JUDGMENT
1. This Court while issuing notice in FAO No.28 of 2001 vide order dated 1.6.2001 directed that till disposal of Misc.(Arb) Case No.213/
2001 pending in the Court of District Judge, Kamrup, further proceedings initiated by the sole arbitrator appointed by the respondent shall remain stayed.
2. This miscellaneous petition has been filed for vacating the aforesaid order passed in FAO No.28/2001.
3. I have heard Mr. G.N. Sahewalla, learned sr. counsel for the respondent-applicant and also Mr. P.C. Deka, Learned Senior Counsel for the appellant-opposite party.
4. The applicant M/s Ranjul Baruah, respondent in FAO No.28 of 2001 was awarded with contract works by the opposite party M/s Numaligarh Refinery Ltd. for construction and other works. The applicant raised certain disputes. Reminders were also issued from time to time to settle the same. Having failed to get any positive response, the respondent insisted for appointment of an arbitrator as per terms of Clauses-110 of the agreement. The petitioner Company did not respond. Thereafter, the applicant vide letter dated 20.9.2000 send a panel qf three names in terms of Clause-110 comprising of the following persons with a request to select any of them for appointment as the Sole Arbitrator within 30 days:-
(1) Justice Jitendra Nath Choudhury Former Judge, High Court at Calcutta, 6, Rowland Road, Calcutta – 700 020.
(2) Mr. Santosh Kumar Chandra, Former Engineer-in-Chief and Ex-Ofilcio Secretary, P.W.D., Govt. ofWest Bengal 13/4, Central Park, Calcutta – 700 032.
(3) Mr. Tathagata Roy, Former Chief Engineer, Metro Railway, Calcutta and Ex-Offlcio General Manager RITES, P-70, Lake Road, Calcutta – 700 029.
This letter was sent by Registered Post. As there was no response, as per terms of the arbitration clause, this applicant appointed Mr. Santosh Kumar Chandra, former Engineer-in-Chief and Ex-Officio Secretary, P.W.D., Government ofWest Bengal as the sole arbitrator. On appointment as such, the sole arbitrator initiated arbitration proceedings and issued notice. On receipt of notice the petitioner Company filed the Miscellaneous (Arbitration) Case No. 213/2001 before the Court of District Judge, Kamrup for stay of further proceedings initiated by the arbitrator. The Learned District Judge vide the impugned order dated 1.6.2001 refused to interfere with the proceedings without hearing the other side and, for this purpose, ordered that notice be issued to the Contractor fixing 19.6.2001. Hence, this appeal by the Company.
5. Mr. G.N. Sahewalla. learned sr. counsel appearing for the
respondent-applicant submitted that the sole arbitrator has been appointed in terms of the arbitration clause and as such they are not required by law to approach the Hon’ble Chief Justice for appointment of the sole arbitrator as per the provisions of the Scheme framed under Section 11 of the Arbitration and Conciliation Act, 1966. Mr. F.C. Deka, learned Sr. counsel for the appellant-opposite party, however, submitted that they have never agreed to the appointment of Mr. Santosh Kumar Chandra as the sole arbitrator and. therefore, the Hon’ble Chief Justice has to be approached for such appointment.
6. At this stage, for better appreciation of the controversy at hand, I would like to extract the relevant excerpts from the arbitration clause which include the agreed procedure on appointment of the arbitrator. It is as follows:-
“For the purpose of appointing the sole Arbitrator referred to above, the Appointing Authority will send within thirty days of receipt of the notice, to the CONTRACTOR a panel of three name persons who shall all be presently unconnected with the organisation for which the work is executed.
The CONTRACTOR shall on receipt of the names as aforesaid, select any one of the persons named to be appointed as a sole Arbitrator and communicate his name to the appointing Authority within thirty days of receipt of names. The Appointing Authority shall thereupon without any delay appoint the said person as the sole Arbitrator. If the CONTRACTOR fails to communicate such selection as provided above within the period specified, the Appointing Authority shall make the selection and appoint the selected person as the Sole Arbitrator.
If the Appointing Authority fails to send to the CONTRACTOR the panel of three names as aforesaid within the period specified, the CONTRACTOR shall send to the Appointing authority a panel of three names of persons who shall all be unconnected with either party. The Appointing Authority shall on receipt of the names as aforesaid select any one of the persons named and appoint him as the sole Arbitrator. If the Appointing Authority fails to select the person and appoint him as the sole Arbitrator thin 30 days of receipt of the panel and inform the CONTRACTOR accordingly, the CONTRACTOR shall be entitled to appoint one of the persons from the panel as the sole Arbitrator and communicate his name to the appointing authority. If the Arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reasons whatsoever, another sole Arbitrator shall be appointed as aforesaid.
The venue of arbitration shall be such place as may be fixed by the Arbitrator in his sole discretion.
The award of the Arbitrator shall be final and binding on both the parties.”.
7. The arbitration clause as above provides for amicable settlement of dispute falling which either of the parties has been given the option to issue written notice for appointment of the arbitrator. It is provided that on receipt of such a notice, the appointing authority will then send within 30 days of the receipt of the notice to the Contractor a panel of three names for selection of one of them for appointment. The choice of the Contractor has to be communicated to the appointing authority within 30 days and the appointing authority will appoint the person chosen by the Contractor as the sole Arbitrator. In case of failure by the Contractor to communicate his choice, the appointing authority has been given the absolute powers of selection and appointment from the panel forwarded by them to the Contractor. If is further provided thai in case the appointing authority fails to send to the Contractor the panel of thee names within the specified time, the Contractor shall forward a panel of three names of his choice to the appointing authority and the appointing authority shall appoint one of them as the sole arbitrator. IN default, the Contractor has been given the power to appoint one of such person from his panel and to communicate the names to the appointing authority.
