Rajan Roy, J.:— Heard Sri Apoorva Tewari, Advocate for the applicant and Sri B.K Shukla, Advocate and Sri Pankaj Srivastava Advocate, learned counsel for the respondent.

2. This application was filed under Section 11(6) of the un-amended Arbitration and Conciliation Act 1996 on 31.1.2014 i.e prior to the coming into force of the Amending Act No. 3 of 2016, notified on 31.12.2015, but made applicable w.e.f 21.10.2015, when an ordinance was issued almost on the same terms.

3. It is not in dispute that the parties herein had entered into a contract under which the applicant herein was required to perform certain jobs and provide certain services to the respondent. From the record it is also evident and is not in dispute that differences arose between the parties which ultimately led to the rescission of the contract itself vide order dated 4.12.2012 (Annexure-13 to the arbitration application).

4. Certain forfeitures and penalties were imposed upon the applicant and recoveries were sought to be made. Ultimately on 19.3.2013 an application (Annexure-16 to the arbitration application) was submitted by the applicant to the General Manager, allegedly in terms of Clauses 63 and 64 of the Arbitration Clause as contained in the agreement requesting for appointment of an arbitrator and raising a claim therein.

5. Though on a bare reading of the application and the provisions of Clause 63 the court finds that the said application was not very happily worded, nevertheless, in essence, it can be said that it was an application referable to Clause 63.

6. As the demand for appointment of an arbitrator would arise under Clause 64 only after a decision had been taken by the General Manager on an application under Clause 63 within 120 days or his failure to do so, the contention of Sri Tewari that under Clause 63 a decision was required to be taken on the issue as to whether an arbitrator should be appointed or not, is not correct. This is also evident from what follows clause 63 i.e Clause 64. The language of Clause 63 indicates that a decision shall be taken by the General Manager on the reference of the claim raised before him.

7. Be that as it may, on 19.8.2013, another application (Annexure-17 to the arbitration application) was submitted by the petitioner which, according to the petitioner, was referable to Clause 64 as being a demand for appointment of arbitrator, having been submitted to the General Manager on his failure to take to take a decision under Clause 63 within 120 days of the first application which in fact was also a final claim referred in Clause 64(1)(4) and this application dated 19.8.2013 was submitted within 180 days of the aforesaid claim, therefore, the applicant performed its part of the obligation under the arbitration clause.

8. The respondent, on the other hand, sent a panel of four names in terms of Clause 64(3)(a)(ii) of the Arbitration Agreement to the applicant-contractor who was required to suggest to the General Manager at least two names out of the said panel for appointment as contractor's nominee within 30 days from the date of dispatch of request by the Railway.

9. It is not in dispute that the notice sending the said panel on an address given by the applicant in his letter-pad was received back unserved. Thereafter, Railways sent another notice on the same terms containing panel of four names, but, on an address of the applicant as recorded in their records. This notice was also received back unserved and there is no dispute in this regard.

10. It is in these circumstances that the applicant filed this application under Section 11(6) for appointment of an Arbitrator alleging that the pre-requisites mentioned therein were attracted in the present case.

11. As far as Section 11(6)(a) is concerned, it cannot be said that any of the parties have failed to act as per the agreement, therefore, same is not attracted, however, the fact of the matter is that for whatever reason and without entering into the controversy as to who is responsible for this as it is hardly relevant for the appointment of an arbitrator, the parties did fail to reach an agreement expected of them under the agreed procedure in the arbitration agreement. The fact that notice was sent and not acted upon by the applicant is meaningless for the reason that same was never received by it, as admittedly both the notices were received back by the Railways. In these circumstances, it can be reasonably said that contingency mentioned in Section 11(6)(b) gets attracted.

12. The existence of a dispute between the parties is admitted; the existence of an arbitration-clause is also admitted; it is not in dispute that the arbitral proceedings commenced at least on 19.8.2013 i.e prior to coming into force of the amended provisions which came into force on 31.12.2015 w.e.f 23.10.2015 Now the question which arises for consideration is as to who should be appointed as an arbitrator.

13. The applicant herein contends that the parties having failed to reach an agreement expected of them under the procedure prescribed for appointment of an arbitrator, now, the matter is in the hands of this court, therefore in the proceedings under Section 11(6) it is unfettered by the arbitration agreement, viz. 64(3)(a)(ii) and is free to appoint an arbitrator independent of the procedure mentioned therein. A plea which is vehemently opposed by Sri Shukla who contends that an agreement entered into by the parties as to the appointment of arbitrators has to be strictly adhered to even if Section 11(6)(b) is attracted and the only option is to appoint an arbitrator in terms of Clause 64(3)(a)(ii).

14. Sri Apoorva Tewari, on the other hand relies upon Section 26 of the Arbitration and Conciliation (Amendment) Act 2015 to contend that even though the arbitral proceedings commenced prior to coming into force of the said Act in terms of Section 21 of the principal act, as, vide Clause 64 sub-Clause (7) the parties had agreed to the application of any statutory modifications of the principal Act of 1996 to the arbitral proceedings contemplated under the arbitration clause, therefore, the amended provisions contained in the Amending Act 2015 will apply and as one of the objects as is borne out from the statement of objects and reasons is to provide for neutrality of arbitrators and a specific provision has been made in Section 12(5) of the Amendment Act of 2015 that notwithstanding any prior agreement to the contrary any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator and there is nothing on record to indicate the applicability of the Ist proviso to the said sub-Section which permits the waiver of the applicability of this sub-Section (5) by an express agreement in writing subsequent to disputes having arisen between them, therefore, in the proceedings under Section 11(6) neutral and independent arbitrator other than Railway officials should be appointed in terms of Section 12(5) and the Seventh Schedule referred hereinabove. In this regard he also invited the attention of the court to Section 11(8) as existing prior to the amendment which also required to secure the appointment of an independent and impartial arbitrator and even after considering the earlier provision, the Supreme Court in various decisions namely Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151; Punj Lloyd Ltd. v. Petronet Mhb Ltd., (2006) 2 SCC 638; Union Of India v. Bharat Battery Manufacturing Co. (P) Ltd., (2007) 7 SCC 684; Deep Trading Co. v. Indian Oil Corporation, (2013) 4 SCC 35; Northern Railway Administration v. Patel Engineering Co. Ltd., (2008) 10 SCC 240; Union Of India v. Singh Builders Syndicate, (2009) 4 SCC 523; and North Eastern Railway v. Tripple Engineering Works, (2014) 9 SCC 288, held that the said provision was not mandatory and in exceptional circumstances and for justifiable reasons the court while appointing an arbitrator in a proceeding under Section 11(6) could deviate from the agreed upon procedure and appoint an independent arbitrator other than the one mentioned in the arbitration clause. In this context he submitted that this need is all the more prominent in view of the object and the provisions relating to the amended provisions of the Act as contained in Section 12(5) and the Seventh Schedule.

15. He also contended that the first line of Clause 64(7) is also not a hurdle in this regard, as it is referable to Section 11(2) of the Act 1996 and nothing more needs to be read into it. Furthermore, the opening words contained in amended Section 12(5) to the effect “notwithstanding any prior agreement to the contrary” take the matter out of the pale of any doubt/controversy. Moreover, the said line is merely referable to Section 11(2) of the Act 1996.

16. In response Sri B.K Shukla, learned counsel for the respondent submitted that the purport and scope of Clause 64(7) was not to apply statutory modification to the principal Act 1996 in toto, but only to the extent any new forum or remedy is provided. He contended that it is certainly not the purport of the said clause that the procedure for appointment of arbitrator agreed therein shall also be given a go-by, as, such an interpretation would be contrary to the arbitration clause itself.

