ORDER
Narendra Nath Tiwari, J.
Page 1319
1. These appeals arise out of the common order dated 24th December, 2004 passed in W.P.(C) No. 5257 of 2004 and W.P.(C) No. 5292 of 2004 between the same parties. Issues involved in both the appeals are the same and grounded on similar facts. Hence, both the appeals were heard together and are being disposed of by this common order.
2. The same writ petitioner is the appellant in both these appeals. Two writ petitions were filed in this Court seeking a writ/direction commanding upon the Arbitrator-respondent No. 2 not to proceed with the arbitral proceeding arising out of agreements dated 12.03.1986 and for quashing the entire arbitration proceeding(s) on the ground that reference was made to respondent No. 2-arbitrator in contravention of Clauses 51 and 52 of the agreement and the same is barred by limitation and appointment of the respondent No. 2-arbitrator being in violation and contravention of law, he has got no jurisdiction to proceed with the arbitration proceedings.
3. Brief facts giving rise to the said case is that for execution of the work relating to Galudih Right Bank Main Canal, tenders were invited; the respondent No. 1 submitted Page 1320 the bid which was accepted; an agreement was entered into between the Executive Engineer, Kharkai Link Canal Division and respondent No. 1; and work order was issued in favour of the respondent No. 1. According to the terms of the agreement, the work was to be completed within a period of 24 months from the date of work order, i.e., by 13.03.1988. But, the work could not be completed by respondent No. 1 within the stipulated time. The respondent No. 1 made several requests for extension of time and the same were accepted. When the respondent No. 1 failed to complete the work inspite of several extensions, a decision was taken by the Department to take final measurement of the work done by the first respondent. By letter No. 1299 dated 08.07.2003 the Chief Engineer of the Department closed the agreement. The Department, ultimately, took the final measurement through a committee. It has been stated that the respondent No. 1 was informed about the same repeatedly and even by a press communique, but no body turned up on behalf of the respondent No. 1 at the time of taking final measurement. The respondent No. 1, after some time, submitted a claim in the Office of the Executive Engineer, to the tune of Rs. 1020.176 lakh, invoking Clause 51 of the agreement. According to the appellants, the claim was highly excessive and arbitrary. On receipt of the claim, the Executive Engineer asked the respondent No. 1 to furnish the basis of the said claim which was not submitted and as a result of which the Superintending Engineer had not taken any decision in the matter. On expiry of 60 days from the date of submission of claim, the said respondent No. 2, by his letter dated 01.04.2004 expressed intention for arbitration and for that purpose requested to furnish a panel of arbitrators. According to the appellant, since the claim of the respondent No. 1 was unrealistic and inflated, the Chief Engineer did not respond to the said request. The respondent No. 1, then, submitted a panel of arbitrators to the Chief Engineer, in which names of three persons were mentioned. The Chief Engineer was requested to select any of the three officers for the purpose of arbitration. The Chief Engineer did not also acceded to the said request. The respondent No. 1, thereupon, appointed respondent No. 2, a retired Chief Engineer (Bihar) as the sole arbitrator by letter dated 04.06.2004, communicating the same to the appellants.
4. The appellant contended that the said appointment of respondent No. 2 as an arbitrator, by the respondent No. 1, was in contravention of the provisions Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act’) and the entire subsequent arbitral proceedings are illegal, void and not maintainable and that the respondent No. 2 has no jurisdiction to proceed with the arbitral proceedings and the same are liable to be quashed by this Court.
5. The respondent No. 1 contested the said writ applications, contending, interalia, that the question whether the arbitrator is competent to decide his jurisdiction has been now settled and answered in affirmative by the judicial pronouncement and the appellant can raise the said issue before learned Arbitrator who is competent to decide his jurisdiction and the same cannot be adjudicated upon and decided by this Court in exercise of its writ jurisdiction.
