Sunil P. Deshmukh, J.(Oral)—By this arbitration application, applicant purports to have appointment of an arbitrator for resolution of dispute between the parties and to cancel and set aside appointment of Mr. B. B. Jadhav, retired superintending engineer, Pune, as arbitrator selected by respondent - contractor.
2. The facts which are not in dispute are, a contract of construction of earthwork, structure, lining and selective lining of Kothala branch canal had been awarded to the present respondent way back around 1990-91. A dispute had arisen between the parties and matter was being proceeded with before civil court, however, the proceedings appear to have culminated into settlement between the parties around September, 1996.
3. It appears that, a dispute had subsequently arisen and pursuant to arbitration agreement/contract and particularly clause 53 thereof, it came to be referred to arbitration by Mr. S. D. Chate, superintending engineer, Upper Penganga Project Circle, Nanded in the year 2006. However, after lapse of a period of 70 months thereafter, Mr. Chate appears to have withdrawn himself from the arbitration proceedings. It was thereafter, Mr. E. B. Jogdand, superintending engineer and administrator, CADA, Aurangabad, came to be appointed as arbitrator, however, he too withdrew from the proceedings around February, 2014.
4. Under the circumstances and with reference to experience that serving superintending engineers who were in the office could not proceed with the arbitration, respondent-contractor on 14-02-2014 wrote to the chief engineer-administration, Command Area Development Authority, Water Resources Department, Aurangabad pursuant to clause 53 of the agreement that it would be expedient to have appointment of a retired superintending engineer as the arbitrator as he would be able to devote time to arbitration proceedings.
5. In response to said letter, the chief engineer by letter dated 13-03-2014, had sent to respondent a list of three superintending engineers, viz; Mr. A. R. Kamble, Mr. B. D. Nemade and Mr. B. B. Jadhav, retired superintending engineer. On receipt of said letter, the respondent under its letter dated 15-03-2014 selected the name of Mr. B. B. Jadhav, superintending engineer (retired) as the sole arbitrator.
6. It appears, after waiting for movement by applicant respondent contractor wrote to the arbitrator on 15-07-2014 informing him about his appointment as arbitrator and asking him to proceed with arbitration, simultaneously endorsing a copy to the applicant.
7. Subsequently, vide letter dated 21-07-2014, said Mr. B. B. Jadhav communicated the parties that a meeting, on his appointment as arbitrator, is scheduled on 03-08-2014 at Pune.
8. A letter was addressed to Mr. B. B. Jadhav on 01-08-2014 that in view of order dated 14-07-2014, where under purportedly Mr. A.R. Kamble is supposed to have been appointed as arbitrator, it is not advisable to attend the meeting dated 03-08-2014 before the arbitrator.
9. Thereafter, the respondent-contractor under letter dated 03-08-2014 claims to have submitted its statement of claim to the arbitrator Mr. Jadhav, with copy of said communication to the executive engineer of the respondent in the arbitration proceedings i. e. present applicant and the matter was being proceeded with.
10. Present application has been moved by the applicant on 26-09-2014 objecting to appointment of Mr. B. B. Jadhav, retired superintending engineer on the ground that a retired superintending engineer is not contemplated under arbitration clause 53 and as such is not qualified to act as an arbitrator. It is being contended that Mr. B.B. Jadhav has been appointed unilaterally by respondent as arbitrator who had issued notices to the applicant to remain present in the proceedings on 03-08-2014 at Pune.
11. According to applicant, Mr. A.R. Kamble, serving superintending engineer was appointed as arbitrator pursuant to the arbitration agreement.
12. Support is being sought to be taken for aforesaid purpose, of an order passed by the Supreme Court of India in Arasmeta Captive Power Company Private Limited v. Lafrge India Private Limited (Civil Appeal No.11003 of 2013) dated 12-12-2013, which, according to the applicant, had been passed under the similar circumstances. In that matter, it is submitted that the supreme court has observed that clause 53 refers to appointment of superintending engineer (serving), since suggestion for the names of serving superintending engineers was sought and without getting into contest, learned counsel on behalf of the respondent contractor in that matter appears to have acceded to the request.
