CODE: - Civil 6

UILS COMPULSORY MOOT COURT FOR 5th YEAR OCT-2019

JOINT-VENTURE (PETITIONER)
V.

RAIL VIKAS NIGAM LTD. (RESPONDENT)

SUBMISSION BEFORE THE HONORABLE HIGH COURT OF FEROZABAD

MEMORIAL ON BEHALF OF THE PETITIONER

MEMORIAL ON BEHALF OF THE PETITIONER 1

 TABLE OF CONTENTS

Table of contents ........................................................................................................................ 2

List of abbreviations .................................................................................................................. 3

Index of authorities .................................................................................................................... 4

Books referred ........................................................................................................................ 4

Books on alternative dispute resolution: - ......................................................................... 4

Books on Constitution: - .................................................................................................... 4

Statutes Referred: - ............................................................................................................ 4

Dictionaries Referred: -...................................................................................................... 4

Websites Referred: - .......................................................................................................... 4

Table of cases ............................................................................................................................. 5

Statement of Jurisdiction............................................................................................................ 6

Statement of facts ....................................................................................................................... 7

Questions presented ................................................................................................................... 8

Summary of arguments .............................................................................................................. 9

Body Of Arguments ................................................................................................................. 10

[A] The Amendment Acts of 2015 & 2019 shall apply to Arbitrations that had commenced
prior to the respective Amendment Acts coming into force. ............................................... 10

[B] Panel of Arbitrators prepared by respondent is contrary to the amended provisions of

Section 12 of the Act of 1996. ............................................................................................. 12

[C] The OM mandates reconstitution of the arbitral tribunals in respect of Arbitrations that
had commenced prior to the Amendment Act coming into force. ....................................... 14

Prayer ....................................................................................................................................... 16

MEMORIAL ON BEHALF OF THE PETITIONER 2

 LIST OF ABBREVIATIONS

S. No. Abbreviation Full Form

1. & And
2. Anr. Another
3. Co. Company
4. Hon’ble Honorable
5. i.e. That is
6. JV Joint-Venture
7. J. Justice
8. Ltd. Limited

9. NIT Notice inviting tender

10. Mr. Mister

11. OM Office Memorandum

12. Ors. Others

13. P. Page

14. PP. Pages

15. Pvt. Private

16. r/w Read with

17. RVNL Rail Vikas Nigam Ltd.

18. SC Supreme court

19. HC High court

20. V. Versus

21. w. e. f With effect form

22. ED Edition

23. LoA Letter of Acceptance

24. U.O. I Union of India

25. NHAI National highway Authority of India

MEMORIAL ON BEHALF OF THE PETITIONER 3

 INDEX OF AUTHORITIES

BOOKS REFERRED
BOOKS ON ALTERNATIVE DISPUTE RESOLUTION: -
 Harman Shergill Sullar. Alternative Dispute Resolution (Shree Ram Law House, 2nd
edition).

BOOKS ON CONSTITUTION: -
 M.P.Jain Indian Constitutional Law, Wadhwa publishers Nagpur, New Delhi, 2003
 D.D. Basu, Constitution of India, Lexis Nexis, 14th edition, 2009
 Dr. Narender Kumar, Constitutional Law of India, Allahabad Law Agency, 2014

STATUTES REFERRED: -
 THE CONSTITUTION OF INDIA, 1949.
 THE ARBITRATION AND CONCILIATION ACT, 1996.

DICTIONARIES REFERRED: -
 BRYAN A. GARNER, BLACK’S LAW DICTIONERY (8TH ED. 2001)
 OXFORD ENGLISH DICTIONARY (2ND ED. 2009)
 WEBSTER’S NEW INTERNATIONAL DICTIONARY
 CAMBRIDGE ADVANCED LEARNERS’ DICTIONARY (3RD ED.)

WEBSITES REFERRED: -
 www.indiankanoon.org
 www.judis.nic.in
 www.manupatra.com
 www.scconline.com
 www.lexisnexis.com
 www.casemine.

