{"id":98031,"date":"1993-03-05T00:00:00","date_gmt":"1993-03-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/nandyal-co-op-spinning-mills-ltd-vs-k-v-mohan-rao-on-5-march-1993"},"modified":"2017-09-14T03:12:32","modified_gmt":"2017-09-13T21:42:32","slug":"nandyal-co-op-spinning-mills-ltd-vs-k-v-mohan-rao-on-5-march-1993","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/nandyal-co-op-spinning-mills-ltd-vs-k-v-mohan-rao-on-5-march-1993","title":{"rendered":"Nandyal Co-Op. Spinning Mills Ltd vs K.V. Mohan Rao on 5 March, 1993"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Nandyal Co-Op. Spinning Mills Ltd vs K.V. Mohan Rao on 5 March, 1993<\/div>\n
Equivalent citations: 1993 SCR (2) 280, \t 1993 SCC (2) 654<\/div>\n
Author: K Ramaswamy<\/div>\n
Bench: Ramaswamy, K.<\/div>\n
           PETITIONER:\nNANDYAL CO-OP.\tSPINNING MILLS LTD.\n\n\tVs.\n\nRESPONDENT:\nK.V. MOHAN RAO\n\nDATE OF JUDGMENT05\/03\/1993\n\nBENCH:\nRAMASWAMY, K.\nBENCH:\nRAMASWAMY, K.\nSAHAI, R.M. (J)\n\nCITATION:\n 1993 SCR  (2) 280\t  1993 SCC  (2) 654\n JT 1993  Supl.\t    89\t  1993 SCALE  (2)8\n\n\nACT:\nArbitration Act, 1940\nSection\t   8.\tContract--Arbitration covenant--Agreement\nauthorising  a party to nominate  Arbitrator--Nomination  of\nArbitrator--Right of other party to challenge nomination  on\nthe ground of biaa--Held by the convenant of arbitration  in\nthe agreement bias is not waived.\nPower  of Court to appoint  Arbitrator--Agreement  providing\nappointment of Arbitrator by a party--notice by other  party\nto  appoint  Arbitrator--Authorised  party  not\t  appointing\nArbitrator  within  15 days--Appointment  of  Arbitrator  by\nCourt  held valid--Conditions for applicability\t of  Section\n8--Discussed.\n\n\n\nHEADNOTE:\nThe  respondent\t entered into a building-contract  with\t the\nappellant-mill.,  Clause  65.1\tof  the\t contract   provided\n\"except\t where\totherwise  provided  in\t the  contract\t all\ndisputes or questions relating to...... shall be referred to\nthe  sole  Arbitration of the person appointed\tby  the\t Ad-\nministrative  Head of owner.  There will be no objection  to\nany such appointment that the Arbitrator so appointed is the\nowner's representative, that he had to deal with the matters\nto which the contract relates and that in the course of\t his\nduties as owner's representative he had had expressed views.\non all or any of the matters in dispute or differences\".\nDifferences  having  arisen  during  the  execution  of\t the\ncontract  the  respondent gave notice twice  requesting\t the\nappellant to nominate an Arbitrator within 15 days. time but\nno  action  thereunder was taken except\t replying  that\t the\nmatter\twas under consideration.  Thereafter the  respondent\nriled  a  petition under Section 8 of the  Arbitration\tAct,\n1940  in  the  Court  to  appoint  an  Arbitrator.   In\t the\nmeantime,  the\tappellant  informed the\t respondent  that  a\nSuperintending Engineer of B.H.E.L. Hyderabad was  appointed\nas  sole Arbitrator to which the respondent objected on\t the\nground\tof bias.  The Civil Court appointed a retired  Judge\nof the High 280\n281\nCourt as Arbitrator.  The appellant's revision petition\t \"Us\ndismissed by the High Court.\nIn  appeal to this Court it was contended on behalf of\ttile\nAppellant  that\t (1) by the covenant of arbitration  in\t the\nagreement  the\trespondent had waived bias;  (2)  under\t the\nterms  or  the contract the respondent was to abide  by\t the\nappointment of Arbitrator by the Administrative Head of\t the\nappellant   and,   therefore,\tthe   Civil   Court   lacked\njurisdiction to appoint Arbitrator under Section 8(a) of the\nAct.\nDismissing the appeal, this Court,\nHELD-  1.  The appointment of the Arbitrator  by  the  trial\ncourt  as  upheld by the High Court is perfectly  legal\t and\nvalid. [290A]\n2.   Under the contract all questions and disputes  relating\nto the contract were to be referred to the sole\t arbitration\nof  the person appointed by the Administrative Head  of\t the\nappellant.   The right to suit available under Section 9  of\nthe  Code of Civil Procedure has been contracted  out.