JUDGMENT S.D. Pandit, J.
1. This petition is filed by Mahanagar Telephone Nigam Ltd., (A company incorporated under the Provisions of Companies Act, 1996). It is Public Sector undertaking. The respondent No. 1 M/s. J. K. Anand had taken a contract for the construction of Cable Duck System in its Okhla Telephone Exchange Local Net Work Part-I. The disputes had arose between the contractor and the petitioner, therefore, as per the terms of the contract the contractor M/s. J. K. Anand moved the employer to refer his claims and disputes to an arbitrator as per the terms of the contract. Thereupon the Chief General Manager of the petitioner under clause 67 has appointed Mr. J. Anthony as a Sole Arbitrator to decide disputes and to make award regarding the claim/disputes by the contractor as well as counter claim. By his letter dated 21.1.1992 the said arbitrator respondent No. 2 entered into the same reference and he issued notices to both the sides. But when the petitioner filed his counter claim he refuse to entertain them by contending the said counter claims of the respondent - the petitioner before me, could be entertained if the same are specifically referred to him by the appointing authority for his decisions. He had informed thus by his letter 21.1.1993. It seems that thereafter though the petitioner was trying to convince him to take into consideration counter claim of the respondent before the arbitrator and petitioner before me. The respondent No. 2 was not ready to entertain the same. The petitioner has filed the present petition to remove the arbitrator on account of commission of misconduct and to make a fresh appointment of an arbitrator.
2. The claim of the petitioner is resisted by the contractor respondent No. 1 by filing his reply. It is contended on behalf of the respondent No. 1 that the procedure prescribed by the arbitrator was quite legal and proper. It is further contended that allegations made against the arbitrator as regards bias of the arbitrator towards the petitioner are fale. It is also contended that the petitioner is only interested in protection of the proceedings. They have not come before the court immediately after the procedure prescribed by the arbitrator and they are also protracting the decision of the arbitrator and in these circumstances the present petition should be dismissed.
3. The only question which arise before me for the consideration, is as to whether the arbitrator has committed any misconduct and consequently whether he is to be removed. My finding on the same appointment is in the the affirmative for the reasons hereinafter stated.
4. Both the parties are not at all disputing the fact that respondent No. 1 M/s. J. K. Anand had exercised the Arbitration Clause and asked the Chief General Manager to appoint an arbitrator and to make reference of the claims and disputes raised by him. It is also an admitted fact that the Chief General Manager of MTNL by his letter dated 27.1.1993 appointed respondent No. 2 as the sole arbitrator to decide the claim/disputes raised by the contractor that is respondent No. 1 M/s. J. K. Anand. In order to consider as to whether the arbitrator has committed any misconduct or not. It is necessary to see what is the appointment of the arbitrator in this case. The Chief General Manager of MTNL has made appointment of respondent No. 2 by letter dated 21.1.1993 as under :
"Now, therefore, I M. R. Subrahmanyam, Chief General Manager, MTNL, New Delhi, by virtue of powers conferred on me under clause 67 of the agreement hereby appoint Shri G. Anthony, SE (HQ) Postal as sole arbitrator to decide and make award regarding claims/disputes by the contractor as mentioned in Annexure 'A' hereto and counter claims of MTNL, if any subject always however to their admissibility under clause 67 of the aforesaid agreement."
5. The learned advocate for the respondent has brought to my notice the fact that in the above appointed letter the appointment authority has not mentioned the details of the counter claims of the petitioner in the said appointment order. It is true that in the said appointment order there is no specific mention on the details of the counter claim on MTNL but that will not amount to non reference of counter claims of MTNL. It must be mentioned here that as soon as the contractor has raised claims and disputes and had requested the Chief General Manager of MTNL to refer them to the arbitrator, the Chief General Manager had before him only the claims or disputes raised by the contractor. He has made an appointment of the arbitrator on account of exercising powers under the contract and he had not asked the employer of the contractor as to whether there were any counter claims or whether the claims made by the petitioner by the contractor justified or not. But when the contractor was raising the claims the employer must be given opportunity to raise the counter claims, if any, as per the terms of the contract and these claims were to be referred to be raised before the arbitrator. Therefore, in these circumstances there was no question of mentioning in the said appointment order the details of counter claims of the respondent before the arbitrator and petitioner before me. When the appointment orders specifically directed the arbitrator that he was to decide the claims and disputes raised by the contractor and the counter claims of the MTNL, he was bound in law to entertain the counter claim of the MTNL. No doubt in his letter dated 21.1.1993 the respondent No. 2 does mention that he would entertain the counter claim only if the said are referred by the appointing authority but that decision of the arbitrator is against order of appointment by which he was appointed an arbitrator. When he is directed by the order of appointment that he is to entertain and decide counter claims of the employer of the contractor, he cannot insist that he would consider the counter claim only if the counter claims are specifically referred to him by the appointing authority. He has no jurisdiction to direct that appointing authority must specifically referred the counter claims to him. Therefore, the failure of the arbitrator to consider the counter claim of the petitioner will amount to a legal misconduct.
6. It must be mentioned here that even after his letter of dated 21.1.1993 the respondent before his and the petitioner before me had brought to his notice that as per the order of reference made to him he was bound to entertain the counter claim but inspite of bringing the specific order of his appointment to his notice his insistence that the counter claims are not specifically refers to him by the appointing authority is a legal misconduct on his part.
7. It is true that the petitioner has come before the court after some lapse of time. It was open for the present petitioner even to raise his contention even after the award was passed in this case and in that case also the award would have been rejected and would have been set aside. It must be remembered that the arbitrator was choosen by the petitioner himself. The contractor is making certain claim of money he has completed the contract in the year of 1990 and he had exercised the above appointment of the arbitrator in January, 1991. Therefore, in these circumstances, I would ask the petitioner to bear the cost of the arbitrator/respondent No. 2 till today. I will also direct the petitioner to pay the cost of the respondent in this petition to the extent of Rs. 1,000/-.
8. The disputes between the parties are pending since the year 1991 and it seems from the material on record that the petitioner is trying to protect the matter, therefore, taking into consideration these aspects and in view of the concession given by the learned advocate for the petitioner by not pressing for appointment of arbitrator by the Chief General Manager of MTNL, I sold that by this order the respondent No. 2 should be removed as an arbitrator. I appoint Justice B. R. Khanna, Retired Judge of this court as an arbitrator to decide the disputes between the parties. I, therefore, pass the following order :
9. The petition is allowed. The appointment of the respondent No. 2 an arbitrator to decide and make award regarding the claims raised by the contractor and the counter claims of the petitioner is set aside. Justice B. R. Khanna, Retired Judge of this court is appointed as an arbitrator in his place to decide and make award regarding the claims/disputes raised by the contractor M/s. J. K. Anand as under :
Claim No. 1 : Claim for payment of amount of the final bill for the work of Rs. 3,55,296/-.
Claim No. 2 : Claim for the release of amount withheld from the Running Account Bills Rs. 52,950/-.
Claim No. 3 : Claim for payment of compensation on account of increase in the minimum wages of labour Rs. 14,33,908/-.
Claim No. 4 : Claim for the prolongation of the work beyond stipulated date of completion Rs. 41,63,785/-.
Claim No. 5 : Claim for pre-suit interest, pendente lite interest and future interest @ 20% per annum.
Claim No. 6 : Claim for cost of arbitration proceedings of Rs. 25,000/-.
10. The arbitrator is to also decide and make award on the counter claims of MTNL, who is to file its counter claim before the arbitrator on the date of its appearance before the arbitrator as per his notice.
11. The arbitrator should decide the said claims and counter claims and make the award within three months from the date he enters into arbitration. The arbitrator should decide the question as regards his fees and should also decide who are responsible to pay the same.
12. This order should be sent to the arbitrator immediately.
13. The petitioner should pay Rs. 1,000/- as costs to respondent and bear his own.
14. Dasti to both the advocates.