Jadavji Wallamji vs Union of India (UOI)

Masud, J.—This is an application on behalf of a contractor u/s 20(1) of the Indian Arbitration Act, 1940, to file the arbitration agreement between him and Union of India represented by the General Manager, South Eastern Railway. On or about March 29, 1962, the Plaintiff entered into an agreement with the Defendant who was acting through the General Manager of the Dandakaranya Balangir Kiriberu Railway Projects for construction of some well foundation and masonry structure in piers of bridge. The said project which originally had its office at Waltair has recently been merged with the South Eastern Railway which has its office at No. 1 India Exchange Place in Calcutta within the jurisdiction of this Hon''ble Court. The said agreement contains an arbitration Clause and also detailed procedure to appoint two arbitrators, the material portions of which read as follows:

Clause (63) of the General Conditions of Contract--Demand for arbitration.

If the contractor be dissatisfied with the decision of the Railway on any matter in question, dispute or difference, on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to or if the Railway fails to make a decision within a reasonable time, then and in any such case, but except in any of the excepted matters referred to in Clause (62) of these conditions, the contractor shall within 10 days of the receipt of the communication of such decision or after the expiry of the reasonable time, as the case may be, demand in writing that such matter in question, dispute or difference be referred to arbitrations. Such demand shall be delivered to the Railway by the contractor and shall specify the matters which are in question, dispute and difference and only such dispute or difference of which the demand has been made and no other shall be referred to arbitration.

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3(a)--Arbitration. Matters in question, dispute or difference be arbitrated upon shall be referred for decision to--

(i) A sole Arbitrator who shall be the General Manager or a person nominated by him in that behalf in cases where the claim in question is below Rs. 50,000 and in cases where the issues involved are not of a complicated nature. The General Manager shall be the sole Judge to decide whether or not the issues involved are of a complicated nature.

(ii) Two Arbitrators, who shall be Gazetted Railway Officers of equal status to be appointed in the manner laid down in Clause (3)(b) for all claims to Rs. 50,000 and above and for all claims irrespective of the amount or value of such claims if the issues are of a complicated nature. The General Manager shall be the sole judge to decide whether the issues are of a complicated nature or not. In the event of the two Arbitrators being divided in their opinions the matter under dispute will be referred to an umpire to be appointed in the manner laid down in Clause (3)(b) for this decision.

(b) For the purpose of appointing two Arbitrators as referred to in Sub-clause (a)(ii) the Railway will send a panel of more than three names of officers of the appropriate status of different departments of the Railway to the contractor, who will be asked to suggest a panel of three names out of the list sent by the Railway. The General Manager will appoint one Arbitrator out of this panel as the contractor''s nominee, and then appoint the second Arbitrator of equal status as the Railway''s nominee either from the panel or from outside the panel ensuring that one of the two Arbitrators so nominated is invariably from the Accounts department. Before entering into reference, the two Arbitrators shall nominate an umpire to whom the case shall be referred in the event of difference between the two Arbitrators.

Disputes and differences arose between the Plaintiff and the Defendant relating to the said contract which fall within the scope of the said arbitration agreement. In March 1963, the Plaintiff made several representations claiming enhanced rate for his work in excavations deeper than those showing in the drawings. The Railway authorities by their letters dated March 8, 1963 and June 23, 1966, refused to accede to the request of the Plaintiff for enhancing the rates. It is also alleged that the Defendant has wrongfully withheld the Plaintiff''s security deposit amounting to Rs. 46,416 although the Defendant has no claim whatsoever against the Plaintiff. The Plaintiff thereafter, by letters dated March 27, 1967 and July 31 1967, through his Solicitor, Mr. S.K. Guha, addressed to the Defendant to refer the said disputes to arbitration in terms of the said arbitration clause. In the last paragraph of the said letter dated March 27, 1967, the following statements are made:

In the circumstances, I hereby serve you with notice u/s 8 of the Arbitration Act calling upon you to appoint two Arbitrators within 15 clear days from the receipt of this letter to adjudicate the above disputes failing which appropriate application will be made before the proper Court for necessary relief without any further reference for holding you liable for all costs and consequences.