17. It is not out of place to mention that as per clause 64(3)(a)(ii) the arbitrator to be appointed had to be officers of the Railways, which was a party to the dispute, in the manner prescribed therein. One of the issues to be considered is as to whether Railway officials could be appointed as arbitrators in view of the Amending Act 2015 by which substantial amendments have been made in Section 11(8) and 12.

18. Having given my thoughtful consideration to the rival contentions and the pleadings on record. Section 11(2) of the Arbitration & Conciliation Act 1996 provides “subject to sub-Section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. It is not in dispute that in the present case an agreement was entered into between the parties and Clause 63 and 64 provided for an arbitration clause and matter ancillary thereto. Clause 63 and 64 of the agreement are quoted hereinbelow:

“63. Matters finally determined by the Railway - All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the contractor to the GM and the GM shall within 120 days after receipt of the contractor's representation make and notify decisions on all matters referred to by the contractor in writing provided that matters for which provision has been made in clauses 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57A, 61(1), 61(2) and 62(1) to (xiii) (B) of General Conditions of contract or in any clause of the special conditions of the contract shall be deemed as ‘excepted matters’ (matters not arbitrable) and decisions of the Railway authority, thereon shall be final and binding on the contractor; provided further that ‘excepted matters’ shall stand specifically excluded from the purview of the arbitration clause.

64(1)(i) - Demand for Arbitration-In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the “excepted matters” referred to in Clause 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration.

64(1)(ii) - The demand for arbitration shall specify the matters which are in question, or subject of the dispute or difference as also the amount of claim item wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railway, shall be referred to arbitration and other matters shall not be included in the reference.

64(1)(ii) - (a) The Arbitration proceedings shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway.

(b) The claimant shall submit his claim stating the facts supporting the claims along with all the relevant documents and the relief or remedy sought against each claim within a period of 30 days from the date of appointment of the Arbitral Tribunal.

(c) The Railway shall submit its defence statement and counter claim(s), if any, within a period of 60 days of receipt of copy of claims from Tribunal thereafter, unless otherwise extension has been granted by Tribunal.

(d) The place of arbitration would be within the geographical limits of the Division of the Railway where the cause of action arose or the Headquarters of the concerned Railway or any other place with the written consent of both the parties.

64(1)(iii) - No new claim shall be added during proceedings by either party. However, a party may amend or supplement the original claim or defence thereof during the course of arbitration proceedings subject to acceptance by Tribunal having due regard to the delay in making it.

64(1)(iv) - If the contractor(s) does/do not prefer his/their specific and final claims in writing, within a period of 90 days of receiving the intimation from the Railways that the final bill is ready for payment, he/they will be deemed to have waived his/their claim(s) and the Railway shall be discharged and released of all liabilities under the contract in respect of these claims.

64(2) - Obligation During pendancy of Arbitration - Work under the contract shall, unless otherwise directed by the Engineer, continue during the arbitration proceedings, and no payment due or payable by the Railway shall be withheld on account of such proceedings, provided, however, it shall be open for Arbitral Tribunal to consider and decide whether or not such work should continue during arbitration proceedings.

64(3)(a)(i) - In cases where the total value of all claims in question added together does not exceed Rs. 10,00,000/- (Rupees ten lakhs only), the Arbitral tribunal shall consist of a sole arbitrator who shall be a gazetted officer of Railway not below JA grade, nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by GM.

