Executive Engineer, Upper Painganga Project Vs. M.V. Panse and Others - Court Judgment

Excerpt:
- - d, wadnere as a sole arbitratoras per procedure contemplated under clause 52 by the chief engineer goes to show existence of the arbitration agreement between the parties and, therefore, application on this ground must fail. 2 clearly shows that respondent no. (2) if the appointment is not made within fifteen clear days after the service of the said notice the court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties. on theother hand, inaction on the part of the chief engineer to exercise options will clearly amount to giving deemed consent regarding appointment of respondent no. in that event, any party to such agreement may serve the other party, with written notice to concur in the appointment or supplying vacancy and after service of such notice, if arbitrator is not appointed with concurrence of each other or parties fail to supply vacancy within fifteen clear days after service of the said notice, the court will get jurisdiction. 18. it is a matter of great concern that the government officials, who are entrusted with the public duty, are so callous and casual particularly while dealing with the matters like the one in hand. in this case, the chief engineer ought to have appointed their own arbitrator when that option was clearly vested in him as per clause 52 of the agreement. however, for the reasons best known to the officer concerned, no such option has been exercised, which has created lot of complications and difficulties.orderd.d. sinha, j.1. heard smt. wandile, learned assistant government header for the applicant, and shri pendse, learned counsel for the respondent no. 2. the civil revision application is directed against the judgment and order dated 19-10-1996 passed by the civil judge, senior division, pusad in m.j.c. no. 21 of 1995 whereby the learned court below rejected the application moved by the present applicant under section 33 of the arbitration act, 1940.2. it will be proper for me to consider few relevant facts, which have given rise to the dispute in question. at the relevant time, the applicant was executive engineer, upper painganga project, division no. 2, umarkhed. he was incharge of construction of left bank canal of painganga project at isapur. the tenders were invited by the superintending engineer, upper painganga project circle, nanded for the above referred construction work. the tender of respondent no. 2 m/s. qureshi brothers being lowest, was accepted and construction work of box culvert at r.d. 33. 498 metres at isapur left bank canal was entrusted to it. the work order was accordingly issued to the respondent no. 2 on 8-6-1984 as per agreement no. l.c.b 1 of 1984-85. duration of work was fixed for eight months initially and it was to be completed till 7-2-1985. on receipt of the work order, respondent no. 2 started work of box culvert. however, respondent no. 2 could not proceed further as the land was rocky and ultimately nature of work was changed to slab culvert. respondent no. 2 started work of slab culvert as per revised design. however, respondent no. 2 could not complete the work within the stipulated time and, therefore, time was extended up to 31-7-1985. the work was completed by the respondent no. 2 within the extended period.3. the respondent no. 2 had issued a notice to the applicant and claimed that contract of slab culvert shall be treated under clause 32 instead of clause 31 and also claimed amount of difference due to change of work. the dispute, therefore, arose between applicant and respondent no. 2. as per clause 51 of the agreement, any dispute arising out of the contract was to be settled by the arbitrator and the procedure for appointment of the arbitrator was provided under clause 52 of the agreement. as per procedure laid down under clause 52, shri n.d. wadnere was appointed as a sole arbitrator by the chief engineer (specified project), aurangabad on 27-1-1988, however, shri wadnere could not contract arbitration proceedings till 12-12-1994 due to personal reasons. therefore, shri wadnere expressed his inability to proceed with the matter due to personal problems and thus, he refused to act as an arbitrator. he intimated in respect of the same to the chief engineer on 20-12-1994.4. since shri wadnere, who was the sole arbitrator, refused to act as an arbitrator, respondent no. 2 requested the chief engineer to suggest three other names of the arbitrators for fillings up of the vacancy, but the list of arbitrators was not supplied by the chief engineer. since chief engineer did not supply list of arbitrators, respondent no. 2 suggested names of three arbitrators including name of respondent no. 1 to chief engineer and the chief engineer was asked to select one of them as a sole arbitrator. thechief engineer did not exercise the option and therefore, as per procedure contemplated under clause 52 of the agreement, respondent no. 1 shri m.v. panse was appointed as a sole arbitrator by the respondent no. 2 on 2-3-1995.5. the respondent no. 1 after being appointed as a sole arbitrator asked the parties to remain present on 23-4-1995 at rotary hall, nasik for preliminary meeting. the respondent no. 2 accordingly appeared before the arbitrator and submitted his claim for rs. 27,43,000/-. the applicant did not appear before the arbitrator on 23-4-1995, but by letter dated 21-5-1995 requested the arbitrator to provide statement of claim made by the respondent no. 26. the appointment of respondent no. 1 shri m.v. panse as a sole arbitrator was disputed and challenged by the applicant by filing application under section 33 of the arbitration act, 1940 and it was prayed that appointment of respondent no. 1 be set aside and proceedings before the arbitrator be quashed. the application filed by the applicant under section 33 of the arbitration act, 1940 came to be dismissed on 9-10-1996 by the learned civil judge, senior division, pusad and hence, the present civil revision application.7. in view of the above circumstances, it will be proper to carve out certain undisputed facts in order to properly appreciate the controversy in question. the undisputed facts are as follows :i) as per clause 51 of the agreement, any dispute arising out of contract was to be settled by the arbitrator.ii) procedure for appointment of arbitrator was provided under clause 52, which is as follows :'all