\t The\nwaiver\texpressly  engrafted  was  only\t of  the  Arbitrator\nappointed  by the Administrative Head of the  appellant\t one\nwho  was its representative who had had occasion to  express\nviews on all or any of the matters in dispute or difference,\non which he had had earlier dealt with to which the contract\nrelated\t to.  But there was noncontract to arbiter by  named\nArbitrator the\n3.  Justice must not only be done but seemingly\t appears  to\nhave  been done.  The Arbitrator must not only be  impartial\nbut  also be objective circumspect and honest  in  rendering\nhis  decision.\t 'Many a time the award is  not\t a  speaking\nAward  which  would inspire confidence for  acceptance\tonly\nwhen the above perspectives are. present.  It is  invalidity\nwould be tested on grounds available in law.  Admittedly the\nArbitrator  nominated,\tby the appellant  acted\t on  earlier\noccasions   as\tappellant's  Arbitrator.    Therefore,\t the\nrespondent   rightly   objected\t to   the   nomination\t of,\nArbitrator.  Such nomination, therefore, does not bind\thim.\n[286D-E]\nManak Lal v. Dr. Prem Chand,<\/a> [1957] S.C.R. 575; C. Santa  v.\nUniversity  of\tLucknow\t & Ors.[1977] 1\t S.C.R.\t 64  and  V.\nRaghunadha  Rao v. State of A.P., 1988 (1) A.L.T. 461,\theld\ninapplicable.\nJudicial  Review of Administrative Action by  S.A.  Desmith,\n3rd Edn.\n282\np.223, referred to.\n3.1.It\tis of the first importance that\t judicial  tribunals\nshould\tbe honest, impartial and disinterested.\t  This\trule\napplies in full force to arbital tribunals, subject only  to\nthis  exception, that parties who are free to  choose  their\nown  tribunal  may, provided they act with  full  knowledge,\nchoose\tdishonest partial or interested Arbitrators  (though\nthis  exception\t is  in\t its turn  subject  to\ta  statutory\nexception  which gives parties who have so choosen  a  locus\npoenitentiae  in  certain circumstances).  Apart  from\tthis\nexception,  arbitrators\t who  are  in  all  other   respects\nsuitably   qualified   are   disqualified   by\t dishonesty,\npartiality or interest. [285C-D]\nRussell's Arbitration, 19th Edn. p.116, referred to.\n4.  The application for appointment of an Arbitrator is\t not\nmaintainable  when an Arbitrator has already been  appointed\nand the applicant has been informed of the said facts before\nthe  expiry of 15 days as envisaged under  Section  8(1)(a).\n[287E]\n4.1.Admittedly\t the  respondent  did  gave   notice   twice\nrequesting the appellant to nominate an Arbitrator within 15\nday's  time but no action thereunder had been taken.  If  no\nArbitrator  had\t been  appointed in terms  of  the  contract\nwithin\t15 days from the date of the receipt of the  notice,\nthe  Administrative  Head  of the  appellant  had  abdicated\nhimself\t of  the  power\t to  appoint  Arbitrator  under\t the\ncontract.  Therefore, the Court had jurisdiction to  appoint\nan  Arbitrator\tin  place of the contract  by  operation  of\nSection 8(1)(a).  The contention, therefore, that since\t the\nagreement  postulated preference to Arbitrator appointed  by\nthe Administrative Head of the appellant and if he  neglects\nto  appoint, the only remedy open to the contractor  was  to\nhave  recourse\tto  civil suit is without  force.   Had\t the\ncontract provided for appointment of a named Arbitrator\t and\nthe  named  person  was not appointed,\tcertainly  the\tonly\nremedy\tleft to the contracting party was the right to\tsuit\nBut  that is not the case on hand.  Therefore, the order  of\nthe High Court needs no interference. [287G, 288E-G, 283D]\nUnion  of  India v. Prafulla Kumar Sanyal,<\/a> [1979]  1  S.C.C.\n631, relied on.\nChander\t Bhan  Harbhajan Lal v. State of  Punjab,<\/a>  [1977]  3\nS.C.R.\t38;  M\/s Boriah Basavish & Sons v. Indian  Telephone\nIndustries Ltd., A.I.R. 1973\n 283\nMysore\t309;  V.K  Construction\t Works\t(P)  Ltd.  v.\tFood\nCorporation of India, A.I.R. 1987 Pb. & Haryana 97 and Union\nof India v. Ajit Mehta & Associates, A.I.R.<\/a> 1990 Bombay\t 45,\nheld inapplicable.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION : Civil appeal No. 938 of 1993.
\nFrom  the  Judgment and Order dated 12.10.92 of\t the  Andhra
\nPradesh High Court in C.R.P. No.1381 of 1991.
\nP.P. Rao and Mrs. Sarla Chandra for the Appellant.
\nK. Madhava Reddy and G. Prabhakar for the Respondent.
\nThe Judgment of the Court was delivered by
\nK. RAMASWAMY, J. Leave granted.\n<\/p>\n
Having\theard the learned Senior counsel M\/s.  P.P. Rao\t and
\nK. Madhava Reddy on either side and having given our anxious
\nconsideration  to  their  contentions,\twe  find  in   final
\nanalysis  that\tthe  order  of\tthe  High  Court  needs\t  no
\ninterference.\tThe  facts lie in a short  compass,  are  as
\nstated under
\nThe  respondent concluded a contract with the  appellant  on
\nFebruary  11,  1986  to construct a building at\t a  cost  of
\nRs.1.00\t Crore.\t During its execution since differences\t had
\narisen\tthe  respondent by his letter dated  July  27,\t1987
\nrequested  the\tAdministrative\tHead  of  the  appellant  to
\nappoint\t an Arbitrator within 15 days from the date  of\t its
\nreceipt.   On  August  8 and 18,  1987\tthe  respondent\t was
\ninformed  that\tthe  matter was\t under\tconsideration.\t His
\nrenewed\t request  in  letter on August 17,  1987  evoked  no
\naction.\t  Finding it futile to await, on July 27, 1988,\t the
\nrespondent  filed  O.P. No.167 of 1988 in the Court  of\t the
\nSubordinate Judge, at Nandyal to appoint an Arbitrator.\t The
\nnotice was issued to the appellant therein.  By letter dated
\nJuly 27, 1988 the respondent was informed of the appointment
\nof  Sri\t Yethiraj,  Superintending  Engineer  of   B.H.E.L.,
\nHyderabad  as sole Arbitrator.\tAfter giving opportunity  to
\nboth  sides by Order dated March 12, 1991, the\tCivil  Court
\nappointed  Sri Justice C. Sriramulu, a retired Judge of\t the
\nHigh  Court as Arbitrator.  The High Court dismissed  C.R.P.
