IN THE HIGH COURT OF JUDICATURE AT PATNA LPA No.1364 of 2009 With LPA No.1372 of 2009 With LPA. No.1389 of 2009 --- 1. East Central Railway through its General Manager, Hajipur 2. Controller of Stores, East Central Railway, Biscomaun Bhawan, Patna 3. Chief Material Manager, ECR, Hajipur 4. Deputy Chief Material Manager (Depot), ECR, Samastipur, Bihar ……..Appellants (in all the three cases) Versus M/S Shanti Steels, a Proprietary concern having its place of business at Ghitkaiya Road, P.S. Brahampura, Bairiya, Muzaffarpur, through its Proprietary Amar kumar Agarwal, s/o Sajjan Kr. Agrawal, r/o 202, Hari Om Apartment, Exhibition Road, P.S. Gandhi Maidan, Patna …Respondent (in all the three cases) ----------- 3 20/4/2010 IA. Nos. 6844, 6850 & 6940 of 2009 These are applications for condonation of delay in preferring the appeal. We have heard Mr. Siddhartha Prasad, learned counsel for the appellants, and Mr. S.D. Sanjay, learned counsel for the respondent. Regard being had to the averments made in the applications, we are of the considered opinion that sufficient grounds do exist for condonation of delay and accordingly the delay in filing the appeals stands 2 condoned. Interlocutory applications are accordingly allowed. LPA. Nos.1364, 1372 & 1389 of 2009 In these appeals the assail is to the order dated 25.7.2009 passed by the learned Single Judge in CWJC. Nos.18761, 18963 & 16550 of 2008, whereby the learned Single Judge has issued the following directions: “In view of the terms and conditions, the railways forfeited the earnest money. Learned counsel for the railways further states that the petitioners should have been ready with the money for each bid and for this he ought not to depend on any other circumstances or contingencies. Clause 8 of the conditions of auction sale products for settlement of dispute by a sole arbitrator to be appointed by the railways. As such, in view of the aforesaid clause and also taking into consideration that in similar type of cases this court vide order dated 22.11.2008 passed in Request Case nos.28 of 2008, 29 of 2008 and 27 of 2008 have appointed sole arbitrator. After hearing the counsel for the parties, in the facts and circumstances of the case and also taking into consideration Clause 8 of the terms of auction and sale, this court directs that these cases be also referred to the same sole arbitrator as appointed by a Bench of this court in aforesaid request on the same terms and conditions.” Mr. Prasad, learned counsel for the railways, fairly stated that he only intends to challenge the direction 3 of the learned Single Judge for appointing the same arbitrator who was already appointed as arbitrator in Request Case no.29 of 2008. Be it noted, request case means an application filed under section 11(6) of the Arbitrator & Conciliation Act, 1996. Mr. Prasad, learned counsel for the railways, has invited our attention to the decision rendered in Indian Oil Corporation Limited vs. Raja Transport Private Limited, (2009) 8 SCC 520. In the said case the Apex Court in paragraphs 14,15, 45 & 48 has expressed the view as follows: 14. No party can say he will be bound by only one part of the agreement and not the other part, unless such other part is impossible of performance or is void being contrary to the provisions of the Act, and such part is severable from the remaining part of the Agreement. The arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named Arbitrator contained in the arbitration clause. x x x x x x x x x x x 15. It is now well settled by a series of decisions of this Court that arbitration agreements in government contracts providing that an employee of the Department (usually a high official unconnected with the work or the contract) will 4 be the Arbitrator, are neither void nor unenforceable. We may refer to a few decisions on this aspect. x x x x x x x x x x x 45. If the arbitration agreement provides for arbitration by a named Arbitrator, the courts should normally give effect to the provisions of the arbitration agreement. But as clarified by Northern Railway Administration, where there is material to create a reasonable apprehension that the person mentioned in the arbitration agreement as the Arbitrator is not likely to act independently or impartially, or if the named person is not available, then the Chief Justice or his designate may, after recording reasons for not following the agreed procedure of referring the dispute to the named arbitrator, appoint an independent Arbitrator in accordance with section 11(8) of the Act. In other words, referring the disputes to the named arbitrator shall be the rule. The Chief Justice or his designate will have to merely reiterate the arbitration agreement by referring the parties to the named arbitrator or named Arbitral Tribunal. Ignoring the named Arbitrator/Arbitral Tribunal and nominating an independent arbitrator shall be the exception to the rule, to be resorted for valid reasons. 