- (1.) The appellants and the respondent herein entered into a written agreement on 17/8/1994 for execution of work for supplying and staking hand-broken (hard stone) ballast conforming to Northern Railway, Chief engineer's Circular No. 170/p. Way along cess/toe from km 1/0 to km 50/0 and in ballast depot at Mandor as per Northern Railway Standard specifications and Special Tender Conditions in connection with JU-JSM BG conversion Project. It appears disputes and differences arose between the parties in relation thereto as a result whereof the respondent herein filed an application under S. 20 of the Arbitration Act, 1940 for appointment of the arbitrator in terms of clause 64 of the agreement. A learned Single Judge of the High Court allowed the said application and appointed Justice P. K. Bahri as the sole arbitrator. It was an ex parte order. Aggrieved, the appellants preferred an appeal before the Division Bench of the High Court, which was dismissed. Against the said judgment and order, the appellants are in appeal before us.
(2.) Shri N. N. Goswami, learned Senior Counsel appearing for the appellants urged that in view of clause 64 of the agreement which provides that only two gazetted railway officers of equal status are to be appointed as arbitrators, no person other than the two specified persons could be appointed as arbitrator. We find merit in this submission.
(3.) The relevant part of clause 64 runs as under: "64.Demand for arbitration.- (3) (a) (ii) Two arbitrators who shall be gazetted railway officers of equal status to be appointed in the manner laid in clause 64 (3) (b) for all claims of Rs. 5,00,000. 00 (Rupees five lakhs) and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager shall be the sole judge to decide whether the issues involved are of a complicated nature or not. In the event of the two arbitrators being undecided in their opinions, the matter under dispute will be referred to an umpire to be appointed in the manner laid down in sub-clause (3) (b) for his decision. (3) (a) (iii) It is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all. ";