the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows :within 30 days of receipt of notice from the contractor of his intentionto refer the dispute to arbitration, the chief engineer (irrigation),irrigation department, aurangabad shall send to the contractor alist of three officers of the rank of superintending engineer orhigher, who have not been connected with work under this contract. the contractor shall within 15 days of receipt of this list,select and communicate to the chief engineer the name of oneofficer from the list who shall then be appointed as the sole arbitrator. in case contractor fails to communicate his selection ofname within the stipulated period, the chief engineer shall without delay select one officer from the list and appoint him as thesole arbitrator. if the chief engineer fails to send such a list within30 days as stipulated the contractor shall send a similar list tothe chief engineer within 15 days. the chief engineer shall selectone officer from the list and appoint him as the sole arbitrator,within 15 days. if the chief engineer fails to do so, the contractorshall communicate to the chief engineer the name of one officer from the list, who shall then be the sole arbitrator.'iii) shri n.d. wadnere was appointed as a sole arbitrator as per procedure contemplated under clause 52 of the agreement.iv) on 20-12-1994, shri wadnere communicated to the chief engineer his inability to conduct arbitration proceedings.v) shri m.v. panse (respondent no. 1) was appointed as a sole arbitrator by respondent no. 2 on 2-3-1995 as per the procedure contemplated under clause 52 of the agreement.8. smt. wandile, learned assistant government pleader for the applicant, contended that the claim made by the respondent no. 2 before the earlier arbitrator shri wadnere was of rs. 1,83,977/-, whereas the claim referred to arbitrator, i.e. respondent no. 1 shri panse is of rs. 27,43,000/- and since there is a substantial change in the claim, it cannot be said that the dispute is the same, which was referred to the earlier arbitrator shri wadnere. the learned counsel, therefore, submitted that the dispute referred to new arbitrator, i.e. respondent no. 1 is void ab initio which renders the arbitration agreement invalid and the learned court below, therefore, ought to have allowed the application moved by the applicant under section 33 of the arbitration act.9. another contention raised by the learned counsel for the applicant is that the respondent no. 2 has already been given payment of its final bill and same was adjusted in its accounts and, therefore, it was not just and proper on the part of the contractor to raise any dispute/claim thereafter as the contract came to an end and question of referring dispute to the arbitrator does not arise and, therefore, procedure contemplated under clause 52 of the arbitration agreement is not relevant.10. smt. wandile lastly contended that the procedure required to be followed in case of appointment of new arbitrator when the earlier arbitrator refused to act as an arbitrator, is contemplated under section 8 of the arbitration act, 1940 and in the instant case, the said procedure has not been followed and, therefore, appointment of respondent no. 1 as an arbitrator made by respondent no. 2 is not according to law.11. shri pendse, learned counsel for the respondent no. 2, supported the impugned order passed by the court below and contended that there is no dispute with regard to existence of arbitration clause in the agreement. the award has not yet been passed and, therefore, application under section 33 of the arbitration act, 1940 is not maintainable. it is further submitted by the learned counsel for the respondent no. 2 that on receipt of letter of refusal to act as a sole arbitrator from shri n.d. wadnere, respondent no. 2 on or about 30-12-1994 requested the chief engineer (which in fact is a notice under clause 52 of the arbitration agreement) to suggest three names of persons, one of whom could be appointed as the sole arbitrator to fill up the vacancy created by refusal to act as a sole arbitrator by shri wadnere. it is further contended that the chief engineer, however, did not suggest names of persons, out of whom sole arbitrator was required to be appointed by respondent no. 2 even after expiry of 30 days. therefore, respondent no. 2 had no other alternative, but to intimate names of three persons, one of whom could be appointed as a sole arbitrator by communication dated 10-2-1995. the chief engineer did not select any person to be appointed as a sole arbitrator even after expiry of 15 days and, therefore, respondent no. 2 appointed respondent no. 1 shri m.v. panse as a sole arbitrator as per procedure contemplated under clause 52 of the agreement. it is, therefore, contended that the applicant is not entitled to challenge arbitration proceedings, at this stage, to which the applicant is a party right from the beginning unless arbitration proceedings are completed. shri pendse further contended that measurements, which were taken by the applicant regarding work carried out by the respondent no. 2, were never made known to respondent no. 2and same were not acceptable to respondent no. 2. increased rates and other various items arising out of terms and conditions of the agreement are not included by the applicant in the final bill prepared by the applicant and, therefore, in cannot be said that final bill is paid in may 1995. it is submitted by the learned counsel that the respondent no. 2 is entitled to claim enhanced bill of rupees 27,43,000/- and it is for the arbitrator to consider the same after taking into account the material placed before him by the parties during arbitration proceedings. it is also contended that provisions of section 8 of the arbitration act, 1940 are not at all attracted and appointment of respondent no. 1 was done by the respondent no. 2 as per procedure contemplated under clause 52 of the agreement. the learned counsel, therefore, submitted that impugned order is just and proper.12. i have considered the contentions raised by the learned counsel for the parties and also perused the impugned order. i have also taken into consideration the undisputed fact as stated above. in the backdrop of the above-referred facts and circumstances, it is necessary to consider the provisions of section 33 of the arbitration act, 1940. section 33 reads thus :'any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the court and the court shall decide the question on affidavits :provided that where the court deems it just and expendient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in & suit.'section 33 contemplates that any party to an arbitration agreement or any person claiming under him can challenge existence or validity of arbitration agreement or award before the court and the court shall decide the question on affidavits. since the present controversy is restricted to the first part of section 33, it is not necessary for me to consider proviso to section 33.13. it is important to note that the court can exercise jurisdiction vested in it under section 33 of the arbitration act only when the parties to the arbitration agreement are challenging the very existence of the agreement or validity thereof and not otherwise. in the instant case, on the basis of undisputed facts, it is difficult to hold that the applicant can be said to have challenged existence of the arbitration agreement. there is no dispute about the agreement entered into between the applicant and respondent no. 2 for construction of necessary works. it is also not disputed that in that agreement, there is a specific clause, i.e. clause no. 52, which provides for procedure to appoint a sole arbitrator in case dispute arises between the parties. it is also not in dispute that as per procedure laid down under clause 52, sole arbitrator shri n.d. wadnere came to be appointed in the year 1988 itself and continued as such till 1994. at no point of time since 1988 till 1994, applicant raised any objection regarding either existence of arbitration agreement or validity of the same. shri n.d. wadnere was appointed as a sole arbitrator by the chief engineer (specified project), aurangabad in view of arbitration agreement, particularly in pursuance of clause 52 thereof. there is nothing on record to show that the applicant at any point of time questioned validity of the arbitration agreement before the competent forum. on the other hand, act of appointment of shri n.d, wadnere as a sole arbitratoras per procedure contemplated under clause 52 by the chief engineer goes to show existence of the arbitration agreement between the parties and, therefore, application on this ground must fail. similarly, there is nothing on record to show how arbitration agreement would become invalid in the absence of specific material on record. the challenge raised by the applicant appears to be in respect of appointment of respondent no. 1 only and not to either existence or validity of the arbitration agreement. hence, it will be difficult for this court to accept the contention raised by the learned counsel in this regard.14. it is, however true that the learned counsel for the applicant tried to canvass that after full and final payment of bill made by the applicant to respondent no. 2, question of existence of arbitration agreement does not arise and, therefore, further appointment of arbitrator is uncalled for. there is nothing on record to show that the respondent no. 2 has accepted the payment made by the applicant, as full and final settlement of its claims against the applicant and there is nothing outstanding in respect of the same. it is pertinent to note that even the dispute was referred to the arbitrator by the respondent no. 2 prior to alleged final payment made by the applicant. it is, therefore, clear that respondent no. 2 had already referred the dispute to the arbitrator. this action on the part of the respondent no. 2 clearly shows that respondent no. 2 never accepted the said payment as full and final settlement of its dues arising out of the contract and, therefore, it is difficult to hold that the arbitration agreement had come to an end on the date of alleged final payment made by the applicant and hence, it is equally difficult to accept the contention of the learned counsel for the applicant that the arbitration agreement cannot be said to be in existence or was not in existence after the alleged final payment made by the applicant to respondent no. 2. even otherwise, in para 23 of the impugned order, it is observed by the court below that in the instant case, the applicant does not intend to challenge existence or validity of the arbitration agreement or award. the applicant simply wants to challenge appointment of respondent no, 1 shri m.v. panse as a sole arbitrator. be that as it may, in the instant case, for the reasons stated above, the application moved by the applicant under section 33 of the arbitration act is not maintainable.15. while dealing with the second contention raised by the learned counsel for the applicant regarding applicability of the provisions of section 8 of the arbitration act, it is necessary to consider the scheme enumerated in section 8 in respect of power of the court to appoint arbitrator or umpire. section 8 reads thus :'(1) in any of the following cases-(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrator, as the case may be, do not supply the vacancy; or(c) where the parties or the arbitrator are required to appoint an umpire and do not appoint him,any party may serve the other parties or the arbitrator, as the case may be, with a written notice to concur in the appointment or appointment or supplying the vacancy.(2) if the appointment is not made within fifteen clear days after the service of the said notice the court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.'sub-section (a) of section 8(1) contemplates that where an arbitration agreement provides that reference shall be to one or more arbitrators to be appointed by consent of the parties and the parties do not concur in respect of the person or persons to be appointed as arbitrator/arbitrators' in that event the court is empowered to do so. in view of the facts of this case, sub-section (a) of section 8(1) is not attracted.16. the provisions of sub-section (b) would be attracted only when it is not intended by the arbitration agreement to fill up the vacancy if created on account of appointed arbitrator refuses to act or is incapable of acting or dies and parties to the agreement or arbitrator do not supply the vacancy. in that event alone, any party to such an agreement may serve the other party or arbitrator as the case may be, with written notice to concur in the appointment or appointments in supplying the vacancy. in