MEMORIAL ON BEHALF OF THE PETITIONER 4

 TABLE OF CASES

S.NO CASE CITATION PG.NO

1. Board of Control for Cricket in India (2018) 6 SCC 287. 10
v. Kochi Cricket (P.) Ltd. and Ors.
2. Bharat Broadband Network Limited AIR2019SC 2434 13,14
v. United Telecoms Limited.
3. Ssangyong Engineering and 2019 (3) ARBLR 152 SC 10
Construction Co. Ltd. v NHAI.
4. Voestalpine Schienen GmbH v. Delhi AIR 2017 SC 939 12
Metro Rail Corporation Ltd.

MEMORIAL ON BEHALF OF THE PETITIONER 5

 STATEMENT OF JURISDICTION

The Joint-Venture (JV) hereafter referred to as the petitioner, has approached the Hon’ble High
Court of Ferozabad under Article 2261 of The Constitution of India, 1949 against Rail Vikas
Nigam Limited (RVNL) hereafter referred to as respondent.
.

1
Power of High Courts to issue certain writs
(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in
relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any
Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights
conferred by Part III and for any other purpose.
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person
may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the
cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such
Government or authority or the residence of such person is not within those territories
(3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner,
is made on, or in any proceedings relating to, a petition under clause (1), without-
(a) furnishing to such party copies of such petition and all documents in support of the plea for such
interim order; and
(b) giving such party an opportunity of being heard,
makes an application to the High Court for the vacation of such order and furnishes a copy of such application to
the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of
the application within a period of two weeks from the date on which it is received or from the date on which the
copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of
that period, before the expiry of the next day afterwards on which the High Court is open; and if the application
is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the
said next day, stand vacated
(4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the
Supreme court by clause (2) of Article 32.

MEMORIAL ON BEHALF OF THE PETITIONER 6

 STATEMENT OF FACTS

1. The petitioner is a joint-venture of three companies and was formed for execution of the
work of construction. Notice Inviting Tender (NIT) for the works was issued on31.02.2017.
The petitioner's bid for the works was accepted and a Letter of Acceptance was issued by
RVNL on 12.08.2017. Thereafter, on 23.11.2017, the parties entered into a formal contract
for execution of the works.
2. The petitioner alleges that RVNL failed to fulfil its primary obligations in terms of the
contract. The petitioner also disputes the reduction of variation rates as communicated by
RVNL. In view of the aforesaid disputes, the petitioner invoked the dispute resolution
clause by a letter dated 20.04.2018 and invited the concerned authority for a decision in
respect of the disputes. The concerned authority rejected the claims raised by the petitioner.
This led the petitioner to invoke the arbitration clause by a letter dated 14.09.2018.
3. RVNL responded to the aforesaid notice by a letter dated 28.09.2018, whereby it
communicated a panel of five proposed arbitrators and called upon the petitioner to choose
one person. By a letter dated 27.10.2018, the petitioner nominated Sh. Kartik Kumar-one
of the five persons named in the letter dated 28.09.2018 - as an arbitrator.
4. By a letter dated 25.01.2019, RVNL nominated its arbitrator. In the meanwhile, the
petitioner issued two letters dated 13.01.2019 and 25.01.2019 calling upon RVNL to
reconsider the procedure for constitution of the Arbitral Tribunal. The petitioner claims that
the same is contrary to the provisions of Section 12(5) of the A&C Act as introduced by
the Amendment Act. It is relevant to note that the petitioner also stated in its letter dated
13.01.2019 that the same be treated as a notice under Section 11(5) of the A&C Act.
5. Thereafter, on 06.02.2019, the Arbitral Tribunal was constituted with the appointment of
the Presiding Arbitrator. On 27.04.2019, the petitioner filed its Statement of Claims as well
as an application under Section 12 of the A&C Act challenging the constitution of the
Arbitral Tribunal. On 05.09.2019, NITI Aayog issued the OM. Thereafter, by a letter dated
08.11.2019, Ministry of Railways communicated its approval for implementing the OM.
6. In view of the above, the petitioner sent a letter dated 19.12.2019 requesting that the
Arbitral Tribunal be dissolved and an arbitral tribunal be constituted afresh in terms of the
provisions of the Amendment Act and the OM issued by the NITI Aayog. The Arbitral
Tribunal declined the aforesaid request. This has led the petitioner to file the present
petition.

