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M. Rajkumar, Railway & Highways Engineering Contractor, Erode v/s The Union of India, Rep. by the General Manager, Southern Railway, Chennai & Others

    O.P. No. 319 of 2021 & A. No. 1640 of 2021

    Decided On, 29 June 2021

    At, High Court of Judicature at Madras


    For the Petitioner: K. Aparna Devi, Advocate. For the Respondents: R1 to R5, P.T. Ramkumar, Standing Counsel.

Judgment Text

(Prayer: Petition filed under Section 14 read with section 11 of Arbitration and Conciliation Act, 1996 as amended by the Arbitration and Conciliation [Amendment] Act, 2019 to terminate the mandate of the respondents 4 to 6, the arbitral tribunal and appoint an independent arbitrator to arbitrate all the disputes and claims of the petitioner to be submitted arising out of the agreement No.06/DYCE/CN/I/MDU/HQ/2011, dated 26.12.2011 and to direct the respondents to pay the cost.)

1. This petition has been filed to terminate the mandate of the arbitrator mainly on the ground that the arbitrators are paid fees as per the circular and guidelines issued by the Railway Board and not as per the fourth schedule of the Arbitration and Conciliation Act. Challenge is made with regard to the same before the learned arbitrator, which is negatived by the arbitral tribunal. Therefore, it is the contention of the petitioner that the arbitral tribunal has become dejure and also defunct in respect of the performance itself. Hence, the arbitral tribunal has to be reconstituted.

2. A three member arbitral tribunal was constituted after obtaining consent from the petitioner. The same could be seen in the proceedings dated 03.11.2020 available in the typed set of papers. Before the arbitral tribunal, the petitioner had filed an objection for constitution of arbitral tribunal mainly on the ground that since fees has been agreed as per the circular of the Railway Board, tribunal would not perform the function impartially and also on the other ground that arbitral tribunal cannot follow the Railway Board guidelines and circular and they have to conduct the proceedings in terms of the Arbitration and Conciliation Act, Amended Act 2019.

3. The learned arbitrator has passed the Order rejecting the application on various grounds apart from the limitation and also indicated that the arbitral tribunal is independently dealing with the matters and would be impartial and their decision would be based on the facts and documents produced by the parties.

4. Heard both side. Perused the materials available on record.

5. The main ground raised in this application to terminate the mandate of the arbitral tribunal is fixation of fees as per the circular by the Railway Board. The constitution of the tribunal with the consent of the applicant is not in dispute. When the constitution is challenged, the party who intends to challenge the constitution shall within 15 days, after becoming aware of the Constitution of the tribunal, make objection to the tribunal by a written communication as per Section 13 of the Arbitration and Conciliation Act. If such a challenge is not successful before the tribunal, the tribunal shall continue the proceedings and make arbitral award as per Sub Clause 4 of Section 13 of the Arbitration and Conciliation Act. In case, the award has been passed by the tribunal, such an award can be challenged under section 34 of the Arbitration and Conciliation Act. Therefore, when the challenge procedure was not successful, the only remedy available to the applicant is to challenge the award, in the event of award being passed and not to terminate arbitral tribunal. Hence, this Court is of the view that merely because fees has not been fixed as per the schedule IV of the Arbitration and Conciliation Act, it cannot be inferred that the tribunal is acting partially.

6. It is to be noted that the arbitral tribunal has categorically informed the applicant that the functioning of the tribunal will not be depending on the fees received as per the guidelines and circular and tribunal will be independent and impartial. De

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spite such assurance given by the tribunal, challenging the very constitution on technical grounds is not sustainable in the eye of law, hence, this petition is liable to be dismissed. However, the arbitral tribunal shall receive the fees as per the Schedule IV of the Arbitration and Conciliation Act. 7. Accordingly, this Original Petition is dismissed. Consequently, connected application is closed.