64(3)(a) (ii) - In cases not covered by the clause 64(3)(a)(i), the Arbitral Tribunal shall consist of a Panel of three Gazetted Rly. Officers not below JA grade or 2 Railway Gazetted Officers not below JA Grade and a retired Railway Officer, retired not below the rank of SAG Officer, as the arbitrators. For this purpose, the Railway will send a panel of more than 3 names of Gazetted Rly. Officers of one or more departments of the Rly. which may also include the name(s) of retired Railway Officer(s) empanelled to work as Railway Arbitrator to the contractor within 60 days from the day when a written and valid demand for arbitration is received by the GM. Contractor will be asked to suggest to General Manager at least 2 names out of the panel for appointment as contractor's nominee within 30 days from the date of dispatch of the request by Railway. The General Manager shall appoint at least one out of them as the contractor's nominee and will, also simultaneously appoint the balance number of arbitrators either from the panel or from outside the panel, duly indicating the ‘presiding arbitrator’ from amongst the 3 arbitrators so appointed. GM shall complete this exercise of appointing the Arbitral Tribunal within 30 days from the receipt of the names of contractor's nominees. While nominating the arbitrators it will be necessary to ensure that one of them is from the Accounts department. An officer of Selection Grade of the Accounts Department shall be considered of equal status to the officers in SA grade of other departments of the Railway for the purpose of appointment of arbitrator.

64(3)(a)(iii) - If one or more of the arbitrators appointed as above refuses to act as arbitrator, withdraws from his office as arbitrator, or vacates his/their office/offices or is/are unable or unwilling to perform his functions as arbitrator for any reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay, the General Manager shall appoint new arbitrator/arbitrators to act in his/their place in the same manner in which the earlier arbitrator/arbitrators had been appointed. Such reconstituted Tribunal may, at its discretion, proceed with the reference from the stage at which it was left by the previous arbitrator (s).

64(3)(a)(iv) - The arbitral Tribunal shall have power to call for such evidence by way of affidavits or otherwise as the Arbitral Tribunal shall think proper, and it shall be the duty of the parties hereto to do or cause to be done all such things as may be necessary to enable the Arbitral Tribunal to make the award without any delay. The Arbitral Tribunal should record day to-day proceedings. The proceedings shall normally be conducted on the basis of documents and written statements.

64(3)(a)(v) - While appointing arbitrator(s) under sub-clause (i), (ii) & (iii) above, due care shall be taken that he/they is/are not the one/those who had an opportunity to deal with the matters to which the contract relates or who in the course of his/their duties as Railway servant(s) expressed views on all or any of the matters under dispute or differences. The proceedings of the Arbitral Tribunal or the award made by such Tribunal will, however, not be invalid merely for the reason that one or more arbitrator had, in the course of his service, opportunity to deal with the matters to which the contract relates or who in the course of his/their duties expressed views on all or any of the matters under dispute.

64(3)(b)(i) - The arbitral award shall state item wise, the sum and reasons upon which it is based. The analysis and reasons shall be detailed enough so that the award could be inferred there from.

64(3)(b)(ii) - A party may apply for corrections of any computational errors, any typographical or clerical errors or any other error of similar nature occurring in the award of a tribunal and interpretation of a specific point of award to tribunal within 60 days of receipt of the award.

64(3)(b)(iii) - A party may apply to tribunal within 60 days of receipt of award to make an additional award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

64(4) In case of the Tribunal, comprising of three Members, any ruling on award shall be made by a majority of Members of Tribunal. In the absence of such a majority, the views of the Presiding Arbitrator shall prevail.

64(5) where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made.

64(6) The cost of arbitration shall be borne by the respective parties. The cost shall inter-alia include fee of the arbitrator(s), as per the rates fixed by the Railway Board from time to time and the fee shall be borne equally by both the parties. Further, the fee payable to the arbitrator(s) would be governed by the instructions issued on the subject by Railway Board from time to time irrespective of the fact whether the arbitrator(s) is/are appointed by the Railway Administration or by the court of law unless specifically directed by Hon'ble court otherwise on the matter.

64(7): Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules there under and any statutory modifications thereof shall apply to the arbitration proceedings under this clause.”

19. As also observed hereinabove, the fact is that the parties failed to reach an agreement expected of them under the procedure prescribed in Clause 64(3)(a)(ii), therefore Section 11(6)(b) gets attracted. The reasons for failure are not germane to the appointment of an arbitrator, as, the dispute as also the existence of arbitration clause is admitted and the failure referred above is evident. The point is whether the arbitrator is to be appointed in terms of Section 64(3)(a)(ii) that is comprising of Railway officials or even independent of it. Under the un-amended Act there could not have been any dispute that firstly the arbitrator(s) should have been appointed in a proceeding under Section 11(6) in terms of the aforesaid clause as per the law laid down in the case of Singh Builders (supra). The hurdle is the amended provisions of the Amending Act 2015, specially Section 11(8) and 12. If amended section 12(5) applies along with the Seventh Schedule irrespective of the arbitration clause then of course contention of Sri Tewari would have to be accepted.

20. Amended Sections 11(8), 12 and Seventh Schedule read as under:

“11(8). The Supreme Court or, as the case may be, the High Court or the person or institution designated by such court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-Section (1) of Section 12, and have due regard to-

(a) any qualifications required for the arbitrator by the agreement of the parties; and

(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

12. Grounds of challenge.- [(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,-

(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and

(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.

Explanation 1.- The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.

Explanation 2.- The disclosure shall be made by such person in the form specified in the Sixth Schedule.]

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if-

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality; or

(b) he does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

[(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:

Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.

Provided further that this sub-section shall not apply to cases where an arbitrator has already been appointed on or before the commencement of the Arbitration and Conciliation (Amendment) Ordinance, 2015.]

SEVENTH SCHEDULE [See Sec. 12(5)]

Arbitrator's relationship with the parties or counsel

1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.

2. The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties.

3. The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties.

4. The arbitrator is a lawyer in the same law firm which is representing one of the parties.

5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration.

6. The arbitrator's law firm had a previous but terminated involvement in the case without the arbitrator being involved himself or herself.

7. The arbitrator's law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of the parties.

8. The arbitrator regularly advises the appointing party or an affiliate of the appointing party even though neither the arbitrator nor his or her firm derives a significant financial income therefrom.

9. The arbitrator has a close family relationship with one of the parties and in the case of companies with the persons in the management and controlling the company.

10. A close family member of the arbitrator has a significant financial interest in one of the parties or an affiliate of one of the parties.

11. The arbitrator is a legal representative of an entity that is a party in the arbitration.

12. The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties.

13. The arbitrator has a significant financial interest in one of the parties or the outcome of the case.

14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom.

Relationship of the arbitrator to the dispute

15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties.

16. The arbitrator has previous involvement in the case.

Arbitrator's direct or indirect interest in the dispute

17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held.

18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute.

19. The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute. Explanation 1.— The term “close family member” refers to a spouse, sibling, child, parent or life partner.

Explanation 2.— The term “affiliate” encompasses all companies in one group of companies including the parent company. Explanation 3.— For the removal of doubts, it is clarified that it may be the practice in certain specific kinds of arbitration, such as maritime or commodities arbitration, to draw arbitrators from a small, specialised pool. If in such fields it is the custom and practice for parties frequently to appoint the same arbitrator in different cases, this is a relevant fact to be taken into account while applying the rules set out above.’.”

21. Section 26 of the Amending Act reads as under:

“26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”

22. As per Section 26, nothing contained in the Amending Act 2015 shall apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the principal Act i.e the un-amended Act of 1996 before commencement of the Amending Act 2015, unless the parties otherwise agree, but the Amending Act shall apply in relation to the arbitral proceedings commenced on or after the date of commencement of this Act.

23. As per Section 21, arbitral proceedings in respect of a particular dispute commence on the date on which a request that the dispute be referred to arbitration is received by the respondent, unless otherwise agreed by the parties.

24. In the present case, the arbitral proceedings commenced prior to coming into force of the Act of 2015 w.e.f 23.10.15, as, it is not in dispute that a demand for appointment of an arbitrator in terms of Clause 64 was made by the applicant on 19.8.2013, therefore, unless parties otherwise agree in terms of Section 26 quoted hereinabove, the amending act will not apply.