MEMORIAL ON BEHALF OF THE PETITIONER 7

 QUESTIONS PRESENTED

ISSUE I

WHETHER OR NOT THE AMENDMENT ACTS OF 2015 & 2019 SHALL APPLY TO ARBITRATIONS
THAT HAD COMMENCED PRIOR TO THE RESPECTIVE AMENDMENT ACTS COMING INTO FORCE?

ISSUE II

WHETHER OR NOT THE PANEL OF ARBITRATORS PROPOSED BY RESPONDENT IS CONTRARY TO THE

AMENDED PROVISIONS OF SECTION 12 OF THE ACT OF 1996?

ISSUE III

WHETHER OR NOT THE OFFICE MEMORANDUM MANDATES RECONSTITUTION OF THE ARBITRAL

TRIBUNALS IN RESPECT OF ARBITRATIONS THAT HAD COMMENCED PRIOR TO THE AMENDMENT
ACT COMING INTO FORCE?

MEMORIAL ON BEHALF OF THE PETITIONER 8

 SUMMARY OF ARGUMENTS

ISSUE I
WHETHER OR NOT THE AMENDMENT ACTS OF 2015 & 2019 SHALL APPLY TO ARBITRATIONS
THAT HAD COMMENCED PRIOR TO THE RESPECTIVE AMENDMENT ACTS COMING INTO

FORCE?

A. It is the discretion of the parties to decide in affirmative on this question.

B. Though the amendments are of prospective in nature but legislature provides us with
exception i.e. discretion of parties.
C. In present case the parties agreed in the Arbitration Clause to adhere to any statutory
modification or re-enactment thereof.

ISSUE II
WHETHER OR NOT THE PANEL OF ARBITRATORS PROPOSED BY RESPONDENT IS CONTRARY
TO THE AMENDED PROVISIONS OF SECTION 12 OF THE ACT OF 1996?

A. Relationship of all the Arbitrators falls under first category specified in the Seventh
Schedule which renders them ineligible to be appointed as Arbitrators.
B. Sub-section (5) of Section 12 contains non-obstante Clause and the other party cannot
insist on appointment of the arbitrator in terms of arbitration agreement.

ISSUE III
WHETHER OR NOT THE OFFICE MEMORANDUM MANDATES RECONSTITUTION OF THE
ARBITRAL TRIBUNALS IN RESPECT OF ARBITRATIONS THAT HAD COMMENCED PRIOR TO THE
AMENDMENT ACT COMING INTO FORCE?

A. The OM explains that the PSUs/Department may seek the consent of the contractors to
transfer the pending cases under the amended Arbitration Act, Wherever possible.
B. But in the present case the parties are already agreed to adhere or to transfer the case to
amended Arbitration Act.
C. This renders reconstitution of arbitration tribunal as mandatory in order to make the
arbitration process more cost effective and to settle the disputes in a timely manner.

MEMORIAL ON BEHALF OF THE PETITIONER 9

 BODY OF ARGUMENTS

[A] THE AMENDMENT ACTS OF 2015 & 2019 SHALL APPLY TO ARBITRATIONS
THAT HAD COMMENCED PRIOR TO THE RESPECTIVE AMENDMENT ACTS
COMING INTO FORCE.

