Anil Kumar, J.
1. This order shall dispose of this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator by the petitioner.
2. The petitioner contended that in response to an invitation to tender inquiry No. AM-5/RC-14100105/072003/WT/BTYS/defense/2003-04/75 for supply of battery secondary lead acid, an offer dated 7.10.2002 was submitted which was revised by letter dated 8.4.2003. On the basis of revised offer dated 8.4.2003 a rate contract No. AM-5/RC-14100105/072003/WT BTYS/DEF/2003-04/75/BHARAT/COAC/185 dated 5.5.2003 for the period 5.5.2003 to 16.3.2004 was executed between the petitioner and the respondent.
3. The rate contract entered with the petitioner contained a price variation clause (Clause No. 12) but the variation factor of the batteries, on account of fluctuation of lead price had not been incorporated. Petitioner asserted that the requests were made to the respondent to incorporate the same. Request was also made to issue amendment towards rate of sales tax. The requests of the petitioner's were, however, complied with almost after one year of letter dated 2.7.2004
4. However, during the pendency of the rate contract, respondent issued a supply order No. 01/RC/Z9/BTY/047/BHARAT/2004-05 dated 16.3.2004 for supply of 19,021 batteries, thereforee supplies was made by the petitioner to the respondent. While supplying the batteries petitioner submitted detailed calculation of unit price of battery as per price variation clause and the photocopies of Hindustan Zinc Price Circular.
5. Though the respondent continued to receive the batteries but did not issue the amendment with respect to price variation clause for the quarter April to June, 2004, July to September 2004, October to December 2004, January to March 2005, April to June 2005, July to September 2005, October to December 2005 and January to March 2006. It was asserted by the petitioner that non issuance of amendment with price variation clause affected the cash flow of the petitioner and resulted into a blockage of a huge amount of Rs.25 lakhs. Even the Central Ordinance Depot, Agra Cantt, (Direct Demanding Officer) by letter dated 31.5.2005 also requested the respondent to issue the necessary amendment letter with respect to price increase.
6. As the respondent did not issue the amendment pertaining to price variation clause, the disputes arose between the petitioner and the respondent and, thereforee, the petitioner invoked the arbitration agreement between the parties.
7. The terms and conditions governing the rate contract categorically stipulated 'as contained in subject tender enquiry Booklet DGSandD-68 (Revised), DGSandD-69, DGSandD-229, DGSandD-230 and DGSandD-1001 including sole arbitration Clause 24 thereof amended up to date.
8. Clause 24 of arbitration between the parties is as under:
i) In the event of any question, dispute or difference arising under these conditions or any special conditions of contact, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the Sole arbitration of an officer in the Ministry of Law, appointed to be the Arbitrator by the Director General of Supplies and Disposals. It will be no objection that the arbitrator is a Govt.Servant that he had to deal with the matters to which the contract relates or that in the course of his duties as a Govt. servant he has expressed views on all or any of the matters in dispute or difference. The award of the Arbitrator shall be final and binding on the parties to this contract.
ii) In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the Court for any reason, shall be lawful for the Director General of Supplies and Disposals to appoint another Arbitrator in place of the outgoing Arbitrator in the manner aforesaid.
iii) It is further a terms of this contract that no person other than the person appointed by the Director General of Supplies and Disposals as aforesaid should act as Arbitrator and that, if for any reason that is not possible, the matter is not to be referred to arbitration at all.
iv) The Arbitrator may from time to time with the consent of all the parties to the contract enlarge the time for making the award.
v) Upon every and any such reference the assessment of the cost incidental to the reference and award respectively shall be in the discretion of the Arbitrator.
vi) Subject as aforesaid, the Arbitration Act, 1940 and the rules there under and any statutory modification thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.
vii) If the value of the claim in a reference exceeds Rs.1 lash, the Arbitrator shall give reasoned award.
viii) The venue of the arbitration shall be the place from which formal acceptance of tender is issued or such other place as the Director General of Supplies and Disposals at this discretion may determine.
ix) In this clause, the expression 'the Director General of Supplies and Disposals' means the Director General of Supplies and Disposals for the time being and includes if there be no Director General of Supplies and Disposals or if Director General of Supplies and Disposals is on leave or is absent from duty or is not available for any reason whatsoever, the Addl. Director General of Supplies and Disposals; in case both the Director General and the Addl. Director General of Supplies and Disposals are on leave or are absent from duties or not available for any reason whatsoever, the officer who is looking after the current duties of Director General and/or Addl. Director General of Supplies and Disposals whether in addition to other functions or otherwise.
9. As the respondent did not issue the amendment to price variation clause nor settled the disputes which had arisen between the parties, petitioner sent a notice under Section 11 of Arbitration and Conciliation Act, 1996 on 7.6.2005. The petitioner demanded the respondent either to issue the necessary amendments on account of price variation with respect to various quarters or appoint an arbitrator within 30 days. The notice dated 7.6.2005 was acknowledged by the respondent and acknowledgment slip bearing No. 26110 dated 9.6.2005 was issued.
10. Another reminder/notice dated 2.1.2006 was issued by the petitioner to the respondent invoking the arbitration agreement and seeking appointment of the arbitrator which was also acknowledged by the respondent by slip No. 33190 dated 3.1.2006.
11. That by the notices sent under Section 11 of the Arbitration and Conciliation Act, 1996 the petitioner sought appointment of the arbitrator categorically stipulated so.
12. Despite invoking the arbitration agreement by the petitioner, respondent neither resolved the disputes between the parties nor appointed any arbitrator within thirty days of receipt of notice.
