JUDGMENT
V.S. Aggarwal, J.
1. By this common order the two AAs 30 and 31 of 2000 can conveniently be disposed together because not only the parties are common, even the controversies as well as the facts are identical. It is therefore convenient to dispose them together.
2. The petitioner Mr. Kiran Construction Company has filed the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996. It has been asserted that the petitioner was awarded the work of construction of civil and structural works pertaining to Part B i.e. Balance Civil and Structural Works for plant building and pump foundation for IOC Bhatinda Oil Terminal. The agreement contained an arbitration clause. The work was completed to the entire satisfaction of the respondents but disputes have arisen between the parties. The petitioner requested respondent 3 for appointment of the sol arbitrator in terms of arbitration clause on 6.7.1998. Respondent No. 3 did not make any appointment for a period of 10 months and a reminder was sent on 9.5.1999. Respondent No. 3 responded to the letters only on 20th October, 1999 and it as mentioned that petitioner should send the list of disputes which were required to be adjudicated. The petitioner sent a detailed list of disputes vide letter of 4th December, 1999. Since then because no arbitrator was appointed and respondent No. 3 is alleged to have maintained complete silence, the present petition has been filed.
3. Respondents 1 and 2 have contested the petition. Preliminary objection has been raised that the petition has become infructuous because Shri C Ramachandaran, Dy. General Manager of Indian Oil Corporation has been appointed as the sole arbitrator on 4th April, 2000. He has entered upon the reference and served a notice to both the parties. It is not disputed that in the contract there was an arbitration clause and that the petitioner had earlier written for appointment of the arbitrator in 1998, as alleged by the petitioner. It is denied that respondent 3 had maintained complete silence and it is reiterated that the arbitrator has since been appointed and therefore the petition must be taken to have become infructuous.
4. During the course of submissions learned counsel for respondents 1 and 2 had highlighted the fact that since the arbitrator has been appointed the petition must be taken to have become infructuous. The arbitrator so appointed was not acceptable to the petitioner who urged that since the arbitrator has been appointed after the petitioner have moved the present petition under sub-section (6) to section 11, therefore, the respondents 3 had no right to appoint the arbitrator. This position as such was not controverter specifically but it was urge vehemently that even on behalf of respondent 1 and 2 that ordinarily once a procedure ha been agreed upon as to who is to appoint arbitrator and that has been adhered to, even if the petition has been filed, the court should allow the same arbitrator in accordance with the agreement to proceed with the matter.
5. In the face of the aforesaid the short question that comes up for consideration is as to whether the arbitrator so appointed by respondent No. 3 should be allowed to continue as the arbitral tribunal or not. Sub-section (6) to Section 11 of the Arbitration and Conciliation Act reads as under:-
6. Section 11(6) of the Act reads as under:-
(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 he agreement on the appointment procedure provides other means for securing the appointment.
7. The provisions are clear and language is plain that when an appointment procedure ha been agreed between the parties and the party fails to act as required under the procedure and they even fail to reach an agreement or the person who has to appoint the arbitrator fails to perform the said function a request can be made to the Chief Justice or any person nominated/designated by the Chief Justice to take the necessary measure. This question in fact has been answered by the Supreme Court in the case of Datar Switchgears Ltd vs. Tata Finance Ltd & Anr. 2000(3) Arb. LR 447:
19. 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 therefore the first party has moved the Court under Section 11, that would be sufficient. In other words, in cases 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. We do not therefore agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited.”
(emphasis added)
8. In the other words, the Supreme Court has specifically held that if the arbitrator is appointed after other party has moved the court, the right to appoint the arbitrator is forfeited or ceases. Before that indeed the respondent could appoint the arbitrator as agreed. In face of this position indeed the respondents 1 and 2 cannot be heard to state and urge that respondents 1 and 2 even after the petitioner had filed the present application have the right to appoint the arbitrator. Needles to emphasis at this sage that the present petitions had been filed on 20th January 2000 while the arbitrator as per the respondents 1 and 2 themselves had been appointed on 28th April, 2000.
9. Despite that learned counsel for respondents 1 and 2 urged that since the arbitrator has been appointed still the said arbitral tribunal should be allowed to continue with the said proceedings. Reliance was placed on the decision of this court in the case of DLF Industries Ltd. vs. Indian Oil Corporation Ltd. In AA 45/99 decided on 14th March, 2001. The facts in the cited case were that there were disputes between the parties and it contained an arbitration clause. A notice had ben served by the petitioner in that case on 6th October, 1997. There was no response. The petition was filed in the court on 9th February, 1999 and on the same date the arbitrator had bee appointed. It was this important fact that prevailed with this court in holding that the arbitrator so appointed should be allowed to continue with the proceedings and that the nominee of the Chief Justice has merely to take measures for enforcement of the arbitration clause contained in the appointment or arbitrator.
10. It is well known that unless specifically a point of law has been decided the ratio decidendi of decision would be confined to the facts of this case. As noted above in the decision rendered by this Court in the case of DLF Industries (supra) the petitioner in that case had moved the court and on the same date the arbitrator had been appointed. There was no inordinate delay and it was this fact which prompted this court not to appoint an independent arbitrator.
11. Reliance further was placed on the decision of this court in the case of Modi Korea Telecommunications Ltd. vs. Deptt. of Telecommunications 2000 III AD (Delhi) 101. In the case referred to the petition had been filed on 13th September, 1999. The arbitrator had been appointed on 21st October, 1999 in accordance with the arbitration clause. This court held that respondent had not unduly delayed the appointment of the arbitrator and therefore the appointment as such could not be challenged. But with utmost respect it must be stated that the said decision runs counter to the decision of the Supreme Court in the case of Dattar Switchgears Ltd. (supra). In fact any by that time the decision in the case of Dattar Switchgears (supra) had not even been pronounced. Thus, both the said decisions are distinguishable.
12. Keeping in view the aforesaid indeed the plea of respondent 1 and 2 in this regard cannot be accepted. In fact one need hardly emphasis in thus regard that ordinarily the court would accept the procedure as per the agreement for appointment of the arbitrator. But in cases like the present where the petitioner is not ready to submit and has serious disputes about the arbitrator so appointed and insist that keeping in view the inordinate delay the court may appoint an independent arbitrator the said fact cannot be lost sight of. This is apparent from the face of the record. The petitioner had served the notice in this regard on 6th July, 1998. A reminder was issued on 9th May, 1999. The reply only came on 20th October, 1999 seeking the claim laid by the petitioner which were given on 4.12.1999. Still the petitioner appointed the arbitrator in April 2000. It is abundantly clear form narration of these facts that there has been inordinate delay in appointment of the arbitrator by the respondents 1 and 2, the petitioner therefore has a just grievance to urge that an independent arbitrator may be appointed.
13. As a result of these reasons, therefore, the objections are allowed and since the respondent No. 3 had been appointed after the petitioner had approached the court it must be held that it had lost the right to do so. Instead Justice Jaspal Singh, a former Judge of this court is appointed as the arbitrator to adjudicate the disputes mentioned in paragraph 9 of the petition. The learned arbitral tribunal will fix his own fees.