Union Of India vs M/S Premier Files Ltd

Union of India for piling work in respect of which clause

25 provides for settlement of disputes in relation to the

said work. The work agreement was completed and final

bill for the said work was paid along with incentive for

one week early completion of work under clause 34 of the

Agreement. Some differences and disputes in relation to 2

the said work arose between the parties. The respondent

requested the appointing authority of the appellant to

appoint an Arbitrator as per arbitration clause to

adjudicate the dispute between the parties. The appellant

appointed one Shri O.P.Gaddhyan as an Arbitrator to

adjudicate the said dispute. The said Arbitrator entered

into the reference and thereafter Shri O.P.Gaddhyan

resigned. After his resignation, the respondent filed an

arbitration application for appointment of an Arbitrator

before the High Court at Calcutta. It is not in dispute

that when the application for appointment of Arbitrator

was pending before the High Court, another Arbitrator

was appointed by the appointing authority on 14th of

July, 2006. However, by the impugned order, the High

Court had disposed of the said application filed by the

respondent appointing a senior advocate of the Calcutta

High Court as an Arbitrator in terms of Section 11(6) of

the Arbitration and Conciliation Act, 1996 (hereinafter

referred to as the `Act').

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3. Feeling aggrieved, the Union of India has come up to this

Court by way of a special leave petition which, on grant

of leave, was heard in presence of the learned counsel for

the parties.

4. It is not in dispute that clause 25 provides for settlement

of dispute in relation to the work agreement for piling

work. It is also not in dispute that the work agreement

was completed and final bill was passed. Since some

differences and disputes arose, an Arbitrator was

appointed by the competent authority who subsequently

resigned. After the resignation of the Arbitrator appointed

by the competent authority, no appointment was made

by the competent authority after the resignation for

about two months. As noted herein above, a lawyer

Arbitrator was appointed by the High Court by the

impugned order. In our view, in the facts and

circumstances of the present case and in view of the

specific clause being clause 25 of the Arbitration

Agreement, the impugned order appointing a lawyer

Arbitrator in the aforesaid matter must be said to be in 4

violation of the provisions of clause 25 of the agreement

which clearly says that the Arbitrator must be appointed

by the competent authority. That apart, before the

appointment of a lawyer Arbitrator in the matter, the

competent authority has already appointed Shri

S.C.Padhi as an Arbitrator and in fact the said Arbitrator

has already entered appearance and proceeded with the

arbitration and, therefore, it would not be justified for

appointing a lawyer Arbitrator at that stage. Considering

the fact that the Arbitrator has already been appointed in

terms of the agreement and that such appointment was

made before the final order was passed under section 11

of the Act appointing a lawyer Arbitrator to decide the

disputes between the parties, we set aside the order of

the High Court and restore the order of the competent

authority appointing Shri S.C.Padhi as a sole Arbitrator

to decide the disputes between the parties. The learned

Arbitrator is directed to pass an award within six months

from the date of communication of this order to him after

giving hearing to the parties and pass a reasoned award

in accordance with law.

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5. For the reasons aforesaid, the impugned order is set

aside. The appeal is allowed to the extent indicated

above. The application filed by the respondent under

Section 11(6) of the Act, therefore, stands rejected. No

order as to costs.

..........................J. [Tarun Chatterjee]

New Delhi; ..........................J. August 04, 2009. [R.M.Lodha)