S.K.Roy Choudhury, J. - (1.) THIS is an application under Section 8 of the Arbitration Act, 1940 for appointment of an Arbitrator by the Court in place and stead of an Arbitrator who has resigned.
(2.) THE facts shortly are that the petitioner entered into a construction contract with the respondent dated the 26th of June, 1958, for the construction of a new railway line on the terms and conditions mentioned in the said agreement. THE said agreement contained an arbitration clause in the general conditions of contract which was incorporated in the said contract between the parties. THE said clauses are Clause. 62 and 63. As disputes and differences arose in terms of the said contract and the petitioner demanded reference to arbitration of the disputes in terms of the arbitration clause on or about 31st of March 1973, and as the respondent failed to refer the disputes to arbitration an application under Section 20 of the Arbitration Act, 1940, was made before this Court by the petitioner on the 6th of Sept., 1974, being special Suit No 25 of 1974, and by an order dated the 18th of March, 1975, the arbitration agreement was directed to be filed in this Court and an order of reference was made to the Joint Arbitrators to be appointed in terms of the arbitration clause. Pursuant to the said order of reference, the General Manager of the South Eastern Railway in terms of the arbitration agreement appointed one Mr. Section K. N. Nayar and Mr. Section Sengupta as the joint Arbitrators by his letter dated the 16th of Sept. 1976. It appears that the Arbitrators entered on the reference and thereafter, one of the said Arbitrators Md. Section K. N. Nayar resigned from the office of the Co-Arbitrator by his letter dated the 23rd, of June, 1977, addressed to the General Manager, South Eastern Railway. THE petitioner addressed a letter to the General Manager, South Eastern Railway dated the 20th of July, 1977, requiring the said General Manager, to concur in the appointment of an Arbitrator out of the names mentioned in the said letter. It is alleged by the petitioner that the General Manager, by a letter dated the 19th of July, 1977, wrongfully in purported exercise of his authority appointed one Mr. V. P. Dang as an Arbitrator in place of Mr. Section K. N. Nayar who has since resigned. Thereafter, the Joint Arbitrators by their letter dated the 30th of July, 1977, required the petitioner to submit its statement of Claim before the said Joint Arbitrators Mr. Section Sengupta and Mr. V. P. Dang. The petitioner by his letter dated the llth of Aug. 1977, challenged the validity of the appointment of Mr. Dang by the General Manager alleging the same as not in accordance with the arbitration agreement and thereby refused to file the statement of claim until the Tribunal of Arbitration is properly constituted. It is alleged by the petitioner that no appointment by filling up the vecancy caused by the resignation of the said Arbitrator, Mr. Section K. N. Nayar has been made by mutual consent of the parties. Therefore, the present application was filed on the 25th of Jan. 1978 for appointment of an Arbitrator by the Court in place and stead of the said Arbitrator Mr. Section K. N. Nayar who has resigned.
(3.) MR. Goutam Guha, appearing for the petitioner, submitted that all the requirements under Section 8 (1) (b) of the Arbitration Act, 1940, have been satisfied in this case as the petitioner after the resignation of one of the said two Arbitrators caused a notice to be served on the respondent to concur in the appointment of an Arbitrator in place and stead of the said Arbitrator, MR. Section K. N. Nayar, and as the respondent failed to do so the present application has been made for the appointment of an Arbitrator to fill up the vacancy. MR. Guha submitted that there is no intention of the parties expressed in the said arbitration agreement not to fill up the vacancy and therefore, the Court has the jurisdiction to appoint the said Arbitrator by filling up the vacancy. MR. Guha submitted that the purported appointment by the General Manager after his original appointment is bad as he had no jurisdiction to do so as the power has been exhausted after it has been exercised. MR. Guha also submitted relying on the decision of Masud J. in East. India Construction Pvt. Ltd. v. Union of India, that the power of appointment by the General Manager exhausted after the same has been exercised. The arbitration clause in the said case before MR. Justice Masud was the identical clause which is for consideration in this case. Therefore, MR. Guha submitted that it is only the Court which has the power to appoint and the substitutional appointment by the General Manager should be held to be bad and invalid. He submitted that the arbitration clause does not provide for such substitutional appointment and, therefore, it is only the Court which can appoint the Arbitrator under Section 8 (1) (b) of the Arbitration Act, 1940. MR. Guha also submitted that the question of the application under Section 20 of the Arbitration Act, 1940, being barred under Article 137 can no longer be raised by the respondent as the order under Section 20 of the Arbitration Act, 1940, was duly made by this court and the same has been given effect to by appointment of the Arbitrators pursuant to the said order of reference and during the pendency of the reference one of the Arbitrators has resigned causing vacancy in the said Tribunal of arbitration which is required to be filled up to proceed further with the pending reference. MR. Guha also submitted that the petitioner has changed his position after the respondent has accepted the said order of the Court and reference was made to the Arbitrators pursuant to the order of the Court. Therefore, the respondent is estopped from questioning the validity of the order of reference under Section 20 of the Arbitration Act, 1940. MR. Guha further submitted that the said application under Section 20 of the Arbitration Act, 1940 is not barred by limitation under Article 137 as the demand for arbitration in terms of the arbitration clause was made by the petitioner only in 1973 by its lawyer's letter dated" the 31st of March, 1973, and the application under Section 20 of the Arbitration Act, was made on the 6th of Sept., 1974, being well within three years from the right to apply accrued being the date on which the demand was made for referring the disputes to be referred to arbitration in terms of the arbitration clause in the agreement. MR. Guha submitted that order should be made as prayed for in this application by appointment of an Arbitrator in place and stead of the Arbitrator who has resigned and the vacancy may be filled up.;