Woodhill-Hillways (JV), Bhubaneswar v. Rail Vikas Nigam Ltd. , Odisha
2025-01-08
S K Panigrahi
body2025
DailyLaw.ai
JUDGMENT : S.K. Panigrahi, J. 1. The Petitioner in the present Writ Petition is challenging the order dated15.05.2024, passed in Arbitration Petition No.16 of 2024 by the Commercial Court/ Khurda/ dismissing the petitioner’s application under Section 151 of the CPC for a stay of arbitration proceedings pending before Opposite Parties No. 2 to 4. I. F ACTUAL M ATRIX OF THE C ASE 2. The brief facts of the case are as follows: (i) The petitioner is a joint venture comprising M/s. Woodhill Infrastructure Ltd. and M/s. Hillways Construction Ltd. (ii) Rail Vikas Nigam Limited invited bids for the execution work namely ‘Earthwork in formation - (excluding blanket), Minor Bridges between Km 19.000 to Km 47.000 and 3 Nos. of Steelgirder Bridges, 8 Nos. of Road over Bridges between Km. 19.000 to Km 67.000 in connection with Angul-Sukinda new Railway BG Line in State of Odisha, India’. (iii) The petitioner’s bid was declared as technically successful bid, and consequently, the Letter of Acceptance dated 23.12.2013 was issued in favour of the petitioner. (iv) Subsequently, an agreement was executed between the parties on23.04.2014. Pursuant thereto, the petitioner mobilized personnel, machinery, key construction equipment, and other overheads necessary to commence the work. (v) Despite the petitioner’s efforts, certain hindrances allegedly beyond its control delayed the project. As a result, the petitioner sought extensions of time, which were granted in phases, with the final extension allowing completion by 31.03.2022. (vi) The petitioner completed the work within the extended timeline and submitted a No Claim Certificate as required under the agreement. However, the petitioner claims that this submission was made under financial duress and that certain dues remained unpaid by the respondent. (vii) The petitioner/ vide letter dated 13.10.2020/ intimated its claims for adjudication. Furthermore/ fearing the expiration of the limitation period/ the petitioner issued a letter dated 08.06.2023/ reiterating its claims. Rail Vikas Nigam Limited rejected these claims through its letter dated 10.07.2023/ citing the No Claim Certificate. (viii) Aggrieved by this, the petitioner invoked CIause-20.3 of the agreement dated 23.04.2014 which provides for dispute resolution through arbitration and nominated Mr. Pradeep Kumar Gupta, Retd. Special DC, CPWD, as its arbitrator via letter dated 14.11.2023. (ix) The respondent, in turn, proposed a modified list of arbitrators and requested the petitioner to nominate from the said list. The petitioner subsequently nominated Mr. Chahatey Ram, Retd. G.M., NF Rly.(IRSE), as its arbitrator.
Pradeep Kumar Gupta, Retd. Special DC, CPWD, as its arbitrator via letter dated 14.11.2023. (ix) The respondent, in turn, proposed a modified list of arbitrators and requested the petitioner to nominate from the said list. The petitioner subsequently nominated Mr. Chahatey Ram, Retd. G.M., NF Rly.(IRSE), as its arbitrator. (x) The respondent appointed Mr. Vishwesh Chaube, Ex-M.E., Railway Board, as its nominee arbitrator. The two nominee arbitrators then jointly appointed Mr. Achal Khare, Retd. GM, DFCCIL, as the presiding arbitrator, thereby constituting the Arbitral Tribunal. (xi) The Opposite. Parties No. 3 and 4 jointly appointed Opposite. Party No.2 Mr Achal Khare as the presiding arbitrator. (xii) The petitioner, vide letter dated 04.01.2024, objected to the composition of the Arbitral Tribunal, alleging duress in both the submission of the No Claim Certificate and the acceptance of Mr. Chahatey Ram as its nominee arbitrator. (xiii) The petitioner further filed an application under Sections 13(3) and 14 of the Arbitration and Conciliation Act, 1996, challenging the mandate and constitution of the Arbitral Tribunal. (xiv) Opposite Parties No. 3 and 4 submitted their disclosures in terms of Section 12 (1) of the Arbitration and Conciliation Act, 1996. (xv) The tribunal heard the matter on 30.01.2024 and, by order dated15.02.2024/ dismissed the petitioner’s application. (xvi) Aggrieved by this, the petitioner challenged the tribunal’s order under Section 14 (2) of the Arbitration and Conciliation Act, 1996, by filing ARBP No. 16 of 2024 before the Commercial Court, Khurdha. Despite seeking an interim stay on the arbitration proceedings, the Commercial Court declined interim relief. (xvii) Subsequently, the petitioner approached this Court in W.P.(C) No. 6064 of 2024. This court had directed the Commercial Court to consider the application for stay of arbitration proceeding prior to 16.05.2024. The Commercial Court, Khurdha., vide its order dated 15.05.2024, disposed of the petitioner’s application for grant of stay under Section 151 of the CPC. Aggrieved by the said order, the petitioner has filed the present Writ Petition before this Court. (xviii) During the pendency of this petition, the Commercial Court, Khurdha dismissed the petitioner’s application under Section 14 of the Arbitration and Conciliation Act, 1996, on 11.12.2024, finding it devoid of merit. II. S UBMISSIONS O N B EHALF O F T HE P ETITIONER 3.
