Page No.# 1/10 GAHC010275192024 2025:GAU-AS:5258 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/6976/2024 M/S. R.B. ENTERPRISES A PARTNERSHIP FIRM HAVING ITS OFFICE AT CHIRWAPATTY ROAD, PIN- 786125, DISTRICT- TINSUKIA, ASSAM, REPRESENTED BY ONE OF ITS PARTNER AND AUTHORIZED REPRESENTATIVE MR. JITUL CHANDRA GOHAIN VERSUS UNION OF INDIA AND 7 ORS. REPRESENTED BY MINISTRY OF DEFENCE NEW DELHI 2:HQ CHIEF ENGINEER SHILLONG ZONE SPREAD EAGLE FALLS SHILLONG- 793011 3:HQ CE EASTERN COMMAND ENGINEERS BRANCH PIN- 908542 C/O 99 APO 4:STE EASTERN COMMAND FORT WILLIAM KOLKATA MAIDAN FORT WILLIAM HASTINGS KOLKATA WEST BENGAL 700021 5:CONTROLLER OF DEFENCE ACCOUNTS (CDA) UDAYAN VIHAR Page No.# 2/10 NARANGI GUWAHATI PIN- 781171 6:COMMANDER WORKS ENGINEER DINJAN MILITARY ENGINEER SERVICE POST- PANITOLA DIST- DIBRUGARH PIN- 786183 7:ACCOUNT OFFICER (AO) GARRISON ENGINEER LEKHAPANI POST- LEKHAPANI DIST.- TINSUKIA (ASSAM) PIN- 786180 8:DIRECTORATE OF CONTRACT MANAGEMENT MILITARY ENGINEER SERVICES ENGINEER-IN-CHIEFS BRANCH INTEGRATED HQ OF MOD (ARMY) KASHMIR HOUSE RAJAJI MARG NEW DELHI- 11001 Advocate for the Petitioner : MR. JYOTIRMOY ROY, B SAHA,MR B P SARMAH,MR. R HAZARIKA,MR. C CHAKRAVARTY Advocate for the Respondent : DY.S.G.I., MR M R ADHIKARI (C.G.C) BEFORE HONOURABLE MR. JUSTICE MICHAEL ZOTHANKHUMA ORDER 30.04.2025 Heard Mr. J. Roy, learned Sr. Counsel for the petitioner assisted by Mr. R. Hazarika. Also heard Mr. M.R. Adhikari, learned CGC for all the respondents. 2. The petitioner is aggrieved with the termination letter dated 21.11.2024, terminating the road construction contract with the petitioner, under condition No.54 of the General Conditions of Contract (hereinafter referred to as ‘the GCC’), as he had failed to complete the contract by the due date. The impugned Page No.# 3/10 termination letter also stated that the work would be completed through another agency and the performance security & the retention money up to the last paid RAR would be forfeited. In addition, all the tools & plants and materials lying at the site would be confiscated by the Government and no compensation would be given to the petitioner. Also, the petitioner firm would be debarred from participating in the tender for the balance work relating to the above contract work. 3. The petitioner’s counsel submits that the petitioner’s contract work having been terminated under condition No.54 of the GCC, the petitioner cannot apply the arbitration clause provided in Clause 70 of the GCC, inasmuch as, an alternative arrangement has not been finalized by the respondents, to get the balance work completed through any other contractor or agency. He submits that the same is provided in the first proviso to Clause 70 of the GCC, i.e., the 3rd sub-para of Clause 70 of the GCC. 4. Mr. M.R. Adhikari, learned CGC, on the other hand, submits that the first proviso to Clause 70 of the GCC, i.e., the 3rd sub-para of Clause 70 of the GCC has been deleted vide amendment No.46, as reflected in the Amended General Conditions of Contract which is in the contract agreement signed by the petitioner and the respondents. He submits that as the petitioner has signed the contract agreement with the deleted first proviso/3rd sub-para of Clause 70 of the GCC, the petitioner cannot now take a stand that the first proviso/3rd sub- para of Clause 70 of the GCC is applicable to his case. 5. The counsels for the respondents submit that the petitioner’s contract Page No.# 4/10 work was terminated, as the petitioner could not complete his work on time and as the petitioner had completed only 9% of the work, even with all the extension of time given to the petitioner. The petitioner’s counsel on the other hand submits that the petitioner completed 30% of the contract work. 6. I have heard the learned counsels for the parties. 7. The dispute raised by the petitioner and the respondents is basically a factual dispute, inasmuch as, the question to be decided is whether the contract agreement signed between the parties contains the first proviso/3rd sub-para of Clause 70 of the GCC. 8. The original contract agreement signed by the petitioner and the respondents has been produced today and a perusal of the same shows that the first proviso/3rd sub-para of Clause 70 of the GCC is not a part of the contract agreement. The relevant portion of the contract agreement is reproduced hereinbelow as follows:- “46 26 (a) Condition 70 Arbitration: sub para 3 Deleted the existing contents and shall be substitude as “Blank”. ” 9. The original Clause 70 & 71 of the GCC, without any part being deleted is as follows:- “70. Arbitration- All disputes, between the parties to the Contract (other than those for which the decision of the C.W.E or any other person is by the Contract Page No.# 5/10 expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of a [Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of sub-Division II of Institution of Surveyor (India) recognised by the Govt. of India] to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Works or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the Contractor as provided in Condition 67 hereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence. The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings. "The Arbitrator may, from time to time with the consent of the parties, enlarge, the time for making and publishing the award. The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual, item of dispute. [The arbitrator shall give reason for the award in each and every case irrespective of the value of claims or counter claims]. The venue of Arbitration shall be such place or places as may by fixed by the Page No.# 6/10 Arbitrator in his sole discretion. The Award of the Arbitrator shall be final and binding on both parties to the Contract.” “71. Conciliator- If dispute (other than those for which the decision of the CWE or any person is by the contract expressed to be final and binding) of any kind whatsoever arises between the parties to the contract during the execution of the works, or after completion or after determination/cancellation/termination of the contract, including any disagreement by either party with any action, inaction, opinion, instruction, certificate or valuation by the Accepting Officer or his nominee, the matter in dispute shall, in the first place be referred to the Disputes Resolution Board (DRB) in case of contracts valuing Rs. 10 crore or more and to conciliation, by a sole conciliator, in case of contracts valuing less than Rs. 10 crore. In case of disagreement with the decision of such DRB or conciliator, any party may invoke arbitration clause. Procedure for the constitution/appointment of DRB/Conciliator shall be as laid down in the Contract Agreement.].” 10. The affidavit-in-reply submitted by the petitioner on 28.04.2025 has annexed extracts of the Special Conditions of Contract, wherein it has been provided that the Dispute Resolution Board (DRB) in terms of Clause 71 of the GCC shall consist of 3 members, which should be notified by the respondents, within 1(one) month from the date of acceptance of the contract. In the present case, no DRB has been constituted even till today. In view of the above, it is clear that there is no question of referring the grievance raised by the petitioner in relation to the termination of his contract before the DRB, in pursuance to Clause 71 of the GCC. In view of the fact that there is a specific arbitration clause provided under Clause 70 of the GCC, sans the first proviso/3rd sub-para of Clause 70 of the GCC, this Court is of the view that the petitioner should Page No.# 7/10 approach the respondents, for reference of the dispute between the parties to arbitration, even prior to finalization of an alternative contractor/agency for completing the balance amount of uncompleted contract work. 11. In the case of M/s Barpeta Agro Infra Vs. The Union of India & 2 Ors, Arb. P. 51/2023, this Court was to decide whether the General Manager, N.F. Railway could appoint 3 retired/serving Officers of the N.F. Railway as members of the Arbitral Tribunal, in terms of the arbitration clause provided in the contract agreement. This Court considered the conflicting judgments of the Supreme Court in the case of (1) Perkins Eastmen Architects DPC and Anr Vs. HSCC (India) Limited, reported in (2020) 20 SCC 760; (2) TRF Ltd. Vs. Energo Engg. Projects Ltd., reported in (2017) 8 SCC 377 and (3) Central Organization for Railway Electrification Vs. Ms. ECI-SPICSMO- MCML (JV) a Joint Venture Company, reported in (2020) 14 SCC 712. This Court thereafter observed that the Supreme Court in Union of India Vs. Tantia Constructions Ltd., reported in (2021) SCC OnLine SC 271, referred the conflicting decisions to a larger Bench, for final resolution of the issue. 