- (1.) THIS application raises an important point of law which, on the facts of the present case, appear to be a matter of first impression. The petitioner-company has made the present application under Section 8 of the Indian Arbitration Act, 1940, for the appointment of one Mr. N. S. Tayebji, retired Chief Engineer, Eastern Railway, as the Arbitrator in place of one of the appointed Arbitrators Mr. K. Ramani. The circumstances under which the application has been moved may be stated as follows.
(2.) THE petitioner entered into an agreement on February 2, 1963, with the respondent for construction of certain Railway quarters at Dhanbad. THE said agreement contains an arbitration clause which is Clause 63, the relevant provision of which are stated below:- Arbitration : (a) Matters in question, dispute or differences to be arbitrated upon shall be referred for decision to: (i) . . . . . . . . . (ii) Two Arbitrators who shall be Gazetted Officers of equal status to be appointed in the manner laid down in Clause 3(b) for all claims of Rs. 50,000 and above, and if 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 are of a complicated nature or not. In the event of the two Arbitrators being divided in their opinions the matter in dispute will be referred to an Umpire to be appointed in the manner laid down in Clause 3(5) for its decision. (a) . . . . .. . . . . . . . . (b) For the purpose of appointing two Arbitrators as referred to in sub-clause (a)(ii). THE above Railway will send a panel of more than three names of officers of the appropriate status of different departments of the Railway to the Contractor who will be asked to suggest a panel of three names out of the list so sent by the Railway. THE General Manager will appoint one Arbitrator out of this panel as Contractor's nominee and then appoint a second Arbitrator equal status as a Railway nominee either from the panel or outside the panel ensuring that one of the Arbitrators not nominee is invariably from the Accounts Department. Before entering Reference the two Arbitrators shall nominate an Umpire to which the case will be referred in the event of any difference between two Arbitrators . . . . . (e) Subject as aforesaid, the Arbitration Act, 1940, and the Rules thereunder and any statutory notification thereof shall apply to the arbitration proceeding under contract. In accordance with the said procedure for appointment of two Arbitrators, the General Manager appointed Mr. Ramani, Officer on Special Duty, South Eastern Railway, Garden Reach, as the Arbitrator being the Contractor's nominee, and also appointed Mr. K. C. Bose, Deputy Finance Adviser, Eastern Railway, as Arbitrator, being Railway nominee and the disputes and differences between the parties were referred to the said Arbitrators in terms of the said agreement. The said Arbitrators entered upon the Reference on or about August 5, 1966. On August 24, 1968, Mr. Ramani wrote a letter to the General Manager, Eastern Railway, informing him, his inability to continue as Arbitrator in the said matter. On March, 1969, the Engineer, Eastern Railway wrote a letter to the petitioner-company stating that the General Manager would take steps to appoint another Arbitrator in place of Mr. Ramani in accordance with the procedure mentioned in the said arbitration clause. On March 24, 1969, the petitioner wrote a letter to the respondent that, as Mr. Ramani had refused to act any further, the company gave the Railway their notice to concur in the appointment of the said Mr. Tayebji in place of Mr. Ramani. In the said notice, it was also stated that if the respondent did not concur in the said appointment within 15 days from the date of service the company would apply to Court for necessary orders. The respondent did not reply to the said letter and the petitioner has moved the present application on April 25, 1969.
(3.) IT may be stated here that the facts in this case are not disputed. The short point to be decided in this application is whether it is lawful for the General Manager to appoint an Arbitrator in place of Mr. Ramani in accordance with the procedure mentioned in the arbitration clause or whether the Court will appoint an Arbitrator in place of Mr. Ramani. Mr. M. Hazra, Counsel for the petitioner, in moving the present application has contended that this is a fit case for the Court under Section 8 of the Arbitration Act to appoint an Arbitrator in the vacancy caused by the refusal of Mr. Ramani to continue as Arbitrator. In support of the said contention he has relied upon (1) Shamjimal v. Sefton and Co. Ltd., AIR 1954 P&H 190, (2) Messrs A. Ramjibhai and Co. v. Yusifali Mahomadalli Antria and Bros, AIR 1925 Sind 12 and (3) Surendra Nath Paul v. Union of India, AIR 1965 Cal 183.;