UNION OF INDIA Vs. DHANURDHAR CHAMPATIRAY

JUDGEMENT

(1.) THE Opp. Party executed a construction work for the petitioners. Some disputes arose between the petitioners and the Opp. Party arising out of the said work. Clause 25 of the agreement between the parties provided for reference of the disputes to the sole arbitrator or the person appointed by the Chief Engineer in charge of the work at the time of dispute or if there be no Chief Engineer, the administrative head of the said work at the time of such appointment. On 26.3.2003, the Chief Engineer in charge received a written request dated 21.3.2003 from the Opp. Party for appointment of the arbitrator. When no arbitrator was appointed by the Chief Engineer in charge, the Opp. Party filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 in ARBP No. 21 of 2003 before the Chief Justice of the High Court, praying for appointment of an arbitrator. The said prayer was opposed by the petitioners before the Chief Justice stating that in the meanwhile an arbitrator had been appointed on 2.7.2003. By order dated 21.1.2004 the Chief Justice relying on the decision of the Supreme Court in Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr., 2000 (8) SCC 151, held that since appointment of the arbitrator was made by the Chief Engineer in charge after the application under Section 11 of the Arbitration and Conciliation Act, 1996 was filed, such appointment was without jurisdiction. Having so held, the Chief Justice passed orders appointing Shri Gobind Das, a Senior Advocate, as an Arbitrator, by the said order dated 21.1.2004. Aggrieved by the said order dated 21.1.2004, the petitioner has filed this writ petition under Article 226 of the Constitution praying for appropriate relief.

(2.) MRS . Agarwal, learned Standing Counsel for the petitioners submitted that since the procedure for appointment of the Arbitrator had been agreed to by the parties in Clause 25 of the agreement, the Arbitrator could only be appointed as per the said procedure and merely because there was delay in making the appointment as per the said procedure, the Chief Justice could not have, in the impugned order held that the appointment of the Arbitrator by the Chief Engineer in charge in accordance with Clause 25 of the agreement was without jurisdiction. She further submitted that in the decision of the Supreme Court in Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. (supra) on which reliance was placed by the Chief Justice in the impugned order, the Supreme Court has held in paragraph 23 that when the parties have entered into a contract and settled on a procedure, due importance has to be given to such procedure and the Court has to respect the terms of the contract entered into by parties and endeavour to give importance and effect to it. She further pointed out that in the said paragraph 23 of the decision, the Supreme Court held that when the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the said clause.

(3.) WE find force in the aforesaid submission of Mr. Sanganeria. Sub section (2) of Section 11 of the Arbitration and Conciliation Act, 1996 provides that subject to Sub section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub section (6) of Section 11 of the said Act further provides that where under an appointment procedure is agreed upon by the parties and a party fails to act as required 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. In Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. (supra) the Supreme Court after analysing the provisions of Section 11 of the said Act, held :