13. It is being submitted on behalf of applicant that the name selected by the contractor is not accepted by the authorities as pursuant to the terms, the arbitrator shall be of the rank of superintending engineer or higher but shall not be connected with the work under the contract. Since Mr. B. B Jadhav is a retired superintending engineer, it is not accepted by the authorities and therefore they have decided to appoint Mr. A. R. Kamble, serving superintending engineer, under letter dated 14-07-2014.
14. According to the applicant, under the terms and conditions agreed upon by parties, retired superintending engineer is not contemplated as arbitrator and it is only an officer of the rank of superintending engineer or higher, who is serving can be an arbitrator. With reference to order passed in Special Leave Petition No. 728 of 2008, it is claimed, no such appointment can be made, and only superintending engineer (serving) would be eligible to be appointed as arbitrator. As such, since Mr. Jadhav was proceeding further with arbitration, a request is being made purportedly pursuant to section 11(6) of the Arbitration Act for appointment of arbitrator and for setting aside the appointment of Mr. B.B. Jadhav.
15. Learned counsel for the applicant in support of his submissions refers to and relies on several citations which have been submitted along with arbitration application.
16. A reference is made to ACC Limited (Formerly known as the Associated Cement Co. Ltd.) v. Global Cements Ltd. reported in 2012(4) SCC, 196. It is being cited for the purpose that in the absence of prohibition for appointment of substitute arbitrator, it is the court''s duty to give effect to the policy of law that is to promote efficacy of arbitration. That was a case with reference to under clause 21 of agreement which provided for arbitration by a specific arbitrator who had been appointed, however, he died. In the peculiar facts of that case, the court has observed that, ''clause 21 does not prohibit or debar the parties from appointing a substitute arbitrator in place of named arbitrator and in absence of prohibition parties can persuade the court for appointment of an arbitrator under clause 21 of the agreement.'' Learned counsel appearing for the applicant is at pains to persuade this court to hold said observations serve as aid to the facts in present case. Here, in the present case, it is the contention of the respondent that, as a matter of fact, procedure contemplated in clause 53 of the agreement has been followed thrice. On first occasion, Mr. Chate was appointed, subsequently, after his withdrawal, Mr. Jogdand had been appointed, and now in place of Mr. Jogdand, Mr. Jadhav has been appointed.
17. Learned counsel for the applicant has also placed reliance on the case Deep Trading Company v. Indian Oil Corporation and others, reported in (2013)4 SCC 35 in order to show that appointment under section 11(6) of the Arbitration Act can be made by the court. In said case, the dealer had made a demand to the corporation by notice to refer the dispute to arbitrator under the terms of agreement. Failure of a party to act as required under agreed procedure for appointment of arbitrator, the Chief Justice can do the same pursuant to section 11 of the Arbitration Act. As such, the dealer had submitted an application before to Chief Justice of Allahabad High Court under section 11 (6) of the Arbitration Act for appointment of arbitrator as notice was not responded to. During pendency of the proceeding, the corporation purportedly appointed one of its officers as arbitrator. The High Court with reference to the same declined to appoint arbitrator. In that context, the Supreme Court has observed with reference to section 11 and the decisions in the cases of Datar Switchgears Ltd (2000)8 SCC 151 and Punj Lloyd Ltd. v. Petronet MHB Ltd. (2006)2 SCC 638 that if a party fails to act as per stipulations under the agreement, the right of such party stands forfeited and ceases to have right to appoint the arbitrator. Three judge bench of the Supreme Court was in agreement with legal position laid down in Datar Switchgears Ltd. case and followed in Punj Lloyd Ltd. v. Petronet MHB Ltd. In the present case, section 11(8) would not be helpful for in this case, Mr. Jadhav was a superintending engineer is not being contested nor that the agreement provides for appointment of a person as arbitrator who is of the rank of superintending engineer. However, according the applicant, he is not eligible for being appointed as arbitrator since he is not holding charge of post of superintending engineer, being retired.