the present case, it is an undisputed position that first arbitrator shri n.d. wadnere, who was appointed in the year 1988, expressed his inability and refused to act as an arbitrator in the year 1994, hence vacancy occurred. it is also an admitted position that arbitration agreement provides for filling up such vacancy by supplying the name of the person to be appointed as an arbitrator by the parties as per the procedure contemplated under clause 52 of the agreement. it is also not disputed that procedure for appointment of arbitrator is specifically provided under clause 52 of the agreement and in view of the said procedure, if party to the agreement fails to exercise option as required by the said clause, it will be presumed that the said party has given implied consent to the name/names suggested by the other party for the purpose of appointing an arbitrator. in the instant case, shri n.d. wadnere, first arbitrator, refused to act as an arbitrator for the reasons stated above with effect from 20-12-1994. the respondent no. 2 vide letter dated 30-12-1994 requested the chief engineer to supply list of arbitrators. however, there was no response given by the chief engineer in this regard. therefore, names of three arbitrators were sent by the respondent no. 2 vide letter dated 10-2-1995. the chief engineer was again requested to exercise his option and select one of them as arbitrators. the chief engineer, however, did not exercise the said option and did not select any one of them to be appointed as an arbitrator and, therefore, respondent no. 2 appointed respondent no. 1 shri m.v. panse as a sole arbitrator whose name was included in the list of three arbitrators supplied by the respondent no. 2 to the chief engineer. the entire procedure contemplated under clause 52 of the arbitration agreement has been followed while making appointment of shri m.v. panse as an arbitrator in the instant case and, therefore, it is difficult to accept the contention raised by the learned counsel for the applicant that appointment of respondent no. i as an arbitrator is without consent of the applicant. on theother hand, inaction on the part of the chief engineer to exercise options will clearly amount to giving deemed consent regarding appointment of respondent no. 1 as a sole arbitrator as per procedure contemplated under clause 52 of the agreement. the effects of act and omission depend upon the language used in the clause and will have to be construed accordingly in its right perspective, since many legal consequences would follow. in the present case, inaction on the part of the chief engineer to exercise option available to him in regard to appointment of sole arbitrator in view of clause 52 would amount to implied consent given by the chief engineer for appointment of sole arbitrator by the respondent no. 2. hence, in the circumstances of this case, even sub-clause (b) of section 8(1) cannot be said to be attracted.17. sub-section (2) of section 8 will come into play only when it is not intended by the arbitration agreement to supply vacancy created on account of contingencies mentioned in clause (b) of section 8 and parties to the said agreement do not supply the same. in that event, any party to such agreement may serve the other party, with written notice to concur in the appointment or supplying vacancy and after service of such notice, if arbitrator is not appointed with concurrence of each other or parties fail to supply vacancy within fifteen clear days after service of the said notice, the court will get jurisdiction.the court will get jurisdiction to appoint arbitrator under the provisions of sub-section (2) of section 8 only after the above stated procedure is completed by the parties to the agreement and not otherwise. the said procedure consists of following stages:i) as contemplated in clause (b) of section 8, an arbitration agreement does not intend to supply vacancy so occurred on account of contingency mentioned therein;ii) parties to the agreement do not supply the vacancy;iii) service of written notice by any party to another party to concur in the appointment or supplying the vacancy and if the appointment of arbitrator is not made within fifteen clear days from service of the said notice.in the instant case, for the reasons stated in the earlier part of this judgment, it is already held that provisions of sub-clause (b) of section 8 are not attracted and, therefore, in the given set of circumstances, 1 have no hesitation to hold that sub-section (2) of section 8 will also have no application in respect of issue in question. therefore, the contentions raised in this regard by the learned counsel for the applicant are misconceived, devoid of substance and cannot be accepted.18. it is a matter of great concern that the government officials, who are entrusted with the public duty, are so callous and casual particularly while dealing with the matters like the one in hand. in this case, the chief engineer ought to have appointed their own arbitrator when that option was clearly vested in him as per clause 52 of the agreement. however, for the reasons best known to the officer concerned, no such option has been exercised, which has created lot of complications and difficulties. similarly, on second occasion again the chief engineer could have exercised his option when respondent no. 2 supplied names of arbitrators and out of whom the sole arbitrator was to be appointed, which included the name of respondent no. 1. even at that stage, the chief engineer did not exercise his option norcommunicated in writing to the respondent no. 2 about his non-acceptance in regard to names supplied by the respondent no. 2. had the chief engineer exercised his option in view of priority given to him for selecting arbitrator as per clause 52 of the agreement, the time, energy and money spent on prosecuting proceedings before the court below and in this court would have been avoided. i hope and wish that in future, public servants specially entrusted with the public duty shall act carefully and diligently in order to avoid unnecessary legal complications, which would save time, energy and money of the state.19. in the result, the civil revision application is dismissed with costs. since arbitration proceedings are started in the year 1988, it is expected that the arbitrator will complete the same as expeditiously as possible.20. application dismissed.

