Sarat Chandra Mohapatra and Vijay Prakash Goel, JJ. - (1.) THIS is an appeal by defendants - -appellants under Section 39 of the Arbitration Act (hereinafter referred to as Act). In the year 1987 -88 plaintiff entered into an agreement for construction of administrative, storage and certain technical buildings at Meerut. In respect of this agreement, there was a dispute relating to payment. In view of clause 70 of the written agreement providing for arbitration, contractor issued notice to the authority as provided in clause 70 for appointment of an arbitrator to adjudicate the dispute on 16.9.1993. Authority did not exercise the power for appointing an arbitrator within 15 days. On 25.11.1993 contractor filed a suit under Section 20 of the Act for appointing of an arbitrator. Shortly thereafter on 29.12.1993 an arbitrator was appointed by authority referring the dispute relating to three claims as was annexed to the final bill. When arbitrator entered into reference and issued notice, a suit under Section 20 of the Act was taken for hearing. Learned Trial Judge while accepting the person appointed as arbitrator, directed that the claims made in the application under Section 20 of the Act shall be considered by the arbitrator. This is grievance of the appellants.
(2.) SRI Shishir Kumar, learned counsel for the appellant submitted that an arbitrator having been appointed to whom only three claims have been referred to, the court has no jurisdiction to extend the scope of the arbitrator by referring further question. He relied upon a decision of Supreme Court reported in Santokh Singh Arora v. Union of India : A.I.R. 1992 S.C. 1809 in support of the submission. He further submitted that in view of clause in the agreement that all claims are to be enclosed to the final bill in respect of which the dispute is made no further claim can be made before the Court and this aspect of the matter was not considered by the Court for refusing the reference in respect of other claims to the arbitrator. Sri P.K. Jain, learned counsel for respondent which entered caveat submitted that the authority not having appointed an arbitrator within 15 days from the date of receipt of the notice had no further jurisdiction to appoint an arbitrator and in such circumstances, Court has jurisdiction under Section 20 of the Act to appoint an arbitrator and to refer the disputes to the arbitrator. He has further submitted that despite the clause in the agreement that the claim of the contractor shall be enclosed to the final bill in respect of which there is dispute, further claim can also be made and referred to arbitrator who is to adjudicate whether such claims as well as the merit of the claim where it finds that the claims are entertainable.
(3.) AFTER hearing learned counsel for both the parties and on perusal of documents produced before us including the impugned order, we are satisfied that authority empowered under the agreement to appoint an arbitrator was negligent in not appointing arbitrator within the time stipulated. It is explained to us that on account of delay by the contractor to lodge the claim requiring appointment of arbitrator, there was delay and as such appointment was valid.;