The Chief Administration Officer and Engineer, Dandakaranya Balangir Kiriberu Railway Projects, Waltair, replied to the Plaintiffs Solicitor, Mr. S.K. Guha, on May 11/12, 1967, in the last paragraph of which it is stated:

In the circumstances explained above, you will perhaps agree that the notice issued u/s 8 of the Arbitration Act, 1940, for the appointment of two Arbitrators for settling the disputes is not in order as there can hardly be any dispute between your client and the Railway administration...if inspite of all these clarifications, should your client choose to move the Civil Court for relief, he would be doing so at his sole risk and responsibility and he will be liable for all the costs that the Railway administration may have to incur in defending the case.

Mr. Bholanath Sen, counsel on behalf of the Petitioner, has submitted that the arbitration agreement should be filed in this Court u/s 20 inasmuch as, admittedly, there has been an arbitration agreement between the parties and disputes and differences have arisen.

Mr. Provat Kumar Sen, counsel on behalf of the Defendant Union of India, has strenuously contended that the agreement cannot be filed in this Hon''ble Court as this Court, fn the facts and circumstances of this case, cannot have any jurisdiction to entertain the application. He has urged the following grounds in support of his contention:

(a) The agreement was entered into with the President of India through the General Manager of Dandakaranya Balangir Kiriberu Railway Projects having its head office at Waltair in Andhra Pradesh. The said projects have merged with the South Eastern Railway with effect from July 17, 1967. But, since the merger, the Engineer-in-Chief (D.B.K.), South Eastern Railway at Waltair, at present also functioning as the Divisional Superintendent, South Eastern Railway at Waltair, is the successor-in-office and is fully empowered and Ss competent to deal with the dispute. A supplementary agreement to the principal agreement dated March 29, 1962, was executed between the Plaintiff and the President of India, acting in the premises through the Engineer-in-Chief (D.B.K.), South Eastern Railway at Waltair on November 16, 1967. The said South Eastern Railway had its head office at Garden Reach outside the jurisdiction of this Court and the office at No. 1 India Exchange Place is not the head office. Further, the office at India Exchange Place has nothing to do with the subject-matter of this case. In the premises, the Defendant does not carry on the business at No. 1 India Exchange Place and, as such, the Calcutta High Court is not the Court where a suit could be filed on the subject-matter of the reference within the meaning of Section 2(c) of the Arbitration Act.

(b) The execution of the work under the contract was made in Andhra Pradesh and no part of the cause of action has arisen within the jurisdiction of this Hon''ble Court and, as such, no suit could be filed in this Court to decide the dispute between the parties.

(c) Assuming that a part of the cause of action has arisen within the jurisdiction of this Hon''ble Court, no leave has been taken under Clause 12 of the Letters Patent before the present Special Suit was filed.

Mr. Sen''s contention may now be examined. The Plaintiff has filed this suit against the Union of India and no other Defendant. Admittedly, on March 29, 1962, the Plaintiff entered into an agreement with the President of India through the General Manager of the D.B.K. Railway Projects, having its head office at Waltair in Andhra Pradesh The said projects have been merged on July 17, 1967, with the South Eastern Railway. Thus, the liability, if any, of D.B.K. Railway Projects under the contract dated March 29, 1962, devolved on the South Eastern Railway when the D.B.K. Railway Projects were merged with the South Eastern Railway on July 17, 1967. Thus, the Engineer-in-Chief (D.B.K.), South Eastern Railway may have his office at Waltair in Andhra Pradesh, but the Engineer-in-Chief has no personal liability in the matter. Further, the South Eastern Railway is not also a legal entity for the purpose of enforcing the rights and liabilities under the contract. Different Railways are only administrative divisions or zones set up by the Union of India. The rights and liabilities under the contract can only be enforced by or against the Union of India, the owner of all the Railway properties. The South Eastern Railway has an office at No. 1 India Exchange Place within the jurisdiction of this Court. It is now well-settled that the Union of India in running the Railway administration ''carries on business'' within the meaning of Section 20 of the Code of Civil Procedure. The words ''carries on business'' are also set out in Clause 12 of the Letters Patent. Section 20(1) of the Arbitration Act provides that where a difference has arisen between the parties to an agreement, any party may apply to a Court having jurisdiction in the matter to which the agreement relates for filing the arbitration agreement in that Court. The ''Court'' has been defined in Section 2(c) of the Act as

