HON’BLE SRI JUSTICE K.S. APPA RAO C.R.P.No.2726 of 2002 ORDER: This Civil Revision Petition is filed aggrieved by the order dated 15-10-2001 passed in O.P.No.109 of 1993 on the file of the Senior Civil Judge, Tanuku. The Revision Petitioner is the petitioner in O.P.No.109 of 1993. 2. The brief averments of the petition in O.P.No.109 of 1993, which are necessary for disposal of the present Revision Petition, are as follows: The petitioner is a Company registered under the Indian Companies Act, 1913 having its registered office at Venkatarayapuram, Tanuku. The first respondent is a statutory body having its project at Rajamundry. The second respondent is an employee of the first respondent. The petitioner and the first respondent entered into an agreement dated 20-05-1987 whereunder the first respondent agreed to supply gas to the petitioner at 16,000 standard cubic metres per day. As per Article 5.02 of the Agreement, the petitioner is under obligation to pay the first respondent for the minimum guaranteed off take of 47,52,000 standard cubic metres of gas for each year whether the said quantity of gas consumed or not. The first respondent agreed to supply gas from 01-08-1987 onwards upto 20-05-1990. Due to operational reasons, the first respondent could not supply the gas from 01-08-1987, but started supplying from 18-07- 1988. Under Article 9.03 of the Agreement, in the event of sellers inability to supply the agreed quantity of gas due to defects on his part, the minimum guarantee off take of gas shall be reduced on prorata basis. The first respondent by telex message dated 12-01-1989 informed the petitioner and another company by name Coastal Agro Industries Limited, which are the only two companies finally remained in the field of buyers, that it is unable to supply agreed quantity of gas due to operational reasons and the buyer should cut down the gas consumption by 50% until further notice. Subsequently, the first respondent did not inform the petitioner that they are in a position to supply full quantity of gas and that the petitioner could consume the gas as per the contract without observing 50% cut, and after the contract period is over, the first respondent by its letter dated 12-06- 1990 raised a bill for Rs.9,26,995/- contending that during the period from 18-07-1989 to 19-05-1990, the petitioner did not purchase full quantity of gas and the price of short lifted gas comes to Rs.9,26,995/- and the same should be paid by the petitioner. The petitioner by reply dated 16-06-1990 denied the liability to pay the said amount. It is further averred that the claim of the first respondent is barred by limitation and there is no dispute to be adjudicated under the agreement dated 20-05-1987. The petitioner received a letter dated 15-12-1993 from the first respondent invoking the arbitration clause in the agreement and the second respondent, who is working as Deputy General Manager (Finance & Accounts) in its organization, was appointed as sole arbitrator. It is also averred that the claim for short lifting arise only when the first respondent was in a position to supply full quantity of gas and since it failed to supply the gas as agreed, the petitioner is not liable to pay the amount claimed by the first respondent. It is further averred that although power is given to the competent authority of ONGC to appoint sole Arbitrator, it was however impliedly understood that an independent third party Arbitrator only would be appointed in case it becomes necessary to invoke the said clause, but in the present case, the first respondent’s employee, who is second respondent, was appointed. Subsequent to the appointment of the second respondent as an Arbitrator, the petitioner received a Communication dated 20-12-1993 from the second respondent asking to appear before him on 17-04-1994 at 11 AM for preliminary hearing. Therefore, the petitioner filed the O.P. to revoke the arbitration agreement. 3. The first respondent, while denying the averments made in the petition, filed counter alleging that there is an agreement between the petitioner and the first respondent for supply of natural gas and as per the agreement when disputes or differences arose between the parties, the same has to be referred to Arbitration and the award passed by the Arbitrator will be binding on both parties. Under Article 15 of the Agreement, the concerned member, having administrative control over the marketing section of ONGC, has power to appoint an Arbitrator and accordingly, the competent authority appointed the second respondent as Arbitrator to pass the Award and the order of appointment of Arbitrator is perfectly valid and binding on the parties, and the claim is not barred by limitation and it has to be decided only by the Arbitrator, but not by the Civil Court. 