P.C:

1. This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking reference of disputes arising out of and in connection with Agreement, dated 09.08.2012, to an Arbitrator.

2. The Agreement in question was executed between the parties for commercial exploitation of available space in the Multi-Functional (MFC) Complex at Rajahmundry Station of Vijayawada Division.

3. The applicant claims that as per the terms and conditions of the Agreement, the license was granted for a period of twelve years which was valid up to 09.08.2025 and was subject to renewal in accordance with Clause 2(d) of the Agreement.

4. A formal request is stated to have been made seeking extension of the Agreement for a further period of three years, which was rejected on 14.10.2024.

An appeal preferred before the Divisional Regional Manager is stated to have been pending since 10.03.2025, without any decision having been communicated to the applicant till date.

5. Disputes between the parties, as per the Agreement, were agreed to be resolved though the mechanism of Arbitration, in terms of Clause 13, which reads as under:

               “13. Arbitration:

               In the event of any question, dispute or difference arising under this or in connection with this license 9 except as to any matters the execution of which is a specially provided for these conditions,) the same shall be referred to the Sole Arbitrator appointed by the General Manger, South Central Railway.”

6. A Notice, dated 23.07.2025, was served upon the respondents, invoking the arbitration clause, on account of the disputes having arisen between the parties, proposing the name of a retired District Judge, as a sole arbitrator, to adjudicate upon the disputes, receipt whereof is not denied.

7. It is no longer res integra that a person who has interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.

               In Perkins Eastman Architects DPC vs. HSCC (India) Limited ((2020) 20 SCC 760), the Apex Court held:

               “21. … Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and recognised by the decision of this Court in TRF Ltd.”

8. This principle was subsequently affirmed by a judgment of the Constitution Bench of the Apex Court in the case of Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A Joint Venture Co. (2024 SCC OnLine SC 3219), wherein it was held:

               “129. Equal treatment of parties at the stage of appointment of an arbitrator ensures impartiality during the arbitral proceedings. A clause that allows one party to unilaterally appoint a sole arbitrator is exclusive and hinders equal participation of the other party in the appointment process of arbitrators. Further, arbitration is a quasi-judicial and adjudicative process where both parties ought to be treated equally and given an equal opportunity to persuade the decision-maker of the merits of the case. An arbitral process where one party or its proxy has the power to unilaterally decide who will adjudicate on a dispute is fundamentally contrary to the adjudicatory function of arbitral tribunals.

               …

               169. c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators;

               d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators.”

9. Be that as it may, the present arbitration application is allowed. Justice C. Praveen Kumar, former Judge of the High Court of Andhra Pradesh, is appointed as an Arbitrator, who shall enter upon the reference and adjudicate upon the disputes arising out of and in connection with the Agreement, dated 09.08.2012, and render the Award within the statutory period. The parties shall be free to file detailed claims and counterclaims, before the learned Arbitrator. The learned Arbitrator shall also be entitled to claim the fee as per the provisions of the Fourth Schedule of the Arbitration and Conciliation Act, 1996.

No costs. Pending miscellaneous applications, if any, in this petition, shall stand closed.