LAKSHMANAN, CJ. - (1.) THE above application was filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short the Act), for appointment of an Arbitrator.
(2.) THE applicant is a partnership firm having its principal place of business at Bharatpur. THE applicant entered into a contract with the non - applicant No. 1 State for construction of road from Jhalera to Alipura in Hindaun Division under the Contract No. 167/95-96 and the estimated cost of construction was Rs. 12,89,852/ -. A copy of the Agreement has been filed and marked as Annex. 1. According to the applicant, the firm started the work under the contract aforesaid and the work even continued beyond the originally agreed period for the reason attributable to the State and for the reasons beyond the control of the applicant. THE period for completion of work was extended upto 12. 12. 97. THE applicant submitted the final bill to the non- applicant in the sum of Rs. 11,00,156/- vide letter dated, 17. 4. 1998. Despite reminders, the payment was not made. Invoking Clause 23 of the agreement, the applicant firm served a notice dated. 10. 5. 2000 on the State and requested for referring the dispute to the High Power Standing Committee within a period of one month from the date of receipt of the application, but it was not done so. Clause-23 of the Agreement is reproduced herein below for ready reference: "clause-23: If any question, difference or objection whatsoever shall, arise in any way in connection with or arising out of this instrument of the meaning of operation of any part thereof or the rights, duties or liabilities of either party, then save in so far as the decision of any such matter as hereinbefore provided for and been so decided, every such matter constituting a total claim of Rs. 50,000/- or above, whether its decision has been otherwise provided for and whether it has been finally decided accordingly, or whether the contract should be terminated or has been rightly terminated and as regards the rights or obligations of the parties as the result of such termination shall be referred for decision to the empowered Standing Committee which would consist of the following: 1. Administrative Secretary concerned, 2. Finance Secretary or his nominee not below the rank of Deputy Secretary. 3. Law Secretary or his nominee not below the rank of Joint L. R. 4. Chief Engineer-cum-Addl. Secretary of the concerned Department. 5. Chief Engineer concerned (Member Secretary ). The Engineer Incharge, on receipt of application alongwith prescribed fee from the contractor shall refer the dispute to the Committee within a period of one month from the date of receipt of the application. The State failed to refer the dispute to the Committee as per Clause - 23, the applicant was compelled to make an application u/sec. 10 and 11 of the Act before the District Judge, Karauli. The District Judge, by order dated 27. 11. 2000 directed the State to refer the matter to the Standing Committee within the period stipulated in the order. It was directed that the Secretary,p. W. D. , Government of Rajasthan, shall within two months from the date of order, call upon the applicant firm for appearance before the Standing Committee. The period of two months came to an end on 27. 1. 2001. The applicant on expiry of the period stipulated in the order dated, 27. 11. 2000, made another application u/ss. 10 and 11 of the Act for appointment of an Arbitrator before the District Judge in Civil Miscellaneous Case No. 8/2001. Notices were issued to the non- applicant of the said application, but before the said application could be disposed of, the amendment in the scheme of 1996 came into effect from 12. 2. 2001 and for the subject matter of the dispute being of the value of more than Rs. 5 lacs,the District Judge being no more competent to entertain the application, by order dated, 20. 03. 2001, directed for return of the application to the applicant for filing before the proper forum. In the circumstances aforesaid, the present application was made before the Chief Justice for appointment of an Arbitrator invoking Arbitration Agreement under Clause 23. A reply was filed denying the allegations made in the application. It is stated, the delay is attributable to the applicant and that therefore, the matter is not referable to the Arbitrator and since there is negligence of the Contractor himself, there is no need to appoint the Arbitrator. Since the applicant stopped the work, fresh tender was invited on 12. 8. 98 and the work had been allotted on 7. 11. 