Union Of India (Uoi) Through ... vs Rr Industries, Shri R.K. Jain, ...
2005 Latest Caselaw 819 Del

JUDGMENT

Vijender Jain, J.

1. Counsel for the petitioner has impugned the order passed by the designated authority under section 11 of the Arbitration and Conciliation Act, 1996, on the ground that although on account of notice having been received from the opposite party and time to appoint the arbitrator having expired, though the right to supply the vacancy may not be available to the petitioner, yet the arbitrator has to be appointed in terms of the arbitration clause and only a gazetted Railway officer could be appointed the arbitrator, which the designated authority has not done. The second limb of the arguments of learned counsel for the petitioner is that in a similar Writ Petition (Civil) No.13448/2004, UOI v. Prestress Wire Industries, the Division Bench of this Court has issued notice of the writ petition and meanwhile has stayed the operation of the impugned order.

2. We have perused the impugned order passed by the designated authority. The application/notice for appointment of arbitrator was given by the respondent to the petitioner vide application dated 01.6.2004. The petition for appointment of the arbitrator by the designated authority was filed by respondent on 24.2.2005 and, admittedly, the arbitrator has been appointed by the petitioner vide letter dated 21.3.2005 i.e. after expiry of 30 days of the receipt of the notice and after filing of the petition by the respondent for appointment of the arbitrator. The arguments of learned counsel for the petitioner that in terms of the law laid down by the Supreme Court, the petitioner forfeits his right to supply the vacancy but still the appointment of the arbitrator has to be in terms of arbitration clause and only a gazetted Railway officer could be appointed the arbitrator.

3. Reliance was placed by the designated authority on Datar Switchgears Ltd. v. Tata Finance Ltd and Anr. [(2000) 8 SCC 151]. The relevant extract is reproduced as under:

"So far as cases falling under Section 11 are concerned " such as the one before us- no time limit has been prescribed under the Act whereas a period of 30 days has been prescribed under Section 11 and Section 11 of the Act. In our view, therefore, so far as Section 11 is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand but before the party first has moved the court under Section 11, that would be sufficient. In other words in cases arising under Section 11 if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases..."

4. It is admitted in this case that on expiry of the stipulated 30 days, the respondent moved the designated authority for appointment of arbitrator and only thereafter, the petitioner appointed the arbitrator. Relying upon the above quoted judgment of the Supreme Court of India, we are of the view that once the appellant opts not to appoint the Arbitrator within the stipulated period and in a way leaves open to the opposite party to move the designated authority and consequently the opposite party resorts to the only available remedy of applying to the designated authority for appointment of an Arbitrator, then, in our view, the appellant is estopped from reverting back to the original position for any purpose and to say that if at all arbitrator is being appointed by the designated authority it should be according to the appellant's choice and as per the unavailed of arbitration clause and only a gazetted railway officer should be appointed the arbitrator.

5. In earlier rather similar matters, the designated authority had appointed retired District Judges as Arbitrators instead of the arbitrators mentioned in the arbitration clause. The petitions against the said appointments were dismissed by us in N.T.P.C. v. Gauri Shanker Agarwal & Co. reported in 118(2005) DLT 245 and UOI and Anr. v. Kohli Construction Company and Anr. decided on 26.4.2005. We may also refer to a Single Bench judgment of this Court titled B.W.L. Ltd. v. MTNL and Ors. reported in 85(2000) DLT 84 where the learned Single Judge after discussing the law on the subject also appointed a retired Justice of the Supreme Court of India as Arbitrator and not the Arbitrator as sought by the Petitioner therein. We are of the opinion that firstly there is the statutory limitation of 30 days and then precedented limitation up to the time of filing of the petition under section 11 of the Arbitration and Conciliation Act 1996, by the opposite party. The party which does not exercise its right and crosses first limitation and then also crosses the extended limitation and sleeps over its right, in our view, totally forfeits the right either to appoint the arbitrator or to have the arbitrator of its own department, who may or may not be an independent and impartial person, if we may say so. To our mind, the forfeiture of the right of the erring party is not partial. It is complete forfeiture. The lauded purpose of this arbitration provision in the new Act is to expedite justice delivery system. The exercise of the power by the designated authority to appoint a retired judicial officer, in our view, therefore, cannot be attacked. The judicial officer, whether retired or sitting, is presumed to be an independent and impartial adjudicator. Therefore, in our considered opinion, the petitioner cannot find fault with the impugned order.

6. Coming to the second argument of the learned counsel for the petitioner that in some similar matter another Division Bench has issued show cause notice. We have seen the order passed in W.P.(C) No.13448/2004, which is to the following effect:

"W.P.(C) No.13448/2004 & CM 9435/2004

Notice to the respondent dusty and alternatively by other prescribed modes of service on satisfying the requirements of Registry.

Meanwhile, operation of interim order to stay till the next date.

List on 15.10.2004."

7. The facts and circumstances before another Division Bench may be different. In any case this is an interlocutary order and we do not know as to what the final judgment shall be.

8. Considering all the facts and circumstances, we do not find merit in the petition, the same is, therefore, dismissed.