4. During the course of enquiry before the lower Court, on behalf of the petitioner, no oral evidence was adduced, however Exs.A-1 to A-12 were got marked. On behalf of the respondents also, no oral evidence was adduced, however, Exs.B-1 to B-4 were got marked. 5. The lower Court, after elaborate enquiry, dismissed the petition observing that the petitioner is not entitled for the relief to revoke the arbitration agreement and directed the first respondent to strictly follow clause 15.01 of Ex.A-1 for appointing the Arbitrator by proper authority for adjudication of the dispute. Aggrieved thereby, the petitioner therein preferred the present Civil Revision Petition contending that the lower Court, having found that the appointment of the Arbitrator itself is illegal, ought to have allowed the petition, instead dismissed the petition directing the first respondent to strictly follow clause 15.01 of Ex.A-1 for appointing Arbitrator by proper authority for adjudication of the dispute, and such direction is illegal and beyond the scope of the petition and jurisdiction of the Court; that the claim of the first respondent is barred by time and therefore, the question of appointing the Arbitrator for adjudication of such dispute does not arise; that the claim raised by ONGC towards short lifting of minimum guarantee off-take of gas for the year 1989-90 is barred by time on the ground that the demand was first raised by ONGC on 12-06-1990 and three years time got lapsed by 12-06-1993, and the proceedings for arbitration are initiated after expiry of three years. 6. On the other hand, the learned counsel appearing for the respondents argued that there is correspondence between the parties prior to the initiation of the arbitration proceedings and therefore, the claim is not time barred and supported the order of the lower Court. 7. Now the point for consideration is whether the impugned order directing the first respondent to strictly follow clause 15.01 of Ex.A-1 for appointment of Arbitrator, is sustainable? 8. Admittedly there is no dispute between the parties with regard to Ex.A-1 agreement dated 20-05-1987. The respondents raised objections on the finding of the lower Court directing to strictly following Clause 15.01 of Ex.A-1 for appointment of the Arbitrator. Clause No.15.01 of Ex.A-1 is a condition agreed by both parties to abide by the decision of the Arbitrator. The lower Court, after elaborate enquiry, well discussed the evidence on record and came to the conclusion that the claim is not barred by limitation pursuant to the Arbitration Clause 15.01 of Ex.A-1. When the order reads that the first respondent did not strictly follow Clause 15.01 of Ex.A-1, the lower Court ought not to have given direction to the first respondent accordingly. It is for the first respondent to take steps for appointment of Arbitrator strictly following the arbitration clause 15.01 of Ex.A-1. The impugned order reads that as per clause 15.01 of Ex.A- 1, the proper authority to appoint the sole Arbitrator is the member having administrative control over the marketing section of the first respondent. But, as seen from Ex.A-10, letter, it shows that it was issued by the General Manager (C) of the first respondent company and that the Member (Operations) has approved the appointment of second respondent as Arbitrator to resolve the dispute and the appointment of the second respondent as arbitrator is not properly made. The same is not challenged by the first respondent by way of cross objections. 9. Therefore, in view of the positive finding of the lower Court that the first respondent has not strictly followed arbitration Clause 15.01 of Ex.A-1, the direction given by the lower Court to the first respondent to follow clause 15.01 of Ex.A-1 for appointment of Arbitrator by proper authority, in my view, is beyond the scope of jurisdiction of the lower Court. However, as the respondents did not challenge the said order, it is now left open to the respondents to take appropriate steps as per Ex.A-1. The other findings of the lower Court, while dismissing the petition, holding that the petitioner is not entitled for the relief to revoke the arbitration agreement holds good. 10. With the above observations, the Civil Revision Petition is disposed of. No order as to costs. ______________ K.S. APPA RAO, J Date:16-12-2011 YCR