\nNo.1381 of 1991 on October 25, 1992.\n<\/p>\n
284<\/span><\/p>\n
Sri  P.P.  Rao,\t learned Senior counsel\t conteded  that\t the
\nconcurrent  finding that Sri Yethiraj had bias\tagainst\t the
\nrespondent  as\the  had acted on  earlier  occasions  as  an
\nArbitrator of the appellant is vitiated by legal error since
\nbias  can always be waived.  By the covenant of\t arbitration
\nin the agreement, the respondent had waived bias,  Secondly,
\nit  is\tconfended  that Sri Yethiraj had  no  personal\tbias
\nagainst\t the  respondent  and  the  contract  postulated  of
\nappointment  of an Arbitrator, the contract cannot  be\tnul-
\nlified\ton the plea of bias, as the endeavour of  the  court
\nwould  be to give effect to the contract.  We find no  force
\nin the contentions.  Clause 65.1 of the Contract reads thus:\n<\/p>\n
\t      “Except\twhere  otherwise  provided  in\t the
\n\t      contract\tail disputes or\t questions  relating
\n\t      to…….shall\treferred   to\t the\tsole
\n\t      Arbitration of the person appointed by the ad-
\n\t      ministrative Head of onwer.  There will be  no
\n\t      objection\t to  any such appointment  that\t the
\n\t      Arbitrator   so  appointed  is   the   owner’s
\n\t      representative,  that he had to deal with\t the
\n\t      matters to which the contract relates and that
\n\t      in  the  course  of  his\tduties\tas   owner’s
\n\t      representative  he had had expressed views  on
\n\t      all  or  any  of the  matters  in\t dispute  or
\n\t      differences…….\n<\/p><\/blockquote>\n
\t      It  is  also a term of this contract  that  no
\n\t      person  other than a person appointed by\tsuch
\n\t      Administrative Head as aforesaid should act as
\n\t      Arbitrator  and  if for any reason it  is\t not
\n\t      possible\tthe  matter is not referred  to\t the
\n\t      arbitration at all……..\n<\/p><\/blockquote>\n
\t      Clause  65.2.  Subject  to  as  aforesaid\t the
\n\t      provisions  of the Arbitration Act, 1940\t(for
\n\t      short  ‘the  Act’\t added)\t or  any   statutory
\n\t      modication  or  re-enactment thereof  and\t the
\n\t      rules  made thereunder and for the time  being
\n\t      in  force\t shall\tapply  to  the\t arbitration
\n\t      proceedings ‘under this cluase.”\n<\/p><\/blockquote>\n
It  would  thus\t be clear that all  questions  and  disputes
\nrelating  to  the  contract shall be referred  to  the\tsole
\narbitration  of the person appointed by\t the  Administrative
\nHead  of the appellant.\t The right to suit  available  under
\nSec.9  of  the Code of Civil Procedure has  been  contracted
\nout.   The  waiver  expressly  engrafted  was  only  of\t the
\nArbitrator appointed by the
\n 285<\/span>
\nAdministrative\tHead  of  the  appellant  one  who  was\t its
\nrepresentative who had had occasion to express views on\t all
\nor any of the matters in dispute or differences on which  he
\nhad had earlier dealt with to which the contract related to.
\nThere  is no contract to arbiter by a named  Arbitrator\t the
\ndispute\t or differences that had arisen under the  Contract.
\nJustice must not only be done but seemingly appears to\thave
\nbeen  done.   Contracting  parties agreed to  abide  by\t the
\nArbitrator, i.e. chosen forum.\tRussell’s Arbitration,\t19th
\nEdition\t at p.116 stated that there is\tuniversal  agreement
\namongst\t jurists  of all countries that it is of  the  first
\nimportance   that  judicial  tribunals\tshould\tbe   honest,
\nimpartial  and\tdisinterested.\tThis rule  applies  in\tfull
\nforce to arbital tribunals, subject only to this  exception,
\nthat parties who are free to choose their own tribunal\tmay,
\nprovided  they\tact with full knowledge,  choose  dishonest,
\npartial\t  or  interested  arbitrators  (emphasis   supplied)
\n(though this exception is in its turn subject to a statutory
\nexception  which gives parties who have so choosen  a  locus
\npoenitentiae  in  certian circumstances).  Apart  from\tthis
\nexception,  arbitrators\t who  are  in  all  other   respects
\nsuitably   qualified   are   disqualified   by\t dishonesty,
\npartiality or interest.\n<\/p>\n
When the arbitration tribunal was chosen by the\t contracting
\nparties,  undoubtedly  they  had  chosen  to  avail  of\t the
\nadjudiction  by the Tribunal and to abide by  the  decision.
\nHaving\tso chosen and taken a decision it would no loger  be
\nopen to turn around and contend that the tribunal was biased
\nagainst the party.  This was the view laid by this court  in
\nManak Lai v. Dr.  Prem Chand<\/a> [1957] SCR 575 at 589 thus:\n<\/p>\n
\t      “It  seems clear that the appellant wanted  to
\n\t      take  a chance to secure a  favourable  report
\n\t      from  the tribunal which was  constituted\t and
\n\t      when  he found that he was confronted with  an
\n\t      unfavourable report, he adopted the device  of
\n\t\t\t    raising the present technical point.”\n<\/p><\/blockquote>\n
This ratio was followed in G. Sama v. University of  Lucknow
\n& Ors.,<\/a> [1977] I SCR 64 at pp. 69-70.  The above ratio bears
\nno  relevance  since  the contract was not  to\tappoint\t Sri
\nYethiraj as arbitrator nor the respondent stood by any award
\nbeing  made by him.  Only an officer, representative of\t the
\nappellant  who had had an occassion to deal with the  matter
\nor  expressed  an  opinion  on\tthe  matter  in\t dispute  or
\ndifference, if appointed
\n286<\/span>
\nlater, such an appointment (though open to debate but  needs
\nno   occasion  to  decide)  cannot  be\tquestioned  as\t the
\nrespondent had contracted to waive that objection.
