Chennai Metro Rail Limited v. M/S.Lanco Infratech Limited

In the High Court of Judicature at Madras Dated: 16.03.2015 Coram:

The Honourable Mr. SANJAY KISHAN KAUL, Chief Justice and The Honourable Mr. Justice M.M. SUNDRESH O.S.A. No.35 of 2014 and M.P. No.1 of 2014 Chennai Metro Rail Limited rep. by its Chief General Manager (Construction) Thiru.V.Somasundram Harini Towers, No.7, Conran Smith Road Gopalapuram, Chennai 600 086.

.. Appellant / Petitioner vs.

1. M/s. Lanco Infratech Limited rep. by its General Manager Mr. D. Ramesh No.25, G.N. Chetty Road 4th Floor, T. Nagar, Chennai-17.

2. K.D. Arcot

3. A.P. Radhakrishnan

4. G. Sivakumar

5. The Registrar Indian Council of Arbitration Federation House Tansen Marg New Delhi 110 001.

.. Respondents/ Respondents Prayer: Original Side Appeal filed under Order XXXVI, Rule 1 of Original Side Rules read with Clause 15 of the Letters Patent, to set aside the Order and Decree dated 10.01.2014 passed by the learned Single Judge, in O.P. No.845 of 2013 on the file of this Court.

For Appellant : Mr. R. Thiagarajan, Sr. Counsel for Mr. Jayesh B. Dolia For Respondents : Mr. V.T. Gopalan, Sr. Counsel for Mr. K. Ravindranath for R1 ---

J U D G M E N T

(Made by The Hon'ble The Chief Justice) An agreement for contract was executed between the appellant and the respondent for Design and Construction of an Elevated Station at Meenambakkam and works connected therewith on 05.09.2011. There are disputes inter se the parties arising from that agreement, as according to the first respondent, amounts are due, while according to the appellant, the first respondent has abandoned the work midway.

2. The dispute resolution clause provides for settlement of disputes through arbitration. An Arbitral Tribunal of three Arbitrators was envisaged with one Arbitrator to be appointed by each party and the Arbitrators so appointed to elect the third Presiding Arbitrator. In view of these disputes, the first respondent invoked the arbitration clause vide letter dated 05.09.2013 and appointed their nominee Arbitrator. The appellant sent a reply dated 13.09.2013 calling for details of the qualification of the Arbitrator, which was furnished by the first respondent vide letter dated 20.09.2013. The appellant, however, failed to nominate their Arbitrator till 15.10.2013, resulting in the first respondent moving an application before the Indian Council of Arbitration on 03.10.2013, who nominated the Arbitrator by letter dated 15.10.2013. In a nutshell, the plea of the first respondent is that the appellant lost their right to nominate the Arbitrator.

3. The appellant filed an application under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, seeking termination of the mandate of the third respondent as an Arbitrator and of the second respondent as the Presiding Arbitrator, but the plea of the appellant did not find favour with the learned single Judge, who dismissed the petition vide the impugned order dated 10.01.2014 by a detailed and extensive order.

4. The material factor has been the appointment of the nominee Arbitrator by the appellant on 15.10.2013, but, by that time, the appellant had lost the right to appoint the Arbitrator.

5. The result of the aforesaid is that till date the arbitration proceedings has not even begun, which is causing unnecessary delay in the adjudicative process envisaged by the parties.

6. In order to resolve the issue, the first respondent without prejudice to the rights and contentions, addressed a communication dated 27.01.2015 to the appellant and what was proposed was that the Arbitrator nominated by the first respondent may be accepted by the appellant and the Arbitrator appointed by the Council may take the position of the Presiding Arbitrator.

7. Learned counsel for the appellant submits that the aforesaid can be a resolution of the issue in question subject to one caveat i.e. the Arbitrator appointed by the Council must have the qualification as provided in Clause 20.6.6. of the agreement. Whether he does or does not possess the qualification is not known.

8. It is, thus, agreed that the Arbitral Tribunal will consist of the nominee Arbitrator of the first respondent, namely, Shri.A.Jagannathan and Shri.G.Sivakumar, as the nominee Arbitrator of the appellant. The Presiding Arbitrator would be nominated by the Indian Council of Arbitration, which may be either Shri.K.D.Arcot or Shri.A.P.Radhakrishnan or any other person, who meets with the qualification, as laid down in Clause 20.6.6 of the Agreement.

9. Copy of the order be sent to the Indian Council of Arbitration to make the said nomination within fifteen days of the receipt of the order.

10. The appeal accordingly stands disposed of. No costs. Consequently, M.P.No.1 of 2014 is closed.

Sd/- Asst.Registrar (CO) /true copy/ Sub Asst. Registrar Note:- ATR To

1. The Registrar Indian Counsel of Arbitration Federation House Tansen Marg New Delhi 110 001

2. The Sub Assistant Registrar Original Side High Court, Madras 1 cc to Mr.K. Ravindranath, Advocate, sr. 14690 O.S.A. No.35 of 2014 SAI (CO) kk 18/3