Judgment:
ORDER

D.D. Sinha, J.

1. Heard Smt. Wandile, learned Assistant Government Header for the applicant, and Shri Pendse, learned Counsel for the respondent No. 2. The Civil revision application is directed against the judgment and order dated 19-10-1996 passed by the Civil Judge, Senior Division, Pusad in M.J.C. No. 21 of 1995 whereby the learned Court below rejected the application moved by the present applicant under section 33 of the Arbitration Act, 1940.

2. It will be proper for me to consider few relevant facts, which have given rise to the dispute in question. At the relevant time, the applicant was Executive Engineer, Upper Painganga Project, Division No. 2, Umarkhed. He was incharge of construction of left bank canal of Painganga Project at Isapur. The tenders were invited by the Superintending Engineer, Upper Painganga Project Circle, Nanded for the above referred construction work. The tender of respondent No. 2 M/s. Qureshi brothers being lowest, was accepted and construction work of box culvert at R.D. 33. 498 metres at Isapur left bank canal was entrusted to it. The work order was accordingly issued to the respondent No. 2 on 8-6-1984 as per agreement No. L.C.B 1 of 1984-85. Duration of work was fixed for eight months initially and it was to be completed till 7-2-1985. On receipt of the work order, respondent No. 2 started work of box culvert. However, respondent No. 2 could not proceed further as the land was rocky and ultimately nature of work was changed to slab culvert. Respondent No. 2 started work of slab culvert as per revised design. However, respondent No. 2 could not complete the work within the stipulated time and, therefore, time was extended up to 31-7-1985. The work was completed by the respondent No. 2 within the extended period.

3. The respondent No. 2 had issued a notice to the applicant and claimed that contract of slab culvert shall be treated under Clause 32 instead of Clause 31 and also claimed amount of difference due to change of work. The dispute, therefore, arose between applicant and respondent No. 2. As per Clause 51 of the agreement, any dispute arising out of the contract was to be settled by the Arbitrator and the procedure for appointment of the Arbitrator was provided under Clause 52 of the agreement. As per procedure laid down under Clause 52, Shri N.D. Wadnere was appointed as a Sole Arbitrator by the Chief Engineer (Specified Project), Aurangabad on 27-1-1988, However, Shri Wadnere could not contract arbitration proceedings till 12-12-1994 due to personal reasons. Therefore, Shri Wadnere expressed his inability to proceed with the matter due to personal problems and thus, he refused to act as an Arbitrator. He intimated in respect of the same to the Chief Engineer on 20-12-1994.

4. Since Shri Wadnere, who was the Sole Arbitrator, refused to act as an Arbitrator, respondent No. 2 requested the Chief Engineer to suggest three other names of the Arbitrators for fillings up of the vacancy, but the list of Arbitrators was not supplied by the Chief Engineer. Since Chief Engineer did not supply list of Arbitrators, respondent No. 2 suggested names of three Arbitrators including name of respondent No. 1 to Chief Engineer and the Chief Engineer was asked to select one of them as a Sole Arbitrator. TheChief Engineer did not exercise the option and therefore, as per procedure contemplated under Clause 52 of the agreement, respondent No. 1 Shri M.V. Panse was appointed as a Sole Arbitrator by the respondent No. 2 on 2-3-1995.

5. The respondent No. 1 after being appointed as a Sole Arbitrator asked the parties to remain present on 23-4-1995 at Rotary Hall, Nasik for preliminary meeting. The respondent No. 2 accordingly appeared before the Arbitrator and submitted his claim for Rs. 27,43,000/-. The applicant did not appear before the Arbitrator on 23-4-1995, but by letter dated 21-5-1995 requested the Arbitrator to provide statement of claim made by the respondent No. 2

6. The appointment of respondent No. 1 Shri M.V. Panse as a Sole Arbitrator was disputed and challenged by the applicant by filing application under section 33 of the Arbitration Act, 1940 and it was prayed that appointment of respondent No. 1 be set aside and proceedings before the Arbitrator be quashed. The application filed by the applicant under section 33 of the Arbitration Act, 1940 came to be dismissed on 9-10-1996 by the learned Civil Judge, Senior Division, Pusad and hence, the present civil revision application.

7. In view of the above circumstances, it will be proper to carve out certain undisputed facts in order to properly appreciate the controversy in question. The undisputed facts are as follows :

i) As per Clause 51 of the agreement, any dispute arising out of contract was to be settled by the Arbitrator.

ii) Procedure for appointment of Arbitrator was provided under Clause 52, which is as follows :

'All the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole Arbitrator appointed as follows :

