At, Supreme Court of India
By, HON'BLE JUSTICE S. N. PHUKAN AND HON'BLE JUSTICE S. R. BABU
1. The appellant and respondent had entered into a contract which has provided Clause 25-A for appointment of an Arbitrator. The said clause reads as follows
"Clause 25-A - If any question, difference of objection whatsoever arise in any way connected with or arising out this instrument or the meaning or operation of any part thereof the rights, duties or liabilities of either party then save insofar as the decision of any such matter is here in before provided for and has been so decided, every such matter including whether its decision has been otherwise provided for and/or whether it has been finally decided accordingly, or whether the contract should be terminated or has been rightly terminated and as regards the rights and obligations of the parties as the result of such termination shall be referred for arbitration to be appointed by the Chief Engineer/Electrical Beas Project, Chandigarh on written request either from the contractor or from the XEN, written within 180 days or in the months from the date of payment of final bill to the contractor or from the date of requisite notice is sent to the contractor to the effect that his final bill is ready for payments and his decision shall be final and binding and where the matter involves a claim for the payment or recovery or deduction of money only the amount, if any, awardrd in such arbitration shall be recoverable in respect of the matter so referred." *
2. The appellant made a request to the Chief Engineer by serving a notice upon him to appoint an Arbitrator within 15 days of the receipt of the said notice on 7-2-1988. However, within the period stipulated in the notice, the Chief Engineer did not appoint the Arbitrator. Thereafter the appellant filed an application as provided under Section 8 of the Arbitration Act, 1940 before the Court of Senior Sub-Judge, Chandigarh. The trial Court allowed the application and directed the appointment of an Arbitrator. Aggrieved by that order, the respondent filed a revision petition in the High Court and the High Court took the view that an application under Section 8 of the Act was not proper and if at all the appellant ought to have invoked Section 20 thereof and thus there was no occasion for the Court to appoint an Arbitrator. The High Court allowed the appeal and dismissed the application filed by the appellant. That is why this appeal has been presented before us
3. Learned Counsel appearing for the appellant drew our attention to the decision of this court in Nandyal Co-op. Spinning Mills Ltd. v. K. V. Mohan Rao 1993 SC 1718 = 1993(1) Arb. LR 469), which has exhaustively considered an identical situtation and took the view that where a contract authorises a party to appoint an Arbitrator, but on Arbitrator is appointed by that party within time stipulated in the notice served by the other party, court would bet jurisdiction in terms of Section 8 of the Act
4. Applying the aforesaid principle to the facts of the
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present case, we set aside the order made by the High Court and restore that of the trial Court. Now the Arbitrtor appointed by the trial court shall proved with the matter as expeditiously as possible 5. The appeals are allowed accordingly. However, in the circumstances of the case, there shall be no order as to costs.