LI Network
Published on: December 29, 2023 at 12:27 IST
The Calcutta High Court recently granted approval for the appointment of a sole arbitrator by M/s Mehrotra Buildcon Pvt Ltd in its dispute with the South Eastern Railway (SER).
Justice Moushumi Bhattacharya, presiding over a single bench, allowed the petitioner’s application under Section 11 of the Arbitration & Conciliation Act, 1996.
The decision criticized the restrictive clause in the General Conditions of Contract (GCC), which compelled the petitioner to choose an arbitrator from a list provided by the respondent.
The court highlighted the one-sided nature of the clause, emphasizing that it limited the petitioner’s choice by mandating the selection of two names from a list of four, with the final decision resting on the General Manager of the respondent. Justice Bhattacharya observed the absence of consent and choice in the clause, making it inherently unfair.
The case originated from a dispute related to the construction of a foot overbridge in Odisha, where disputes over the price variation clause prompted the petitioner to seek conciliation and, eventually, arbitration. The petitioner contested the unilateral nature of clause 64(3)(b)(ii) of the GCC, which required them to choose from a list of arbitrators provided by the respondent.
The Court, considering the petitioner’s objections and the unilateral appointment mechanism, found that the Arbitration Act envisions complete consensus on all points. It rejected the notion of dragging a party into arbitration without their clear consent.
The Court emphasized that the clause’s unilateral nature went against the principles of the Arbitration Act and cited Supreme Court decisions supporting a broader panel for arbitrator selection to ensure impartiality.
Consequently, the Court allowed the petitioner’s application and appointed (Retd) Justice Ranjit Kr Bag as the sole arbitrator, asserting the importance of free and mutually agreed-upon arbitration mechanisms.
Case Title: M/s. Mehrotra Buildcon Pvt. Ltd. v South Eastern Railway