48. In the light of the above discussion, the scope of section 11 of the Act containing the scheme of appointment of arbitrators may be summarised thus: (i) Where the agreement provides for arbitration with three arbitrators (each party to appoint one arbitrator and the two appointed arbitrators to appoint a third arbitrator), in the event of a party failing to appoint an Arbitrator within 30 days from the receipt of a request from the other party (or the two nominated arbitrators failing to agree on the third arbitrator within 30 days from the date of the appointment), the Chief Justice or his designate 5 will exercise power under sub-section (4) of section 11 of the Act. (ii) Where the agreement provides for arbitration by a sole arbitrator and the parties have not agreed upon any appointment procedure, the Chief Justice or his designate will exercise power under sub-section (5) of section 11, if the parties fail to agree on the arbitration within thirty days from the receipt of a request by a party from the other party. (iii) Where the arbitration agreement specifies the appointment procedure, then irrespective of whether the arbitration is by a sole arbitrator or by a three-member Tribunal, the Chief Justice or his designate will exercise power under sub- section (6) of section 11, if a party fails to act as required under the agreed procedure (or the parties or the two appointed arbitrators fail to reach an agreement expected of them under the agreed procedure or any person/institution fails to perform any function entrusted to him/it under that procedure). (iv) While failure of the other party to act within 30 days will furnish a cause of action to the party seeking arbitration to approach the Chief Justice or his designate in cases falling under sub- sections (4) & (5), such a time bound requirement is not found in sub-section (6) of section 11. The failure to act as per the agreed procedure within the time limit prescribed by the arbitration agreement, or in the absence of any prescribed time limit, within a reasonable time, will enable the aggrieved party to file a petition under Section 11(6) of the Act. (v) Where the appointment procedure has been agreed between the parties, but the cause of action for invoking the jurisdiction of the Chief Justice or his designate under clauses (a), (b) or 6 (c) of sub-section (6) has not arisen, then the question of Chief Justice or his designate exercising power under sub-section (6) does not arise. The condition precedent for approaching the Chief Justice or his designate for taking necessary measures under sub-section (6) is that (i) a party failing to act as required under the agreed appointment procedure; or (ii) the parties (or the two appointed arbitrators), failing to reach an agreement expected of them under the agreed appointment procedure; or (iii) a person/institution who has been entrusted with any function under the agreed appointment procedure, failing to perform such function. (vi) The Chief Justice or his designate while exercising power under sub-section (6) of section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause. (vii) If circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else. In the cases at hand, the learned Single Judge has not ascribed any reason while appointing the same arbitrator who had already been appointed in another case. In absence of any reason, the arbitrator who is supposed to be appointed by the General Manager could not have been appointed by the Court. 7 Mr. S.D. Sanjay, learned counsel for the respondent, submitted that the same arbitrator was appointed because of the convenience. Convenience cannot be a ground of appointment as the appointment of arbitrator is governed by the statute. On a query being made from Mr. Prasad, learned counsel for the railways, how much time would be taken by the General Manager in appointing the arbitrator, he has fairly stated that the appointment shall be made within a period of four weeks from today. On a further query being made whether the railways would disturb the arbitrator appointed in the Request Case no.29 of 2008, Mr. Prasad fairly stated that the arbitrator shall not be disturbed inasmuch as the railway administration as well as the claimants are participating before the said arbitrator. The appeals are allowed to the extent indicated above. There shall be no order as to costs. Neyaz/ (Dipak Misra, CJ.) (Mihir Kumar Jha, J.)