- 1 - NC: 2025:KHC:7078 CMP No. 386 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO. 386 OF 2023 BETWEEN: 1. THE GENERAL MANAGER RAIL WHEEL FACTORY MINISTRY OF RAILWAYS YELAHANKA, BENGALURU-560 064. 2. THE PRINCIPAL CHIEF MECHANICAL ENGINEER RAIL WHEEL FACTORY MINISTRY OF RAILWAYS YELAHANKA, BENGALURU-560 064. …PETITIONERS (BY SRI. ABHINAY .Y.T, ADVOCATE) AND: 1. HYT ENGINEERING COMPANY PRIVATE LIMITED REGISTERED OFFICE AT PLOT NO. 29/10, D BLOCK MIDC, CHINCH WAD, PUNE-411 019. REPRESENTED BY ITS DIRECTOR …RESPONDENT (BY SRI. B.R. NISCHAL DEV, ADVOCATE) THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO APPOINT AN ARBITRATOR FROM AMONG THE FOUR NAMES, VIZ., (1) R.K. AGARWAL (RETD. PRINCIPAL CHIEF ENGINEER, NORTHERN RAILWAY), (2) AJAY KUMAR LAL (RETD. FINANCIAL ADVISOR AND CHIEF ACCOUNTS OFFICER, Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATKA - 2 - NC: 2025:KHC:7078 CMP No. 386 of 2023 NORTHERN RAILWAY), (3) AJAI KANT RASTOGI (RETD. DIVISIONAL RAILWAY MANAGER, MADURAI DIVISION, SOUTHERN RAILWAY) AND (4) ANIL KUMAR AGARWAL (RETD. ADDITIONAL MEMBER, RAILWAY BOARD) AS SUBSTITUTE ARBITRATOR, PURSUANT TO THE ARBITRATION CLAUSE IN THE AGREEMENT DATED 29.5.2003 BEARING NO. WAP/AUG/PHASE-2/W-2, IN THE INTERESTS OF JUSTICE AND EQUITY. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of an Arbitrator to replace the presiding Arbitrator who had resigned. 2. The respondent, on notice, has tendered appearance and has engaged a learned counsel. Statement of objections is filed. 3. Petitioners and respondent entered into a contract on 29.05.2003. Respondent invoked arbitration clause on 11.10.2013 and a three member arbitral Tribunal was constituted on 30.05.2014. However, the - 3 - NC: 2025:KHC:7078 CMP No. 386 of 2023 respondent assailing the constitution of Arbitral Tribunal challenged the same in CMP.No.97/2014. This Court vide order dated 07.11.2024 disposed of the civil miscellaneous petition keeping the constitution of Tribunal at three persons by accepting the respondent's nominee. 4. Petitioners and respondent have let in oral and documentary evidence before the Arbitrator. However, one presiding Arbitrator resigned on 18.10.2017. This compelled petitioners to send a list of five arbitrators to the respondent to suggest his nominee. Though final reminder was sent by the petitioner on 09.05.2018, petitioners allege that respondent did not respond to any of the letters. However, respondent filed Commercial AA.No.249/2018 seeking appointment of an independent Arbitrator which was dismissed by the commercial Court on 28.06.2021. 5. The respondent, in his reply to the list sent by the petitioners on 27.07.2021, indicated the applicability of Section 12(5) of the Act, thereby expressly stating that - 4 - NC: 2025:KHC:7078 CMP No. 386 of 2023 he had not waived its applicability. Consequently, the respondent insisted on a fresh appointment in light of the 2015 amendment. This position taken by the respondent compelled the petitioners to invoke the arbitration clause, leading to the filing of the present civil miscellaneous petition seeking the appointment of a substitute Arbitrator following the resignation of one of the Arbitrators. 6. The learned counsel for the petitioners, reiterating their contentions, has placed reliance on the judgment of the Hon'ble Apex Court in Union of India vs. Parmar Construction Company1. Referring to the said judgment, he argues that the Amendment Act, 2015, which came into effect on 23.10.2015, does not apply to arbitral proceedings that commenced in accordance with Section 21 of the Arbitration and Conciliation Act, 1996. He further submits that, in the absence of any contrary agreement between the parties, a substitute Arbitrator must be appointed. 