ORDER
D.M. Dharmadhikari, J.
1. This application has been filed under Section 8 read with Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred 10 as ‘the Act of 1996’) with a request to the Hon’ble Chief Justice of this Court to appoint a sole arbitrator to decide the disputes between the parties in terms of Clause (9) of the agreement entered into between the parties on 1st of June, 1951 concerning the civil work for providing, supplying and laying 350 mm dia H. S. pipe line for I.W.S.S. Korba, West Area of the South Eastern Coalfields Limited.
2. The application under Section 11 of the Act was filed by the applicant-company on 12-12-1996. The non-applicant/SECL was noticed and it submitted a reply dated 19-7-1997 filed on 4-8-1997 stating that the approach to this Court for appointment of arbitrator is premature as I he stage for arbitration had not then reached. The S.E.C.L. also raised counter-claims against the applicant-company stating that the breah, if any, was on the part of the latter. During pendency of proceedings in this Court, the non-applicant/ S.E.C.L. appointed Shri V. K. Tripathi, Chief Mining Engineer (Retd.) of the South Eastern Coalfields Limited, Bilaspur as the sole arbitrator in terms of the arbitration clause in the contract. The sole arbitrator so appointed issued notice to the applicant-company to submit its claim. The applicant-company objected to the appointment and proceedings of the arbitration stating that since the matter was already in the High Court under Section 11 of the Act, the arbitrator could not proceed. The sole arbitrator thereafter proceeded ex parte, adjudicated the dispute and made an award on 24-2-1998 which has been filed by the applicant on record along with his application (I.A. No. 1994/98) seeking stay of operation and execution of the award.
3. On the abovementioned facts, and the subsequent events resulting into the passing of the arbitration award, learned counsel Shri Ravindra Shrivastava appearing for the applicant-company contends that the non-applicant/ S.E.C.L., on being noticed for appointment of arbitrator, having failed to make the appointment within the notice period, have lost their right to
make the appointment after the applicant had already approached the High Court under Section
11 of the Act for appointment of an arbitrator. The contention advanced on the basis of provisions contained in Section 11 of the Act is that where the matter of appointment is sub judice in Court under Section 11 of the Act, the power of the parties to make appointment is lost. It is submitted that any other interpretation would negative the power of the Court to appoint an independent and impartial arbitrator where the
parties failed to appoint an arbitrator i n accordance with the arbitration clause.
4. Shri P. S. Nair, learned counsel appearing for the non-applicant/S.E.C.L. in his reply submitted that the provisions of Section 11 of the Act nowhere prohibit a party to the dispute to appoint an arbitrator in accordance with the arbitration clause irrespective of the fact that one of the parties has already approached the Chief Justice or his designate for appointment of an arbitrator in terms of the said arbitration clause. It is contended that Section 11 envisages several contingencies in different types of arbitration clauses, in the matter of appointment of arbitrator by the parties or through the Chief Justice on a request made to him. It is submitted that where the parties agree upon a particular procedure for appointment of arbitrator and the appointment is so made in accordance with the agreed procedure, merely because one of the parties had earlier approached the Chief Justice is no ground to hold that the arbitration proceedings initiated in accordance with the arbitration clause are completely nullified. It is contended that since now the arbitrator appointed in terms of the arbitration clause has adjudicated upon the dispute and has passed an award, the award alone is challengeable on permissible grounds under Section 34 of the Act and the present proceedings under Section 11 have been rendered infructuous.
5. In order to decide the legal contentions advanced by the counsel for the parties, it is necessary to examine the language and effect of the provisions contained in Section 11 of the Act needs reproduction in full :
“11. Appointment of arbitrators :–
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to Sub-section (6), the parties are free to agree on a procedure for appointing the
arbitrator or arbitrators.
(3) Failing any agreement referred to in subsection (2), in an arbitration with three arbitral ors, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in Subsection (3) applies and –
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fails to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(5) Failing any agreement referred to in subsection (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties –
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,
a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
(7) A decision on a matter entrusted by Subsection (5) or Sub-section (6) to the Chief Justice or the person or institution designated by him is final.
(8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator shall have due regard to-
(a) any qualification required of the arbitrator
by the agreement of the parties, and
(b) other considerations an are likely to secure the appointment of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.
(10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by Sub-section (4) or Sub-section (6) to him.
(11) Where more than one request has been made under Sub-section (4) or Sub-section (5) or Sub-section (6) to the Chief Justice of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(12) (a) Where the matters referred to in Sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to “Chief Justice” in those sub-sections shall be construed as a reference to the “Chief Justice of India”.
(b) Where the matters referred to in subsections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to “Chief Justice” in these sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in Clause (e) of Sub-section (1) of Section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.”
