JUDGMENT
C.K. Mahajan, J.
1. By way of this petition, the applicant seeks
appointment of an independent Arbitrator in terms of
Section 11(6) of the Arbitration and Conciliation Act,
1996 for adjudication of disputes and differences
between the parties.
2. Pursuant to tender notice issued by
respondent No. 1, the petitioner submitted its offer to
respondent No. 2 for supply of 3000 M.T. of HTS wire
of 3X3 mm strand (herein after called as Goods) as per
specification IS:6006/1983. By letter dated
30.12.1997, the respondent No. 2 made a counter offer
to the petitioner for supply of 3000 MT of HTS wire as
per specification IS-1785 (Part I) 1983 and IS-6006
(1983) as per their terms and conditions. The
petitioner accepted the offer vide letter dated
2.1.1998. Formal contract was sent to the petitioner
by letter dated 18.2.1998 for making supplies in terms
thereof. The contract contained an arbitration clause
which provides for reference of disputes or
differences to the sole arbitration of a Gazetted
Railway Officer appointed to be the Arbitrator by the
General Manager. The said contract was duly sealed,
signed and executed by the petitioner and was
delivered to the office of respondent along with its
letter dated 23.2.1998. In terms of said contract,
the Railway Board issued release order upon the
petitioner for supply of said 3000 Metric Tones of
Goods in favor of Central Railway to the extent of
2000 Metric Tonnes and South Eastern Railway to the
extent of 1000 Metric Tones. The respective Zonal
Railways issued dispatch instructions from time to
time for supply of Goods. The petitioner manufactured
the goods in terms of instructions received. The
Goods were required to be inspected by the concerned.
Sleeper Manufacturing Units. The concerned sleeper
manufacturing units failed and neglected to carry out
such inspections. The petitioner called upon the
concerned sleeper manufacturing units to make
financial arrangement for making payment of the Goods
in terms of the contract, which they wrongfully and
illegally failed and neglected to do so. In part
compliance of aforesaid order placed by the Railway
Board, the sleeper manufacturing units attached to the
South Eastern Railway lifted only 36 Metric Tonnes of
the Goods and the sleeper manufacturing units attached
to the Central Railway lifted 1347 Metric Tonnes of
the Goods. 1617 Metric Tonnes of the Goods were
remain to be lifted by the said Zonal Railways. The
respondents failed to fulfill their contractual
obligations. Therefore, the contract could not be
completed within the stipulated period. Disputes and
differences arose between the parties. The petitioner
invoked the arbitration clause by way of legal notice
dated 1.12.2000. The respondents failed to appoint
the Arbitrator. hence the present petition.
3. Notice was issued to the respondents by
order dated 20th December, 2001. The respondents
entered appearance on 9th July, 2002 and it was
brought to the notice of the Court that an Arbitrator
was appointed by the respondents on 7th March, 2002.
Till date, no reply has been filed by the respondents.
4. Counsel for the respondents, however,
resisted petition on the ground that in terms of
arbitration agreement between the parties, Gazetted
Officer of the Railway is required to be appointed as
an Arbitrator. He states that this Court cannot
appoint an independent Arbitrator in the first
instance. He placed reliance on a decision of Kerala
High Court in Bel House Associates Pvt. Ltd. v.
The General Manager, Southern Railway, Madras and
Anr. AIR 2001 Kerala 163 wherein the court held
that the Court must implement the procedure agreed
upon between the parties for appointment of an
Arbitrator. He, however, conceded that Arbitrator was
not appointed by the respondents within 30 days from
the date of invocation of arbitration clause and prior
to filing of the petition. The Arbitrator was
appointed during the pendency of the petition.
5. Counsel for the petitioner contends that the
respondents had no power to appoint an Arbitrator
during the pendency of the petition as they had
forfeited their right to do so. In support of his
contention, he placed reliance on the decision of
Supreme Court in Datar Switchgears Ltd. v. Tata
Finance Ltd. and Anr. JT 2000 (Suppl. 2) SC 226 wherein
the Supreme Court observed as under:-
“So far as cases falling under Section 11(6)
are concerned – such as the one before us – no
time limit has been prescribed under the Act,
whereas a period of 30 days has been
prescribed under Section 11(4) and Section
11(5) of the Act. In our view, therefore, so
far as Section 11(6) is concerned, if one
party demands the opposite party to appoint an
arbitrator and the opposite party does not
make an appointment within 30 days of the
demand, the right to appointment does not get
automatically forfeited after expiry of 30
days. If the opposite party makes an
appointment even after 30 days of the demand,
but before the first party has moved the Court
under Section 11, that would be sufficient.
In other words, in case arising under Section
11(6), if the opposite party has not made an
appointment within 30 days of demand, the
right to make appointment is not forfeited but
continues, but an appointment has to be made
before the former files application under
Section 11 seeking appointment of an
Arbitrator. Only then the right of the
opposite party ceases…..”
6. I have heard learned counsel for the
parties, perused the petition and considered the
documents on record. I have also perused the
decisions relied upon by counsel for the parties.
7. This Court in the case of B.W.L. Ltd. v.
U.O.I. (AA No. 162/2001) decided on dated 10th May,
2002 had appointed an independent Arbitrator as the
defendants failed to appoint an Arbitrator in terms of
Arbitration clause within the statutory period of 30
days. This Court held that the respondent had
forfeited its right to appoint an Arbitrator and
appointed an Arbitrator.
8. In light of above, I am of the view that the
decision relied upon by counsel for the respondent is
of no help in view of the decision of Supreme Court in
Datar Switchgears Ltd. and the decision of this Court
in B.W.L. Ltd. (supra). The respondents have
forfeited their right to appoint the Arbitrator as
they failed to appoint Arbitrator within 30 days and in
any case before filing of the petition.
9. Following the aforesaid decision of Supreme
Court and this Court, the petition is allowed. The
appointment of Mr. C.P. Tayal, Chief Track Engineer,
by the respondent is revoked. Mr. Justice A.K.
Srivastava (Retd) is appointed as an Arbitrator for
adjudication of disputes and differences between the
parties. The Arbitrator shall fix his own fee.
10. A copy of the order be sent to the
Arbitrator for information.
