PUNJAB AND HARYANA HIGH COURT, CHANDIGARH v. Union of india

Hon'ble Mr. Justice Mukul Mudgal, Chief Justice. *** Present: Shri Vishal Gupta, Advocate, for the petitioner. Shri Puneet Jindal, Advocate, for the respondents. *** Mukul Mudgal,CJ (Oral) Pursuant to an application filed under Sections 11, 14 and 15 of the Arbitration and Conciliation Act, 1996 for termination of mandate of respondents No. 3 and 4, before the District Judge, Gurdaspur, the learned District Judge after the appearance of the respondents,s vide order dated

23.12.2006 allowed the application and appointed Justice A.L.Bahri (Retd) Judge of this Court as an Arbitrator to submit the award within a period of within six months. The relevant part of the order is reproduced as under:- ''In the present case, on the request of the petitioner on 8.12.1998, respondent No.1 had appointed Mr. M.I.S.Saini, Deputy Chief Engineer, Northern Railways as contractor's nominee. Mr. Alok Vishwas DFS & CAO Construction, Northern Railway was Railway's nominee. As per general conditions of the contract agreement, designated nominees/arbitrators were to appoint third arbitrator/umpire but third nominee/umpire was not appointed. After resignation of Railway's nominee, Smt. Neelam Singhvi was the Railway's nominee as per letter dated 21.2.2000. Railway's nominee had also tendered resignation. Petitioner suggested the name of independent arbitrator. Opportunity was given to the second party to submit -2- Arb.Case No. 57 of 2008 names of independent arbitrator or file objections if any to appoint independent arbitrator suggested by the petitioner but no objection by the respondents except that application of the petitioner dated 25.10.2006 be dismissed. When arbitrators failed to agree on third umpire and failed to act as per mandate then no alternative except to terminate the mandate of respondents No.3 and 4 and appoint impartial arbitrator under the Act. Hon'ble Justice Amrit Lal Bahri (Retired) H.No.124 Sector 16-A, Chandigarh is appointed as independent and impartial arbitrator to submit award under the Act. Issues No. 1 and 2 are decided in favour of the petitioner''. Against the order passed by the learned District Judge, Gurdaspur, respondent Union of India preferred a revision before this Court under Section 11 of the Act soley on the ground that the power to appoint an arbitrator is with the Chief Justice of the High Court or his nominee.and vide order dated September 07, 2007, the revision petition was accepted and the order aforesaid was set aside with the observation that the matter be dealt with in accordance with the principle of law laid down by the Hon'ble Supreme Court in SBP Company Versus Patel Engineering Ltd. And another- 2005(8) SCC 618. Pursuant to the disposal of the revision, petitioner Narinder Singh filed an application before the District Judge, Gurdaspur under order 47(1) of the Code of Civil Procedure and the learned District Judge, Gurdaspur after hearing the counsel for the parties, transferred the petition to this Court vide order dated 26.03.2008. I have heard learned counsel for the parties and perused the record. The only ground urged by learned counsel for the petitioner is that the District Judge had no jurisdiction to entertain the petition, whereas -3- Arb.Case No. 57 of 2008 the learned counsel for the respondent urged that the provisions of Section 11 of the Arbitration and Conciliation Act are required to be followed. Since there was dis-agreement between the arbitrator appointed by the petitioner and the respondent, the third arbitrator/umpire could not be appointed. The provisions of Section 11 of the Act reads as under:- ''Appointment of Arbitrators.- (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2)X X X XX X X X X X X X (3)X X X X X X X X X X (4) applies and - If the appointment procedure in sub-section (3) a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him''. In my view it is not disputed that the two appointed arbitrators failed to agree on the appointment of third arbitrator within 30 days of the date of their appointment, accordingly, this Court is competent to appoint the third arbitrator as per Section 11(4)(b) of the Act. I have considered the plea of the parties. Taking into account the facts of this case it is evident that the delay in the appointment of the third arbitrator was largely due to the fact that the arbitrator appointed by the Railway was firstly transferred and then resigned, the third arbitrator was not appointed within the stipulated period. The fact that the appointment of Justice A.L.Bahri (Retd) was challenged only on the ground that the District Judge, Gurdaspur was not competent to appoint the -4- Arb.Case No. 57 of 2008 arbitrator and no other ground was urged by the respondent, makes it clear that the only objection raised was on account of lack of jurisdiction of the District Judge, Gurdaspur. Admittedly, this court has the jurisdiction to appoint an Arbitrator. Though counsel for the respondents argued at length but failed to point out why the appointment of Justice A.L.Bahri (Retd) should not be continued as a third arbitrator or the sole arbitrator before whom the proceedings had commenced. Undoubtedly in the normal circumstances the arbitrator is to be appointed as per the terms of the agreement but taking into account the fact that since in any case Shri A.L.Bahri was functioning as a sole arbitrator for several hearings and in any case was capable of being appointed as the third arbitrator and the fact that the respondent Union of India will be burdened with the expenses of three and not one arbitrator, it would be in the interest of justice that the present arbitrator continues. In this view of the matter it is ordered that the appointment of Justice A.l.Bahri (Retd.) shall continue and resume the proceedings from where the same were terminated by this Court because of the order passed in Civil Revision No.1615 of 2007. In the meanwhile the parties will exchange the statements of claim and response thereto. The statement of claim be supplied to counsel for the respondents within four weeks and response to the statement of claim shall be supplied to the counsel for the petitioner within four weeks thereafter. The parties shall appear before the Arbitrator on 03.05.2010 or on an agreed date convenient to the parties but not later than a fortnight from 03.05.2010 after exchange of pleadings as directed aforesaid. The Arbitrator shall make an endeavor to dispose of the reference as early as -5- Arb.Case No. 57 of 2008 possible preferably within a period of six months from the date of appearance of the parties before him. With these directions, the petition stands disposed of. February 15, 2010 Malik (MUKUL MUDGAL) CHIEF JUSTICE