6. A closer scrutiny and examination of the several sub-sections of Section 11, quoted above, would show that several contingencies in the matter of appointment of arbitrator have been contemplated and the remedy of a request to the Chief Justice is specified therein, Under Subsection (2) of Section 11, the parties are free to agree on a procedure for appointing an arbitrator or arbitrators. In the instant case, Clause (9) of the agreement which contains forum of arbitration lays down the agreed procedure for appointment of arbitrator. Clause (9) of the agreement reads
thus :
“All disputes or difference whatsoever arising between the parties out of or relating to the constitution, meaning and operation or effect of this contract or breach thereof shall be settled by a sole arbitrator appointed by CMD of South Eastern Coalfields Limited and the award of arbitrator shall be final and binding on the parties concerned. The arbitrator may from time to time with the consent of the parties enlarge the, time for making and publishing the award. The arbitration proceedings shall be in accordance with the Arbitration Act, 1940.” Thus, it is to be noted that the parties have agreed for appointment of a sole arbitrator by C.M.D. (Chief Managing Director) of South Eastern Coalfields Limited.
7. As the above-quoted arbitration clause lays down the agreed procedure for appointment of arbitrator, the subject-matter is covered by Subsection (2) of Section 11 and Sub-sections (3), (4) and (5) are expressly excluded from application. The said Sub-sections (3), (4) and (5) cover other contingencies where there are more than one arbitrators to be appointed and on a notice being given by one of the parties the other party fails to make the appointment. In those contingencies, appointment has to be made by the Chief Justice or by any person or institution designated by him.
8. Compared to the provisions in Sub-sections (3) to (5) of Section 11, in a case covered by Subsection (2) of the said Section, where there is an agreed procedure for appointment of an arbitrator or arbitrators, on an approach or request to the Chief Justice under Sub-section (6), the Chief Justice has to take necessary measures in accordance with the arbitration agreement ‘for securing appointment’. The above distinction is clearly brought out in the matter of appointment of arbitrator by the Chief Justice on request under Sub-sections (3) to (5) as compared to taking measures for ‘securing appointment’ of arbitrator under Sub-sections (2) and (6), In sub-sections (3) to (5), on the failure of the parties after notice to appoint arbitrator or arbitrators, the appointment is to be made by the Chief Justice whereas in a case where an agreed procedure for appointment of arbitrator or arbitrators is not followed, under Sub-section (6) on a request by one of the parties, the Chief Justice has merely ‘to
take necessary measures’ for initiating the arbitration proceedings. The contention advanced on behalf of the applicant-company, therefore, cannot be accepted that as in the instant case a legal notice was given by the applicant-company calling upon the non-applicant/S.E.C.L, to appoint an arbitrator within 30 days from the service of notice, the right of the non-applicant to appoint an arbitrator was lost. As has been seen above, this is not a case which is covered by Sub-section (4)(a) or (5). This is a case covered by Subsections (2) and (6) of Section 11 of the Act to which the provision of service of a notice for appointment within 30 days as laid down in Sub-section (4) of the said section has no application.
9. As has been noticed above, under Sub
section (6) where the agreement lays down a,
procedure for appointment of arbitrator referable
to Sub-section (2), the Chief Justice has merely to
take necessary measures for enforcing the
procedure laid down in the agreement for
arbitration. Under Sub-section (6), the Chief
Justice or his designate has not to make any
appointment but to enforce or compel he party to
make the appointment in accordance with the
agreed procedure.
10. In the instant case, after the dispute was raised and a request for appointment of an arbitrator was made by the applicant-company, the non-applicant might have failed to make the appointment within the notice period but for that reason alone it cannot be held that the non-applicant had lost its right to make an appointment in accordance with the agreed procedure contained in the arbitration clause. Merely because such appointment of sole arbitrator has been made during pendency of proceedings under Section 11, or is no ground to hold that the appointment made and the award passed were illegal. None of the provisions contained in various sub-sections of Section 11, particularly Sub-sections (2) and (6), which alone are applicable to the facts of this case, contains any prohibition against any of the parties to the arbitration agreement to make appointment of an arbitrator in accordance with the arbitration clause. The question whether such sole arbitrator has acted fairly and independently is a question which cannot be gone into in these proceedings and that can be raised only by way of challenge to the arbitration award on the ground available under Section 34 of the Act.
11. As has been held above, in a case covered by Sub-section (2) of Section 11, in exercise of powers under Sub-section (6), this Court as designate of Chief Justice has merely to take necessary measures for enforcement of the arbitration clause containing the agreed procedure for appointment of arbitrator. Such arbitrator in accordance with the procedure has already been appointed and as he has in fact passed an award after due intimation to the parties, this Court does not consider it necessary to make any further order.
12. Consequently, the application stands disposed of in terms of the observations made above by leaving the parties to litigate their rights, if any, in proceedings under Section 34 of the Act. All interlocutory applications made in this case also stand disposed of.