1. It is humbly submitted before the Hon’ble Court that in Board of Control for Cricket in
India v. Kochi Cricket (P.) Ltd. and Ors.2 , it was stated that
“Section 26 of the Amendment Act makes it clear that the Amendment Act, as a whole,
is prospective in nature. Thereafter, whether certain provisions are clarificatory,
declaratory or procedural and, therefore, retrospective, is a separate and independent
enquiry.”
2. One of the most significant amendments in the nature of clarification of an existing legal
position is the insertion of Section 87 which clarifies the confusion regarding the
application of the 2015 Amendment Act created by Section 26 therein. According to
Section 26 of the 2015 Amendment Act, the amendments brought by the 2015 Amendment
Act were to apply to the ongoing arbitration proceedings upon agreement to that effect of
both the parties. With respect to the court proceedings arising in connection to such
arbitration proceedings, the Supreme Court, in the judgment in Board of Control for
Cricket in India v. Kochi Cricket (P.) Ltd.3 and in Ssangyong Engineering and
Construction Co. Ltd. v NHAI4 , clarified that the 2015 amendments were retrospective in
the sense that they were applicable to the court proceedings arising out of or in relation to
arbitral proceedings commenced before the introduction of the 2015 Amendment Act.
3. Section 87 seeks to address this concern. Section 87 is applicable retrospectively, i.e.
deemed to have taken effect from 23 October 2015 (the date on which 2015 Amendments
came into effect. In our case it is 23 October 2018.) and clarifies that the 2015 amendments
will be applicable "Unless the parties otherwise agree, only to arbitral proceedings
commenced on or after the commencement of the 2015 Amendment Act and the court
proceedings arising out of or in relation to such arbitral proceedings".
4. So, retrospectivity of the amendment acts depends upon the facts of a particular that
whether the parties are agreed to adhere to the amended provisions or not.
5. The new Section 87 as inserted by Amendment Act of 2019 is as follows-

2
(2018) 6 SCC 287.
3
(2018) 6 SCC 287.
4
2019 (3) Arb. LR 152 (SC).

MEMORIAL ON BEHALF OF THE PETITIONER 10

 Section 87: Effect of arbitral and related court proceedings commenced prior to 23rd
October, 2015.5
87. Unless the parties otherwise agree, the amendments made to this Act by the Arbitration
and Conciliation (Amendment) Act, 2015 (3 of 2016) shall--
(a) not apply to--
(i) arbitral proceedings commenced before the commencement of the
Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016);
(ii) court proceedings arising out of or in relation to such arbitral proceedings
irrespective of whether such court proceedings are commenced prior to or after the
commencement of the Arbitration and Conciliation (Amendment) Act, 2015;
(b) apply only to arbitral proceedings commenced on or after the commencement of the
Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and to court proceedings
arising out of or in relation to such arbitral proceedings.
6. The relevant extract of the arbitration clause which shows agreement for settling dispute
in accordance with the principal act and any modification thereof is set out below: -
“20.3 Arbitration: Any dispute in respect of which amicable settlement has not been
reached arising between the Employer and the Domestic or foreign Contractor related
to any matter arising out of or connected with this contract, the disputes shall be settled
in accordance with the Indian Arbitration Act, 1996 and any statutory modification or
re-enactment thereof.”
7. It is humbly submitted that the underlined part in abovementioned para no. 5&6 clearly
shows that according to Section 87 of the Act of 1986 the amendments shall work in
prospective nature, unless the parties otherwise agree to pass the continuing arbitral
proceedings to the amended provisions. Which has been agreed upon by the parties of the
present case as shown in underlined part of para no. 6, i.e. relevant extract of the arbitration
clause.
8. Therefore, it is humbly submitted before the hon’ble court that it is beyond reasonable
doubt that though the amendments work prospectively but going through the provided
exception in section 87, in present case it works retrospectively as agreed by the parties to
the agreement.