6. Learned Single Judge, after hearing the parties, recorded his considered finding holding that under the provisions contained in Section 16 of the Act, the arbitral tribunal has got power to rule on its own jurisdiction and decide over objections and that the said question cannot be decided by this Court in exercise of its jurisdiction under Articles 226 and 227 of the Constitution of India in view of the specific remedy Page 1321 provided under the said Act. Learned Single Judge, thus, dismissed the writ applications.
7. The appellant contended that the view taken by learned Single Judge is erroneous and unsound. The impugned order is, thus, liable to be set aside and reliefs prayed for in the writ applications are fit to be granted.
8. The respondent No. 1, on the other hand, supported the order of learned Single Judge and contended that the said order is well considered, sound and in conformity with law and does not warrant any intervention by this Court. It was further contended that the writ application was not maintainable as the issue sought to be raised in the writ application can be effectively raised and decided under the provisions of the Act by the Arbitrator himself and not before any other Forum. It has been further submitted that the respondent No. 1 is a private person and writ application is not at all maintainable against him.
9. The rival contentions of the parties give rise to the following issues:
(i) Whether the Arbitrator, appointed as per the terms of the Arbitration Agreement within the meaning of Section 7 of the Act (not under the provisions of Section 11 of the said Act) is competent to decide the objection of his own jurisdiction?
(ii) Whether the writ petition against the respondent No. 1, a private limited company, not discharging any public duty, is maintainable?
Issue No. (i)
10. In order to appreciate the first issue, it is necessary to notice the provisions of Section 7 of the said Act which reads as under:
7. Arbitration agreement. – (1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
Section 7 of the Act defines what is an arbitration agreement for the purpose of this Act and as to how it is to be made.
11. Section 11 of the Act provides for appointment of arbitrators, which runs thus:
11. Appointment of arbitrators. -(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
Page 1322
(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 Sub-section (2), in an arbitration with three arbitrators, 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 Sub-section (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 fail 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 Sub-section (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 Sub-section (4) or Sub-section (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 qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as 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 (5) or Sub-section (6) to him.
Page 1323
(11) Where more than one request has been made under Sub-section (4) or Sub-section (5) or Sub-section (6) to the Chief Justices 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-section shall be construed as a reference to the “Chief Justice of India.
(b) Where the matter referred to in Sub-sections (4), (5), (6), (7), (8), and (10) arise in any other arbitration, the reference to “Chief Justice” in those 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.
12. Sub-section (2) of the said Section provides that the parties are free to agree on a procedure for appointing the arbitrator or arbitrators subject to Sub-section (6). Sub-section (6) of the said Section provides for the remedy on failure of the parties to follow the agreed procedure for appointment, i.e., (i) when a party fails to act as required under that procedure, or (ii) the parties of the two appointed arbitrators fail to reach an agreement expected of them under that procedure, or (iii) a person, including an institution, fails to perform any function entrusted to him or it under that procedure and only in the said situation, 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 appointing procedure provides other means for securing the appointment. Thus, if there is arbitration agreement and if there is agreed procedure for appointing the arbitrator, then according to the said provisions of the Act, intervention of the Chief Justice or any person or institution designated by him is not warranted and the parties have to follow the procedure for appointment procedure as provided in the arbitration agreement.
13. In the instant case, there is no dispute regarding the arbitration agreement between the parties and regarding the procedure for appointment of the arbitrator being Clause 52 of the agreement, which is quoted hereinbelow:
52. ARBITRATION:
All the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows.
Within thirty days of receipt of notice from the contractor of his intention to refer the dispute to arbitration the Chief Engineer, Subernrekha Multipurpose Project, Jamshedpur shall send to the contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The contractor shall within fifteen days of receipt of this list select and communicate to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator.
If contractor fails to communicate this selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list Page 1324 and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do so the contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall then be the sole arbitrator,
(emphasis supplied)
The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modifications, thereof. The decision of the sole arbitrators shall be final and binding on the parties thereto. The arbitrators shall determine the amount of costs of arbitration to be awarded to either parties.
Performance under the contract shall continued during the arbitration proceedings and payments due to the contractor shall not be withhold unless they are subject matter of the arbitration proceedings.
