of the arbitrator(s) as per the terms of the contract. The implication that the Court would be free to deviate from the terms of the contract is obvious. 7. The apparent dichotomy in ACE Pipeline and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, referring the disputes to the named arbitrator shall be the rule. The Chief Justice or his designate will have to merely reiterate the arbitration agreement by referring the parties to the named arbitrator or named Arbitral Tribunal. Ignoring the named arbitrator/Arbitral Tribunal and nominating an independent arbitrator shall be the exception to the rule, to be resorted for valid reasons. xxxx xxxx xxxx xxxx xxxx 48. In the light of the above discussion, the scope of Section 11 of the Act containing the scheme of appointment of arbitrators may be summarised thus: (i) Where the agreement provides for arbitration with three arbitrators (each party to appoint one arbitrator and the two appointed arbitrators to appoint a third arbitrator), in the event of a party failing to appoint an arbitrator within 30 days from the receipt of a request from the other party (or the two nominated arbitrators failing to agree on the third arbitrator within 30 days from the date of the appointment), the Chief Justice or his designate will exercise power under sub-section (4) of Section 11 of the Act. (ii) Where the agreement provides for arbitration by a sole arbitrator and the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration clause. (vii) If circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else. 8. Thus, the issue is no more res integra. Though an arbitrator is specified in the agreement for arbitration, if circumstances so warrant, the Chief Justice or the designated Judge is free to appoint an independent arbitrator, having due regard to the qualification, if any, and other aspects as required under Section 11(8) of the Act. 9. On the facts of the present case, one wonders whether the issue actually arose or not. Clause 2900 of the Standard Conditions of Contract no doubt provides that the sole arbitrator shall be a Gazetted Railway Officer but in Clause 19.0 of the agreement dated 16.01.2012 executed between the parties, it is clearly stipulated that the contract shall be governed by the General Conditions and Special Conditions of Contract. Clause 19.0 specifically provides that ... t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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