25. Clause 64(7) of the agreement which is part of the arbitration clause reads as under:

“64(7): Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules there under and any statutory modifications thereof shall apply to the arbitration proceedings under this clause.”

26. As per clause 64(7) of the arbitration clause/agreement, subject to the provisions of the aforesaid, Arbitration & Conciliation Act 1996 and the rules made thereunder any statutory modifications thereof shall apply to the arbitration proceedings.

27. The moot point is as to whether the parties have agreed to the applicability of the Amending Act 2015.

28. Clause 64(7) leaves no doubt that the parties had agreed to the application of any statutory modifications to the Act 1996 and Rules made thereunder. Any such agreement in the past is also an agreement in the present, as, the said agreement, sofar as the arbitration clause is concerned, is still subsisting even after rescission of the contract. The arbitration clause continues to subsist even after rescission of the contract and the legal position in this regard is well settled. In similar circumstances in Thyseen's case (supra) the Supreme Court considered Section 85 of the Act 1996 and a clause similar to Clause 64(7) existing herein in respect of an appeal relating to Rani Constructions. In Section 85 the words used are “unless otherwise agreed by the parties”. Clause 25 considered therein read as under:

“subject to the provisions of the contract to the contrary as aforesaid, the provisions of the Indian Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to all arbitration proceedings under this clause.”

29. The Supreme Court considered the said provision and clause 25 referred hereinabove and based on the reasoning given in paragraphs 28, 35, 36, 37 and 38 held that in view of Clause 25 the statutory modification brought about by the new Act 1996 was applicable. In paragraph 38 the Supreme Court also considered the import of Section 28 of the Contract Act and observed that the Exception-I to Section 28 of the Contract does not render illegal a contract by which the parties agree that any future dispute shall be referred to arbitration. That being so, the parties can also agree that the provisions of the arbitration law existing at that time would apply to the arbitration proceedings. It is not necessary for the parties to know what the law will be in force at the time of the conduct of arbitration proceedings. They can always agree that the provisions of law in force at the relevant time would apply. It further observed that in this view of the matter, if the parties have agreed that at the relevant time provisions of law at that time would apply, there can not be any objection to that.

30. The only difference in the present case is that in Section 26 of the Amending Act 2015 words used are “unless the parties otherwise agree” instead of “unless otherwise agreed by the parties”. However, this difference is of no significance for the reason that a past agreement which subsists on the date of coming into force of the Amending Act 2015 and also at present would also be an agreement in praesenti, therefore, in view of the aforesaid reasons, by virtue of Clause 64(7), Amending Act 2015 is applicable to the arbitral proceedings in the present case.

31. Under Section 11(2) of the Arbitration & Conciliation Act 1996, which has not undergone any change vide Amending Act 2015, the parties are free to agree on a procedure for appointing the arbitrator or arbitrators subject to sub-Section (6). Sub-Section 6 provides that where under an appointment procedure agreed upon by the parties a party fails to act as required under that procedure, which is not the case here, or the parties, or the two appointed arbitrators fail to reach an agreement expected of them under that procedure, which is the case here, or a person, including an institution, fails to perform any function entrusted to him or it under that procedure; a party may request the Supreme Court or as the case may be the High Court, or any other person or institution designated by such court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