...a Civil Court having jurisdiction to decide the questions forming the subject-matter of the Reference if the same had been the subject-matter of a suit....

Now the point to be decided is whether a suit could be filed in the Calcutta High Court to decide the disputes and differences referred to the arbitration. Mr. Sen has drawn my attention to Union of India (UOI) and Another Vs. Ladu Lal Jain, where the Supreme Court has held that a party can file a suit against the Union of India representing the Railway administration at its head-quarters at Gauhati. Relying on the said decision Mr. Sen has argued that if the Union of India can be sued within the jurisdiction of any Court where a branch or subordinate Railway office is situated, there was no occasion for the Supreme Court to say that the suit was maintainable at Gauhati where the head-quarters of the Railway was situated. In my view, the Supreme Court made the said observations in the facts of that case which are clearly distinguishable from the facts in the present case. There the jurisdiction of the Subordinate Judge''s Court at Gauhati does not flow from Clause 12 of the Letters Patent. The cause of action between the parties arose outside the State of Assam. But, as one of the two Railways, responsible for the loss of the consignment, has its head-quarters at Gauhati, the suit was filed at Gauhati in accordance with the expl. II of Section 20 of the CPC which reads as follows:

A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

Thus, although the cause of action arose outside the State of Assam, the Supreme Court came to the conclusion that the institution of the suit at the Subordinate Judge''s Court, Gauhati, is valid. In the present case, the jurisdiction of the Calcutta High Court in entertaining a suit is governed by Clause 12 of the Letters Patent which does not contain any restriction or limitation to its jurisdiction by adding any Clause similar to expl. II of Section 20 of the Code. Admittedly, the South Eastern Railway has its office at No. 1 India Exchange Place. The Calcutta office, although is not the head office of the South Eastern Railway, is a limb of the South Eastern Railway administration, and the Union of India is carrying on business not only in the head-quarters but also in its office at India Exchange Place. An individual may carry on business in more than one place and there is no reason why a corporation cannot carry on business at different places. u/s 20 of the Code a suit can only be filed in a place where the subordinate office is situated, if a cause of action arises there. If no cause of action arises, the suit has got to be filed at its main office. Very often a company is registered outside the State of West Bengal or even outside India, but a suit can be filed against such company if it has an office within the jurisdiction of this Court. Further, it should be remembered that in the said Supreme Court case, the two different Railway administrations were alleged to be liable for the Plaintiff''s loss and one of the Railway administrations had no office at Gauhati, yet the Supreme Court in the concluding paragraph has stated:

In view of that we have said above, we hold that the Union of India carries on the business of running Railways and, can be sued in the Court of the Subordinate Judge at Gauhati within whose territorial jurisdiction the head-quarters of one of the Railways run by the Union is situated.

Further, as stated earlier, Union of India is the owner of the D.B.K. Railway Projects and also the South Eastern Railway and it carries on the business of running the Railway administration. In carrying on this Railway business by the Union of India, the rights and liabilities of the Railway administrations can only be the rights and liabilities of the Union of India as the owner of such Railway administrations. It cannot be said that the Union of India carries on business only at its head office and not anywhere else. In this connection, reliance may be placed on the unreported judgment delivered by A.N. Sen, J. on April 22, 1966, in Suit No. 1728 of 1955, Hanutram Sohanlal v. Union of India Suit reported in ILR (1966) Cal. 585. In Courts outside the jurisdiction of the High Court under Letters Patent there is a statutory bar to file a suit at a place where the subordinate office is situated unless a part of cause of action has arisen there. But such statutory restriction, as provided in expl. II to Section 20 of the Code does not exist in Courts when jurisdiction is vested under Clause 12 of the Letters Patent. Further, the general principle should be remembered that though branch offices are agencies of one and the same concern, they are distinct trading bodies for certain purposes: vide Rex v. Lovitt (1912) A.C. 212 (219).

