K VENKATESWARLU Vs. STATE OF A P

JUDGEMENT

(1.) The applicant seeks the appointment of a second arbitrator. The facts lie in a narrow compass: The applicant entered into a contract with the first respondent-State for execution of the, "earthwork excavation and forming embankment from Km 235.000 to Km 236.000 of Kakatiya Canal of S.R.S.P." under an agreement No.29/83-84 dated 25.10.1983 for Rs.1,39,69,934/-. During the course of execution of the work and after its completion certain disputes arose between the applicant and the respondents 1 and 2. Therefore, the applicant referred the disputes to the first respondent in his letter dated 12.10.1989. However, the first respondent rejected the said dispute under his letter dated 24.11.1989. The applicant invoked the arbitration clause by requesting the panel of arbitrators as envisaged in the agreement to enter upon the reference under his letter dated 04.12.1989. The applicant received a letter dated 30.12.1989 purportedly from the convenor wherein inter alia the names and designations of the other two arbitrators were indicated as Sri Mirza Athar, Joint Secretary to Government, Finance and Planning Department, Secretariat Building, Hyderabad, and Sri B.Lavakusa Rao, Director of Accounts, Srisailam Project, Kurnool District. The convenor-arbitrator asked both the parties to submit their claim statement and counter respectively before the dates mentioned therein.

(2.) It is the further case of the applicant that the so-called convenor-Arbitrator was in fact the Engineer-in-Chief (Administration) but not the Engineer-in-Chief, Investigation. There was no such post of Engineer-in-Chief, Investigation in Irrigation and CAD department. The second arbitrator suggested by the said convenor was Joint Secretary to Government, whereas the Arbitration clause in the agreement provides for a Deputy Secretary, Finance and planning department. Under the circumstances, the applicant gave a notice to the first respondent in his letter dated 21.01.1990 requesting him to concur with the appoint of a sole arbitrator by selecting any one from the three Retired Judges of the High Court of Andhra Pradesh. However, the first respondent rejected the said contention of the applicant in his letter-dated 07.02.1990. The applicant therefore, filed O.P.No.196 of 1990 in the Court of the II Additional Judge, City Civil Court, Hyderabad, requesting for appointment of an independent and qualified person as a sole arbitrator. However, O.P.No.196 of 1990 was dismissed on 04.08.1997 in terms of the judgment reported in GOVERNMENT OF ANDHRA PRADESH v. N.V. CHOUDARY1. Meanwhile, the Arbitration and Conciliation Act, 1996 ('the New Act' for brevity) came into force with effect from 16.08.1996. It is the further case of the applicant that since the respondents did not constitute the panel of arbitrators and did not inform the constitution of the said panel of arbitrators pursuant to the direction of the Full Bench of the High Court of Andhra Pradesh, the arbitral proceedings did not commence under the Arbitration Act, 1940 ('the Old Act' for brevity). Therefore, the provisions of the New Act would apply. Since the Act envisages that the arbitral procedure should be fair, efficient and capable of meeting the needs of the specific arbitration and inasmuch as the designated officials, being employees of the respondent Government are not independent persons, the arbitration clause relating to the constitution of Arbitration Tribunal incorporated in the agreement is hit by Section 23 of the Contract Act, 1872 and hence it is void. The applicant therefore, issued a notice dated 16.06.2000 to the first respondent duly appointing Sri Justice V.Bhaskara Rao, as the first arbitrator requesting him to appoint an independent and impartial person preferably a retired Judge of the High Court of Andhra Pradesh as the second arbitrator. The first respondent by his letter dated 02.08.2000 rejected the request of the applicant. That letter was received beyond the 30 days period. Therefore, it is deemed under law that the first respondent has waived its right to object the appointment of an independent and impartial person as the second arbitrator. Hence this application.

(3.) The case of the respondents inter alia in the counter was that, since the dispute arose out of an agreement dated 25.10.1983, the Old Act applied, but not the New Act. The applicant himself invoked the arbitration clause. When he was asked to submit his statement before the panel of arbitrators, the applicant gave a notice to the first respondent asking to concur with the appointment of sole arbitrator and since the stand of the applicant was contrary to the arbitration clause in the agreement it was not considered. O.P.No.196 of 1990 filed by the applicant was rightly dismissed in terms of the Full Bench Judgement of the A.P. High Court and the same became final. Thereafter the applicant did not approach the convenor of the panel of arbitrators nor the Court for making the panel certain or altered. Having kept quiet for a long time, the applicant's claim is barred by limitation. The arbitration proceedings in fact were commenced with the letter dated 12.12.1989, whereunder the convenor of the panel of arbitrators required the applicant to submit his claim statement. The arbitral clause in the agreement provides for a panel of three arbitrators in the capacity of their respective designations and officers and not to be identified by their names as contended by the applicant. The Engineer-in-Chief, Investigation was also in-charge of Administration and hence there was no discrepancy in the designation. The points, therefore, that arise for my determination are: