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Supreme Court issues notice on Centre’s plea against appointment of Arbitrator by Calcutta High Court

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The Supreme Court on Wednesday issued notice on a petition filed by the Centre against the Calcutta High Court order, which had appointed Justice (Retd) Ranjit Kumar Beg of Calcutta High Court as sole arbitrator to settle the dispute between one Tarun Kanti Das, a contractor and Eastern Railways (Kolkata), arising out of a contract. 

A three-judge bench headed by Chief Justice of India N.V. Ramana and also comprising Justices Surya Kant and A.S. Bopanna, issued notice and tagged the matter with similar identical issues. The court also refused to stay the Calcutta High Court order of appointing the Arbitrator.

The petition before the apex court was filed by the Union of India, through the General Manager 17, Kolkata, West Bengal and the Senior Divisional Engineer (Coordination) Eastern Railway, Kolkata, West Bengal.

The petitioners challenged the order dated February 12, 2021, passed by the Single Judge bench of Justice Arijit Banerjee, which had allowed application filed by Contractor Tarun Kanti Das, seeking appointment of an independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. 

The Single-Judge Bench of the High Court had perused the material placed on record by the parties and found that there is no dispute pertaining to facts of the case concerned, existence of arbitration clause in contract.

Further, the Court had noted that despite the issuance of notice under Section 21 of the Act of 1996, by contractor to the Railway, no arbitrator was appointed as per the Contract. 

The Calcutta High Court took note of the Supreme Court decision made in Perkins Eastman Architects DPC vs HSCC (India) Ltd of 2020, wherein a similar issue came up before the apex court and the SC, admitting the application of Perkins Eastman for appointment of independent sole arbitrator, further appointed Justice (Retd) A.K. Sikri as sole arbitrator to decide all disputes among parties arising out of agreement, subject to mandatory declaration made under amended 12 of the Act. 

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The High Court judge noted,

“I have considered the facts and circumstances of the case. The petitioner did not agree to waive the applicability of Section 12(5) of the Act of 1996. The petitioner was well within his rights to do so. The concerned arbitration clause does not contemplate as to what would happen if the petitioner disagrees to waive the applicability of Section 12(5) of 1996 Act. In such circumstances, in my opinion, the only way forward is for the Court to appoint an independent arbitrator.”

“Accordingly, Justice Ranjit Kumar Beg (Retd), a former Judge of this Court is appointed as the sole arbitrator to adjudicate the disputes and differences that have arisen between the parties in relation to the subject contract. The arbitrator will be entitled to engage secretarial staff for conducting the arbitral proceedings. Since no place of sitting is agreed upon, let the arbitration proceeding be held in Calcutta. The arbitrator will be free to fix his fees and the remuneration of the secretarial staff. The fees of the arbitrator and the remuneration of the secretarial staff will be paid by the parties in equal shares,” said the High Court in its order. 

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