Happy Electricals v. Central Public Works Department

5. The respondent, by letters, requested the Chief Engineer (Civil)for appointment ofan arbitrator to adjudicate the disputes between theparties in terms of ^ Clause 25 ofthe respective agreements. Accordinsto the respondent letters were received by the Chief Engineer ofthe appellantno.1 on differentdates. 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 Arb. P. Nos.07/2010,08/2010,09/2010& 10/2010 Page 5 of10 arbitrator. However, according to the case made out by the appellants, on 9^^ of March, 2005, Chief Engineer (Civil). BSNL had already avvointed Sri Gurbawc Sin^h. Principal Chief Engineer (Arbitration), BSNL vide its office letter No. 69- 41(05)/CE(c)/BBSR/205. By the imyugned order, the Hish Court allowed apylication under Section 11(6) of the Act, and avvointed one Sri Bibhudhendra Mishra in place ofdepartmentalnomineeSir Gurbanx Sinsh who was appointed by ChiefEngineer (Civil), BSNL ofappellant no.1.

XXX XXX XXX XXX

9. Similarly, in the case ofAcePipeline Contracts Private Limited vs. Bharat Petroleum Corporation Limited, (2007) 5 SCC 304 = 2007 SCACTC 203 (SC)=2007(2) Arb. LR 49 (SC), this court went to observe that(para 6,p.55ofArb.LR): "But in sub-section (6), where the procedure has already been agreed upon by theparties, as in thepresentcase, and in that event, ifaparty fails to actas required under thatprocedure or the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under thatprocedure or aperson, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may, in that event, request the Chief Justice or aperson or an institution designated by him to take necessary measures, unless the agreement on the appointment procedure provides other means for appointment of arbitrator. Therefore, sofar as the period of thirty days is concerned, it is not mentioned in Arb. p. Nos.07/2010,08/2010,09/2010& 10/2010 Page6of10 subsection (6). Theperiodoflimitation is only provided under subsections (4) and (5) of Section 11. As such, as per the statute, the period of limitation of thirty days cannot be invoked under subsection (6) ofSection 11 of the Act." On aperusal ofthe above quoted observations ofthis court made in Ace Pipeline Contracts Private Limited, the reasons advanced in the orders passed by the High Court must be found to be a correct interpretation ofthe aforesaidprovision andsofar as theperiod of30 days with regard to Section 11(6)is concerned, there is no doubt at all that thirty days limitation cannot be invoked as mandatory period under Section 11(6) of the Act. But a somewhat different view was expressed in a latter decision of this court in the case of Union ofIndia vs. Bharat Battery Manufacturing Co. Pvt. Ltd.,(2007) 7SCC 684= 2007SCACTC437(SC)=2007(3)Art.LR 282 (SC). Jn view ofthe difference ofopinion ofthe two coordinate benches of this court, the matter—was referred to a Three Judse Bench in the—case—of Northern Railway Administration. Ministry of Railway vs.PatelEnsineerins Company Ltd..(2008) in see 240=2008 SCACTC 480(SC)=2008(3)Art. LR 349(SC). in which the decision in Ace Pipeline Contracts Pvt. Ltd. was also referred to. Arijit Pasavat. J. fas His Lordship then was), headins the Three Judse Bench ofthis court, after considerins the scope and obiectofthe Act varticularlv Section 11 of the Act, concluded the following (paras 1 and 13, p.354ofArb.LR): "A bare reading of the scheme ofSection 11 shows that the emphasis is on the terms ofthe Arb.P. Nos.07/2010,08/2010,09/2010&10/2010 Page7of10 agreement bein2adhered to and/or siven effect as closely as possible. In other words, the ^ court may ask to do what has not been done. The court mustfirst ensure that the remedies provided for are exhausted. It is true, as contended by Mr. Desai, that it is not mandatory for the ChiefJustice or any person or institution desimated by him to appoint the named arbitrator or arbitrators. But at the same time, due resard has to be siven to the qualifications required by the asreement and other considerations.

XXX XXX XXX In all these cases at hand the Hish Court does not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other considerations necessary to secure the appointment ofan independent and impartial arbitrator. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements ofsub-section (8)ofSection 11 have to be kept in view, considered and taken into account. If it is not done, the appointment becomes vulnerable. In the circumstances, we set aside the appointment made in each case, remit the matters to the Hish Court to make fresh appointments keeyins in view the parameters indicated above."

10. In the aforesaid decision in the case of Northern Railway Administration, Ariiit Pasavat, J. Arb. P. Nos.07/2010,08/2010,09/2010& 10/2010 Page 8of10 (as His Lordshiu then was),found that the Hish Court in the said case did not apvear to have focused on the reQuirement to have due resard to the Qualifications r required bv the asreement or other conditions | (_ necessary to secure the apyointment of an independent and impartial arbitrator. In the aforesaid decision, this court also concluded that since the requirement ofsub-section (8)ofSection 11 was not at all dealt with by the Hish Court in its order, the appointment of an arbitrator without dealing with sub-section (8) ofSection 11 ofthe Act became vulnerable and accordinslv, 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 hadfailed to take into consideration the effect ofSection 11(8) ofthe Act as was done in Northern Railway Administration. IP In view of the discussions made hereinabove andparticularly in view ofthe principles laiddown by this Court in Northern Railway Administration, we set aside the impugned order and remand the case back to the Hwh Court for fresh decision of the application under Section 11(6)ofthe Act and while considering the application afresh, the High Court is directed to take into consideration the aforesaid decision ofthis Court." (emphasis supplied) In view of the aforesaid judgment and Clause 25 of the Agreement,Iam ofthe opinionthatprocedure, qualifications and other considerations stipulated in the agreementfor appointmentofan Arb. p. Nos.07/2010,08/2010,09/2010&10/2010 Page9of10 L. independent and impartial Arbitrator have been followed while appointing Mr.S.K.Singhal asthe Arbitrator. Even ifthere wassome delay in appointment ofan Arbitrator by the respondent,I hereby,in exercise of powers under Section 11 ofthe Act, 1996, appoint Shri S.K.Singhal,Arbitrator,Ministry ofUrban Development,New Delhi, as the sole Arbitrator to adjudicate upon all the dispute between the parties. With the aforesaid observations, present petitions stand disposed of. \\J^ MANMOHAN,J MARCH 11,2010 js Arb. P. Nos.07/2010,08/2010,09/2010& 10/2010 Page 10of10