13. Consequently, the petitioner filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 dated 30.3.2006.
14. The petition is contested by the respondent contending inter-alia that the respondent did not receive any legal notice from the petitioner as the letters cum notices sent by the petitioner, according to the respondent were the request by the petitioner for allowing price increase on account of price variation clause or to appoint arbitrator in terms of Clause 24 of the General conditions of Contract, DGSandD-68 (Revised) for adjudication of their claim.
15. I have heard the learned Counsel for the parties. The respondent has admitted the notices sent by the petitioner asking issuance of amendment for the price variation clause were received by him. The contention of the respondent that these notices were not the notices for appointment of arbitrator is ex- facie incorrect. The notices sent by the petitioner categorically stipulated that they were notices under Section 11 of the Arbitration and Conciliation Act, 1996. By said notices the petitioner categorically demanded that an arbitrator be appointed and disputes arisen between the parties be referred to the Arbitrator. While demanding appointment of arbitrator, the demand to resolve the disputes, will not negate the demand raised by the petitioner for appointment of arbitrator. The plea of the respondent that no legal notices were sent for appointment of Arbitrator is thus without any substance.
16. The respondent has not denied that there is a valid arbitration agreement between the parties. The jurisdiction of the Court to consider the petition for appointment of arbitrator has not been denied. Legal and valid notices were given by the petitioner to the respondent seeking appointment of Arbitrator. Since the respondent failed to appoint an arbitrator within thirty days of receipt of notice and thereafter even till filing of the present petition under Section 11 of the Act, the respondent has forfeited his right to appoint an arbitrator.
17. A learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr. 112 (2004) DLT 339 : 2004 (3) RAJ 147, had held that since the respondent failed to appoint an Arbitrator within the stipulated time of 30 days of the notice, and even after filing of the petition under Section 11 of the Act, it is for the Court to appoint an Arbitrator. Learned Counsel for the petitioner states that the position is similar in present case also, since in the present case notices were issued to the Respondent on 7th June,2005 and 2nd January,200610.06.2005 and were served on the respondent and despite that no Arbitrator has been appointed.
18. Reference can also be made to the judgment of the Division Bench of this Court in Delkon (India) Pvt. Ltd. v. G.M., Bharat Heavy Electricals Ltd. : 120(2005)DLT542 (DB), where it was observed in paras 4 and 5 as under:
4. We have given our careful consideration to the arguments advanced by learned Counsel for both the parties. In view of the law laid down in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. IV (2000) CLT 191 : JT 2000 (Supp. 2) SC 226 it is no more rest integra that the vacancy can be supplied by a party pursuant to the arbitration agreement even after thirty days of the receipt of the notice. However, once a party approaches the Court and files a petition for appointment by the designated authority of the Chief Justice of that Court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood extinguished on filing of the petition under Section 11(6) of the Arbitration and Conciliation Act, in September 1998 the appointment of an Arbitrator on 3rd May, 1999 could not be made, thereforee in our view, the order passed by the learned Single Judge on 7th May, 1999 suffers from patent illegality. thereforee, the submission of the respondent that the petitioner had appeared before the Arbitrator and the application of the petitioner raising preliminary objections is pending adjudication which inter alias challenges the jurisdiction of the Arbitrator to decide the dispute is of no consequence as from the order reproduced above it was pursuant to the directions passed by the learned Single Judge that the parties were directed to appear before the Arbitrator. The petitioner had no other option but to appear before the Arbitrator and after appearing before the Arbitrator the petitioner has not submitted to the jurisdiction of the Arbitrator, rather has at first opportunity taken the objection that the Arbitrator had no jurisdiction to proceed with the matter.
The learned Counsel for the respondent is unable to show anything as to why the view taken in Union of India v. R.R. Industries : 120(2005)DLT572 (DB) be not followed where it was held that once a party does not supply the vacancy or fails to supply the vacancy before filing of a petition under Section 11(6) of the Arbitration and Conciliation Act, forfeits the right to supply the vacancy in terms of the arbitration clause. What remains is only the arbitration clause, i.e. the dispute has to be resolved under the mechanism of alternative dispute redressal scheme but no right survives to the respondent to supply the named Arbitrator in the arbitration clause.
19. Another single judge of this Court has also followed the ratio of the judgment of Union of India v. R.R. Industries : 120(2005)DLT572 in another matter Sudhir Gensets Ltd. v. Union of India and Anr. : 125(2005)DLT602 . The ratio of `Datar Switchgear' was again affirmed by the Apex Court in Punj Lloyd Ltd. v. Petronet MHB Ltd. (2006) 2 SCC 638 and it was held that once period of notice had lapsed and the petitioner had moved under Section 11(6) of Arbitration and Conciliation Act, 1996, party having right to appoint arbitrator under arbitral agreement loses the right to do so. There is no reason in the facts and circumstances to differ with the ratio laid down in these cases nor any thing contrary has been canvassed before me by the respondent. The inevitable inference in the facts and circumstances is that the respondent forfeited his right to appoint an arbitrator on his failure to appoint an arbitrator to resolve the disputes between the parties within thirty days of receipt of notice.
20. Considering the facts and circumstances, I, thereforee, appoint Mr. Justice K.S. Gupta (retd.) C-II/22 Bapa Nagar, New Delhi, a retired High Court Judge, as an arbitrator. The arbitrator will fix his own fees and his procedure to conduct the arbitration for the decision of the disputes between the parties. The parties shall appear before the learned arbitrator on 10.7.2006 at 4 PM. A copy of this order be communicated to the learned arbitrator forthwith. Parties are also directed to communicate this order to the learned arbitrator.
21. Copy of this order be also given dusty to both the parties.