JUDGMENT Swatanter Kumar, J.
1. The petitioner claims to be a reputed partnership firm engaged in the business of inter alia civil construction work. The respondent is a leading Government of India Enterprise also engaged in building and construction activities in India. It had entered into a contract with the petitioner and civil construction work was awarded by the respondent to the petitioner stating as "General Civil Works (GCW-I) pertaining to main plant area civil work Package in respect of NTPC's RhSTPP, Stage -II, (2x500 MW) P.O. Bijpur, Dist. Sonebhadra, U.P. - vide L.O.A. No. 4686/IZ/DF-4405 dated 23rd August, 2002. According to the petitioner, the respondent company committed various breaches of the terms of the contract and hence the completion of the assigned contract got delayed. That in spite of the breaches on part of the respondent, the respondent, without any notice to the petitioner, vide letter dated 22.09.2003 terminated the contract with the petitioner. The petitioner vide letter dated 26.09.2003 informed the respondent that the said termination was illegal and unjustified. Having left with no alternative, the petitioner submitted a final bill dated 23.10.2004 and demanded the payments. Vide letter dated 27.12.2004, the petitioner informed the respondent that the said amount should be paid to the petitioner and in default thereto, the claims were required to be adjudicated in terms of the arbitration clause No. 23.0 of the agreement between the parties. The respondent vide letter dated 29.12.2004 categorically denied its liability to pay any dues to the petitioner. The petitioner thereupon invoked the arbitration clause and requested the Chairman and Managing Director of the respondent to appoint an arbitrator to settle the disputes between the parties vide letter dated 23.2.2005. 30 days left but no action was taken by the respondent and, therefore, the petitioner while relying upon the judgments of the Supreme Court in Datar Switchgear Ltd. v. Tata Finance Ltd. JT 2000 (Supp.-2) SC 226, Konkan Railway Corporation Ltd. v. Mehul Construction Co. and Konkan Railway Corporation Ltd. v. M/s. Rani Construction Private Limited , prays that the court may appoint a sole arbitrator to adjudicate upon the disputes of the value of Rs. 1,14,59,838/- because of the default on the part of the respondent.
2. The respondent has filed a reply to this petition stating that in view of the slow progress of the work by the petitioner and the petitioner having failed to comply with the terms and conditions of the contract, the contract itself was cancelled under Clause 37(c) of the contract and the balance work was got executed by the respondent at the risk and cost of the petitioner. The execution and existence of the arbitration clause in the agreement is not, as such, disputed. The cancellation/termination of the contract was informed to the petitioner on 22.09.2003. It is stated that in view of the said arbitration clause and the clear stipulation to the effect, the Chairman-cum-Managing Director would not loose the right to appoint an arbitrator and only a person appointed by him would act as an arbitrator. The arbitrator to be appointed should be one appointed by the Chairman-cum-Managing Director of the respondent corporation. The respondent claims to have certain counter claims against the petitioner as well. In the entire reply, the receipt of the notice dated 27.12.2004 and 23.2.2005 is not disputed.
3. The relevant arbitration clause between the parties reads as under:-
23.0 ARBITRATION In the event of any dispute/differences arising out of any of the conditions of this tender (to be converted to work order in case of successful bidder) the matter be referred to the sole arbitrator, the arbitrator to be appointed by our Chairman-cum-Managing Director of the Corporation whose decision shall be final and binding on both the parties. The arbitration proceeding shall be governed by the provision of the Arbitration and Conciliation Act (26 of 1996) as amended from time to time. This is also a condition of this order that under any circumstance, no person other than one appointed by Chairman-cum-Managing Director of this Corporation shall act as arbitrator.
4. The above clause certainly states that the arbitrator is to be appointed by the Chairman-cum-Managing Director of the respondent Corporation whose decision shall be final and binding. At the same time, the same clause also refers that the arbitration proceedings shall be governed by the provisions of the Arbitration & conciliation Act, 1996 as amended from time to time. In face of the judgments of the Supreme Court afore-referred and the judgment of this court in Batavarlal M. Patel v. NBCC Ltd. 2004(3) Arb.LR 97 (Delhi), the objection raised by the respondent is without any basis. The negative clause contained in the arbitration clause would be inconsequential and ineffective in view of the statutory provisions of Section 11(6) of the Act and the law enunciated by the Supreme Court in Datar Switchgear and Kondan Railway Corporation cases (supra). The party who has committed a default in appointing an arbitrator after receipt of the notice and does not appoint the same within 30 days or at least before the petition is filed before the court, looses its rights to appoint an arbitrator. This is the view taken consistently by the highest court of the land and there is no occasion on the facts of the present case that this court should take a different view than the afore-referred.
5. Furthermore, in the case of Batavarlal M. Patel v. NBCC Ltd. (supra), the respondent in the present case was the respondent in that case and similar objection was taken which was declined by the court and the court held as under:-
This position of the law laid down by this Court and the Hon'ble Supreme Court as extracted above is categorical. Therefore, once the party moves the Court under Section 11(6) of the Act, the right of the opposite party to appoint an Arbitrator as per the Arbitration agreement ceases. The above position of law squarely applies to the present case. The respondent's right to appoint an Arbitrator was vanquished on 27th March, 2004, the date when the petitioner approached this Court under Section 11(6) of the Act and the appointment of the Arbitrator sought to be made on 5th June, 2004 by the respondents is of no avail and is set aside.
6. In the present case, there is no dispute to the fact that the notice dated 23.02.2005 was received by the respondent and it failed to take action in consonance with the arbitration clause between the parties. Along with this notice, the petitioner had annexed consolidated list of disputes. It may also be noticed at the cost of the petitioner that the petitioner had written a letter dated 27.12.2004 raising claims against the respondent and also requiring it to make the payment within 30 days or in alternative to permit the petitioner to raise disputes in accordance with the arbitration clause. The respondent though denied its liability in relation to the claims stated in annexure-A to that letter but still did not appoint an arbitrator. The failure on the part of the respondent was that of persistent default and failure to act in accordance with law.
7. Consequently, this petition is allowed and Mr. P.K. Bahri (a Retd. Judge of this Court) appointed as sole arbitrator to adjudicate upon the disputes annexed to the notice dated 23.2.2005 as Annexure-A.
8. In the facts and circumstance of the case, the parties are left to bear their own costs.