18. Learned counsel for the applicant has placed reliance on the case Northern Railway Administration, Ministry of Railway, New Delhi v. Patel Engineering company Ltd. reported in 2008(6) SCC 397 and has submitted that due regard will have to be given to the qualification required under agreement for appointment of an independent and impartial arbitrator. This case had called upon to answer the reference, wherein scope and ambit of section 11(6) of the Arbitration Act relating to appointment of arbitrator had fallen for consideration. While considering the scope of section 11, the court has observed under paragraphs No. 8, 9, 10 and 11 that the court must first ensure that the remedies provided for are exhausted and terms of agreement be adhered to as closely as possible and further that it is not mandatory for the Chief Justice to appoint the named arbitrator, but at the same time qualification as is required under the agreement will have to be given ''due regard'' meaning proper attention. The observations would come into play, in a case wherein the court is required to exercise powers pursuant to section 11(6) of the Arbitration Act and it may ask the parties to do what has not been done.
19. Learned counsel for the applicant further relies on the case of Yashwith construction P. Ltd. v. Simplex Concrete Piles India Ltd and another reported in (2006)6 SCC 204 to buttress his submission that under section 15(2) of the Arbitration Act, appointment of arbitrator by substitution or replacement of earlier arbitrator ought to be according to the rules as would be applicable to the appointment of original arbitrator, who was being replaced. In that case, managing director of the respondent company had appointed arbitrator in terms of agreement but, the arbitrator had resigned and thereupon the managing director had appointed another arbitrator. It was at that stage, the petitioner therein had approached the Supreme Court under section 11(5) read with section 15(2) of the Arbitration Act claiming that Chief Justice may appoint a substitute arbitrator. The Chief Justice had found that appointment of new arbitrator by the managing director after the resignation of the first arbitrator was valid in law and permissible under the contract and had further observed that right to make such an appointment was saved by section 15(2) of the Arbitration Act. The argument with regard to Section 15(2) refers to statutory rules providing for appointment of arbitrators and not to contractual provisions was rejected by the Chief Justice and he had further considered that no occasion had arisen to appoint an arbitrator under section 11(6) of the Arbitration Act. Challenge in writ petition before division bench of High Court had failed which was the subject-matter of further challenge before the Supreme Court. The Supreme Court held that the Chief Justice and division bench of the High Court had rightly understood the scope of section 15 of the Arbitration Act. Withdrawal of an arbitrator from the office for any reason is within the purview of section 15(1)(a) of the Arbitration Act. Obviously, section 15(2) would be attracted and a substitute arbitrator has to be appointed according to the rules applicable for the appointment of the arbitrator sought to be replaced. The Supreme Court further considered that term "rules" in section 15(2) obviously refers to the provisions for appointment of arbitrator as contained in the arbitration agreement or any rules of any institution under which the disputes were to be referred to arbitration. There was no failure on the part of the concerned party as per the arbitration agreement to fulfil his obligation in terms of section 11 of the Arbitration Act so as to attract the jurisdiction of the Chief Justice under section 11(6) of the Arbitration Act. When the party or the concerned person had failed to act in terms of the arbitration agreement, rules as have been referred to under section 15(2) mean that appointment of substitute arbitrator must be done in accordance with original agreement or provisions applicable to the appointment of the arbitrator at the initial stage. Taking into account the facts of said case, reliance being placed on the same on behalf of the applicant would hardly carry forward the case for the applicant in the facts of the present case.
20. Mr. Surwase, learned counsel for the applicant also relied on the case SBP and Co. v. Patel Engineering Ltd. And another reported in (2005)8 Supreme Court Cases 618 and submitted that consideration those should weigh with the learned Chief Justice or his designate, while making order of appointing arbitrator, shall give regard to, his jurisdiction, valid arbitration agreement and person making request to him is party to the arbitration agreement and lastly that there is dispute subsisting and capable of being arbitrated.