5
In present case it has been assumed that enforcing date is deemed to be 23 October 2018 instead of 23 October
2015.

MEMORIAL ON BEHALF OF THE PETITIONER 11

[B] PANEL OF ARBITRATORS PREPARED BY RESPONDENT IS CONTRARY TO THE
AMENDED PROVISIONS OF SECTION 12 OF THE ACT OF 1996.
9. It is humbly submitted that the respondent proposed the panel of five arbitrators whose
qualification and experience as has been provided in arbitration clause is contrary to Sub-
Section 5 of Section 12 as they fall under the categories provided in seventh schedule,
whose relevant extract is as follows-
(iii) Qualification and Experience of Arbitrators: The arbitrators to be appointed shall
have minimum qualification and experience as under:
(a) One member of the tribunal shall be necessarily a working (not below the rank
of SAG) or a retired officer (retired not below the rank of SAG, age not exceeding
70 years and in reasonably good mental and physical fitness) of Indian Railway
Accounts Service having experience in financial matters related to construction
contracts.
(b) One member shall be a technical person having degree in Engineering and may
be working (not below the rank of SAG) or retired officer (retired not below the
rank of SAG, age not exceeding 70 years and in reasonably good mental and
physical fitness) of any Engineering service of Indian Railways or equivalent
service in RVNL, and having knowledge and experience of the Railway working.
(c) The Presiding Arbitrator shall necessarily be a serving railway/RVNL officer
and he shall have same minimum qualification and experience as specified above
for either of the two arbitrators.
(d) Out of 3 Arbitrators not more than One shall be a retired officer.
10. In the case of Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd.6 it was
stated that
“The main purpose for amending the provision was to provide for neutrality of
arbitrators. In order to achieve this, Sub-section (5) of Section 12 lays down 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, he shall be ineligible to be appointed as
an arbitrator. In such an eventuality, i.e., when the arbitration Clause finds foul with the
amended provisions extracted above, the appointment of an arbitrator would be beyond

6
AIR 2017 SC 939,

MEMORIAL ON BEHALF OF THE PETITIONER 12

 pale of the arbitration agreement, empowering the court to appoint such arbitrator(s) as
may be permissible. That would be the effect of non-obstante Clause contained in Sub-
section (5) of Section 12 and the other party cannot insist on appointment of the
arbitrator in terms of arbitration agreement.” [para no.17]

Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings.
Rule against bias is one of the fundamental principles of natural justice which applied to all
judicial and quasi-judicial proceedings.

11. In the case of Bharat Broadband Network Limited v. United Telecoms Limited7, justice
Nariman in depth considered the effect of 2015 amendment in Section 12 of the Act, that
Section 12(5) is relates to the de jure inability of an arbitrator to act as such. Under this
provision, any prior agreement to the contrary is wiped out by the non-obstante clause in
Section 12(5) the moment any person whose relationship with the parties or the counsel or
the subject matter of the dispute falls under the Seventh Schedule. The sub-section then
declares that such person shall be "ineligible" to be appointed as arbitrator.
12. Further it is humbly submitted that Sub-clause (5) of Section 12 of the Act, which starts
with a non-obstinate clause categorically states that any prior agreement to the contrary,
any person whose relationship, with the parties or counsel or the subject-matter of dispute,
falls under any of the category specified in the Seventh Schedule shall be ineligible to be
appointed as an Arbitrator. Meaning thereby that any agreement prior to the enforcement
of the amended provision will not become binding if the parties have agreed between
themselves for appointment of any person as an Arbitrator, if he is disqualified under the
terms of Seventh Schedule to Section 12(5) of the Act.
13. It has been humbly submitted before the hon’ble court that such an ineligibility shall only
be wiped out with the express agreement in writing in order to waive the applicability of
this sub-section and that too only subsequent to dispute having arisen between them, but in
present case ineligibility of all the arbitrators shall not been waived and hence results in
automatically termination of the mandate of all the arbitrators.

7
AIR2019SC 2434.

MEMORIAL ON BEHALF OF THE PETITIONER 13

[C] THE OM MANDATES RECONSTITUTION OF THE ARBITRAL TRIBUNALS IN

RESPECT OF ARBITRATIONS THAT HAD COMMENCED PRIOR TO THE

AMENDMENT ACT COMING INTO FORCE.