Within 30 days of receipt of notice from the Contractor of his intentionto refer the dispute to arbitration, the Chief Engineer (Irrigation),Irrigation Department, Aurangabad shall send to the Contractor alist of three Officers of the rank of Superintending Engineer orhigher, who have not been connected with work under this contract. The Contractor shall within 15 days of receipt of this list,select and communicate to the Chief Engineer the name of oneOfficer from the list who shall then be appointed as the sole Arbitrator. In case Contractor fails to communicate his selection ofname within the stipulated period, the Chief Engineer shall without delay select one Officer from the list and appoint him as thesole Arbitrator. If the Chief Engineer fails to send such a list within30 days as stipulated the Contractor shall send a similar list tothe Chief Engineer within 15 days. The Chief Engineer shall selectone Officer from the list and appoint him as the sole Arbitrator,within 15 days. If the Chief Engineer fails to do so, the Contractorshall communicate to the Chief Engineer the name of one officer from the list, who shall then be the sole Arbitrator.'

iii) Shri N.D. Wadnere was appointed as a sole Arbitrator as per procedure contemplated under Clause 52 of the Agreement.

iv) On 20-12-1994, Shri Wadnere communicated to the Chief Engineer his inability to conduct arbitration proceedings.

v) Shri M.V. Panse (respondent No. 1) was appointed as a Sole Arbitrator by respondent No. 2 on 2-3-1995 as per the procedure contemplated under Clause 52 of the agreement.

8. Smt. Wandile, learned Assistant Government Pleader for the applicant, contended that the claim made by the respondent No. 2 before the earlier Arbitrator Shri Wadnere was of Rs. 1,83,977/-, whereas the claim referred to Arbitrator, i.e. respondent No. 1 Shri Panse is of Rs. 27,43,000/- and since there is a substantial change in the claim, it cannot be said that the dispute is the same, which was referred to the earlier Arbitrator Shri Wadnere. The learned Counsel, therefore, submitted that the dispute referred to new Arbitrator, i.e. respondent No. 1 is void ab initio which renders the arbitration agreement invalid and the learned Court below, therefore, ought to have allowed the application moved by the applicant under section 33 of the Arbitration Act.

9. Another contention raised by the learned Counsel for the applicant is that the respondent No. 2 has already been given payment of its final bill and same was adjusted in its Accounts and, therefore, it was not just and proper on the part of the Contractor to raise any dispute/claim thereafter as the contract came to an end and question of referring dispute to the Arbitrator does not arise and, therefore, procedure contemplated under Clause 52 of the arbitration agreement is not relevant.

10. Smt. Wandile lastly contended that the procedure required to be followed in case of appointment of new Arbitrator when the earlier Arbitrator refused to act as an Arbitrator, is contemplated under section 8 of the Arbitration Act, 1940 and in the instant case, the said procedure has not been followed and, therefore, appointment of respondent No. 1 as an Arbitrator made by respondent No. 2 is not according to law.

11. Shri Pendse, learned Counsel for the respondent No. 2, supported the impugned order passed by the Court below and contended that there is no dispute with regard to existence of arbitration clause in the agreement. The award has not yet been passed and, therefore, application under section 33 of the Arbitration Act, 1940 is not maintainable. It is further submitted by the learned Counsel for the respondent No. 2 that on receipt of letter of refusal to act as a sole arbitrator from Shri N.D. Wadnere, respondent No. 2 on or about 30-12-1994 requested the Chief Engineer (which in fact is a notice under Clause 52 of the Arbitration agreement) to suggest three names of persons, one of whom could be appointed as the Sole Arbitrator to fill up the vacancy created by refusal to act as a sole Arbitrator by Shri Wadnere. It is further contended that the Chief Engineer, however, did not suggest names of persons, out of whom sole Arbitrator was required to be appointed by respondent No. 2 even after expiry of 30 days. Therefore, respondent No. 2 had no other alternative, but to intimate names of three persons, one of whom could be appointed as a Sole Arbitrator by communication dated 10-2-1995. The Chief Engineer did not select any person to be appointed as a Sole Arbitrator even after expiry of 15 days and, therefore, respondent No. 2 appointed respondent No. 1 Shri M.V. Panse as a Sole Arbitrator as per procedure contemplated under Clause 52 of the agreement. It is, therefore, contended that the applicant is not entitled to challenge arbitration proceedings, at this stage, to which the applicant is a party right from the beginning unless arbitration proceedings are completed. Shri Pendse further contended that measurements, which were taken by the applicant regarding work carried out by the respondent No. 2, were never made known to respondent No. 2and same were not acceptable to respondent No. 2. Increased rates and other various items arising out of terms and conditions of the agreement are not included by the applicant in the final bill prepared by the applicant and, therefore, in cannot be said that final bill is paid in May 1995. It is submitted by the learned Counsel that the respondent No. 2 is entitled to claim enhanced bill of Rupees 27,43,000/- and it is for the Arbitrator to consider the same after taking into account the material placed before him by the parties during arbitration proceedings. It is also contended that provisions of section 8 of the Arbitration Act, 1940 are not at all attracted and appointment of respondent No. 1 was done by the respondent No. 2 as per procedure contemplated under Clause 52 of the agreement. The learned Counsel, therefore, submitted that impugned order is just and proper.

12. I have considered the contentions raised by the learned Counsel for the parties and also perused the impugned order. I have also taken into consideration the undisputed fact as stated above. In the backdrop of the above-referred facts and circumstances, it is necessary to consider the provisions of section 33 of the Arbitration Act, 1940. Section 33 reads thus :

'Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits :

Provided that where the Court deems it just and expendient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in & suit.'

