Case: Bharat Sanchar Nigam Ltd.  Vs. Dhanurdhar Champatiray

3. The relevant facts leading to the filing of these appeals as emerging from the records may be briefly stated as follows :  The parties herein entered into a contract pursuant to distinct notices inviting tender by BSNL [in short `the appellant] for the work of construction of 4 Nos. of Type-II, 2 Nos. Type-III and 1 No. of Type-IV Staff Quarters at Bhanjanagar of vertical extension to combined building at Aska of 3 Nos. of Type III, 3 Nos. of Type II and 4 K type T.E. building at Jankia and of vertical extension to 8 Nos. of Type II and 6 Nos. of Type IV staff quarters at CTTC compound Vanivihar, Bhubaneshwar.  4. The said contract contained an arbitration clause in terms whereof the Chief Engineer, Telecommunication/ Postal Department in charge of the work at the time of dispute, or if there be no Chief Engineer, the Administrative Head of the said Telecommunication/ Postal Department was to be appointed as a sole arbitrator. The said provision envisaged that in terms thereof no person other than the one appointed by such Chief Engineer or Administrative Head of the Telecommunication/Postal as aforesaid should act as arbitrator to decide the disputes referred to him.  5. The Respondent by letters, requested the Chief Engineer (Civil) for appointment of an arbitrator to adjudicate the disputes between the parties in terms of clause 25 of the respective agreements. According to the respondent, letters were received by the Chief Engineer of the appellant no.1 on different dates. The Appellants having failed to respond to the letters of respondent requiring them to appoint an arbitrator and to appoint an arbitrator in response to such letters within the stipulated period in accordance with Clause 25 of the respective Agreements, the respondent was constrained to file petitions under Section 11(6) of the Act for appointment of an Arbitrator. However, according to the case made out by the appellants, on 9th of March, 2005, Chief Engineer (Civil), BSNL had already appointed Sri. Gurbaux Singh, Principal Chief Engineer (Arbitration) BSNL vide its office letter No. 69-41(05)/CE(c)/BBSR/205. By the impugned order, the High Court allowed application under S. 11(6) of the Act, and appointed one Sri. Bibhudhendra Mishra in place of departmental nominee Sri. Gurbaux Singh who was appointed by Chief Engineer (Civil) BSNL of appellant No.1.  6. Feeling aggrieved by the said order of the High Court, the appellant has filed these special leave petitions which on grant of leave, were heard in the presence of learned counsel for the parties.

Reasoning:
11. In the aforesaid decision in the case of Northern Railway Administration (Supra), Arijit Pasayat, J. (as His Lordship then was), found that the High Court in the said case did not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other conditions necessary to secure the appointment of an independent and impartial arbitrator. In the aforesaid decision, this Court also concluded that since the requirement of sub-section (8) of Section 11 was not at all dealt with by the High Court in its order, the appointment of an arbitrator without dealing with Sub-Section 8 of Section 11 of the Act became vulnerable and accordingly, such appointment was set aside. Similar is the position in this case. In this case also, before appointing an arbitrator under Section 11(6) of the Act, the High Court had failed to take into consideration the effect of Section 11(8) of the Act as was done in Northern Railway Administration (supra)