14. It is humbly submitted that in a recent judgment passed by the Apex Court in Civil Appeal
No. 3972 of 2019, Bharat Broadband Network Limited v. United Telecoms Limited8,
decided on 16.4.2019, had distinguished between a situation arising where an Arbitrator
makes a disclosure in writing which is likely to give justifiable doubt as to his independence
or impartiality. Such appointment can be challenged under Section 12(1) to 12(4) read with
Section 13 of the Act, but where such a person becomes "ineligible" to be appointed as an
Arbitrator, there is no question of challenge to such appointment before such Arbitrator. In
such a case, which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted and
the Arbitrator becomes, as a matter of law (i.e. de jure) unable to perform his function,
meaning thereby that his mandate automatically terminates and he shall be substituted by
another Arbitrator under Section 14(1) of the Act.
15. The relevant extract of OM which is in question reads as under:
"In case of contracts/concessions where the process of arbitration was initiated under
the pre-amended Arbitration Act, the PSUs/Department may seek the consent of the
contractors/concessionaires to transfer the pending cases under the amended
Arbitration Act, wherever possible. The shift to amended Arbitration Act is expected
to make the arbitration process more cost effective and help in settlement of the disputes
in a timely manner;"
16. It is humbly submitted that though on plain reading of the aforesaid clause it indicates that
the provisions of the provisions of the A&C Act as amended by the Amendment Act would
be implemented only where the same is feasible. But in our case when the parties already
agreed to adhere any modification, re-enactment or amendment then no question arises of
relying on the OM for transferring the pending case to the amended Arbitration Act.
17. The principles of impartiality and independence cannot be discarded at any stage of the
proceedings, specifically at the stage of constitution of the arbitral tribunal, it would be
incongruous to say that party autonomy can be exercised in complete disregard of these
principles-even if the same has been agreed prior to the disputes having arisen between the
parties. There are certain minimum levels of independence and impartiality that should be

8
AIR2019SC 2434.

MEMORIAL ON BEHALF OF THE PETITIONER 14

 required of the arbitral process regardless of the parties' apparent agreement. A sensible
law cannot, for instance, permit appointment of an arbitrator who is himself a party to the
dispute, or who is employed by (or similarly dependent on) one party, even if this is what
the parties agreed. The concept of party autonomy cannot be stretched to a point where it
negates the very basis of having impartial and independent adjudicators for resolution of
disputes. In fact, when the party appointing an adjudicator is the State, the duty to appoint
an impartial and independent adjudicator is that much more onerous and the right to natural
justice cannot be said to have been waived only on the basis of a "prior" agreement between
the parties at the time of the contract and before arising of the disputes.
18. Therefore, it is submitted before the hon’ble court that the Office Memorandum issued by
NITI AAYOG only talks about seeking the consent of the petitioners by the respondent in
order to transfer the proceedings to the amendment Act, but no question of seeking the
consent arises when parties are already agreed on that point hence making the reconstitution
of the Arbitration panel mandatory in order to settle the dispute in a timely, impartial and
independent manner. Moreover, the Ministry of Railways communicated its approval for
implementing the OM, therefore respondent which is subordinate to the Ministry cannot
insist on appointment of the arbitrator in terms of arbitration agreement.

MEMORIAL ON BEHALF OF THE PETITIONER 15

 PRAYER

Wherefore in the light of facts of the instant case, written pleadings & authorities cited, the
companies in the Joint-Venture (JV) humbly prays before this Hon`ble court that it may be
pleased to hold, adjudge & declare that –

1. The Amendment Acts of 2015 & 2019 shall apply to the present Arbitration proceeding.

2. The panel of Arbitrators proposed by respondent is contrary to Sub Section 5 of Section 12.

3. The Office Memorandum mandates reconstitution of The Arbitral Tribunals as the parties
agreed to adhere to the Amendment Act.

Or pass any order, which the court may deem fit in the light of facts of the case, evidences
adduced, justice & good conscience.

The counsels for Petitioners shall forever humbly pray.

S/d.................................

(Counsel for Applicant)

MEMORIAL ON BEHALF OF THE PETITIONER 16