Section 33 contemplates that any party to an arbitration agreement or any person claiming under him can challenge existence or validity of arbitration agreement or award before the Court and the Court shall decide the question on affidavits. Since the present controversy is restricted to the first part of section 33, it is not necessary for me to consider proviso to section 33.

13. It is important to note that the Court can exercise jurisdiction vested in it under section 33 of the Arbitration Act only when the parties to the arbitration agreement are challenging the very existence of the agreement or validity thereof and not otherwise. In the instant case, on the basis of undisputed facts, it is difficult to hold that the applicant can be said to have challenged existence of the arbitration agreement. There is no dispute about the agreement entered into between the applicant and respondent No. 2 for construction of necessary works. It is also not disputed that in that agreement, there is a specific clause, i.e. clause No. 52, which provides for procedure to appoint a sole Arbitrator in case dispute arises between the parties. It is also not in dispute that as per procedure laid down under clause 52, sole Arbitrator Shri N.D. Wadnere came to be appointed in the year 1988 itself and continued as such till 1994. At no point of time since 1988 till 1994, applicant raised any objection regarding either existence of arbitration agreement or validity of the same. Shri N.D. Wadnere was appointed as a sole Arbitrator by the Chief Engineer (Specified Project), Aurangabad in view of arbitration agreement, particularly in pursuance of clause 52 thereof. There is nothing on record to show that the applicant at any point of time questioned validity of the arbitration agreement before the competent forum. On the other hand, act of appointment of Shri N.D, Wadnere as a sole Arbitratoras per procedure contemplated under clause 52 by the Chief Engineer goes to show existence of the arbitration agreement between the parties and, therefore, application on this ground must fail. Similarly, there is nothing on record to show how arbitration agreement would become invalid in the absence of specific material on record. The challenge raised by the applicant appears to be in respect of appointment of respondent No. 1 only and not to either existence or validity of the arbitration agreement. Hence, it will be difficult for this Court to accept the contention raised by the learned Counsel in this regard.

14. It is, however true that the learned Counsel for the applicant tried to canvass that after full and final payment of bill made by the applicant to respondent No. 2, question of existence of arbitration agreement does not arise and, therefore, further appointment of Arbitrator is uncalled for. There is nothing on record to show that the respondent No. 2 has accepted the payment made by the applicant, as full and final settlement of its claims against the applicant and there is nothing outstanding in respect of the same. It is pertinent to note that even the dispute was referred to the Arbitrator by the respondent No. 2 prior to alleged final payment made by the applicant. It is, therefore, clear that respondent No. 2 had already referred the dispute to the Arbitrator. This action on the part of the respondent No. 2 clearly shows that respondent No. 2 never accepted the said payment as full and final settlement of its dues arising out of the contract and, therefore, it is difficult to hold that the arbitration agreement had come to an end on the date of alleged final payment made by the applicant and hence, it is equally difficult to accept the contention of the learned Counsel for the applicant that the arbitration agreement cannot be said to be in existence or was not in existence after the alleged final payment made by the applicant to respondent No. 2. Even otherwise, in para 23 of the impugned order, it is observed by the Court below that in the instant case, the applicant does not intend to challenge existence or validity of the arbitration agreement or award. The applicant simply wants to challenge appointment of respondent No, 1 Shri M.V. Panse as a sole Arbitrator. Be that as it may, in the instant case, for the reasons stated above, the application moved by the applicant under section 33 of the Arbitration Act is not maintainable.

15. While dealing with the second contention raised by the learned Counsel for the applicant regarding applicability of the provisions of section 8 of the Arbitration Act, it is necessary to consider the scheme enumerated in section 8 in respect of power of the Court to appoint arbitrator or Umpire. Section 8 reads thus :

'(1) In any of the following cases-

(a) Where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrator, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrator are required to appoint an umpire and do not appoint him,any party may serve the other parties or the arbitrator, as the case may be, with a written notice to concur in the appointment or appointment or supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after the service of the said notice the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an Arbitrator or Arbitrators or Umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.'

Sub-section (a) of section 8(1) contemplates that where an arbitration agreement provides that reference shall be to one or more Arbitrators to be appointed by consent of the parties and the parties do not concur in respect of the person or persons to be appointed as Arbitrator/Arbitrators' in that event the Court is empowered to do so. In view of the facts of this case, sub-section (a) of section 8(1) is not attracted.

