M. M. Kumar, CJ:
1. The petitioner is a registered private limited company having its head office at 359, Sector 14, Rohtak 124-1, Haryana. It is engaged in construction of civil works throughout the country. The project coordinator State project Implementation Unit-respondent no. 3 engaged the services of the petitioner-contractor to carry out civil works of various nature such as buildings/blocks etc at Government Women Polytechnic Jammu under a World Bank Scheme. An agreement between the parties was duly executed (Annexure-A) which contains an arbitration clause. However, there is a pre-arbitration mechanism provided by Clause 24. According to Clause 24.1, if the contractor believes that a decision taken by the engineer, namely, Deputy General Manager, JKPCC Ltd, was either outside the authority given to him by the contract agreement or the decision was wrongly taken then the same was to be referred to the Adjudicator within 14 days of the notification of the Engineers decision. On the reference made, the Adjudicator is obliged to decide the issue in writing within 28 days of receipt of notification of a dispute. According to Clause 25.2, if the decision of the Adjudicator is not acceptable to either of the parties then within a period of 28 days of the Adjudicators decision the matter could be referred to the arbitrator at the instance of either party.
2. It has come on record that in the present case the petitioner-contractor doubted the decision taken by the Engineer within the meaning of Clause 24.1 of the arbitration agreement under heading contract data (page 9). At the request of the contractor under Clause 24 of the agreement, reference was made to the Adjudicator. In pursuance of the contract data (page 9), respondent no.3 and the petitioner-contractor appointed one Shri N. K.Kohli, retired Chief Engineer, as Adjudicator in pursuance to Clauses 24 and 25 of the agreement. The petitioner- contractor presented his claims on 03.11.2004 but the Adjudicator gave delayed ex-parte decision on 27.07.2005 (Annexure B). The aforesaid decision of the Adjudicator was much beyond the period of 28 days. The petitioner-contractor exercised his right under Clause 25.2 of the arbitration agreement seeking reference to the arbitrator in respect of the decision of the Adjudicator rendered ex-parte on 27.07.2005 vide letter dated 13.08.2005. A request in that regard was sent to respondent no.3 through registered post, proposing two arbitrators, namely, Honble Mr. Justice (Retd) T. S. Doabia and Honble Mr. Justice (Retd) S. K. Gupta of the Jammu and Kashmir High Court (Annexure C) but there was no response. As per the procedure unfolded by Clause 25.3 of the arbitration agreement the petitioner approached the Chairman, Institute of Engineers Jammu- respondent no.2 by a written request dated 26.09.2005 sent by registered A/D post requesting for appointment of arbitrator, suggesting the aforesaid two names of Honble Mr. Justice (Retd) T. S. Doabia and Honble Mr. Justice (Retd) S. K. Gupta.
3. Objections have been filed. In the preliminary objection filed by respondent no.3 it has been asserted that the petition was liable to be dismissed because the Adjudicator dealt with respective claims of the parties and passed an award on 27.07.2005. On account of the fact that the petitioner has approached this Court after one year, the decision of the Adjudicator has attained finality. It has further been asserted that JKPCC is not the employer and only a Project Management Consultant and its scope of work was limited to provide Engineers. 4. I have heard the learned counsel for the parties and have perused the record with their able assistance.
5. It has remained undisputed that pre-adjudicatory procedure, as provided by Clause 24.1 of the arbitration agreement has been complied with. The Adjudicator did not render his decision within a period of 28 days as required by Clause 25.1 of the arbitration agreement. The petitioner-contractor presented his claim before the Adjudicator on 30.11.2004 who decided the same belatedly by an ex-parte decision on 27.07.2005. Admittedly there was a gap of more than seven months whereas the period stipulated for deciding a dispute by the Adjudicator as per Clause 25.1 of the arbitration agreement was 28 days. Moreover the contractor, within 28 days of the decision, was entitled to seek reference by objecting to the decision of the Adjudicator as per the provisions of Clause 25.2 of the arbitration agreement. On 13.08.2005 he made a written request to the respondent no.3 by sending a registered letter to make a reference to the two former Judges of this Court. Obviously the petitioner-contractor had sent a written request for reference to the respondents within a period of 28 days. The aforesaid fact can be ascertained by referring to the acknowledgement receipt of the registered post which has been placed on record by the petitioner-contractor (Annexure C page 116). A copy of the notice sent under registered post dated 13.08.2005 has also been placed on record (Annexure C page 114). Despite the reminder sent on 26.09.2005 the arbitrator has not been appointed which resulted in filing of the instant petition on 18.08.2006.
