JUDGMENT
Hima Kohli, J.
1. The present petition is filed by the petitioner under the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 (in short ‘the Act’) seeking for appointment of an Arbitrator.
2. Counsel for the petitioner submits that the petitioner is a manufacturer and supplier of telecom cables and had participated in a tender floated by the respondent/BSNL on 12.1.2005 for procurement of underground cables. The petitioner was a successful bidder in the aforesaid tender and was issued a purchase order by the respondent on 30.7.2005. Counsel for the petitioner submits that the terms and conditions of the tender included an arbitration clause as contained in Clause 20, which is reproduced hereinbelow:
20 ARBITRATION
20.1 In the event of any question, dispute or difference arising under this agreement or in connection there-with (except as to matters, the decision of which is specifically provided under this agreement), the same shall be referred to the sole arbitration of the CMD, BSNL or in case his designation is changed or his office is abolished, then in such cases to the sole arbitration of the officer for the time being entrusted (whether in addition to his own duties or otherwise) with the functions of the CMD, BSNL or by whatever designation such an officer may be called (hereinafter referred to as the said officer), and if the CMD or the said officer is unable or unwilling to act as such, then to the sole arbitration of some other person appointed by the CMD, BSNL or the said officer. The agreement to appoint an arbitrator will be in accordance with the Arbitration and Conciliation Act, 1996. There will be no objection to any such appointment on the ground that the arbitrator is a Government Servant or that he has to deal with the matter to which the agreement relates or that in the course of his duties as a Government Servant he has expressed his views on all or any of the matters in dispute. The award of the arbitrator shall be final and binding on both the parties to the agreement. In the event of such an arbitrator to whom the matter is originally referred, being transferred or vacating his office or being unable to act for any reasons whatsoever, the CMD, BSNL or the said officer shall appoint another person to act as arbitrator in accordance with terms of the agreement and the person so appointed shall be entitled to proceed from the stage at which it was left out by his predecessors.
3. Counsel for the petitioner submits that the advance purchase order dated 30.7.2005 placed on the petitioner contained a price variation clause which required the respondent to calculate the price variation of copper, based upon the monthly copper price circular issued by the respondent/BSNL. He submits that the final copper wire price w.e.f. April, 2005 onwards was issued by the respondent/BSNL, vide its circular dated 21st August, 2006, which the petitioner disputed by issuing a notice dated 6.12.2006 to the respondent/BSNL calling upon the respondent to resolve the disputes and differences with regard to price variation of copper. Though the aforesaid letter was replied to by the respondent/BSNL, vide reply dated 28.12.2006, the request of the petitioner was not accepted and the petitioner was called upon to furnish further documents. The aforesaid reply was rejoined to by the petitioner, through counsel, vide notice dated 5.3.2007, wherein the respondent was also requested to appoint an Arbitrator in terms of Clause 20 of the contract. The respondent issued a reply dated 4.4.2007 refusing the request of the petitioner for appointing an Arbitrator, thus, compelling the petitioner to file the present petition.
4. Notice on the aforesaid petition was issued on 23.5.2007. Reply to the aforesaid petition is filed by the respondent, wherein the respondent does not dispute the existence of the arbitration clause or the fact that despite notice dated 5.3.2007, the respondent has not taken any steps for appointing an Arbitrator in terms of the Clause 20 of the contract governing the parties. However, counsel for the respondent states on merits that price fixation of copper was within the discretion of the respondent and once the purchase orders were issued by the respondent and accepted by the petitioner, the petitioner is barred from raising any dispute on the said issue.
5. The provision of Section 11(6) of the Act only requires the Court to verify form the pleadings of the parties as to whether an arbitration clause governs the parties and, if so, whether the petitioner has made a request to the respondent calling upon it to appoint an Arbitrator in terms of the arbitration clause. Lastly, the Court must satisfy itself that the claims sought to be referred to arbitration are not time barred, and that there is no accord & satisfaction in respect thereto. The following judgments have been rendered by the Supreme Court in the context the nature of orders to be passed on an application preferred under Section 11(6) of the Act:
(i) SBP & Co. v. Patel Engineering Ltd. and Anr. (2005) 8 SCC 618
(ii) Shree Ram Mills Ltd. v. Utility Premises (P) Ltd. (2007) 4 SCC 599.
6. In the present case, it is not disputed that the petitioner had raised a dispute with the respondent and called upon the respondent to appoint an Arbitrator. It is also an admitted position that an Arbitrator has not been appointed by the respondent within 30 days from the date of receipt of the notice from the petitioner for appointment of an Arbitrator or even prior to the date of institution of the present petition. The fact as to whether the claims raised by the petitioner can be termed as a `dispute or a difference’ arising under the agreement, for invocation of arbitration, shall be a subject matter of consideration by the learned Arbitrator. This Court while examining the disputes between the parties, is only required to arrive at a prima facie conclusion as to whether the parties arrived at a full and final accord or not and whether the claims raised by the petitioner are alive or not. Both the aforesaid tests are satisfied by the petitioner as there is no full and final accord & satisfaction arrived at between the parties and the claims raised by the petitioner are stale. It will, therefore, be for the learned Arbitrator to take a decision on merits as to whether the claims raised by the petitioner against the respondent are maintainable or not.
7. In the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. reported in IV (2000) CLT 191 (SC) : VII (2000) SLT 543 : JT 2000 (Suppl.2) SC 226, the Supreme Court has held that if the vacancy of an arbitrator is not filled till the party approaches the Court and files a petition for appointment of an arbitrator by the designated authority of the Chief Justice of that Court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply the vacancy by the opposite party stands extinguished. The ratio of the aforesaid case was approved by the Supreme Court in Punj Lloyed Ltd. v. Petronet MHB Ltd. and it was again followed by a Division Bench of this Court in the case of Delkon (India) Pvt. Ltd. v. G.M. Bharat Heavy Electricals Ltd. .
8. In view of the aforesaid judgments, the respondent has lost its right to appoint an Arbitrator, it having failed to do so within 30 days from the date of receipt of the notice from the petitioner for appointment of an Arbitrator or even prior to the date of institution of the present petition.
9. Thus, this Court has no option but to allow the present petition filed by the petitioner. Accordingly, Justice Jaspal Singh (Retd.) is appointed as an Arbitrator to adjudicate the disputes between the parties. The parties are directed to appear before the Arbitrator on 29th May, 2008 at 4.30 P.M.
10. The fee of the learned Arbitrator, as fixed by him, shall be shared by the petitioner and the respondent in equal proportions, apart from the administrative expenses.
11. The parties are at liberty to raise before the learned Arbitrator all their disputes in respect of the contract governing them, as envisaged in the arbitration clause. The respondent shall be at liberty to raise objections, if any, as to the maintainability of the claims raised by the petitioner. The petition is disposed of.
12. A copy of this order be forwarded by the Registry to the learned Arbitrator for information. The parties are also at liberty to inform the learned Arbitrator about this order.