\nThe  decition relied on by the High Court in  V.  Raghunatha
\nRao v.State of A.P., (1988) 1 ALT 461 was in relation to the
\nappointment  of an Engineer of the Department, the party  to
\nthe contract.  In the dotted lines contract it was held that
\nthe  consensus\tad idem was absent and the element  of\tbias
\nwould  be  inherent from the facts situation.  It  bears  no
\nrelevance  to the facts of the case.  In Judicial Review  of
\nAdministrative Action by S.A. DeSmith (3rd Edition) at p.223
\nit  is\tstated\tthat  “In  a  private  law  an\t independent
\ncommercial arbitrator must observe strictly judicial  stand-
\nards”.\t At  p.229 he further stated that “It is open  to  a
\nparty  to  lead\t evidence  to  prove  that  an\t independent
\narbitrator  has shown altered bias. in favour of  the  other
\nparty or that an arbitrator who is an employee of the  other
\nparty has prejudged the issue.” Admittedly Yethiraj acted on
\nearlier\t occasions as appellant’s arbitrator.  Justice\tmust
\nnot  only be done but seemingly appears to have\t been  done.
\nThe  arbitrator\t must  not only be  impartial  but  also  be
\nobjective, circumspect and honest in rendering his decision.
\nMany  a time the award is not a speaking award\twhich  would
\ninspire\t confidence  for  acceptance  only  when  the  above
\nperspectives are present.  Its invalidity would be tested on
\ngrounds available in law.  Therefore, the respondent rightly
\nobjected  to the nomination of Yethiraj.   Such\t nomination,
\ntherefore,  does not bind him.\tWe find force in  the  stand
\ntaken by the respondent supported by Sri K. Madhava Reddy.
\nIt  is\tnext  contended by Sri Rao  that  s.8(1)(a)  of\t the
\nArbitration Act does not apply to the facts of this case  as
\nthe contract abstracted hereinbefore makes the respondent to
\nabide\tby   the  appointment  of  an  arbitrator   by\t the
\nAdministrative\tHead  of  the  appellant.   It\the  had\t  an
\nobjection  to the nomination of Yethiraj, he would have\t had
\nrequested  for another arbitrator.  The Civil  Court  lacked
\njurisdiction.\tThe  exercise of the jurisdiction  by  Civil
\nCourt  under  s.8(1)(a),  is hedged with  existence  of\t the
\ncontract.   Section  8(1)(a) of the  Arbitration  Act  reads
\nthus:\n<\/p>\n
“where an arbitration agreement provides that the  reference
\nshall  be  to  one or more arbitrators to  be  appointed  by
\nconsent\t of  the parties and all the parties do\t not,  after
\ndiferences have arisen, concur in the appointment or
\n287<\/span>
\nappointments;or……..\n<\/p>\n
Any party may serve the other parties or the arbitrators, as
\nthe  case  may be, with a written notice to  concur  in\t the
\nappointments or in supplying the vacancy.”
\nFor  its  applicability, the following\tconditions  must  be
\nfulfilled.\n<\/p>\n
(1)  There must be an arbitration agreement.
\n(2)  The  agreement must provide that in case of  difference
\none  or\t more  arbitrators to be  appointed  by\t consent  of
\nparties\t and  did  not\tconcur in  the\tappointment  of\t the
\narbitrator\/arbitrators.\n<\/p>\n
(3) Disputes have arisen to which the agreement applies.