1 AIR 2019 SC 5522 - 5 - NC: 2025:KHC:7078 CMP No. 386 of 2023 7. In support of his contention, learned counsel for the petitioners has placed reliance on the following judgments: 1) Ellora Paper Mills vs. State of Madhya Pradesh - 2022 SCC Online SC 8; 2) Bharat Broadband Network Limited vs. United Telecoms Limited - (2019) 5 SCC 755; 3) TRF limited vs. Energo Engineering Projects Limited - (2017) 8 SCC 377; 4) Jaipur Zila Dugdh Utpadak Sahakri Sangh Limited and Others vs. Ajay Sales and Suppliers - (2021) 17 SCC 248; 5) Glock Asia-Pacific Ltd. vs. Union of India (UOI) - (2023) 8 SCC 226; 6) Surya Wires Pvt. Ltd., vs. Karnataka State Rural Livelihood Promotion Society - 2024: KHC: 19810. 8. On the other hand, learned counsel for the respondent strongly refutes the petitioners' claims and relies on the judgment of the Hon'ble Supreme Court in Central Organisation for Railway Electrification vs. ECI-SPIC-SMO-MCML (JV) A Joint Venture Company2. Drawing from this decision, he forcefully 2 (2024) SCC Online 3219 - 6 - NC: 2025:KHC:7078 CMP No. 386 of 2023 argues that Section 12(5) of the Arbitration and Conciliation Act overrides any pre-existing procedure for the appointment of an arbitrator unless the parties have explicitly waived its applicability after the dispute has arisen. 9. The respondent's counsel has also meticulously analyzed the judgment cited by the petitioners, particularly Bharat Broadband Network Limited vs. United Telecoms Limited (supra). He contends that the proviso to Section 12(5) applies only when the parties, by express agreement in writing, waive the provision’s applicability. In the present case, he asserts that no such express agreement exists between the parties, thereby making Section 12(5) fully applicable. 10. However, upon a detailed examination of the petition, annexures, and supporting documents, as well as the precedents cited, this Court finds that the respondent’s contention that the resignation of the arbitrator makes the 2015 Amendment Act applicable is untenable. The Hon'ble - 7 - NC: 2025:KHC:7078 CMP No. 386 of 2023 Supreme Court, in Union of India vs. Parmar Construction Company (supra), has unequivocally held that the Amendment Act, 2015, which came into force on 23.10.2015, does not apply to arbitral proceedings that have already commenced under Section 21 of the Arbitration and Conciliation Act, 1996. 11. A review of the Commercial Court’s order in Commercial AA No. 249/2018 reveals that both the petitioners and the respondent filed their respective pleadings, including statements, rejoinders, replies, and sub-rejoinders. After the completion of pleadings, the parties were directed to submit their affidavits and supporting documents. Notably, paragraph 2 of the order establishes that the parties had mutually agreed to dispense with oral cross-examination and instead requested that the award be passed based on the documents on record. Subsequently, both parties submitted written arguments challenging the same. - 8 - NC: 2025:KHC:7078 CMP No. 386 of 2023 12. All these significant details clearly substantiate that arbitral proceedings has not only commenced but was at the fag end of its conclusion. 13. For the foregoing reasons, this Court proceeds to pass the following: ORDER (i) Civil Miscellaneous Petition is allowed appointing Sri. Ajai Kant Rastogi, Retired Divisional Railway Manager, Madurai Division, Southern Railway as the substitute Arbitrator to enter reference of the disputes between the petitioners and the respondent and conduct proceedings; (ii) All contentions inter se parties are left open for adjudication in the arbitration proceedings; (iii) Office is directed to communicate this order to Sri. Ajai Kant Rastogi, Retired Divisional Railway Manager, Madurai Division, Southern Railway as required under the Arbitration and Conciliation Centre Rules, 2012; (iv) The venue of arbitration and the procedure for arbitration shall be as decided by - 9 - NC: 2025:KHC:7078 CMP No. 386 of 2023 the learned arbitrator after due opportunity to the parties. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA List No.: 3 Sl No.: 5