- (1.) On or about 14th of December, 1983, a tender was floated by the U.P. Cooperative Federation Ltd. (hereinafter referred to as "the Federation") for construction of 4000 Metric Ton cold storage at Vashi, New Mumbai. The tender document mentioned the time of completion as twelve months. M/s Three Circles - the respondent herein, submitted a tender to get the contract. In the year 1984, a contract was executed with M/s Three Circles. Clause 10[f] of the Contract Agreement reads as follows: It is further agreed that all disputes or differences arising out of the provisions as contained in the preceding paragraphs, [a] to [f] of Clause 10 shall be referred to the Managing Director of Employer, whose decision shall be final, conclusive and binding and shall not be referred to arbitration or to any court of law. Clause 11 of the contract reads as follows: All disputes and differences between the parties regarding the construction or interpretation of any of the terms and conditions herein contained or conditions of contract being the integral part of this contract [except those which are subject matter of the decision of Managing Director of the Employer or/are expressly forbidden and excluded from being referred to arbitrator under any clause by the contract documents and such decision shall be final, conclusive and binding upon the parties hereto] or determination of and liability or any disputes of whatever nature whether during the course of progress or work or thereafter or after recession of the contract, shall be referred to the arbitration as provided in the condition No. 51 of the Heading "scope and performance" in the Tender documents and shall be deemed to be reference within the relevant provisions of the Indian Arbitration Act, 1940, and or any statutory modification of enactment there under. Clause 51 of the General Conditions of contract provided for arbitration. This clause reads as follows: 51. The contractor will become nominal member of the Federation and will abide by the rules and regulation laid down from time to time. Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other questions, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, order or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the Registrar Cooperative Societies Uttar Pradesh and if the Registrar is unable to or unwilling to act, to the sole arbitration of some other person appointed by the Managing Director, willing to act as such arbitrator. There will be no objection if the arbitrator so appointed is an employee of Federation and that he had to deal with the matters to which the contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Managing Director as aforesaid at the time of such transfer vacation of office or liability to act shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Managing Director as aforesaid should act as arbitrator and if for any reason, that is not possible the matter is not to be referred to arbitration at all. Cases where the amount of the claim in dispute is Rs. 25,000/- [Rupees twenty five thousand] and above, the arbitrator shall give reasons for the award. Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute. The arbitrator[s] may from time to time with consent of the parties enlarge the time, for making and publishing the award. The work under the contract shall, if reasonably possible, continue during the arbitration proceedings and no payment due or payable to the contractor shall be withheld on account of such proceedings. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing of the date of the first hearing. The Arbitrator shall give a separate award in respect of each dispute or difference referred to him. The venue of arbitration shall be such place as may be fixed by the Arbitrator in his sole discretion. The award of the Arbitrator shall be final, conclusive and binding on all parties to this contract.
(2.) The respondent was given extension of time for execution and completion of the project pursuant to Clause 13 of the General Conditions of Contract. It may be kept on record that Clause 32 clearly postulates that the extended time was also to be the essence of the contract. After the expiry of stipulated period of time, the respondent submitted certain claims to the Managing Director of the appellant in terms of Clause 10 of the Contract. A compensation of Rs. 87,000/- was awarded to the respondent. In this connection, it may be stated that the respondent had also suspended work for some time.
(3.) The respondent thereafter filed a suit being Arbitration Suit No. 3212 of 1986 before the High Court of Bombay under Section 20 of the Arbitration Act, 1940 [in short "the Act"] praying for appointment of an Arbitrator. By an order dated 7th of January, 1988, the High Court appointed one Shri N.N. Shrikhande as the sole Arbitrator to decide the disputes raised by the parties. Subsequently, the appellant filed a notice of motion praying for setting aside the order of appointment dated 7th of January, 1988 and also prayed for stay of the arbitration proceedings. The said notice of motion was, however, dismissed by the High Court. The appellant filed an appeal which was also dismissed on the ground of delay.;