16. The provisions of sub-section (b) would be attracted only when it is not intended by the arbitration agreement to fill up the vacancy if created on account of appointed Arbitrator refuses to act or is incapable of acting or dies and parties to the agreement or Arbitrator do not supply the vacancy. In that event alone, any party to such an agreement may serve the other party or Arbitrator as the case may be, with written notice to concur in the appointment or appointments in supplying the vacancy. In the present case, it is an undisputed position that first Arbitrator Shri N.D. Wadnere, who was appointed in the year 1988, expressed his inability and refused to act as an Arbitrator in the year 1994, hence vacancy occurred. It is also an admitted position that arbitration agreement provides for filling up such vacancy by supplying the name of the person to be appointed as an Arbitrator by the parties as per the procedure contemplated under clause 52 of the agreement. It is also not disputed that procedure for appointment of Arbitrator is specifically provided under clause 52 of the agreement and in view of the said procedure, if party to the agreement fails to exercise option as required by the said Clause, it will be presumed that the said party has given implied consent to the name/names suggested by the other party for the purpose of appointing an Arbitrator. In the instant case, Shri N.D. Wadnere, first Arbitrator, refused to act as an Arbitrator for the reasons stated above with effect from 20-12-1994. The respondent No. 2 vide letter dated 30-12-1994 requested the Chief Engineer to supply list of Arbitrators. However, there was no response given by the Chief Engineer in this regard. Therefore, names of three Arbitrators were sent by the respondent No. 2 vide letter dated 10-2-1995. The Chief Engineer was again requested to exercise his option and select one of them as Arbitrators. The Chief Engineer, however, did not exercise the said option and did not select any one of them to be appointed as an Arbitrator and, therefore, respondent No. 2 appointed respondent No. 1 Shri M.V. Panse as a sole Arbitrator whose name was included in the list of three Arbitrators supplied by the respondent No. 2 to the Chief Engineer. The entire procedure contemplated under clause 52 of the arbitration agreement has been followed while making appointment of Shri M.V. Panse as an Arbitrator in the instant case and, therefore, it is difficult to accept the contention raised by the learned Counsel for the applicant that appointment of respondent No. I as an Arbitrator is without consent of the applicant. On theother hand, inaction on the part of the Chief Engineer to exercise options will clearly amount to giving deemed consent regarding appointment of respondent No. 1 as a sole Arbitrator as per procedure contemplated under clause 52 of the agreement. The effects of act and omission depend upon the language used in the Clause and will have to be construed accordingly in its right perspective, since many legal consequences would follow. In the present case, inaction on the part of the Chief Engineer to exercise option available to him in regard to appointment of sole Arbitrator in view of clause 52 would amount to implied consent given by the Chief Engineer for appointment of sole Arbitrator by the respondent No. 2. Hence, in the circumstances of this case, even sub-clause (b) of section 8(1) cannot be said to be attracted.

17. Sub-section (2) of section 8 will come into play only when it is not intended by the arbitration agreement to supply vacancy created on account of contingencies mentioned in Clause (b) of section 8 and parties to the said agreement do not supply the same. In that event, any party to such agreement may serve the other party, with written notice to concur in the appointment or supplying vacancy and after service of such notice, if Arbitrator is not appointed with concurrence of each other or parties fail to supply vacancy within fifteen clear days after service of the said notice, the Court will get jurisdiction.

The Court will get jurisdiction to appoint Arbitrator under the provisions of sub-section (2) of section 8 only after the above stated procedure is completed by the parties to the agreement and not otherwise. The said procedure consists of following stages:

i) as contemplated in clause (b) of section 8, an arbitration agreement does not intend to supply vacancy so occurred on account of contingency mentioned therein;

ii) parties to the agreement do not supply the vacancy;

iii) service of written notice by any party to another party to concur in the appointment or supplying the vacancy and if the appointment of Arbitrator is not made within fifteen clear days from service of the said notice.

In the instant case, for the reasons stated in the earlier part of this judgment, it is already held that provisions of sub-clause (b) of section 8 are not attracted and, therefore, in the given set of circumstances, 1 have no hesitation to hold that sub-section (2) of section 8 will also have no application in respect of issue in question. Therefore, the contentions raised in this regard by the learned Counsel for the applicant are misconceived, devoid of substance and cannot be accepted.

18. It is a matter of great concern that the Government officials, who are entrusted with the public duty, are so callous and casual particularly while dealing with the matters like the one in hand. In this case, the Chief Engineer ought to have appointed their own Arbitrator when that option was clearly vested in him as per clause 52 of the agreement. However, for the reasons best known to the Officer concerned, no such option has been exercised, which has created lot of complications and difficulties. Similarly, on second occasion again the Chief Engineer could have exercised his option when respondent No. 2 supplied names of Arbitrators and out of whom the sole Arbitrator was to be appointed, which included the name of respondent No. 1. Even at that stage, the Chief Engineer did not exercise his option norcommunicated in writing to the respondent No. 2 about his non-acceptance in regard to names supplied by the respondent No. 2. Had the Chief Engineer exercised his option in view of priority given to him for selecting arbitrator as per clause 52 of the agreement, the time, energy and money spent on prosecuting proceedings before the Court below and in this Court would have been avoided. I hope and wish that in future, public servants specially entrusted with the public duty shall act carefully and diligently in order to avoid unnecessary legal complications, which would save time, energy and money of the State.

19. In the result, the civil revision application is dismissed with costs. Since arbitration proceedings are started in the year 1988, it is expected that the Arbitrator will complete the same as expeditiously as possible.

20. Application dismissed.