GENERAL MANAGER TELECOM MADURAI SECONDARY SWITCHING AREA DEPARTMENT OF TELECOMMUNICATION NOW BHARAT SANCHAR NIGAM LIMITED BSNL MADURAI Vs. SESA SEAT INFORMATION SYSTEMS LIMITED PUNE

JUDGEMENT

(1.) AGGRIEVED by the orders passed by Hon'ble Chief Justice or his nominee Judge in Original Petitions filed under Sec. 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"), appointing Arbitrators, Central Government organizations, viz., Telecom Department, Southern Railway, Western Railway, Rajiv Gandhi National Institute, etc., have filed the above writ petitions.

(2.) WHEN the above writ petitions came up for final hearing before K.P.Sivasubramanian, J., on 7.6.2005, the learned Judge, after referring to the several grounds raised by the petitioners as well as contesting respondents and the decision of the Supreme Court on the issues raised, found that the questions raised for consideration pertain to very important issues of interpretation of the provisions of the Act as well as interpreted by the Supreme Court and have impact not only on all these writ petitions, but also several original petitions pending before this Court for appointment of arbitrators, and desired that these petitions be heard by a larger Bench. Pursuant to the same on the orders of the Honourable Chief Justice, the above writ petitions were heard by us.

(3.) ) applies and- (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or- (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in Sub-sec.(2), irtan arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from recejpt of a request by one party from the other party to so agree, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties: (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) to (12) xx xx xx Sec. 12. Grounds for challenge: (1) xx xx (2) xx xx (3) An arbitrator may be challenged only if: (a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or (b) he does not possess the qualifications agreed to by the parties. (1) 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. Sec. 16. Competence of arbitral tribunal to rule on its jurisdiction: (1) to (5) xx xx xx (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Sec.34. Sec. 34. Application for setting aside arbitral award: (1) xx xx xx (2) An arbitral award may be set aside by the Court only if- (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part; 7. (i) Mr. V.T.Gopalan, learned Additional Solicitor General of India by drawing our attention to specific clause/clauses in the agreement for appointment of arbitrator/arbitrators, would contend that either from officers of the concerned or independent arbitrator, the parties would be bound by such agreement and neither of the parties would be allowed to resile. He further contended that a conjoint reading of Sec. 11 (2) and (6) of the Act makes it clear that there is no time stipulated for appointment of an arbitrator and the question of 30 days as per Seel 1(3) and (4) cannot be applied to a case governed by Seel 1(2) and (6). In other words, according to him, the time taken for appointment of an arbitrator should be reasonable. In any event, according to him, neither the Chief Justice nor designated Judge have power to appoint any independent arbitrator by passing the arbitration clause agreed to between the parties. He finally contended that inasmuch as the order passed by the Chief Justice and the designated Judge is administrative in nature, the writ would lie. (ii) Countering the above arguments, Mr.Vijaynarayan, learned senior counsel and the other counsel appearing for respondents, submitted that if an application is made, one of the parties to the agreement, after expiry of the period prescribed therein and in the absence of any response from other party, the Chief Justice or designated Judge has ample power to appoint independent arbitrator. He further contended that once arbitrator is appointed, in view of the statutory provisions, viz., Sees.5, 12, and 13, the said order cannot be interfered by any Court. In other words, according to him, once discretion is exercised, the same cannot be interfered by any one including by way of a judicial order. He also submitted that if the party or parties satisfied the conditions as per the terms of the agreement, the Chief Justice or designated Judge is free to appoint any one or body as arbitrators and interference with the said orders is permitted. 