JUDGMENT
Mukul Mudgal, J.
1. This is an petition under Section 11(6) of the Arbitration and Conciliation Act, 1996(hereinafter referred to as the `Act’) for appointment of an independent arbitrator and discloses the indifference of the public sector undertakings on their belated response to the request for appointment of an arbitrator and the consequences thereof.
2. The parties to this petition entered into a tender/contract for purchase of 12 Fibre(12F) and 24Fibre(24F) Optical Fibre Cables by the respondents. The petitioner is the supplier and the purchaser/respondent is the Bharat Sanchar Nigam Limited. Clause 20.1 of the Agreement between the parties providing for settlement of disputes by way of arbitration reads as follows:-
“Clause 20.1-In the event of any question, dispute or difference arising under this agreement or in connection therewith (except as to the matters, the decision to which is specifically provided under this agreement), the same shall be referred to the sole arbitration of the CMD, BSNL, New Delhi 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, BSNL 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 BSNL 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 BSNL 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 reason whatsoever, the CMD, BSNL or the said officer shall appoint another person to act as an 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. It is not in dispute that upon disputes arising between the parties and in accordance with the above clause, the petitioner had called upon the respondent No.2 to appoint an arbitrator by addressing a communication to the CMD, BSNL as provided in the aforesaid clause 20.1 on 28th January, 2004 by a letter admittedly received by the respondents. There was no response from the respondent No.2. On 15th March, 2004 the petitioner approached this Court under sub-section (6) of Section 11 of the Act. In reply to the arbitration petition, Mr. S. Pattjoshi appears on behalf of the respondents and has stated that they have now appointed an arbitrator on 17th May, 2004. It is not in dispute that the said appointment was after the petitioner approached this Court on 15th March, 2004 and even after the service of the notice upon the respondent in April, 2004. The position of law in respect of the delayed response to a request for appointment of an arbitrator is to be found in the judgment of the Supreme Court in Datar Switchgears Ltd. Vs Tata Finance Ltd. & Another reported as JT 2000 (Suppl.2) SC 226 wherein the relevant para 19 reads as follows:-
“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 before 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.”
4. A learned Single Judge of this Court in B.W.L. Ltd. Vs M.T.N.L. 2000 IV AD (DELHI) 165 crystallized the position of law in relation to the delayed response to the request for appointment of an arbitrator as under:-
“It has now become common place for persons who have retained this power of appointment of an Arbitrator, not to act at all or to act with such obduracy as to render an Arbitration clause totally meaningless. The vehemence with which the present petition was opposed, often caused me to forget that it was only the appointment of an Arbitrator to adjudicate upon the claims raised by both parties and not the disposal of objections, that was in debate. After hearing lengthy arguments it would be an abdication of judicial duty if the Respondents were still permitted to make an appointment of the Arbitrator. The State is expected to act without arbitrariness and with fairness and in furtherance of the well-being of its citizens. It is also expected to know the law, especially as laid down by the Supreme Court. It cannot be excused if its action tantamount to emasculating the laws-i.e. of expeditious disposal of disputes through arbitration.”
5. This position of the law laid down by this Court and the Hon’ble Supreme Court as extracted above is categorical. Therefore once the party moves the Court under Section 11(6) of the Act, the right of the opposite party to appoint an arbitrator as per the arbitration agreement ceases. The above position of law squarely applies to the present case. The respondent’s right to appoint an arbitrator was vanquished on 15th March, 2004, the date when the petitioner approached this Court under Section 11(6) of the Act and the appointment sought to be made on 17th May, 2004 by the respondents is of no avail and is set aside.
6. Accordingly, the petition is allowed and Ms. Justice Usha Mehra, a retired Judge of this Court(Tel.26560316 & 26531100 Mobile 9816411440) appointed as an Arbitrator to adjudicate upon the disputes between the parties sought to be raised in this petition. The Arbitrator to fix her fees in consultation with the parties. The Arbitrator to give her award, not later than 4 months from the date of entering upon reference.
7. This petition stands allowed and disposed of accordingly in the above terms.