(xviii) During the pendency of this petition, the Commercial Court, Khurdha dismissed the petitioner’s application under Section 14 of the Arbitration and Conciliation Act, 1996, on 11.12.2024, finding it devoid of merit. II. S UBMISSIONS O N B EHALF O F T HE P ETITIONER 3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) The order of the Commercial Court demonstrates a non-application of mind, as the decision to admit the Section 14 (2) Arbitration and Conciliation Act, 1996, petition without granting interim orders has rendered the petition infructuous, forcing the Petitioner to participate in proceedings under an illegally constituted arbitral tribunal. (ii) The Commercial Court wrongly held that since the Petitioner had appointed Opposite. Party No. 4, there can be no objection to the tribunal’s constitution. However/ the Petitioner had appointed the Opposite Party No. 4 under duress/ as highlighted in the Petitioner’s letter dated 04.01.2024. The Commercial Court failed to consider the judgment of the Delhi High Court in M/s. BVSR-KVR (JV) v. Rail Vikas Nigam Limited, 2020 (1) ARBLR 80 which removed an arbitrator appointed under duress and appointed a fresh arbitral tribunal in similar circumstances. (iii) The panel provided by Opposite. Party No. 1 is limited and fails to adhere to the judgment in Voestalpine Schienen GmbH vs. Delhi Metro Rail Corporation Ltd , (2017) 4 SCC 665 , where the Supreme Court emphasized the need for a broad-based panel. The limited panel, with 80 out of 94 arbitrators being retired employees of the Ministry of Railways, contravenes judgments in SMS Ltd. v. Rail Vikas Nigam Ltd ., 2020(2) ARBLR 376, Voestalpine (Supra), Simplex Infrastructure Ltd. v. Rail Vikas Nigam Ltd. , 2018/DHC/7804 and L&T v. Rail Vikas Nigam Ltd, 2018/DHC/3115 ., all of which stress the need for a more diverse panel. (iv) The Petitioner submitted that the constitution of the arbitral tribunal, which heavily favours retired employees of Ministry of Railways, violates legal precedents that stress impartiality and independence. Despite the invalid constitution, Opposite. Party Nos. 2, 3, and 4 dismissed the Petitioner’s application/ thereby reinforcing an illegitimate tribunal. (v) The Petitioner was denied an opportunity to prove the duress at the preliminary stage when the statement of claim had not been filed. The arbitral tribunal’s conclusion that no duress existed reflects a lack of independence and impartiality, warranting judicial intervention. (vi) Opposite Party Nos.
2, 3, and 4 dismissed the Petitioner’s application/ thereby reinforcing an illegitimate tribunal. (v) The Petitioner was denied an opportunity to prove the duress at the preliminary stage when the statement of claim had not been filed. The arbitral tribunal’s conclusion that no duress existed reflects a lack of independence and impartiality, warranting judicial intervention. (vi) Opposite Party Nos. 3 and 4 were duty-bound to disclose circumstances that could raise doubts about their impartiality or ability to devote adequate time to the arbitration. Opposite. Party No. 4 disclosed relevant information only when the Petitioner filed its application under Section 13(2) of the Arbitration and Conciliation Act, 1996, just prior to the first arbitration meeting. This delay in disclosure violates Section 12 (1) of the Arbitration and Conciliation Act, 1996 which mandates disclosure upon being approached for appointment. (vii) The illegal appointment of Opposite. Party Nos. 3 and 4 renders the appointment of Opposite. Party No. 2 unsustainable. Once this Court determines that the appointments of Opposite. Party Nos. 3 and 4 were illegal, the appointment of Opposite. Party No. 2 must also be deemed illegal. (viii) The disclosure by Opposite. Party No. 4 indicates a conflict of interest, as he works as Project Director for the Haryana Orbital Rail Corridor Project, a partnership with the Ministry of Railways. This position raises justifiable doubts about his impartiality. Moreover, Opposite. Party No. 4 failed to provide details of arbitration awards given in the last three years, further undermining his disclosure. (ix) Opposite. Party No. 3 disclosed that post-retirement, he is working as an advisor for the Haryana Rail Infrastructure Development Corporation, which is also a project of the Ministry of Railways. His previous involvement in six arbitration cases in the last three years further raises concerns about his impartiality. (x) Opposite. Party No. 2’s disclosure fails to provide sufficient information regarding his prior arbitration cases, leaving doubts about his compliance with Clause 22 and 24 of the Fifth Schedule of the Arbitration and Conciliation Act, 1996. Similarly, Opposite. Party No. 3’s failure to disclose sufficient information regarding his prior arbitrations exacerbates concerns regarding impartiality. (xi) The Petitioner was coerced into changing its nominee arbitrator under financial duress inflicted by Opposite. Party No. 1. Initially, the Petitioner nominated Mr. Pradeep Kumar Gupta, a retired Special D.G., CPWD, but due to undue pressure from Opposite.