32. Section 11(6) comes into play only on the satisfaction of one of the eventualities/contingencies mentioned in Clause (a), (b) and (c) mentioned therein. Once any of the contingencies are attracted, then the appointment of an arbitrator is beyond the pale of the arbitration agreement and the court is free to appoint such arbitrators as may be permissible. Under the un-amended Act even though there was a provision contained in Section 11(8)(b) which required the Chief Justice or the person or the institution designated by him in appointing an arbitrator to have due regard to other considerations as are likely to secure the appointment of an independent and impartial arbitrator the Supreme Court in a catena of decisions viz. Patel Engineering (supra); Singh Builders (supra) held that while appointing an arbitrator under Section 11(6) the agreement for appointment of an arbitrator entered into by the parties is firstly to be adhered and only in the event of exceptional and justifiable circumstances the agreed procedure can be deviated. Such exceptional circumstances were narrated in the case of Singh Builders (supra). In most of the cases where the Supreme Court deviated from the agreed procedure, there existed such exceptional circumstances as exhibited in the case of Singh Builders (supra). Thus, prior to the amendment of 2015 the agreed procedure such as the one contained in Clause 64(3)(a)(ii) was required to be adhered firstly, meaning thereby only Railway officer could be appointed as arbitrator, however, in these very judgments, specially in Singh Builders (supra) the Supreme Court emphasised on independence and impartiality of an arbitrator in the Act of 1996 vide Section 11(8) and observed that a Government, statutory authority and government companies should think of phasing out arbitration clauses providing for serving officers and encourage professionalism in arbitration.

33. It is in the light of these observations and similar observations made in other judgments of the Supreme Court that the Amending Act 2015 has been brought into force. Though these judgments are not specifically referred in the statement of objects and reasons relating to the amending Act one of the objects mentioned is to introduce a provision for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator. In view of this, a provision has been made in Section 11(8) by Amending Act 2015 which is different from the earlier provision and requires the court before appointing an arbitrator to seek a disclosure in writing from the prospective arbitrator in terms of sub-Section (1) of Section 12 and have due regard to the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

34. It is to achieve the aforesaid object that Section 12 has been re-cast. Sub-Section (1) thereof requires the proposed arbitrator to disclose in writing any relationship such as those mentioned in Clause (a) thereof. Explanation 1 to Section 12 provides that the grounds in the Fifth Schedule shall guide in determining whether the circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Explanation 2 prescribes the form of disclosure as being the one prescribed in the Sixth Schedule. Sub-Section (2) requires an arbitrator from the time of his appointment and throughout the arbitral proceedings to disclose to the parties, without delay in writing any circumstances referred to in sub-Section (1) unless they have already been informed of them by him. Sub-Section (3) of Section 12 inter alia, permits the appointment of an arbitrator to be challenged, if circumstances exist that give rise to justifiable doubts as to his independence or impartiality. Sub-Section 12(5) as amended by the Act 2015 is very important in this regard, as, it starts with a non-obstante provision to the effect “notwithstanding any prior agreement to the contrary”, thus it has overriding effect over any prior agreement contrary to section 12 such as Clause 64(3)(a)(ii) of the agreement herein. Any person whose relationship with the parties or counsel or the subject-matter of the dispute, which falls under any of the categories specified in the Seventh Schedule referred in Section 12, one of which is - an employee or one who has any other past or present business interest, shall be ineligible to be appointed as an arbitrator, provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-Section by an express agreement in writing; provided further that this sub-Section shall not apply to cases where an arbitrator has already been appointed on or before the commencement of the Arbitration and Conciliation (Amendment) Ordinance 2015. Needless to say that the Ist proviso to sub-Section (5) will apply only if an express agreement in writing has been entered into between the parties subsequent to the dispute having arisen waiving applicability of the said sub-Section, meaning thereby that it has to be entered subsequent to promulgation of Amending Act 2015, which is not the case here. There is no dispute about non-applicability of the IInd proviso to sub-Section (5) in the present case.

35. In view of the non-obstante clause contained in sub-Section (5) referred hereinabove the change brought about by the Amending Act 2015 is that now the court in a proceeding under Section 11(6) is not bound to appoint an arbitrator in terms of an agreed procedure, such as the one contained in Clause 64(3)(a)(ii) in the present case which required only Railway officials including a retired one to be appointed, as, doing so would be directly in conflict with the statutory modifications brought about by the Amending Act and the purpose and objects sought to be achieved by it. In fact, now it is a statutory obligation in a proceeding under Section 11(6) to appoint an arbitrator only in terms of Section 11(8) and 12, specially 12(5) and the Seventh Schedule referred therein which delineates the prohibited relationship of arbitrators with the parties or counsel etc. and the conflicting interests. An employee is clearly excluded for appointment as an arbitrator.