\n(4)  The  parties had been consented in the  appointment  or
\nappointments.\n<\/p>\n
(5) The appointment is not made within 15 clear days of\t the
\nsrevice of the written notice to do so-, and
\n(6) The application is made to the court by any party to the
\nagreement.\n<\/p>\n
The  application  for appointment of an\t arbitrator  is\t not
\nmaintainable  when an arbitrator has already been  appointed
\nand the applicant has been informed of the said facts before
\nthe expiry of 15 days as envisaged under s.8(1)(a).
\nWe  have seen the arbitral agreement in Clause 65.1, and  of
\napplicability  of  the\tAct in\tClause\t65.2  thereof.\t The
\nagreement  provided that after the disputes had\t arisen\t and
\nnotice\tgiven by either party, power has been given  to\t the
\nAdministrative\t Head  of  the\tappellant  to\tappoint\t  an
\narbitrator.  Admittedly the respondent did gave notice twice
\nrequesting  the\t appellant  to nominate\t an  arbitrator\t and
\nwithin\t15 day’s time no action thereunder had\tbeen  taken.
\nThe replies thereto were only that the matter was under con-
\nsideration.   After the expiry of the period prescribed\t the
\nAdministrative\tHead denuded his power under clause 65.1  of
\nthe  contract  to appoint the arbitrator.   Long  after\t the
\nexpiry\tof  15\tday’s time the respondent  had\tinvoked\t the
\njurisdiction  of the trial court which is competent to\tdeal
\nwith the matter.\n<\/p>\n
288<\/span><\/p>\n
It had given an opportunity to the appellant to contest\t the
\nclaim.\tAppellant had intimated the appointment of  Yethiraj
\nonly long after the expiry of the period.  In Union of India
\nv.  Prafulla  Kumar  Sanyal,<\/a> [1979]  1\tSCC  631  construing
\ns.20(4) of the Act this court held in paragraph 4 thus:\n<\/p>\n
\t      “If no such arbitrator had been appointed\t and
\n\t      when   the  parties  cannot  agree   upon\t  an
\n\t      arbitrator  itself,  the court shall  make  an
\n\t      order  of\t reference to him.   In\t this  case,
\n\t      clause 29 of the Agreement provides that every
\n\t      dispute\tshall  be  referred  to\t  the\tsole
\n\t      Arbitration  of  the person appointed  by\t the
\n\t\t\t    President of India or if he is unwilling to
\n\t      act to the person appointed by the arbitrator.
\n\t      An arbitrator, in fact, has not been appointed
\n\t      by  the President of India  though  provisions
\n\t      has     been     made\tfor\tsuch\t ap-\n<\/p><\/blockquote>\n
\t      pointment…………..\n<\/p><\/blockquote>\n
\t      If  an arbitrator had not been appointed,\t the
\n\t      court  is\t to find whether the  parties  could
\n\t      agree  upon  an arbitrator.   If\tthe  parties
\n\t      agree,  the  court has to appoint\t the  person
\n\t      agreed as an arbitrator.\tIf there is no\tsuch
\n\t      agreement,  the  court will  have\t to  appoint
\n\t      arbitrator of its choice.”\n<\/p><\/blockquote>\n
It  would  thus\t be clear that if  no  arbitrator  had\tbeen
\nappointed  in terms of the contract within 15 days from\t the
\ndate  of the receipt of the notice, the Administrative\tHead
\nof  the\t appointment had abdicated himself of the  power  to
\nappoint\t arbitrator  under  the contract.   The\t court\tgets
\njurisdiction  to  appoint  an arbitrator  in  place  of\t the
\ncontract  by operation of s.8(1)(a). The contention  of\t Sri
\nRao,   therefore,  that\t since\tthe   agreement\t  postulated
\npreference  to\tarbitrator appointed by\t the  Administrative
\nHead  of  the appellant and if he neglects to  appoint,\t the
\nonly  remedy open to the contractor was to have recourse  to
\ncivil  suit  is without force.\tIt is seen  that  under\t the
\ncontract the respondent contracted out from adjudication  of
\nhis  claim by a civil court.  Had the contract provided\t for
\nappointment  of a named arbitrator and the named person\t was
\nnot  appointed,\t certainly  the\t only  remedy  left  to\t the
\ncontracting  party was the rights to suit.  That is not\t the
\ncase  on hand.\tThe contract did not expressly\tprovide\t for
\nthe  appointment of a named arbitrator.\t Instead  power\t has
\nbeen  given to the Administrative Head of the  appellant  to
\nappoint sole arbitrator.  When he failed to do so within the
\nstipulated period of 15 days enjoined under
\n 289<\/span>
\ns.8(1)(a),  then the respondent has been given\tright  under
\nclause 65.2 to avail the remedy under s.8(1)(a) and  request
\nthe  court to appoint an arbitrator.  If the  contention  of
\nSri Rao is given acceptance, it amounts to put a premium  on
\ninaction   depriving  the  contractor  of  the\t remedy\t  of
\narbitration frustrating the contract itself.