The second contention of Mr. Sen is that unless the Plaintiff can prove that at least a part of cause of action has arisen within the jurisdiction of this Hon''ble Court, a suit could not be filed here. I have already held that the Defendant carries on business within the jurisdiction of this Hon''ble Court at its office at No. 1 India Exchange Place, and it is, therefore, not necessary for me to decide this point. But as the point has been argued at great length by the counsel for both the Plaintiff and the Defendant, I now proceed to express my view on this matter. Mr. Bholanath Sen has argued that the Plaintiff has described himself in the cause title as carrying on business at No. 111 Chittaranjan Avenue, Calcutta, within the jurisdiction of this Court. The original agreement has been shown to me by Mr. Bholanath Sen to which the Learned Counsel for the Defendant has not objected. The said agreement described the Plaintiff as carrying on business at No. 111 Chittaranjan Avenue, Calcutta. The original supplementary agreement dated November 16, 1967, was sent by the Defendant to the Plaintiff in his said Calcutta address. The original envelope in which the said supplementary agreement was sent has been shown to me and the Learned Counsel has not raised any objection. The Solicitor''s letter dated May 11/12, 1967, was sent to the Chief Administrative Officer and the Engineer-in-Chief, D.B.K. Railway Projects, Waltair, to which a reply was sent from the General Manager''s office at Garden Reach, Calcutta, to the Plaintiff''s said address at No. 111 Chittaranjan Avenue, Calcutta: vide annEx. B to the affidavit of Yedatori Krishnaswami Srikanta affirmed on January 26, 1968. The original agreement and the supplementary agreement do not show any definite place of payment. It is true that the work was executed in Andhra Pradesh, but there is nothing to show that the parties agreed to a place of payment expressly or by necessary implication in any particular place. In the affidavit filed on behalf of the Defendant there is not any suggestion that the place of payment was settled, expressly or impliedly, at any definite place. It is for the Defendant to prove that the payment was agreed to be made in Madhya Pradesh or at the head office at Garden Reach. Relying on the judgment delivered by Bachawat and A.K. Mukherjea, JJ. in State of Punjab Vs. A.K. Raha (Engineers) Ltd., . I hold that where no place of payment is specified in the contract, either expressly or impliedly, the debtor must seek the creditor, and the obligation to pay the debt involves the obligation to find out the creditor and to pay him at the place where the Plaintiff carries on business. It is not disputed that the Plaintiff has no office at No. 111 Chittaranjan Avenue, Calcutta. The facts of the present case show that the Plaintiff had an office at Jagadalpore, Madhya Pradesh, but that does not mean that he cannot have an office at No. 111 Chittaranjan Avenue, Calcutta, to which place the. Defendant himself has addressed letters. Mr. Provat Sen has drawn my attention to Mahaluxmi Bank Ltd. Vs. Chotanagpur Industrial and Commercial Association, where Bachawat, J. has observed that the common law rule, that is, where no place of payment is specified, either expressly 6r by implication, the debtor must seek his creditor, should be applied with caution in this country. In the facts of that case, Mr. Bachawat came to a finding of fact that the place of payment by necessary implication was the Ranchi Branch of the Plaintiff''s bank and, as such, this Court had no jurisdiction to hear a money suit with respect to a loan allowed by the bank on an overdraft account at its Ranchi office. Reference may be made also to the Full Bench decision of the Punjab High Court in Firm'' Firm Hira Lal Girdhari Lal and Another Vs. Baij Nath Hardial Khatri, where the learned Judges have stated that the said English Common Law Rule is not applicable in India as a matter of law to determine the forum where the suit is to be instituted. In my view, although the said Full Bench decision has stated that the Common Law Rule has no application in India in any case, Bishen Narayan, J. has made the following observations:

The applicability of this rule and the extent to which it should prevail depends on the facts and circumstances of each case. When determining the terms of an implied agreement regarding the place of payment, the Court must take into consideration all the relevant factors bearing on the point, for example, necessities of the case, convenience of the Plaintiff, the place of business or residence of the creditor, the nature of the contract and its other terms, the circumstances in which it was entered into and the course of dealings between the parties--Page 454.

Thus, even according to the Punjab case, the place of business of the Plaintiff-creditor is relevant factor to be considered in determining the jurisdiction of a Court where the place of payment is not expressly stated in the agreement itself. In the instant case, although the Plaintiff''s claims have not been admitted by the Defendant, as in most such cases such situation happens, the Union of India has got the obligation to pay the Plaintiff at its place of business at No. 111 Chittaranjan Avenue, Calcutta, if of course the Plaintiff can substantiate such claim. It may be stated here that in the present case the Defendant has admitted the claim of the Plaintiff so far as his claim for the security deposit amounting to Rs. 46,416 is concerned. The Defendant''s refusal to accept the Plaintiff''s claims including the security money has given rise to a cause of action within the jurisdiction of this Court and, as such, a part of the cause of action has arisen here. In this connection, reference may also be made to S.P. Consolidated Engineering Co. (P) Ltd. Vs. Union of India (UOI) and Another, where Mallick, J. appears to have differed from the said Full Bench decision of the Punjab High Court, and has followed the said Bench decision of the Calcutta High Court in State of Punjab v. A.K. Raha Engineers Ltd. Supra.

Mr. P.K. Sen has next argued that the agreement u/s 20(1) of the Act can only be filed in a Court where a civil suit could be filed with respect to the subject-matter of the Reference, as set out in Section 2(c). Section 2(c) contemplates a Civil Court which has

jurisdiction to decide the questions forming the subject-matter of reference, if the same had been the subject-matter of a suit.

According to him, the Calcutta High Court has jurisdiction to determine the disputes between the parties in a suit only when leave under Clause 12 of the Letters Patent is granted by this Hon''ble Court. u/s 20(2), an application u/s 20(1) is numbered and registered as a suit and in the Calcutta High Court such suits are described as Special Suits, Thus, according to him, in any event, without the leave under Clause 12 of the Letters Patent, this Court has no jurisdiction to hear the special suit or application. In my view, there is no substance in Mr. Sen''s contention. An application u/s 20(1) of the Arbitration Act cannot be deemed to be a suit within the meaning of Clause 12 of the Letters Patent. Such an application can be filed in mofussil Courts where the jurisdiction does not flow from Clause 12 of the Letters Patent but u/s 20 of the Code of Civil Procedure. Section 26 of the Code and Order 6, Rule 3 and appendix ''A'' provide that every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. u/s 2(16), the word ''prescribed'' means ''prescribed by rules''. Again, a suit is followed by a decree which is defined in Section 2(2) of the Code as:

The formal expression of an adjudication which, so far as regards the Court expressing it conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final.

In an application u/s 20(1), the Petitioner applies to file an arbitration agreement which in most cases is not a matter in controversy between the parties. In any event, the rights of the parties are not finally settled in such an application. The heading in chap. III which comprises only one section, i.e., Section 20 is arbitration with intervention of a Court where there is no suit pending.

