Facts of the Case

M/s Shree Krishna Construction filed multiple arbitration applications (S.B. Arbitration Application Nos.163, 165 and connected matters of 2021) against the Union of India (through the General Manager, North Western Railway) and other railway officials, seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, for disputes arising out of railway construction contracts.

The respondents raised objections resisting the applications, apparently including objections regarding the nature and volume of claims, contending these were required to be examined before an arbitrator could be appointed.

The Court found that similar objections had already been considered and rejected by a Single Judge of the same High Court in earlier decisions (M/s Rama Kishan Ashok Kumar (JV) v. Union of India and Dilbag Singh Contractor v. North Western Railway), and accordingly found no substance in the respondents' objections at the appointment stage, while leaving those objections open to be raised before the arbitrator.

Issues Involved

  1. Whether the respondents' objections regarding the nature or volume of the applicant's claims should be examined by the Court before appointing an arbitrator, or left for the arbitrator to decide.
  2. Whether the applicant was entitled to appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Petitioner's Arguments

  • The applicant sought appointment of an arbitrator to adjudicate disputes arising from the railway construction contracts, as provided for under the arbitration clause.

Respondent's Arguments

  • The respondents contended that objections relating to the nature or volume of the claim needed to be examined and could affect whether the dispute was even arbitrable.

Court Order / Findings

  • The Court held that similar objections raised by the respondents had already been considered and rejected in earlier decisions of the same High Court, and found no substance in the respondents' objections at this stage.
  • The Court clarified that this did not preclude the respondents from raising their available objections before the arbitrator at the appropriate stage.
  • The arbitration applications were allowed, and Hon'ble Mr. Justice Manoj Kumar Vyas (Retired Judge) was appointed as the sole arbitrator to adjudicate the disputes, with costs of arbitration to be borne as per the Fourth Schedule to the Arbitration and Conciliation Act, 1996.

Important Clarification

This is purely an arbitration-law order concerning appointment of an arbitrator for railway works-contract disputes; it does not decide, or even touch upon, any GST question, and should not be read as GST-related despite the tax/administrative flavour of some contract disputes of this kind.

Sections Involved

  • Arbitration and Conciliation Act, 1996 — Section 11(6) (court's power to appoint an arbitrator) and the Fourth Schedule (arbitrator's fees)

Decision – In Favour of

Decided in favour of the applicant to the extent of appointment of an arbitrator — the underlying contractual disputes and the respondents' objections remain to be decided by the arbitrator, not by the High Court.

Case Details

  • Court: High Court of Judicature for Rajasthan, Bench at Jaipur
  • Case No.: S.B. Arbitration Application No.165 of 2021, connected with S.B. Arbitration Application No.163 of 2021 and others
  • Neutral Citation: [2023/RJJP/010608]
  • Coram: Hon'ble Mr. Justice Ashok Kumar Gaur

Link to Download the Order

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