21. Mr. Surwase, learned counsel for the applicant has further relied on the case of Union of India and ors. v. M/s Onkar Nath Bhalla and sons reported in 2009 AIR SCW 5085 to persuade this court to hold, having regard to paragraph No. 8 of the judgment, that there being no arbitral dispute existing between the parties and the respondent having submitted final bill and accepted payment under the same, order appointing superintending engineer (retired) arbitrator is not sustainable, more so when arbitrator could only be serving officer possessing degree in engineering or equivalent. Paragraph no. 8 of the judgment is reproduced for ready reference:-
"8. The condition 65 of General conditions of contract IAFW-2249 states that no further claim shall be made by the contractor after submission of final bill and these shall be deemed to have been waived and extinguished. Also condition 70 states that, all dispute between the parties to the contract shall after written notice by either party to contract, be referred to the sole arbitration of a serving officer having degree in Engineering or equivalent.
22. He further purports to rely on the general conditions of contract for local competitive bidding between the parties and particularly, definition of ''approved/approval'' and submitted that approval has to be in writing and also pointed out that in terms of said conditions, ''superintending engineer'' as defined in clause ''o'' means an officer in overall charge of the works to whom the sub-ordinate authority i.e. engineer in charge reports. He further pointed out clause ''q'' which defines ''works'' to mean the work to be executed in accordance with the contract. However, apparently these definitions would hardly be of any assistance to the case being canvassed for superintending engineer is the officer of the same rank overall in charge of the works. In such a case, he can hardly meet with the basic requirements of an independent and impartial arbitrator. Even clause 53 of the arbitration agreement, which is being reproduced herein below for ready reference, stipulates that on receipt of notice from contractor for reference of dispute to arbitration the chief engineer, within 30 days of receipt of such notice, shall send to the contractor a list of three officers of the rank of superintending engineer or higher, who have been not connected with the works under the contract. Thus, reliance being placed on the definition of superintending engineer in general conditions of contract for local competitive bidders is obviously misplaced. Clause 53 of the agreement reads thus:
53. Arbitration: All dispute or differences, in respect of which the decision is not final and conclusive, shall be referred for arbitration to a sole arbitrator appointed as follows:
Within thirty days of receipt of notice from the contractor of his intention to refer the dispute to the arbitration the Chief Engineer shall send to the contractor a list of three officers of the rank of superintending engineer or higher, who have not been connected with work under this contract. The contractor shall within fifteen days of receipt of this list select and communicate to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole Arbitrator.
If contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to select the name from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days as stipulated, the contractor, shall send a similar list to the Chief Engineer within fifteen days, the Chief engineer shall then select one officer from the list and appoint him as a sole arbitrator within fifteen days. If the Chief Engineer fails to do so the contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall then be the sole arbitrator.
The Arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940, or any statutory modification thereof. The decision of the sole arbitrator shall be final and binding on the parties thereto. The arbitrator shall determine the amount of costs of arbitration to be awarded to either parties.
Performance under the contract shall continue during the arbitration proceedings and payment due to the contractor by the Department shall not be withheld, unless they are the subject matter of the arbitration proceedings.
All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakhs & above, such awards shall state reasons for the amounts awarded.
Neither party is entitled to bring a claim to arbitration if the Arbitrator has not been appointed before the expiration of thirty days after defect liability period.
23. On behalf of the respondent, learned Senior advocate Mr. P.M. Shah with assistance of Mr. G.K. Thigale Naik, vehemently submits that the application itself is wholly misconceived as section 11 of the Arbitration Act has no application in the present case. He submits, what the contractor on communication of the list has to do is to select within 15 days a person from the list to be appointed as sole arbitrator. In case of failure on the part of contractor, the chief engineer would select one of the officers and appoint him as arbitrator. In case of failure on the part of chief engineer to follow the procedure and select arbitrator from the list, the contractor shall within fifteen days send a similar list to the chief engineer who shall select one officer from the list and appoint him as arbitrator. Learned Senior Advocate submits that in the present matter, the required procedure for the purpose of appointment of arbitrator has been followed scrupulously by the respondent and the arbitrator stands appointed as laid down under the procedure. Arbitration proceedings before the arbitrator are going on. It is further being referred to that arbitrator is appointed from the list of three officers of the rank of superintending engineering or higher, supplied by the chief engineer and who has not been connected with work under the contract allotted to the respondent.