Similarly, Opposite. Party No. 3’s failure to disclose sufficient information regarding his prior arbitrations exacerbates concerns regarding impartiality. (xi) The Petitioner was coerced into changing its nominee arbitrator under financial duress inflicted by Opposite. Party No. 1. Initially, the Petitioner nominated Mr. Pradeep Kumar Gupta, a retired Special D.G., CPWD, but due to undue pressure from Opposite. Party No. 1, the Petitioner was forced to nominate Opposite. Party No. 4, a retired employee of the Ministry of Railways. (xii) The view in Central Organization for Railway Electrification vs. ECI- SPIC-SMO-MCML (JV), 2019 SCC QnLine 1635 has no relevance to this case, as the terms and appointment procedures differ significantly. Thus, it should not be applied to the present dispute III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES 4. The Learned Counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: (i) The process of appointing the Arbitral Tribunal was initiated by the petitioner voluntarily nominating its arbitrator, strictly in accordance with the procedures outlined in the agreement. The formation of the Arbitral Tribunal adhered to the proper process/ with the petitioner’s full consent and active participation. (ii) The petitioner’s nomination of its arbitrator was made through letters dated 14th November 2023 and 23rd November 2023. These letters do not indicate any coercion or adverse circumstances that might have influenced the petitioner’s decision. The petitioner exercised its right to nominate an arbitrator from the approved panel without any undue external pressure from Rail Vikas Nigam Limited, and the request for Rail Vikas Nigam Limited to nominate its arbitrator was made in the usual and appropriate manner. (iii) The petitioner has challenged the order dated 15th February 2024 both before the Commercial Court and this Court via the present writ petition. However, pursuing two simultaneous proceedings before different forums on the same matter is impermissible under the law. The petitioner must adhere to the proper procedural recourse and refrain from engaging in parallel litigation. (iv) On 14th November 2023, the petitioner nominated Shri Pradeep Kumar Gupta, retired Special DG of CPWD, from the approved panel of arbitrators as its nominee. The petitioner then called upon the respondent Rail Vikas Nigam Limited to nominate its own arbitrator from the same panel.
(iv) On 14th November 2023, the petitioner nominated Shri Pradeep Kumar Gupta, retired Special DG of CPWD, from the approved panel of arbitrators as its nominee. The petitioner then called upon the respondent Rail Vikas Nigam Limited to nominate its own arbitrator from the same panel. Subsequently, due to unforeseen circumstances, the petitioner, by letter dated 23rd November 2023, nominated Shri Chahatey Ram, retired GM of NF Railways (IRSE), as its new nominee arbitrator. This nomination process was conducted in accordance with the standard procedure, without directly seeking the panel from the respondent, but from other ongoing contractual matters involving Rail Vikas Nigam Limited. (v) The claimant executed a ‘No Claim Certificate’ on 19th August 2022, and the final bill was paid on 6th September 2022. All legitimate dues to the contractor were cleared with the final payment, leaving the department in no position to make any further financial payments to the petitioner. Consequently, no financial duress was imposed on the petitioner after the final bill was settled, further negating the petitioner’s claims in this regard. (vi) In Central Organisation for Railway Electrification (supra), the Supreme Court affirmed that when an agreement explicitly provides for the appointment of arbitrators from a specified panel, such appointments must be made in accordance with the terms of the agreement. This precedent is directly applicable to the present case and reinforces the validity of the arbitration process undertaken by the parties. (vii) The decision in The Government of Haryana PWD Haryana (B & R) Branch vs. M/s. G.F. Toll Road Pvt. Ltd. & Ors., (2019) 3 SCC 505 clarifies that retired employees are not disqualified from being appointed as arbitrators. Furthermore, the Supreme Court in Central Organisation for Railway Electrification (supra) addressed the concerns raised by the petitioner regarding the appointment of retired employees as arbitrators, thereby rendering the petitioner’s reliance on the Voestalpine (supra) judgment misplaced and legally untenable. IV. C OURT ’ S R EASONING AND A NALYSIS 5. Heard the learned counsel for the Parties and perused the materials placed on record. 6. Section 12 (1) of the Arbitration and Conciliation Act, 1996 mandates a declaration by arbitrators to ascertain their independence and impartiality. The Seventh Schedule of the Arbitration and Conciliation Act, 1996 lists grounds that render an arbitrator ineligible for appointment. 7.
