Case Note & Summary
The petitioner, ITD Cementation India Ltd., a company engaged in construction and infrastructure, was awarded a contract by the respondent, Konkan Railway Corporation Ltd., a government company, for the construction of tunnels on the Katra-Dharam section of the Udhampur-Srinagar-Baramulla New B.G. Rail Link Project in Jammu and Kashmir. The contract agreement dated 24 September 2014 contained a dispute resolution clause providing for a standing arbitral tribunal comprising three gazetted railway officers, with the panel to be drawn from officers of Northern Railway. After execution, a standing arbitral tribunal was constituted with two of its members being serving employees of Northern Railways. During execution, disputes arose regarding additional toll tax, excessive deduction of works contract tax, repeated tunnel collapses causing huge additional costs, and non-payment of dues. The petitioner corresponded repeatedly with the respondent and eventually sought reference of the disputes to arbitration. The petitioner alleged that the standing arbitral tribunal was de jure unable to perform its functions due to lack of independence and impartiality, as the arbitrators were serving railway officers and the appointment process was one-sided. Invoking the Supreme Court decision in Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd. on arbitrator eligibility, the petitioner filed the present petitions under Sections 11(6), 14(2) and 15(2) of the Arbitration and Conciliation Act, 1996, seeking a declaration that the mandate of the standing arbitral tribunal stood terminated and for appointment of a new arbitral tribunal to adjudicate present and future disputes. The court's decision is not part of the provided extract.
Issue of Consideration
Whether the mandate of the standing arbitral tribunal constituted under the contract agreement stands terminated under Section 14(2) of the Arbitration and Conciliation Act, 1996, and whether a new arbitral tribunal should be appointed under Sections 11(6) and 15(2) of the Act
Law Points
- petition under Sections 11(6)
- 14(2)
- 15(2) of the Arbitration and Conciliation Act
- 1996
- standing arbitral tribunal comprising serving railway officers may lack independence
- reference to Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd. on arbitrator eligibility
Case Details
2019 LawText (BOM) (12) 48
Commercial Arbitration Petition No. 1106 of 2018 and Commercial Arbitration Petition No. 1107 of 2018
Dr. Birendra Saraf with Mr. Raj Panchmatia, Ms. Jyoti Sinha, Mr. Himanshee Vidhani and Mr. Varun Mansinghka for petitioner; Ms. Kiran Bagalia with Subhash Gutle, Mushraf Shaikh for respondent
ITD Cementation India Ltd.
Konkan Railway Corporation Ltd.
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Nature of Litigation
Petition under Arbitration and Conciliation Act, 1996 seeking termination of the existing standing arbitral tribunal's mandate and appointment of a new arbitral tribunal.
Remedy Sought
Declaration that the mandate of the standing arbitral tribunal stands terminated; appointment of a new arbitral tribunal to adjudicate present and future disputes.
Filing Reason
Petitioner alleges that the standing arbitral tribunal is de jure unable to perform its functions due to lack of independence and impartiality as two of three arbitrators are serving employees of the respondent's affiliate and the procedure for constitution is one-sided.
Issues
Whether the mandate of the standing arbitral tribunal constituted under the contract agreement has terminated under Section 14(2) of the Arbitration and Conciliation Act, 1996
Whether a new arbitral tribunal should be appointed under Sections 11(6) and 15(2) of the Act
Judgment Excerpts
(a) that this Hon'ble Court in exercise of its powers under Section 14(2) of the Arbitration and Conciliation Act,1996 be pleased to hold that the mandate of the present Standing Arbitral Tribunal constituted under the Agreement, has been terminated;
The Arbitral Tribunal shall consist of a panel of three Gazetteed Rly. Officers not below JA Grade, or two Railway Gazetted Officers not below JA Grade and a retired Railway Officer,retired not below the rank of SAG Officer as the Arbitrators.
Procedural History
The petitioner filed the petitions under Sections 11(6), 14(2) and 15(2) of the Arbitration and Conciliation Act, 1996 seeking termination of the standing arbitral tribunal's mandate and appointment of a new tribunal. The matter came up before the High Court on 12 December 2019.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 11(6), 14(2), 15(2)
- Companies Act, 1956:
- Jammu and Kashmir General Sales Tax Act, 1962:
