Calcutta High Court
State Bank Of India vs Union Of India Through Principal Chief … on 21 January, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
OD-2 ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
AP/195/2024
STATE BANK OF INDIA
VS
UNION OF INDIA THROUGH PRINCIPAL CHIEF COMMERCIAL MANAGER,
SOUTH EASTERN RAILWAY AND ANR.
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date : 21st January, 2025.
Appearance:
Mr. D. Mukherjee, Adv.
Mr. S. Pal Choudhari, Adv.
MisTithi Paul, Adv.
Miss Shilpi Paul, Adv.
For petitioner/SBI
Ms. Aparna Banerjee, Adv.
For respondent no.1
Mr. Chirantan Sarkar, Adv.
For respondent no.2.
The Court : Supplementary affidavit filed by the petitioner is taken on
record.
The petitioner is directed to file a compilation containing the
pleadings which have been filed by the respective parties before the learned
Arbitrator.
2
This is an application for termination of the mandate of the learned
Arbitrator along with other prayers.
The other prayer to set aside an order is not accepted by the Court, at
this stage. This Court is inclined to decide the application as it has been
described, i.e., as one under Section 14 of the Arbitration and Conciliation Act,
1996. The court will proceed to decide whether the mandate of the learned
Arbitrator has terminated or not.
The learned Arbitrator was appointed by an officer of the South-
Eastern Railway, on the basis of a tripartite agreement which contained an
arbitration clause. The Chief Commercial Manager South-Eastern Railway is a
party to the agreement. The respondent No.1 is also a party to the arbitration
proceedings. The petitioner contends that the unilateral appointment of the
Arbitrator was contrary to the provision of Section 12(5) of the said Act read
with 7th Schedule. The petitioner further contends that there were several
judgments of the Hon’ble Apex Court which laid down the ratio that unilateral
appointment was contrary to the concept of party autonomy and deprived one
of the parties from participating in the process of appointment of the
Arbitrator. The petitioner further contends that prior to the appointment of the
present Arbitrator, the railways had appointed another Arbitrator. When the
issue was raised before the learned Arbitrator by the petitioner, the learned
Arbitrator recused. Thereafter, the railways again appointed the present
learned Arbitrator to arbitrate upon the dispute between the parties. The
3
petitioner filed an objection before the learned Arbitrator. The objection was
rejected and the petitioner’s prayer for recusal was not acceded to.
Mrs. Banerjee, learned advocate appearing for the railways submits
that the railways do not come between the claimant and the bank. The
claimant was proceeding against the bank for certain reliefs, compensation etc.
as the bank failed to make payment to the Railways on behalf of the claimant.
Mr. Chirantan Sarkar, learned advocate appearing for the respondent
no.2, that is claimant, submits that the petitioner lodged a challenge to be
Arbitrator in terms of Section 13 of the said Act. The learned Arbitrator
returned a finding that, he had the authority to proceed with the arbitration.
Under such circumstances, the only remedy available to the petitioner was to
participate in the proceeding and to wait for the award to be published and
then pray for setting aside the award if the same went against the petitioner.
The ground that the learned Arbitrator was disqualified to act, upon being
unilaterally appointed by the Railways, could be raised at that stage alone.
Heard the rival contentions of the parties.
Section 12(5) of the Act provides that the parties to any contract may,
by written agreement, waive any challenge to the disqualification of a learned
Arbitrator on the grounds specified in the 7 th Schedule of the Act. In the
present case, the Court does not find that any such agreement had been
entered into between the parties, by which the petitioner had foregone its right
to raise any dispute under Section 12(5) read with 7 th Schedule of the Act.
4
Such waiver has to be reduced in writing and in the form of an agreement, and
cannot be deduced from their conduct. Secondly, the ineligibility referred to in
this regard under Section 12(5) of the said Act is an ineligibility by operation of
law. In my prima facie view, the challenge to such ineligibility is covered under
Section 14 and not under Section 13 (2) of the Act.
Arguments have been advanced by the learned advocate for the
respondent no.2 that the provisions of Section 13(5) should be applied in the
instant case and the learned Arbitrator should be allowed to continue with the
arbitration proceedings. The petitioner can take this objection when it
approaches the court for setting aside the award under Section 34 of the Act.
Section 13(2) provides that a party within fifteen days from becoming aware of
the constitution of the Tribunal or upon becoming aware that the Arbitrator
was disqualified under Section 12(3) of the said Act, may throw a challenge.
Section 12(3) deals with two situations under which an Arbitrator can be
challenged; (a) Doubts with regard to independence and impartiality, (b) The
Arbitrator does not possesses the qualification agreed to by the parties.
In my prima facie view, the case of the petitioner is distinct and
separate from the provision of Section 12(3). The petitioner contends that the
Arbitrator is de jure unable to perform his duties, on account of him being a
retired employee of the Railways and on account of unilateral appointment by a
party to the agreement. The facts, prima facie, reveal that the State Bank and
Railways are adversaries in the arbitration proceeding.
5
Under such circumstances, till the decision is finally arrived at by this
Court upon disposal of this application, the arbitration proceedings shall
remain stayed.
Let affidavit-in-opposition be filed within three weeks from date; reply
thereto, if any, be filed within two weeks thereafter.
Let this matter appear in the monthly list of March, 2025.
(SHAMPA SARKAR, J.)
pa/sb
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