24. With reference to said clause, learned Senior Advocate Mr. Shah further submits that having experience of unwillingness on the part of superintending engineer (serving) or equivalent officer to do the arbitration work, as a matter of fact, the respondent had suggested the chief engineer to appoint retired officer of the rank of superintending engineer as an arbitrator. In response to the same, under letter dated 13-03-2014 the chief engineer taking into account clause 53 of the arbitration agreement had suggested names of two serving superintending engineers viz; Mr. A. R. Kamble, Mr. V. D. Nemade and one retired superintending engineer, namely, Mr. B. B. Jadhav. It is further being submitted that Mr. A. R. Kamble cannot be considered for appointment as an arbitrator since he had been connected with work of contract under the agreement. It is being submitted that Mr. Nemade is no longer in service. It is further being submitted that retirement of the person from the post of superintending engineer does not debar nor does it prohibit him from being qualified to be appointed as an arbitrator, and that the arbitration clause does not stipulate that it is only serving officer, who is to act as arbitrator.
25. Learned Senior advocate Mr. Shah submits that requirement of qualification is that officer to be appointed as arbitrator shall be of the rank of superintending engineer or higher. Mr. B. B. Jadhav, who has been appointed as arbitrator is from the rank of superintending engineer, may he has retired. It is further being submitted that there are many instances wherein arbitration by retired person has been accepted. According to learned Senior advocate, in this case, the chief engineer in response to the request made by the respondent, had communicated the list of three officers of the rank of superintending engineer, namely, Mr. Kamble, Mr. Nemade and Mr. Jadhav. Apart from above, the respondent had, in fact, selected Mr. B. B. Jadhav from said list and communicated his name to the chief engineer for being appointed as an arbitrator. With reference to wording "the contractor shall within 15 days of receipt of list select and communicate to the chief engineer name of one officer from list, who shall then appoint him as sole arbitrator" Mr. Shah, submitted that neither the chief engineer nor any authority on his behalf had ever till 03-08-2014 communicated to respondent anything in respect of Mr. Jadhav being not appointed or for that matter he being not qualified to arbitrate upon the dispute or that Mr. A. R. Kamble, superintending engineer (serving) is being appointed as arbitrator as purportedly tried to be indicated in communication dated 14-07-2014.
26. According to learned Senior advocate Mr. Shah, ante-dated record is created, for, Mr. Jadhav had on 21-07-2014 sent a communication to the applicant as well as respondent that preliminary meeting is scheduled on 03-08-2014 at 11.00 a. m. at Pune. The respondent had communicated under his letter dated 03-08-2014 to Mr. B. B. Jadhav that arbitration proceedings are being set in motion before him. It was thereafter that ante-dated record has been created about communications dated 14-07-2014 as well as 01-08-2014 purportedly appointing Mr. A. R. Kamble as arbitrator. Learned Senior advocate submits that postal stamp, which is of 03-08-2014 gives sufficient indication of creation of record.
27. It is contended that said communication dated 14-07-2014 is without reference to the communication by the respondent to the chief engineer about selection of Mr. B.B. Jadhav as arbitrator which was in accordance with the terms of arbitration clause. It is being submitted by respondent herein that pursuant to the communication by arbitrator Mr. B.B. Jadhav, the matter has progressed further. The respondent contractor has submitted its statement of claim and proceedings are going on. It is being submitted that the conduct of the applicant in not participating in the proceedings tantamounts to waiver as contemplated under section 4 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to ''Arbitration Act'' for short] as the applicant has not objected to the same in time as is required under the Arbitration Act.
