Judgment:
ORDER
1. This is an application filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 with the request/ prayer for appointment of an arbitrator. The prayer is reproduced as under :--
'It is, therefore most respectfully prayed that Your Lordships may be graciously pleased to appoint sole arbitrator other than an employee of opposite party SAIL/BSI to arbitrate upon the dispute and claims in the ends of justice.
And/Or
Graciously be pass any order/orders deem fit in the matter.'
2. There is no dispute that a contract agreement between the parties came to be executed. There is also no dispute that between the parties, there is an arbitration agreement which is in the form of Clause 18 of the Conditions of Contract. The relevant extract of Clause 18, in so far as it pertains to our case, is reproduced hereinbelow. It reads thus :
'18. ARBITRATION CLAUSE. As per existing guide lines on date.
Except where otherwise provided for in the contract all questions, of dispute or difference whatsoever arising out of relating to or in connection with the contract shall be referred to the Sole Arbitrator to be appointed by the Managing Director, Bokaro Steel Plant, Steel Authority of India Ltd. There will be no objection if the sole arbitrator so appointed is an employee of Bokaro Steel Plant, Steel Authority of India Ltd. the sole arbitrator to whom the matter is originally referred being transferred or vacating his office or arbitrator or being unable to act for any reason, Managing Director as aforesaid may appoint another person to act as sole arbitrator on the request of any of the parties to arbitration. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. Subject as aforesaid the provisions of Indian Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause.
It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount claimed in respect of each such dispute. The said sole arbitrator may from time to time with consent of the parties enlarge the time for making and publishing the award.'
3. Apparently, invoking the aforesaid Clause 18, the petitioner sent a communication on 5.12.2001 to the respondent, inter alia, referring to the entire gamut of the disputes between the parties and after raising certain issues, a specific request for appointment of an arbitrator under Clause 18 (supra), was made. This request was contained in para 4 of the aforesaid letter No. BFW/2001-02/BSI/29 dated 5.12.2001 which reads thus :--
'Accordingly, we do herewith invoke the jurisdiction of arbitration within the meaning of Clause 18 of the important instructions/conditions of purchase order and request you to please appoint sole arbitrator to adjudicate the matter of dispute and differences.'
4. The respondent acting pursuant to the aforesaid request issued a communication dated 27/28th December, 2001 wherein, while referring to the aforesaid letter dated 5.12.2001 sent by the petitioner and in exercise of the powers vesting in him under Section 18 (supra), the ManagingDirector, (SAIL) nominated one Sri K.P. Choudhary, ED (Projects) to act as the Arbitrator in the case. Relevant extract of the aforesaid communication dated 27/28th December, 2001 reads thus :--
'Nevertheless vide letter No. BFW/ 2001-02 BSI/29, dated 5.12.01 you have desired and communicated to M.D., SAIL/BSL for referring the purported disputes and differences to the Arbitration under Clause 18 of the above Purchase Order.
As per Clause 18 of the purchase order, M.D., SAIL/BSL is empowered to nominate and appoint sole arbitrator for adjudication of disputes and differences emerging out of the above purchase order.
Accordingly in response to your letter dated 5.12.2001 our MD has been pleased to nominate and declare Sri K.P. Choudhary, ED (Project) to act as the Sole Arbitrator in the instant matter for adjudicating the purported disputes and differences arising out of the above purchase order,'
5. Apparently, feeling that the appointment of Sri K.P. Choudhary as sole arbitrator was not suited to the interests of the petitioner, the petitioner filed the present application under Section 11(6) of the Arbitration & Conciliation Act, 1996. In so far as it is relevant for our purpose, Section 11 reads thus :--
'11. Appointment of Arbitrators.--(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to Sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in Sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in Sub-section (3) applies and-
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment,the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(5) Failing any agreement referred to in Sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from the receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties,--
(a) a party fails to act as required under that procedure; or
(b) the party or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under thata party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.'
6. A bare reading of Sub-sections (1) to (6) of Section 11 clearly suggests the legislative intention that parties are free to agree on a procedure for appointment of arbitrator and, consequently, if the parties have, in fact, agreed upon such a procedure for appointment of Arbitrator, it is open to them to act in accordance therewith and proceed tn the direction of appointment of the arbitrator. This legislative intention is manifest in Sub-section (2) of Section 11 of the Act. Only, if depending upon the agreedappointment procedure as per Sub-section (2) (supra), if any of the parties fails to act as required under the aforesaid procedure, or parties or the two appointed arbitrators fail to reach an agreement expected of them under the said procedure or a person, including an institution fails to perform any function entrusted to him under that procedure, the aggrieved party may request the Chief Justice to take necessary measures for securing the appointment etc. etc. This all is contained and provided for in Sub-section (6) of Section 11 of the Act. In other words, what Sub-section (6) says is that despite there being an agreed procedure for appointment of arbitrator, the parties fail to either act or do some other such thing which is not in accordance with the appointment procedure, the aggrieved party is at liberty to approach the Chief Justice for appointment of arbitrator.
7. In the present case, for instance, let us consider a hypothetical example. As is seen, the parties had agreed in terms of Clause 18 (supra) with respect to the appointment procedure of the arbitrator, in as much as, Clause 18 of the agreement provided that all questions, disputes and differences between the parties shall be referred to the arbitration of a sole arbitrator to be appointed by the Managing Director of the BSL, SAIL. The parties therefore had agreed that if disputes arise between them, these shall be settled through arbitration and that the person who will be the nominee of the Managing Director, BSL/SAIL shall be the appointed arbitrator. In the present case as is evident, the petitioner had himself approached the Managing Director, BSL/SAIL for appointment/nomination of arbitrator and if the Managing Director had not agreed for the appointment of the Arbitrator or had not taken steps in that direction as required of him, the petitioner would have had a legitimate grievance and a sustainable cause of action to invoke Sub-section (6) (supra) and request the Chief Justice for appointment of the Arbitrator.
8. In the present case, however as the factual situation demonstrates, thepetitioner himself acted in terms of Clause 18 and requested the Managing Director to nominate an arbitrator. The Managing Director also responded promptly and clearly on the request of the petitioner and acting in terms of Clause 18, nominated Shri K.P. Choudhary as the Sole Arbitrator. The matter rested there. Therefore, I am clearly of the opinion that based upon the aforesaid circumstances, it was not open to the petitioner to invoke my jurisdiction for appointment of an arbitrator in terms of Sub-section (6) of Section 11 of the Act because Sub-section (6) would be attracted only if despite the request of the petitioner, the Managing Director had neither responded nor acted in terms of Clause 18 (supra).
For the aforesaid reasons, I hold that this application is not maintainable. This application is dismissed.