EXCALCER Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) IN April 1977 the petitioner entered into a contract with the resnondent for execution of flood protection work from chainage 903 to 906 along the left bank of Mundeswari river. Such contract was arrived at by the acceotance of the petitioner's tender No. 55/S/M of 77-78 in BF No. 2911 (i) (ii) by the respondent by its letter No. 296 dated 11-5-77. Pursuant to this agreement, the respondent issued works order on or about 11-5-77. It is alleged that the petitioner had to execute various extra works in course of execution of the works under the contract at the instance of the respondent. Thereafter disputes and differences arose between the parties in connection with the said contract which contained an arbitration clause as follows :--

(2.) BY a letter dated 29-11-77, addressed to the Chief Engineer the petitioner called upon him to enter upon the reference as the sole arbitrator but the Chief Engineer sat tight over the matter and did not take any step. Thereafter by a notice dated 2-7-79 issued under Section 8 of the Arbitration Act 1940 the petitioner called upon the respondent to concur in the appointment of Sri Durga Mohan Mukherjee, a retired Chief Engineer, Agriculture Department, as the sole arbitrator. The respondent did not concur in the said appointment and the statutory period of 15 days expired. Under the cricumstances the petitioner has taken out his present application under Sections 5, 8, 11 and 12 of the Arbitration Act for appointment of Sri Durga Mohan Mukherjee as the sole Arbitrator and/or for appointment of any fit person by Court as the Arbitrator on the ground that the Chief Engineer as the sole Arbitrator has neglected and refused to act.

(3.) THE counsel for the respondent submitted that the petitioner has no right to move the Court for appointment of an arbitrator without first requesting the Chief Engineer to nominate an arbitrator in terms of the express agreement between the parties. He submitted that the court has no jurisdiction to appoint an arbitrator in absence of such a prior request. THE petitioner's counsel disagreed with this submission on behalf of the respondent and stated that the appointment of the Chief Engineer as the sole arbitrator being complete, his unwillingness or inability to act is a ground for moving the court under Section 8 of the Act. To ascertain which view is correct, interpretation and construction of the present arbitration agreement would be necessary. We very often come across this type of arbitration clause in almost all government contracts. It is a matter of public importance to know the exact scope and effect of this type of arbitration agreement. A close scrutiny of this clause would reveal that the Chief Engineer is given two powers and/or authorities viz., the first is to act as the sole arbitrator and the second is to act as a person designated under the agreement to appoint an arbitrator for the parties if he himself ss unwilling or unable to act as the arbitrator. If the Chief Engineer's appointment as an arbitrator is complete, as submitted by the petitioner, then the inevitable conclusion would be that the parties have authorised a negligent arbitrator unwilling to act to nominate his own successor and to exclude the operation of Section 8 or 9 of the Act viz., Court's power t'o appoint in such cases. This type of appointment of an arbitrator by a negligent arbitrator is unknown in law. THE Arbitration Act contemplates appointments in three ways--(1) appointment by parties to the contract (2) appointment by Court and (3) appointment by a third party expres-sly mentioned in the contract in accordance with Section 4 of the Act. THE Act of 1940 provides that arbitrators can appoint umpire or umpires under certain circumstances but not an arbitrator. Tn view of this, it appears that if the appointment of the Chief Engineer is complete and effective then he cannot act as persona designata and appoint another arbitrator.