28. According to learned Senior advocate, objections, if any, by applicant to the appointment of arbitrator Mr. B. B. Jadhav ought to have been taken within a period of fifteen days after getting knowledge of the same, and for said purpose he refers to sub-section (3) of section 12 of the Arbitration Act, which reads thus:
Section 12: Grounds for challenge-
(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.
(3) An arbitrator may be challenged only if-
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartially, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
29. According to learned Senior advocate submits, if challenge to the appointment of arbitrator is to be posed, it ought to be posed as per the procedure prescribed under the statute as is being referred to under section 13 thereof. Section 13 of the Arbitration Act reads as under:
Section 13 :-Challenge procedure-
(1) Subject to sub-section (4) the parties are free to agree on a procedure for challenging an arbitrator.
(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the aribtral tribunal.
(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make and arbitral award.
(5) Where an arbitral award is made under sub-section (4) the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.
(6) Where an arbitral award is set aside on an application made under subsection
(5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.
30. According to learned Senior advocate, the applicant has failed to follow the procedure as has been referred to under section 13 of the Arbitration Act and, Mr. B. B. Jadhav stands appointed as arbitrator. He further with reference to section 4 submits that by reason of conduct of the applicant, it is to be and it should be assumed that the applicant has waived right to object for the appointment of arbitrator. The applicant ought to have filed his objection to appointment of arbitrator without undue delay. With reference to section 5, he submits that judicial intervention has to be minimum in the matters governed by the Arbitration Act.
31. Learned Senior advocate submits that taking into account exposition in the various citations relied on, on behalf of the applicant, particularly, with regard to scope of section 11 and sub-section (6) thereof, substitute arbitrator has not been prohibited under the Act and the courts have consistently considered that legislative policy embodied under Arbitration Act is with a view to facilitate the parties to resolve the dispute by way of arbitration unless the arbitration clause clearly spells out prohibition or debarment. The Apex court in the case of ACC limited referred to above has held that parties can persuade for appointment of substitute arbitrator in the absence of such debarment or prohibition and as such, it is court''s duty to effect the policy of law and to promote efficacy of arbitration.
32. To buttress his submission that application in the present case is not tenable, he refers to decision of the Supreme Court in the case of Deep Trading Company v. Indian Oil Corporation and others, reported in (2013)4 SCC 35, wherein while arbitrator came to be appointed during pendency of the proceeding under section 11 of Arbitration Act, the same was held to be bad. He distinguishes said case on facts referring to that in the present case arbitrator has been appointed before Section 11 of the Arbitration Act is sought to be invoked by the applicant, and as such, all the more present application is untenable. He submits that as referred to in decision in Northern Railway Administration, Ministry of Railway, New Delhi v. Patel Engineering company Ltd. reported in 2008(6) SCC 397, none of the contingencies from three as have been referred to in the judgment are available in the present matter. It is not the case, the parties failed to act as required under agreed procedure nor the parties to the agreement or two appointed arbitrators failed to reach an agreement expected of them under that procedure or for that matter it is not the case wherein a person including an institution fails to perform any function entrusted to him-it. He, thus, submits that this is not the case wherein the court would intervene in the matter. He further submits that phrase "due regard" as has been used in section 11(8) of the Arbitration Act would not fall for consideration in the present matter.
33. To emphasize his submissions, he reiterates if any dispute with regard to qualification is being raised, challenge to the arbitration by a person appointed, such a challenge has to be posed, according to procedure as is envisaged in the statutory provisions i.e. section 13 of the Arbitration Act. He further submits that as applicant has not objected to appointment in accordance with procedure as envisaged under statutory provisions. The objection being taken to the arbitrator on the ground of qualification to act as such having regard to clause 53 of the agreement, if at all applicant chooses now to oppose the arbitration proceedings on that count, he may well do it by following the procedure envisaged under statutory provisions.
34. Learned Senior advocate Mr. Shah with reference to the facts in the case Yashwith construction P. Ltd. v. Simplex Concrete Piles India Ltd and another reported in (2006)6 SCC 204 submits that under said judgment the Supreme Court has clearly ruled section 11(6) has no application for appointment of arbitrator more so, in the facts and circumstances in the present case.
35. Learned Senior advocate Mr. shah with reference to the facts in case of SBP and Co. v. Patel Engineering Ltd. And another reported in (2005)8 Supreme Court Cases 618, particularly, emphasis on clause (ix) appearing in paragraph No. 47 of the judgment, which reads as under:-
"(ix) In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by section 16 of the Act."
36. He submits that while in the present case, arbitrator having been appointed pursuant to the procedure contemplated under clause 53 of the agreement, arbitral tribunal would have jurisdiction to decide all the matters pursuant to section 16 of the Arbitration Act. He further submits that it is open for the applicant to resort to sections 12 and 13 to object to arbitral proceedings on the ground of qualification of the arbitrator and for the purpose he has to follow the procedure thereunder.
37. Learned Senior advocate Mr. Shah lastly relies on the judgment of the Supreme Court in the case of Arsmeta Captive Power Company private Limited and another v. Lafarge India Private Limited (Civil Appeal No. 11003 of 2013(arising out of SLP(Civil) No. 29651 of 2013), which reiterate the decisions in cases ACC Limited (Formerly known as the Associated Cement Co. Ltd.) v. Global Cements Ltd. and Yashwith construction P. Ltd. v. Simplex Concrete Piles India Ltd and another to under score principles.
38. In the present case, looking at clause 53, requirement under said clause appears to be a person should be of the rank of superintending engineer or higher and provides for a list of arbitrators be communicated by the chief engineer to the contractor and that upon receipt of list, contractor is expected to select the name and communicate the same to the chief engineer. It is further provided under said clause that if contractor fails to select, it is for chief engineer to select the name and appoint arbitrator and that if chief engineer does not, it is for the contractor to communicate to the chief engineer list of names of persons and chief engineer should select one. If he does not, contractor shall communicate the name, who shall then to be the sole arbitrator.
39. The facts as have occurred in the present matter would show that from the list of three superintending engineers sent by chief engineer, the contractor had selected one, namely, Mr. B. B. Jadhav, as arbitrator and communicated the same to the chief engineer.
40. For four months after selection of Mr. B. B. Jadhav as arbitrator, the authorities had neither objected to his selection nor had questioned his qualification to act as arbitrator nor did take any further action.
41. As far as procedure contemplated under clause 53 is concerned, the list of three officers of the rank of superintending engineer or higher is to be sent to the contractor and on selection by the contractor of a name from the list, chief engineer seldom has any alternative but to appoint such person. In the facts and circumstances of the present case, said procedure to a considerable extent appears to have been observed.
42. Requirement under clause 53 of the agreement appears to be that a person should be of the rank of superintending engineer and it does not specifically refer to that the incumbent should be a serving officer or for that matter exclude a retired person of the rank of superintending engineer. In the present case, there does not appear to be dispute that Mr. B. B. Jadhav is a retired superintending engineer.
43. Order by the Supreme Court in Special Leave Petition No. 728 of 2008 although is being pressed into service by the applicant, however, the order appears to have been passed on resilience of the party and not with intention to lay down any ratio.
44. Be that as it may, Mr. B. B. Jadhav being appointed as arbitrator, procedure for objecting to his qualification should be in the manner as referred to under statutory provisions of Arbitration Act. Such an action on the part of applicant is missing in the present case. In such a case, the present proceedings before this court purportedly invoking section 11 of the Arbitration Act would not be tenable.
45. However, having regard to the submissions on behalf of respondent, it would be open for the applicant, if he so desires, to object to arbitration by Mr. B. B. Jadhav by following due procedure as is envisaged in the Arbitration Act. For said purpose, it would be open for the applicant to take resort to said provisions. However, objection, if any, shall be raised within a period of 45 days from the date of communication of this decision of the court to the arbitrator.
46. As such, arbitration application fails and stands dismissed.