12. In the case of Perkins Eastman (supra), the Hon’ble Supreme Court has referred to another decision of the Supreme Court, i.e., TRF Ltd. (supra) and held that the Managing Director, HSCC (India) Limited, which was an executing agency for the Ministry of Health & Family Welfare, was not eligible to become an Arbitrator, nor could he nominate a person as an Arbitrator, that is, by virtue of Section 12(5) of the 1996 Act. This was due to the fact that he would be having an interest in the dispute. Page No.# 8/10 13. In the case of TRF Limited (supra) the Hon’ble Supreme Court had to decide two issues, which were as follows- “1. Whether once the person who was required to arbitrate upon the disputes arisen under the terms and conditions of the contract becomes ineligible by operation of law, he would not be eligible to nominate a person as an arbitrator, i.e. whether the Managing Director of the respondent, who had become ineligible to act as an arbitrator subsequent to the Arbitration and Conciliation (Amendment) Act, 2015, could not have also nominated any other person as arbitrator? 2. Whether challenge to an appointment of arbitrator nominated by Managing Director, under could only be made before the Arbitral Tribunal or the same could be raised before the court in application preferred under Section 11(6) of the Act.” 14. The 3 Judges Bench of the Supreme Court in TRF Limited (supra) thus answered the issues by holding that by virtue of Section 12(5) of the 1996 Act, if any person, who falls under any of the categories specified in the 7th Schedule, shall be ineligible to be appointed as the Arbitrator, by operation of law. Secondly a person, ineligible to become an Arbitrator, cannot nominate another as an Arbitrator. 15. In the case of Central Organization for Railway Electrification (supra), the 3 Judges Bench of the Hon’ble Supreme Court held that when a contract agreement specifically provides for appointment of an Arbitral Tribunal consisting of 3 Arbitrators from out of the panel of serving or retired railway officers, the appointment of the Arbitrator should be done in terms of the agreement as agreed by the parties. This judgment is in complete variance with the judgments passed in TRF Limited (supra) and Perkins Eastman (supra). Page No.# 9/10 16. The Supreme Court has held that earlier judgments have to be followed by the High Court, when there are conflicting decisions of the Supreme Court, as held in the case of Union Territory of Ladakh & Ors Vs. Jammu and Kashmir National Conference & Anr, reported in 2023 Legal Eagle (SC) 891 and National Insurance Company Ltd. Vs. Pranay Sethi, reported in (2017) 16 SCC 680. As such, this Court has followed the earlier decision of the Supreme Court in TRF Ltd. (supra) in respect of appointment of an Arbitrator/Arbitral Tribunal. This Court followed the judgment of the Supreme Court in TRF Ltd. (supra) in M/S Barpeta Agro Infra (supra). 17. In TRF Ltd. (supra) the Supreme Court held that by virtue of the Amending Act (3 of 2016), i.e., Section 12(5) of the 1996 Act and the 7th Schedule of the Arbitration and Conciliation Act, 1996, any person, who falls under any of the categories specified in the 7th Schedule, shall be ineligible to be appointed as the Arbitrator, by operation of law. Secondly a person, ineligible to become an Arbitrator, cannot nominate another as an Arbitrator. 18. In view of the above reasons, this Court is of the view that the reference to arbitration under the Arbitration and Conciliation Act, 1996 would have to be done before an independent Arbitrator, who does not fall under any of the categories specified in the 7th Schedule of the Arbitration and Conciliation Act, 1996, in terms of TRF Ltd. (supra). In view of there being an arbitration clause in the contract agreement, the present writ petition is dismissed, with liberty being given to the petitioner to avail of the alternative remedy, by invoking the provisions of Clause 70 of the GCC, as provided in the contract agreement executed by him, for redressal of his grievance. The Arbitrator be appointed within 1(one) month by the parties, from the date of the petitioner Page No.# 10/10 making a reference for arbitration. The Arbitrator shall be appointed on the consensus of the parties. 19. With the above observations and directions, the writ petition is dismissed. JUDGE Comparing Assistant