\nThe ratio in Chander Bhan Harbhajan Lal v. State of  Punjab,<\/a>
\n[1977]\t3  SCR\t38 at 41E & D relied on by Sri\tRao  is\t not
\napplicable  to the facts of this case.\tTherein no  bar\t was
\ncreated\t in  the contract to appoint a fresh  Committee\t for
\ngoing into the dispute as stipulated in the condition.\t The
\nappellant  who\thad  applied  to the  Govt.  to\t nominate  a
\nSettlement   Committee\tthe  Govt.  moved  the\t court\t for
\nappointment  of\t the Committee.\t Thus the Govt.\t itself\t was
\nentitled to have the committee appointed under the agreement
\nand instead had taken recourse to s.8(1)(a).
\nThe  ratio  in\tM\/s.   Boriah  Basavish\t &  Sons  v.  Indian
\nTelephone  lndustries  Ltd.,  AIR 1973 Mysore  309  is\talso
\ninapplicable  to  the  facts  in  this\tcase.\tTherein\t the
\ncontract expressly provided for appointment of an arbitrator
\nby consent of parties.\tSince the parties did not agree,  it
\nwas held that s.20(4) and not s.8 that would be applicable.
\nThe  case  of  VK  Construction\t Works\t(P)  Ltd.  v.\tFood
\nCorporation  of India, AIR<\/a> 1987 Pb. & Haryana 97 is  equally
\ninapplicable.  Therein the terms of the contract was that no
\nperson\tother  than  a\tperson\tappointed  by  the  Managing
\nDirector  or Administrative Head of the\t Corporation  should
\nact as an Arbitrator.  If for any reason it is not possible,
\nthe matter is not to be referred to the arbitration at\tall.
\nIn terms of that contract the invocation power of the  court
\nunder s.8 was taken.\n<\/p>\n
The  case of Union of India v. Ajit Mehta & Associates,\t AIR<\/a>
\n1990 Bombay 45 renders little assistance.  Clause 70 of\t the
\ncontract  therein  provided  an\t arbitration  clause   which
\npostulated  that  all disputes between the  parties  to\t the
\ncontract shall, after written notice given by either parties
\nto  the contract to either of them, will be referred to\t the
\nsole  arbitration of an Engineering Officer to be  appointed
\nby   the  authority  mentioned\tin  the\t tender\t  documents.
\nEngineer-in-Chief  was\tthe authority concerned.   On  those
\nfacts it was held that the contract excluded the  invocation
\nof  the jurisdiction of the court under s.8 of the  Act\t and
\nthe arbitration award
\n290<\/span>
\nmade pursuant thereto was held to be a nullity.
\nThus  we hold that the appointment of the arbitrator by\t the
\ntrial  court as upheld by the High Court is perfectly  legal
\nand  valid  warranting\tno  interference.   The\t appeal\t  is
\naccordingly dismissed, but without costs.
\nT.N.A.\n<\/p>\n
\t\t\t  Appeal dismissed.\n<\/p>\n
291<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Nandyal Co-Op. Spinning Mills Ltd vs K.V. Mohan Rao on 5 March, 1993 Equivalent citations: 1993 SCR (2) 280, 1993 SCC (2) 654 Author: K Ramaswamy Bench: Ramaswamy, K. PETITIONER: NANDYAL CO-OP. SPINNING MILLS LTD. Vs. RESPONDENT: K.V. MOHAN RAO DATE OF JUDGMENT05\/03\/1993 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. SAHAI, R.M. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-98031","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nNandyal Co-Op. Spinning Mills Ltd vs K.V. 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