IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Arbitration Case No.46 of 2010 Date of Decision: 18.5.2011 M/s Arsh Constructions .....Petitioner Vs. Aravali Power Company Pvt. Ltd. ....Respondent CORAM : HON'BLE MR.JUSTICE HEMANT GUPTA Present : Mr. Ashwani Bansal, Advocate for the petitioner. Mr. Puneet Taneja, Advocate for the respondent. HEMANT GUPTA, J (Oral) The petitioner has sought appointment of an arbitrator under Section 11 of Arbitration and Conciliation Act, 1996 on account of death of an arbitrator appointed by this court vide order dated 22.5.2009. The petitioner was given contract for the construction of temporary transit camp at Aravali Super Thermal Power Project at Jhajhar vide letter dated 10.8.2007. In pursuance of the said allotment of work, the parties entered into an agreement, which contained an arbitration clause. The relevant Clause 56 of the General Conditions of Contract reads as under: - “56. Except where otherwise provided for in the Contract all questions and disputes relating to the meaning of the specifications, design, drawings and instructions herein before mentioned and as to the quality to workmanship or material used on the work or as to any other question, claim, right matter or thing whatsoever in any way arising out of or relating to the Contract, design drawings, Specifications, Arbitration Case No.46 of 2010 estimates, instructions, orders or these conditions or otherwise concerning the works, or to the executions or failure to execute the same whether arising during the progress of works or after the completion or abandonment thereof shall be referred to the sole arbitration of the General Manager of Aravali Power Company Private Limited and if the General Manager is unable or unwilling to act, to the sole arbitration of some other person appointed by the Chairman, Aravali Power Company Private Limited, willing to act as such arbitrator. There will be no objection if the arbitrator so appointed is an employee of Aravali Power Company Limited and that he had to deal with the matters to which the Contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason as aforesaid at the time of such transferred or vacation of his office or inability to act, Chairman, Aravali Power Company Private Limited shall appoint another person to act a arbitrator in accordance with the terms or the Contract. It is also a term of this Contract that no person other than a person appointed by Chairman, APCL as aforesaid should act as arbitrator and if for any reason than is not possible, the matter is not to be referred to arbitration at all………..” Earlier, the petitioner sought appointment of an arbitrator by serving notice upon the respondent. Since the arbitrator was not appointed by the respondent, the petitioner filed a petition before this court bearing Arbitration Petition No.92 of 2008. In the said petition on 22.05.2009, Shri . K.K.Garg, a retired District Judge was appointed as sole arbitrator. The sole arbitrator appointed by this court entered upon reference and fixed many hearings. Unfortunately, the said arbitrator died in the month of December 2009. 2 Arbitration Case No.46 of 2010 It was on 19.1.2010, the petitioner sought appointment of an arbitrator vide communication addressed to the Chairman of the respondent. The respondent submitted its reply on 16.2.2010. It was inter alia pointed out that the proposal for appointment of a sole arbitrator is against the terms of agreement for appointment of an arbitrator. It is also pointed out that as per Clause 56 of the General Conditions of Contract, the petitioner should approach the General Manager of the respondent seeking reference of dispute to him and in case he is unwilling to act as an arbitrator, the petitioner should approach the Chairman of the respondent seeking appointment of an arbitrator. It is thereafter, the present petition for appointment of an arbitrator was filed before this court. Learned counsel for the petitioner argued that since an arbitrator was appointed by this court and the respondent has failed to appoint an arbitrator in terms of Clause 56 of the agreement, this court is competent authority to appoint an arbitrator. On the other hand, learned counsel for the respondent argued that in terms of Section 15(2) of the Act, a substitute arbitrator can be appointed according to rules that were applicable to the appointment of an arbitrator. It is pointed out that in terms of Clause 56, the General Manager is the named arbitrator and has to act as an arbitrator. The Chairman can appoint an arbitrator in terms of Clause 56 of the agreement, only on the failure of the General Manager to act an arbitrator. Learned counsel for the respondent relied upon Supreme Court's judgment reported as National Highways Authority of India and another Vs. Bumihiway DDB Ltd. (JV) and others, 2006(10) Supreme Court Cases 763 in support of his arguments. 3 Arbitration Case No.46 of 2010 I have heard learned counsel for the parties and find that the argument raised by counsel for the respondent is not tenable. The General Manager of the respondent was named arbitrator in the agreement, but he has failed to act as an arbitrator in the first instance, which led to appointment of Shri K.K. Garg, as a sole arbitrator. After death of the sole arbitrator, the petitioner has requested the Chairman of the respondent to appoint an arbitrator. The petitioner has proposed the name of a former District Judge to act as an arbitrator. Though the respondent was fully justified in declining the name proposed by the petitioner, but to state that the General Manager should be requested to take up the arbitration, is not tenable. The contention that the petitioner should approach the Chairman, is only a delaying tactic. The claim of the petitioner arose in the year 2008. Instead of expeditious disposal of the dispute arising between the parties, the respondent has raised such plea which appears to be only to delay the final adjudication by its General Manager knowing well that the said General Manager has not acted as an arbitrator earlier. The petitioner has requested the Chairman of the Corporation for appointment of an arbitrator. The Chairman could himself refer it to the General Manager to act as an arbitrator. The refusal to appoint an arbitrator for the stated reason that the petitioner should approach the General Manager is nothing but refusal to get the adjudication process in motion. Thus the intention of the respondent is not for the adjudication of the disputes. The judgment relied upon by the learned counsel for the respondent provides little assistance to the argument raised. In the aforesaid case, the presiding arbitrator has resigned. The issue was whether the presiding arbitrator is required to be appointed by Court under Section 11 (6) of the Act or in terms of Clause 67.3 of Conditions of Particular Application (COPA) of the Agreement. Sub-clause (e) contemplated that third arbitrator shall be 4 Arbitration Case No.46 of 2010 chosen with consensus by the two arbitrators so appointed by the parties. It was found that two nominated arbitrators were first required to reach a consensus to appoint a presiding arbitrator and on their failure to arrive at an agreement, the President, Indian Roads Congress could exercise jurisdiction to nominate presiding arbitrator. It was on failure of respondent No.2 to exercise jurisdiction, the High Court could assume jurisdiction under Section 11(6) of the Act. Firstly, it is not a case of appointment of a presiding arbitrator, which is to be appointed by the nominated arbitrators. Secondly, the General Manager to whom the disputes were required to be referred, at the first instance, has not acted as an arbitrator earlier. This Court appointed an arbitrator on failure of the General Manager to act as an arbitrator. In view of the said fact, an Arbitrator is required to be appointed by this Court. The petitioner has requested the Chairman of the respondent to provide vacancy after the death of the Arbitrator appointed by this Court. It was the Chairman, who was to supply vacancy in terms of Clause 56 of the General Conditions of Contract, reproduced above, who has failed to appoint an Arbitrator. Consequently, Shri M.K.Bansal, District Judge (Retd.), resident of 175, Hope Apartment, Jharsa Road, Gurgaon is appointed as an Arbitrator to adjudicate upon the disputes between the parties. Learned Arbitrator may fix his fee in consultation with the parties on the first day of hearing with liberty to the parties to seek clarification, if any, required. (HEMANT GUPTA) JUDGE 18.5.2011 GS/Vimal 5