Heard the learned counsel for the Parties and perused the materials placed on record. 6. Section 12 (1) of the Arbitration and Conciliation Act, 1996 mandates a declaration by arbitrators to ascertain their independence and impartiality. The Seventh Schedule of the Arbitration and Conciliation Act, 1996 lists grounds that render an arbitrator ineligible for appointment. 7. In Central Organisation for Railway Electrification (supra), the Supreme Court has held that when the agreement specifically provides for the appointment of an arbitral tribunal consisting of arbitrators from a panel, the appointment of arbitrators must adhere to the terms of the agreement as agreed upon by the parties. 8. Further, in Voestalpine (supra ), the Supreme Court emphasised that panels for arbitrators should be broad-based and inclusive of individuals with varied expertise, to address the diverse nature of disputes. It was observed as hereinunder: “29. …it is imperative that panel should be broadbased. Apart from serving or retired engineers of government departments and public sector undertakings, engineers of prominence and high repute from private sector should also be included. Likewise panel should comprise of persons with legal background like Judges and lawyers of repute as it is not necessary that all disputes that arise, would be of technical nature. There can be disputes involving purely or substantially legal issues, that too, complicated in nature. Likewise, some disputes may have the dimension of accountancy, etc. Therefore, it would also be appropriate to include persons from this field as well.” It was further outlined that the reason for empanelling retired railway officers is to leverage their technical expertise in resolving disputes. The mere fact that they are retired does not make them ineligible for appointment as arbitrators. 9. In this regard, the Supreme Court in G.F. Toll Road (supra) observed that retired employees are not barred from being appointed as arbitrators unless specific disqualifications are established under the Act. 10. In the instant case, the petitioner has himself appointed Mr. Chahatey Ram as its nominee arbitrator and has admitted to the same. There is no evidence to suggest that the panel of arbitrators is not broad-based. The panel includes individuals from various organizations, in line with the requirements set forth in the terms of the agreement. 11. A perusal of the agreement reveals that Clause 20 explicitly provides for the appointment of arbitrators from the mutually agreed panel.
There is no evidence to suggest that the panel of arbitrators is not broad-based. The panel includes individuals from various organizations, in line with the requirements set forth in the terms of the agreement. 11. A perusal of the agreement reveals that Clause 20 explicitly provides for the appointment of arbitrators from the mutually agreed panel. The petitioner has consented to this clause and has not demonstrated any deviation or illegality in the process followed. Furthermore, the petitioner has failed to substantiate claims that the arbitral tribunal is acting illegally or against its interests. No credible evidence of bias or partiality has been presented. 12. The petitioner has not furnished any material to support the allegation that the arbitral tribunal is acting illegally or contrary to the interests of the petitioner. In light of this, the Commercial Court found no reason to grant a stay on the arbitration proceedings. Consequently, the petition filed under Section 151 of the CPC for a stay on the proceedings was rejected. 13. Moreover, during the pendency of this Writ Petition, the main application under Section 14 of the Arbitration and Conciliation Act, 1996, was dismissed by the Commercial Court, which renders the present Writ Petition infructuous. V. CONCLUSION: 14. In light of the foregoing, this Court is of the considered view that the petitioner has failed to establish sufficient grounds for intervention. The Commercial Court’s decision to reject the application for stay of the arbitration proceedings under Section 151 of the CPC is well-reasoned and does not warrant interference. Moreover, the main application, out of which the application under Section 151 of the CPC arose, has already been dismissed, thereby rendering the present Writ Petition untenable. 15. It is reiterated that the parties are bound by the terms of their agreement, and in the absence of compelling evidence of bias or statutory violations, arbitral proceedings must proceed without hindrance. Further, this Court should not unnecessarily interfere in such matter at every stage and throttle the sanctity of the proceedings. 16. Accordingly, this Writ Petition is dismissed. 17. Interim order, if any, passed earlier stands vacated.