36. As far as the use of the words “subject to the aforesaid provision” in Clause 64(7) by virtue of which the statutory modifications have been agreed to be made applicable to the arbitral proceedings are concerned, I find force in the contention of Sri Apoorva Tewari that these words only refer to the freedom to agree to an arbitration agreement as referred in Section 11(2) and do not mean that the application of the statutory modifications is conditional or the extent of application is circumscribed by any such condition. Based on Clause 64(7), the court also finds that purport of the said words does not in any manner mitigate against the application of the Amending Act, 2015 specially Section 11(8) and Section 12 as any other interpretation would be incongruous to the very application of the statutory modifications, especially amended Section 11(8), 12(1) and 12(5) which would be rendered meaningless. Clause 25 similar to 64(7) herein existed in the case of Rani Constructions which was considered in Thyssen Stahlunion Gmbh v. Steel Authority Of India Ltd., reported in (1999) 9 SCC 334, and the new Act of 1996 was held to be applicable based on the provision contained in Section 85 of the said Act read with Clause 25 of the Agreement therein. In view of Section 26 of the Amending Act 2015 read with Clause 64(7) of the agreement the parties have agreed to applicability of statutory modifications to the Act 1996 to the arbitral proceedings relating to the agreement between them, therefore, for the reasons already mentioned hereinabove the Amending Act 2015, including Sections 11(8), 12 along with the Seventh Schedule referred therein apply in the present case to the hilt.

37. Thus, in view of the Amending Act 2015 once any of the contingencies mentioned in Section 11(6)(b) is attracted, the matter goes out of the hands of the parties to the agreement as also the arbitration clause agreed upon as far as appointment of the arbitrator is concerned and the same rests solely in the hands of the court as aforesaid and the appointment of the arbitrator is to be governed by Section 11(8) and 12, especially sub-Section 1 and 5 read with Seventh Schedule referred therein. The earlier decisions namely Northern Railway Administration v. Patel Engineering Co. Ltd., (2008) 10 SCC 240; Union Of India v. Singh Builders Syndicate, (2009) 4 SCC 523; and North Eastern Railway v. Tripple Engineering Works, (2014) 9 SCC 288, requiring adherence to the arbitration clause/agreement first of all and a deviation only thereafter on the surfacing of exceptional circumstances, are, thus, no longer applicable to the cases covered by the Amending Act 2015, in the event of a conflict between the arbitration clause and the provisions of the Amending Act as exists in this case.

38. In view of the above discussion, reliance placed by Sri B.K Shukla, Advocate on the judgment of the Supreme Court in the case of Union of India v. M.P Gupta, (2004) 10 SCC 504; Union of India v. Krishna Kumar (Civil Appeal No. 6324 of 2004, decided on 19.7.2007) does not help his cause as these judgments are based on the law applicable prior to the Amending Act 2015 which has made a vital difference to the legal position as regards appointment of arbitrators. For the same reason arguments advanced by him for appointment of Railway Officials as arbitrator is also not tenable.

39. In view of the above, the name of Justice (Retd.) Sudheer Kumar Saxena is proposed for appointment as Arbitrator.

40. Let a copy of the pleadings on record alongwith the relevant provisions of the Amending Act 2015 be sent to Justice (Retd.) Sudheer Kumar Saxena for eliciting his disclosure in terms of Section 11(8) read with Section 12(1) of the Act, 1996 and Schedule VI and VII as amended by Act 2015, appended thereto, as also his consent for appointment as an arbitrator for resolving the dispute.

41. Steps to be taken by the applicant to facilitate the aforesaid.

42. List this application on 26.8.2016