All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakhs and above, such awards shall state the reasons for the amount awarded.
Neither party is entitled to being a claim to arbitration of the arbitrator has not been appointed before the expiration of thirty days after defect liability period.
The said Clause 52 of the agreement clearly provides that all the disputes and issues in respect of which the decision has not been final and conclusive, shall be referred for arbitration to a sole arbitrator appointed according to the procedure agreed therein. It is not denied that the contractor-respondent had given the notice of his intention to refer the dispute to the arbitration and had requested the Chief Engineer, Subernarekha Multipurpose Project, Jamshedpur to send a list of three eligible officers for the purpose of his selection, but the Chief Engineer did not respond to the same and failed to send the required list within 30 days, as stipulated. The contractor-respondent, then, sent a list to the Chief Engineer within the prescribed period. The Chief Engineer had to select one officer from the list and to appoint as the Sole Arbitrator within 15 days, but it was not done. The contractor-respondent, then, followed the agreed procedure and communicated the name of one officer to the Chief Engineer from the list and who became the sole arbitrator.
14. The contractor-respondent followed the stipulated procedure for appointment of the arbitrator and since the appointment was made in accordance with the agreed procedure, there was no application of Sub-section (6) of Section 11 of the Act and there was no occasion for requesting the Chief Justice or any person designated by him to proceed for appointment of an arbitrator. Section 5 of the said Act prevents judicial intervention except as provided in para I of the Act. It begins with the non-obstante clause and reads thus:
5. Extent of judicial intervention. – Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
15. Sections 2 to 43 come within the same part, i.e., Part I. Section 13 prescribes the challenge procedure, which runs thus:
13. Challenge procedure .- (1) Subject to Sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
Page 1325
(2) Failing any agreement referred to in Sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in Sub-section (3) of Section 12, send a written statement of the reasons for the challenge of the arbitral tribunal.
(3) Unless the arbitrator challenged under Sub-section (2) withdraws from the office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under Sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under Sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34.
(6) Where an arbitral award is set aside on an application made under Sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.
16. Then comes Section 16, which envisages competence of arbitral tribunal to rule on its jurisdiction and reads thus:
16. Competence of arbitral tribunal to rule on its jurisdiction. -(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
(4) The arbitral tribunal may, In either of the cases referred to in Sub-section (2) or Sub-section (3), admit a later plea if it considers the delay Justified.
(5) The arbitral tribunal shall decide on a plea referred to in Sub-section (2) or Sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.
17. From the composite reading of said provisions of the Act, it would manifest that: (i) parties can enter into an arbitration agreement, (ii) the parties are free to agree on a procedure for appointing the arbitrator subject to Sub-section (6) of Page 1326 Section 11, (iii) no judicial authority shall intervene except as provided in this part notwithstanding anything contained in any other law to the contrary, (iv) if the arbitrator is challenged and award to that regard is made, the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34; and (v) the arbitral tribunal may rule on its own jurisdiction including ruling on any objection with regard to the exercise or validity of the arbitration agreement. There is, thus, distinct remedy for the aggrieved party to challenge the jurisdiction or competence of the arbitral tribunal before the arbitrator itself. The writ petitioner-appellant instead of raising the said objection before the arbitrator, has sought to invoke the writ jurisdiction of this Court under Article 226 of the Constitution of India.
18. In Konkarn Railway Construction Ltd. and Anr. v. Rani Construction (P). Ltd. the Constitution Bench of Supreme Court while interpreting various provisions of the Act, held, interalia, that Section 16 empowers the arbitral tribunal to rule on its own jurisdiction and if a party is aggrieved by an arbitral award made after rejection of his plea of jurisdiction, he can challenge it in accordance with Section 34. Different procedures have been prescribed for raising question of jurisdiction or objection regarding his competence on the basis of mode of appointment of the arbitrator, i.e., one appointed under the provisions of Section 7 and another appointed under the provisions of Section 11 of the Act.