98 to Brijraj Singh Jadon of Gangapur City and he had started the work and since the payment has been made to the new Contractor in a sum of Rs. 4,31,594/- upto July 1999 and due to lack of budget the work had been stopped. I have carefully considered the relief made in this application. The existence of an arbitration agreement between the parties is essential to make an application to the Chief Justice or his designate to appoint an Arbitrator while exercising powers u/s. 11 of the Act. The appointment of an Arbitrator will not be made unless there is an arbitration agreement. Existence of dispute is also essential for appointment of an Arbi- trator. Sec. 11 of the Act provides for appointment of an Arbitrator only if the disputes have arisen between the parties. The provisions of sub-sec. 4 & 5 of Sec. 11 of the Act clearly provide that except in the case of a request to appoint a third Arbitrator in the contingency provided therein, a requst for apointment of an Arbitrator made to the Chief Justice must be preceded by a request made by the party to the other party for appointment of an Arbitrator which should be received by the other party at-least 30 days prior to the making of request to the Chief Justice or his designate. When the party to the Arbitration Agreement fails to appoint an Arbitrator within 30 days from the date of receipt of request to do so from the other party to appoint, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. Proviso of sub-sec. 6 of Sec. 11 of the Act comes into operation where procedure to appoint is agreed, but there is failure in acting upon it. In the insta- nt case, the grievance of the applicant was that the respondents failed to appoint an Arbitrator within the stipulated time and as such, the State had forfeited their right to appoint an Arbitrator and the Arbitrator was to be appointed by the Chief Justice. In my opinion, once the party failed to act in accordance with the agreed procedure of appointing Arbitrator, the Chief Justice or the person designated by him is required to appoint Arbitrator after taking into consideration the provisions of the Sec. 11 of the Act.
(3.) FROM a plain reading of Sec. 11 of the Act, there are essentially three methods to secure the appointment of an Arbitrator; (i) Parties may agree for a procedure for appointment of Arbitrators; (ii) If the parties do not reach such an agreement, sub-sec. (3) provides a mechanism for appointing the three member Arbiter without the request made to the Chief Justice or any person or institution designated by him. iii) Sub-sections (4), (5) and (6) of the Act provide for appointment of an Arbitrator or Arbitrators, if the circumstances set out therein,by the Chief Justice, or person or institution designated by him. Under Sub-Sec. (4), the Chief Justice or the person designated by him is empowered to appoint an Arbitrator on the failure of one of the parties to appoint within 30 days from the date of receipt of a request to do so from the other party. The Chief Justice is also empowered to appoint the third Arbitrator on the failure of the two Arbitrators to agree on the third Arbitrator within 30 days from the date of their appointment. Similarly, under Sub- Sec. 5 of Sec. 11, the Chief Justice or the person designated by him is empowered to appoint a sole Arbitrator, if the parties fail to agree on the Arbitrator within 30 days from the date of receipt of a request by one party from the other party. Sub-sec. (6) deals with the situation where the parties fail to act in accordance with the procedure agreed upon by them. In such cases a party may request to the Chief Justice or a person designated by him to take necessary measures unless the agreement on the appoinmtent procedure provides other means for securing appointment. In the instant case, invoking Clause 23 of the Arbitration Agreement, a notice dated, 10. 5. 2000 was issued to the State for referring the dispute to the High Power Standing Committee. the Engineer Incharge on receip of the application alongwith the prescribed fee of 2% of the amount in dispute from the Contractor has failed to refer the dispute to the Committee within a period of one month from the date of receipt of the application. Therefore, the applicant firm made an application u/sec. 10 and 11 of the Act of 1996 to the District Judge, Karauli, who by order dated 27. 11. 2000 directed the non-applicants to refer the matter to the Standing Committee as envisaged under clause 23 within the period stipulated in the order. The District Judge specifically directed the Secretary, P. W. D. Government of Rajasthan, to refer the dispute within two months from the date of order which period also came to an end on 27. 1. 2001. Again, the applicant firm on the expiry of the period stipulated in the above order, made application u/sec. 10 and 11 of the Act for appointment of an Arbitrator before the District Judge in Civil Miscellaneous Case No. 8/2001. Since the amendment in the scheme was introduced and came into effect on 12. 2. 2001, the matter was returned to the party for filing the same before the appropriate forum i. e. how the jurisdiction of the Chief Justice had been invoked under section 10 and 11 of the Act. ;