8. Learned Additional Solicitor General in support of his arguments has relied on the following decisions: (i) Bhupinder Singh Bindra v. Union of India (1995)5 S.C.C. 329;. (ii)Union of India v. Vijay Kumar Garg, judgment of the Supreme Court in Civil Appeal No. J3076 of1996; (Hi) M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited AIR. 1998 M. P. 275; (iv) Datar Switchgears Limited v. Tata Finance Limited (2000)8 S.C.C. 151; (v)Premiere Infrastructure Limited v. Union of India,Order made in O.P.No.815 of 1999 of High Court, Madras; (vi) Essel Shyam Communication Limited v. Union of India (2000)2Raj. 487. (vii) Ashok Coal Depot v. South-Eastern Coal Fields Limited (2000)3 Raj. 252. (viii) Bel House Associates Pvt. Limited v. G.M., Southern Railway Bel House Associates Pvt. Limited v. G.M., Southern Railway Bel House Associates Pvt. Limited v. G.M., Southern Railway (2001)2, A.L.R. 215; (ix) M/s. Kama/a Solvent v. Manipal Finance Corporation Limited M/s. Kama/a Solvent v. Manipal Finance Corporation Limited M/s. Kama/a Solvent v. Manipal Finance Corporation Limited AIR. 2001 Mad. 440; (x) Vindhya Telelinks Limited v. Department of Telecommunications Vindhya Telelinks Limited v. Department of Telecommunications Vindhya Telelinks Limited v. Department of Telecommunications (2001)4 Raj. 243; (xi)Union of India v. M.O.Simon,Order made in O.P.No.28385 of 2001 of High Court of Kerala; (xii)General Manager, Southern Railway, Chennai v. M/s.Chandragiri Construction Company,Order made in O.P.No.7412 of 2003 of High Court of Kerala; (xiii) J.L.Prasad v. General Manager, Southern Railway, Chennai J.L.Prasad v. General Manager, Southern Railway, Chennai J.L.Prasad v. General Manager, Southern Railway, Chennai (2002)4Raj.437; (xiv) Union of India v. Solum Lai Puglia Union of India v. Solum Lai Puglia Union of India v. Solum Lai Puglia (2004)1 S.C.C. 768; (xv) Union of India v. M.P.Gupta Union of India v. M.P.Gupta Union of India v. M.P.Gupta (2004)10 S.C.C. 504. 9. Now we shall analyse these decisions one by one. The first case, viz., Bhupinder Singh Bindra v. Union of India Bhupinder Singh Bindra v. Union of India Bhupinder Singh Bindra v. Union of India (1995)5 S.C.C. 329 is a case decided under the Arbitration Act, 1940 (old Act). In view of the repealing of the said Act and enactment of new Arbitration and Conciliation Act, 1996, adding various new clauses, the said decisions rendered under old Act is not directly on the point. The next one, viz., judgment of the Supreme Court in C.A.No.13076 of 1996 is also of the same effect, since the same relates to old Act. 10. The third one, viz., M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited M/s.Subash Project and Marketing Limited v. South Eastern Coalfields Limited A.I.R. 1998 MP 276 is a judgment by a learned single Judge of Madhya Pradesh High Court, relates to an order passed in an application filed under Sec. 11 of the Act. Likewise, the order of this Court in O.P.No.815 of 1999; Essel Shy am Communication Limited v. Union of India Essel Shy am Communication Limited v. Union of India Essel Shy am Communication Limited v. Union of India (2000)2 Raj. 487, Asltok Coal Depot v. South-Eastern Coal Fields Limited Asltok Coal Depot v. South-Eastern Coal Fields Limited Asltok Coal Depot v. South-Eastern Coal Fields Limited (2000)3 Raj. 252, Bel House Associates Pvt. Limited v. G.M., Southern Railway Bel House Associates Pvt. Limited v. G.M., Southern Railway Bel House Associates Pvt. Limited v. G.M., Southern Railway (2001)2 A.L.R. 215, Vindhya Telelinks Limited v. Department of Telecommunications Vindhya Telelinks Limited v. Department of Telecommunications Vindhya Telelinks Limited v. Department of Telecommunications (2001)4 Raj. 243, J.L.Prasad v. G.M.Southem Railway, Chennai J.L.Prasad v. G.M.Southem Railway, Chennai J.L.Prasad v. G.M.Southem Railway, Chennai (2002)4 Raj. 437 all relate to orders passed in applications filed under Sec. 11 of the 1996 Act. It is not in dispute that an order of Chief Justice or designated Judge is an administrative order, hence the same cannot be challenged in an appeal. However, as held in State of Orissa v. Gokulananda Jena (2003)6S.C.C. 465, an order made by the Designated Judge, being an administrative order is amenable to writ jurisdiction under Art.226 of the constitution. In the light of the fact that the said orders were passed in applications filed under Sec. 11 of the Act, the same need not be considered. 11. The other decisions, viz., order made in Union of India v. M.O.SimonO.P.No.28385 of 2001 (High Court of Kerala), order made in General Manager, Southern Railway, Chennai v. M/s. Chanragiri Construction Company,O.P.No.7412 of 2003 (High Court of Kerala) are consent orders and the same cannot be cited as a binding precedent. The other two decisions, viz. Union of India v. Sohan Lal Union of India v. Sohan Lal Union of India v. Sohan Lal (2004)1 S.C.C. 768 and Union of India of India v. M.P.Gupta Union of India of India v. M.P.Gupta Union of India of India v. M.P.Gupta (2004)10 S.C.C. 504, all other decisions relied on by the learned Additional Solicitor General are either under the old Act or the orders were passed on consent of both parties or administrative orders passed inan application filed under Seel 1 of the Act. 12. In Datar Switchgears Limited v. Tata Finance Limited (2000)8 S.C.C. 151. the respondent made the appointment before the appellant filed application under Seel 1(6). But the said appointment was made beyond 30 days. The question is, whether in a case falling under Sec. 11 (6), the opposite party cannot appoint an arbitrator after the expiry of 30 days from the date of demand. The following conclusion of their Lordships is relevant: (para. 19)