6. It is conceded position that there is an arbitration clause in the contract agreement between the parties as is evident from perusal of Clause 25.2 and 25.3 of the contract agreement. The arbitration has to be conducted in accordance with the procedure provided under Clause 4 of the Special Conditions of Contract ( at page 67) which provides that the dispute between the employer and the contractor relating to any matter out of or connected with the agreement shall be settled in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The aforesaid clause is set out below in extensor along with Clauses 25.2 and 25.3:- 25. Procedure for Disputes. 25.1 25.2. The Adjudicator shall be paid daily at the rate specified in the Contract Data and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicators written decision. If neither party refers the dispute to arbitration within the above 28 days, the Adjudicators decision will be final and binding. 25.3. The arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of Contract. 4. ARBITRATION (GCC CLAUSE 25.3) The procedure for arbitration will be as follows: 25.3. (a) In case of Dispute or difference between the Employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The arbitral tribunal shall consist of 3 arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the parties and shall act as presiding arbitrator. In case of failure of the two Arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the Chairman, Institution of Engineers Jammu, Chapter (JandK), Jammu.
(b)
(c) If one of the parties fails to appoint its arbitrator in pursuance of sub-clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the *Indian Council of Arbitration/President of the Institution of Engineers (India)/The International Centre for Alternative Dispute Resolution (India), both in cases of the Foreign Contractor as well as Indian Contractor shall appoint the arbitrator. A certified copy of the order of the Chairman, Institution of Engineers, Jammu. Chapter (JandK), Jammu, making such an appointment, shall be furnished to each of the parties. (d) Arbitration proceedings shall be held at JandK, Jammu, India and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English. (e) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration proceedings will be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation presentation etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by such party or on its behalf shall be borne by each party itself. (f) Where the value of the contract is Rs. 50 millions and below, the disputes or differences arising shall be referred to the Sole Arbitrator. The Sole Arbitrator should be appointed by agreement between the parties failing such agreement, by the appointing authority, namely, the Chairman, Institution of Engineers, Jammu, Chapter (JandK), Jammu.
7. A perusal of the aforesaid provision would show that arbitrator has to be appointed if the decision of the Adjudicator is not acceptable to either of the parties, provided such a demand has been raised within 28 days of the decision rendered by the Adjudicator. The procedure for conducting the arbitration has been provided in the special conditions of the contract. As per Clause 4, the arbitral tribunal of three persons has to be appointed within a period of 30 days from the notice. The respondents have lost the right to appoint the arbitrator in accordance with the provisions of the standard conditions because the period of 30 days has elapsed. It is well settled principle of law that in such like cases an independent arbitrator has to be appointed. In that regard reliance may be placed on the judgments rendered Datar Switchgears Limited v. Tata Finance Ltd. and anr. (2000)8 SCC 151, Punj Lloyd Ltd. V. Petronet MHB Ltd. (2006) 2 SCC 638, Indian Oil Corporation Limited v. Raja Transport (P) Ltd. (2009)8 SCC 520 and Deep Trading Company v. Indian Oil Corporation, (2013) 4 SCC 35. Accordingly, the prayer for appointment of an independent arbitrator deserves to be accepted.
8. As a sequel to the above discussion this petition succeeds. Mr. Justice Permod Kohli, former Chief Justice of Sikkim High Court and a former Judge of this High Court is appointed as arbitrator. He may also associate any person well versed with civil engineering or in accounts for the effective disposal of the dispute between the parties. A copy of this order along with a photocopy of the paper book be sent to Mr. Justice Permod Kohli at his Lordships local address.