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TMI Blog2000 (9) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... y other parties hereto arising out of or in relation to this agreement shall be referred to the sole arbitration of Mr. S.K. Sen, Director of the Owner, or any other person/officer of the owner nominated by him. The hirer shall not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the owner or he has to deal with the matters to which the contract/agreement relates or that in the course of his duties as an officer of the owner he had expressed views on all or any other matters in dispute or difference in the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason whatsoever, Mr. S.K. Sen, Director as aforesaid at the time of such transfer or vacating such office or being unable to act for any reason whatsoever of such person to whom the matter was originally referred to, shall designate another person to act as arbitrator in accordance with the terms of the said agreement. Such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 SC 200. In this case, the arbitration clause stipulated that except where otherwise provided in the contract all questions and disputes shall be referred to the sole arbitration of the Chief Engineer of the department. Should the Chief Engineer be for any reason unwilling or unable to act as such arbitrator, such questions and disputes shall be referred to an arbitrator to be appointed by the Chief Engineer . The power of nomination was exercised by the Chief Engineer. One of the parties approached the Additional District Judge under section 12( 2 ) of the Arbitration Act, 1940 for revoking the authority of the arbitrator. The prayer was granted. Eventually the case came up for consideration before the Supreme Court. Two propositions can be extracted from a study of the judgment - firstly, that if the arbitrator refused to extend the time and brought the proceedings to an end leaving it to the parties to decide their future course of action, it was open for the Courts to infer that he had refused to act. The second proposition is what is sought to be canvassed by the learned counsel for the Respondent in these proceedings, and it would be best to reproduce, verbatim, the obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the Court is precluded from exercising its power only if the parties intended that the vacancy should not be filled. In other words the Court shall exercise jurisdiction to appoint another arbitrator except where it is specifically debarred from doing so. The word show used in the clause appears to be significant. It in fact furnishes key to the construction of the expression. Mere neglect or refusal to act alone is not sufficient to empower the Court to intervene. The agreement must not further show that the parties intended that the vacancy shall not be supplied. To put it affirmatively in absence of clear words or explicit language to the contrary the Court may appoint another arbitrator. The true effect of the word is that it extends jurisdiction of the Court to exercise power, if the agreement does not specifically debar it from doing so. To put it simply the Court s power to interfere and appoint an arbitrator comes into operation if the arbitrator refuses to act and the agreement does not show that the parties did not intend that the vacancy shall not be supplied. In P.G. Agencies v. Union of India AIR 1971 SC 2298 it was held by this Court, that the languag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by name or by designation and that person refuses to act then the question of appointing him again cannot arise. Refusal by such a person results in the agreement clause ceasing to operate. When two parties agree for appointment of A or B by name or designation and the person so named refuses to act then the agreement shall be deemed to have exhausted itself. The person so named having refused to act he cannot be asked again to arbitrate. That would be contrary to the very basis of arbitration that no one can be forced to act against his free will. It would also be contrary to the agreement and if there is no agreement to appoint another person, the only remedy is to approach the Court to exercise its statutory power and appoint another arbitrator. Same result follows where the arbitration clause empowers the sole arbitrator either to arbitrate himself or to nominate anyone else. It was urged that the principle of agreement clause coming to an end cannot apply where the sole arbitrator has been given power to nominate another person. According to the learned counsel once the nominee refused to act the Chief Engineer was again empowered to nominate another person in his place. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided for appointment of a named arbitrator and the named person was not appointed, certainly the only remedy left to the contracting party was the right to suit. That is not the case on hand. The contract did not expressly provide for the appointment of a named arbitrator. Instead power has been given to the administrative head of the appellant to appoint sole arbitrator. When he failed to do so within the stipulated period of 15 days enjoined under section 8(1)( a ) then the respondent has been given right under clause 65.2 to avail the remedy under section 8(1)( a ) and request the court to appoint an arbitrator. If the contention of Shri Rao is given acceptance, it would amount to putting a premium on inaction depriving the contractor of the remedy of arbitration frustrating the contract itself. " [Emphasis supplied] (p. 660) 7. Similar views have also been expressed in Union of India v. Raghunath Singh Co. AIR 1980 SC 103. In view of the repeated pronouncements of the Apex Court I shall only record that the cases of Meryfur Industries Ltd. v. Union of India AIR 1998 Delhi 215 and Smt. Satya Kailashchandra Sahu v. Vidarbha Distillers AIR 1998 Bom. 210 were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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