IN THE HIGH COURT OF BOMBAY AT GOA APPLN. FOR APPOINTMENT OF ARBITRATOR NO. 6 OF 2009 MCNALLY BHARAT ENGINEERING COMPANY LTD ... Applicant Versus MORMUGAO PORT TRUST ... Respondent Mr. Rajiv Kumat with Mr. Nigel Da Costa Frias and Mr. Aziz Khan, Advocates for the Applicant. Mr. V. B. Nadkarni, Senior Advocate with Mr. Y. V. Nadkarni, Advocate for the Respondent. Coram:- B. P. DHARMADHIKARI, J. Date:- 10th July, 2009 P.C. Heard both learned Counsel. 2. Learned Senior Advocate appearing for respondent has stated that as arbitration clause has not been invoked in the mode and manner stipulated therein, the present application moved under Section 11(6) of the Arbitration and Conciliation Act, 1996, cannot be entertained. He has pointed out that after the dispute was referred to Chief Mechanical Engineer as required by clause 68(a) of the Agreement between the parties, if the applicant was aggrieved by his decision, an appeal to Chairman is contemplated within 30 days. That appeal was not filed within time and, therefore, a further recourse to arbitration which is possible only after adjudication of appeal by Chairman, is not open in the present matter. 3. In view of this objection, I have heard both the sides. Learned Counsel for applicant has stated that on 21.07.2008, the matter was referred to Chief Mechanical Engineer by the applicant and thus a dispute and an intention to proceed further in accordance with agreement was put on record. It is further argued that though on 19.09.2008 said Chief Mechanical Engineer rejected two claims made by the applicant, he also communicated that counter claim against applicant is being worked out and the same would be communicated separately. The applicant before communication of said counter claim i.e. on 13.10.2008, wrote to Chief Mechanical Engineer and pointed out certain lacunae in his consideration and requested for review. On 17.10.2008, the Chief Mechanical Engineer communicated counter claim of the Department by raising a demand of Rs.4786.44 lakhs. After receipt of this demand on 21.10.2008, the applicant wrote to said Chief Mechanical Engineer disputing that counter claim and renewed their earlier claims. On 12.11.2008, they submitted necessary appeal to the Chairman as required by the first sub-clause of clause 68(a). Learned Counsel, therefore, contends that viewed in this background, there is no delay as the Order of Chief Mechanical Engineer communicated vide letter dated 19.09.2008 was not complete and the said Order became complete only on 17.10.2008. He has also invited attention of this Court to the Judgment of Hon'ble Apex Court reported in 2008 DGLS(Soft.) 1035(Bharat Sanchar Nigam Ltd. & anr. v. Motorola India Pvt. Ltd.) to urge that similar clause which ultimately confers absolute discretion or authority with employer to refuse arbitration have been held to be violative of Section 28 of the Contract Act and, therefore, bad. 4. Learned Senior Advocate Nadkarni for Respondent has urged that ruling relied upon is not relevant at all because the provisions of clause 68 of Agreement does not contain any such power and he states that said clause only regulates the mode and manner in which the arbitration needs to be invoked. He points out that same mode and manner as agreed to between parties is held to be mandatory and breach thereof has been held as sufficient to deny the arbitration. He has relied upon the Judgment of Hon'ble Apex Court reported at (2007) 5 S.C.C. 344 (Municipal Corpn. Jabalpur & Ors. v. Rajesh Construction Co.) particularly paragraph 20 and then 2003(4) Mh.L.J. 509 (Union of India v. M/s. Anupam Builder & anr.) paragraph 5. 5. The scheme of clause 68 is not in dispute between the parties. The question before this Court is whether the action of Chairman in not entertaining the appeal presented to him on the ground that it has been filed beyond time of 30 days from the date of Order of Chief Mechanical Engineer is correct or not. The date of said Order according to Respondent is 19.09.2008 and date of which appeal is filed is 12.11.2008. 6. The Judgment on which the learned Counsel for applicant has placed reliance considers the clause by which the amount of liquidated damages worked out by CGM Kerala has been made final. The Hon'ble Apex Court has noticed that such clause giving finality was against the provisions of Section 28 of the Contract Act. This has been held to be so in the background of the fact that the liability to pay damages would first be required to be ascertained and for that purpose the recourse to clause 15.2 was essential. It has been therefore observed that the fixation of liability was primary while its quantification which is provided under clause 16.2 is secondary. The scheme before this Court is clearly different. 7. The Judgment relied upon by respondent reported at Municipal Corpn. Jabalpur & Ors. v. Rajesh Construction Co.(supra), considers same or the similar situation and clause 29 there required appeal filed to Municipal Commissioner after furnishing security to the respondent-Corporation. The Hon'ble Apex Court states that as per Clause 29 it tried to ascertain whether security deposit was made or not and learnt that such security deposit was till then not made. In view of this lapse, Hon'ble Apex Court held that obligation of the Corporation to constitute an Arbitration Board to resolve disputes between the parties could not arise because of the respondent to furnish security as envisaged under clause 29(d) of the Contract. Thus, the primacy given to arrangement or Contract between parties by Hon'ble Apex Court is apparent. The other Judgment Union of India v. M/s. Anupam Builder & anr. (supra), particularly paragraph 5 again shows the same finding. 8. However, in facts before me, it is apparent that Order dated 19.09.2008 was not complete in itself and the Order itself communicated the proposed action to raise counter claim and also further stated that figures would be communicated separately. It is not in dispute that the said counter claim has been communicated on 17.10.2008. It is communicated by the Authority which in fact has to decide the dispute between himself and Contractor. It is obvious that "counter claim" of his own Department could have been looked into after previous notice and opportunity to applicant/Contractor. Prayer for review by applicant needs to be viewed in this backdrop also. The Order passed on 19.10.2008, therefore, became final on 17.10.2008. The period of 30 days to file appeal before Chairman, therefore, has to be computed from 17.10.2008. The appeal has been filed on 12.11.2008 i.e. within a period of 30 days from said communication letter dated 17.10.2008. Form or contents of appeal were not relevant and as appellate authority is the first higher authority not party to dispute, the appellant authority ought to have treated the Order dated 17.10.2008 as cause of action for applicant. This is also important because the appeal is departmental one and a necessary step to place the dispute before independent impartial arbitrator. The said appeal, therefore, could not have been rejected as time barred. 9. In the circumstances, I find that the prayer of applicant as made in present application needs to be granted. On the question of appointment of Arbitrator, parties have suggested different names and ultimately, the name of retired Hon'ble Chief Justice Shri Ahmadi has been suggested. Senior Advocate Shri Nadkarni has some reservations because, according to him, his clients may not be in a position to pay the requisite charges. Considering the nature of controversy and the claims, I find it proper to appoint Hon'ble retired Chief Justice of India Shri Ahmadi as Arbitrator to arbitrate between parties. Though Advocate Nadkarni states that presently he is not in a position to accept the appointment, he requests the Court to observe that sitting should be held in Panaji at Goa. The applicant has no objection for conducting the proceedings at Panaji. 10. The application is accordingly allowed and Hon'ble Retired Chief Justice of India Shri Ahmadi is appointed as Arbitrator. B. P. DHARMADHIKARI, J. arp/*