8. It would be obvious from the documents annexed that in the instant case the applicant as Contractor raised disputes and requested the appointing authority to appoint the sole arbitrator. The appointing authority did not respond to the above request and, therefore, the applicant forwarded a pane;l of three names quoted above for appointment by them. The appointing authority did not act upon it and failed to appoint any one of them. Thereafter the applicant appointed Mr. Santosh Kumar Chandra as the sole arbitrator and communicated the same to the authority concerned. A bare reading of the provisions of the arbitral clause indicate that the Contractor was authorised by agreement to appoint one of the person from the panel forwarded by him on failure on the part of the appointing authority to act upon the panel and, therefore, appointment of Mr. Santosh Kumar Chandra as the sole arbitrator in the instant case
appears to have been made in strict compliance of the arbitration agreement.
9. Mr. P.C. Deka, learned sr. counsel also raised objection on the ground that they have not agreed to the appointment of Mr. Santosh Kumar Chandra and, hence, the sole arbitrator appointed by the applicant has no jurisdiction to continue with the arbitration proceedings. But the agreement nowhere indicates that the sole arbitrator appointed by the Contractor from the panel forwarded by him has to be approved by the appointing authority. The power has been reserved with the Contractor to appoint one of such persons from the panel in the event of failure on the part of the appointing authority. Hencee the appointment of the sole arbitrator in the instant case cannot be said to be contrary to the provisions of the arbitration agreement.
10. Sub-section (2) of Section 11 of the Act of 1996 provides that the parties are free to agree on a procedure for appointment or arbitrator or arbitrators subject to the provisions of Sub-section (6). Sub-Section (5) empowers the Chief Justice to appoint arbitrator when the agreement referred to in Sub-section (2) fails. It is, therefore, obvious that the parties are free to agree on a procedure for appointment of sole arbitrator. It means that either of the parties can be vested with the powers to appoint the arbitrator. The Chief Justice is vested with the powers of appointment of the sole arbitrator only when the parties fail to agree on the arbitrator as per agreement. Sub-section (6) provides for a request to the Chief Justice to take necessary measure on happening of one of the three contingencies mentioned therein.
11. A combined reading of both the Sub-sections clearly indicates that the Chief Justice comes in only when the parties fail to act on an agreement procedure. But in a given case where the agreement provides alternately the powers of appointment with either of the parties and the sole arbitrator is appointed by one of the parties so empowered under the agreement, such appointment cannot be treated as Illegal or contrary to the provisions of law merely because the other party does not agree to the appointment of the person appointed by the party so empowered. It cannot be treated as a case of failure of an agreement as referred to in Sub-section (2) and (6) of the Act.
12. In the instant case, the appointing authority failed to forward the panel of three ames for selection by the Contractor. They also failed to select any person from the panel forwarded by the Contractor. It was only then the Contractor i.e. the applicant invoked his powers of appointment as per terms of the arbitration agreement.
The words “unless the agreement on the appointment procedure provides other means for securing the appointment” incorporated in clause (e) of Sub-section (6) apparently operates as a clog on the objection raised by the petitioner company that they are not agreeable to the appointment of Mr. Santosh Kumar Chandra as the sole arbitrator. The appellant Company in the instant case undoubtedly failed to act as per terms of the agreement which resulted in devolution of the powers of appointment with the Contractor. The appointment of the sole arbitrator by the Contractor on the above contingency has been in compliance with the terms of agreement in letter and spirit. Therefore, the instant case cannot be treated as one for the Chief Justice to interfere and appoint the sole arbitrator.
13. In the instant case. I do not find any illegality in the appointment of Shri Santosh Kumar Chadnra as the sole arbitrator. The grounds for challenge as provided in Section-12 have not been set in motion in this case. Even then, Section 13 provides that such a challenge has to be decided by the arbitral Tribunal. This provision clearly ousts the jurisdiction of the Court in such matters.
14. Mr. Deka, learned Sr. counsel for the appellant submitted that the jurisdiction clause provides that the Courts at Guwahati will only have the jurisdiction to hear and decide the disputes between the parties. The learned counsel also argued that the sole arbitrator based at Calcutta cannot acquire jurisdiction in the matter. In my opinion, the jurisdiction clause in the agreement refers to the ‘court’ which obviously means the Civil Court of competent jurisdiction within the meaning of Section 2(e) of the Act. An Arbitral Tribunal is not a Court as defined in Section 2(e). Hence, the jurisdiction of the sole arbitrator duly appointed by the Contractor cannot be ousted taking the aid of this clause.
15. Mr. Deka, learned Sr. counsel further argued that there is no referable disputes and, hence, the appointment of the sole arbitrator cannot be sustained. In my opinion when a dispute is raised by a party to an arbitration agreement and denied by the other, it has to be treated as a dispute within the meaning of arbitration clause to be adjudicated by the Arbitral Tribunal. One of the main objects of the Act is to minimise the supervisory role of Courts in the arbitral process. The objection raised Is, therefore, exclusively within the Jurisdiction of the Arbitral Tribunal and the court as defined in Section 2(e) cannot be moved for a decision on the mater. The objection in this behalf may be raised before the Tribunal which will dispose of the same in accordance with the provisions of the agreement and the law.
16. In the result, this miscellaneous petition for vacating the interim order passed on 1.6.2001 is allowed and the direction that further proceedings initiated by the sole arbitrator shall remain suspended is hereby vacated.
16. This miscellaneous petition accordingly stands disposed of.