19. Md. Shamim Akhtar, learned Counsel appearing on behalf of the appellant, on the contrary, contended that the Court should appoint an independent arbitrator when the opposite party failed to appoint the named arbitrator in accordance with the agreement between the parties. He relied on a decision of the Supreme Court in Deep Galvanising v. Government of India . He also relied on a decision of the Supreme Court in Konkarn Railway Construction Ltd. v. Rani Construction reported in AIR 2000 SC 778 in which it has been held, interalia, that if a party fails to act, as required under the agreed procedure, party may request the Chief Justice or any person or institution designated by him to take necessary measure for securing the appointment. He also referred to a decision of the Kerala High Court in N.T.P.C. Ltd. v. Rahul Construction (P) Ltd. in support of his contention. In the said decision, the Kerala High Court has dealt with the relevant provisions of the Act and has come to the conclusion that in case where the party has approached the Chief Justice and made a request for appointment of an arbitrator other than the person agreed to between the parties, the Chief Justice or the designated judge would make an effort to secure the appointment as per the agreed procedure not to bye pass or annihilate it. Endeavour must be given to effect it failing which an independent arbitrator can be appointed.
20. In the instant case the parties have entered into an agreement and settled down a procedure and the appointment of arbitrator has been made in accordance with the said procedure. The decisions, thus, cited and relied on by the learned Counsel for the appellant have absolutely got no application to the facts of the instant case. Particularly, none of these decisions provide for raising objection to the jurisdiction of the arbitrator by invoking a writ jurisdiction of the High Court. In view of the clear provision of Section 16 of the Act and the decision of the Constitution Bench of the Supreme Court in Konkarn Railway (supra), there is no scope than to hold that any such objection regarding the competence of arbitral tribunal or its jurisdiction shall Page 1327 be decided and ruled by the arbitrator himself. A similar view was also taken by the Single Judge of this Court in C.R. No. 139 of 2004 disposed of by an order dated 09.02.2005 on considering the various authorities including the said decision in Konkarn Railway (supra).
21. In the light of the above discussion, Issue No. (i) is decided against the appellant and it is held that the arbitrator is competent to decide the objection on its own jurisdiction whether appointed as per the terms of the arbitration agreement within the provisions of Section 7 or appointed under the provisions of Section 11 of the Act.
Issue No. (ii)
22. The writ application has been filed against the respondent-R.K. Construction Pvt. Ltd. and another, which is a private limited company raising a grievance against the appointment of the arbitrator as per the arbitration agreement.
23. The cause for the writ application does not arise out of any act of the said limited company discharging any public duty. The writ application filed by the State seeking relief against a private limited company, not discharging any public duty, is not maintainable. Reference can be made to the decision of the Supreme Court in Chander Mohan Khanna v. NCERT .
24. Learned Counsel for the appellant has placed much reliance on a decision of the Apex Court in Shri Anadi Mukta Sadguru S.M.V.S.J.M.S. Trust v. V.R. Rudani and in K. Krishnamacharyulu v. Sri Venkateswara Hindu College of Engineering in support of the proposition that “high prerogative writ can be issued to any person or authority”. But a glance of paragraph 14 of the said decision of the Supreme Court in Shri Anadi Mukta Sadguru (supra) makes it clear that if the rights are purely of private character no mandamus can be issued. In the case of K. Krishnamacharyulu v. Sri Venkateswara Hindu College of Engineering (supra) writ was issued in the case concerning discharge of a public duty by the teachers who were imparting education as there was an element of public interest. Instant case arises out of a contract, against a private limited company having no element of public interest. Thus, there is no application of the said decisions of the Supreme Court cited by learned Counsel for the appellant to the facts of this case. It is, therefore, held that the writ application filed against the respondents are not maintainable also on that count.
25. Having answered the issues and held, as above, we find no error in the impugned order of learned Single Judge, dismissing the writ petitions of the appellant. There is, thus, no merit in these appeals, which are, accordingly, dismissed. There will be no order as to costs.