Thus, the dispute between the parties in the case of an application u/s 20(1) is to be decided finally by the arbitrator in the arbitration proceeding. The Court does not finally adjudicate the rights of the parties in hearing such an application. Further, by making an application u/s 20(1), it cannot be said that the Plaintiff has instituted a suit under Clause 12 of the Letters Patent. Such suit having not been filed, no question of leave under Clause 12 of the Letters Patent arises Section 20(1) only provides that a party intending to file an arbitration agreement may apply to a Court having jurisdiction in the subject-matter to which the arbitration agreement relates. Section 2(c) indicates the particular Civil Court where such application could be filed. Under this Sub-clause read with Section 20(1), the Civil Court which can decide the questions forming the subject-matter of Reference is the Court where the application should be filed. It cannot be said that the Calcutta High Court cannot decide the subject-matter of the Reference if a suit would have been filed. If the Defendant carries on business within the jurisdiction of the Court, the question of leave under Clause 12 does not arise. If a part of the cause of action has arisen, as I have also held earlier, leave is to be taken before a suit could be filed. A suit in fact has not been filed. A legal fiction has been introduced in Section 2(c). But, a legal fiction is never extended to its logical conclusion with mathematical precision. To illustrate, adoption is a case of legal fiction where the adopted son is deemed to be a natural son in the eye of law. But it cannot be said that an adopted son is to be treated as the natural son for all purposes. Substance cannot override the form nor can the procedural law alter or replace the substantive law. A suit under Clause 12 of the Letters Patent is also filed on presentation of a plaint under chap. XIII, Rule 30 of the Original Side Rules of the Calcutta High Court. The Court''s jurisdiction u/s 20(1) flows from a hypothetical or a contingent situation, that is, a situation which is created if a suit would have been filed in the Calcutta High Court, but such suit, in fact, has not been filed. Section 2(c) really contemplates a Civil Court which has the jurisdiction to decide the subject-matter of the Reference. The emphasis should be more in the words ''the subject-matter of a suit''. It is true when a suit is instituted in the Calcutta High Court because part of the cause of action has arisen within the jurisdiction, a mandatory provision of leave under Clause 12 has got to be applied for. But, such a situation can only arise when the suit is proposed to be filed. Indian Arbitration Act applies to the Letters Patent High Courts and also subordinate Civil Courts. The jurisdiction of subordinate Civil Courts is governed by Section 20 of the CPC whereas the jurisdiction of the Letters Patent High Courts is invoked under leave under Clause 12. In the case of a subordinate Civil Court no leave is necessary in a case where part of the cause of action has arisen. Thus the arbitration agreement, if it is to be filed in subordinate Civil Courts, would require no leave of the Court whereas, if Mr. Sen is right, a application if filed in the Calcutta High Court leave has to be taken. In my opinion, the only thing that is to be found out is whether the particular Court where the arbitration agreement is sought to be filed is a Court where a suit on the subject-matter of the Reference could have been filed. It seems to me that an application u/s 20(1) is to be treated as a suit of a special class and no leave under Clause 12 is indispensable if the same is filed in the Original Side of the Calcutta High Court. In this connection, reliance may be placed on S.P. Consolidated Engineering Company (P.) Ltd. v. Union of India Supra, p. 266 where Mallick, J. has made the following observations:

The wording of Section 20(2) is the "application shall be numbered and registered as a suit" does suggest that it is not a suit in the fullest sense of the term. It seems to me that because of this an application u/s 20 of the Arbitration Act has never been treated as a suit within the meaning of Clause 12 of the Letters Patent. No decision has been cited in which it has been held that leave is imperative in such suits when only a part of cause of action on which the suit is founded arises within the jurisdiction of this Court.

In the premises, I have come to the conclusion that this application should be allowed to be filed in this Hon''ble Court, as prayed for by the Plaintiff.

The next point that arises is whether the Court should appoint an Arbitrator as prayed for by the Plaintiff. u/s 20(4) of the Act, I must make an order of Reference to the Arbitrator appointed by the parties, whether under the agreement or otherwise. But the Sub-section makes it clear that if the parties cannot agree upon an Arbitrator, the Court shall appoint the Arbitrator. In the present case, I find the Plaintiff has raised disputes in respect of additional payment for the additional work and also in respect of refund of the security money withheld by the Defendant. The Plaintiff''s Solicitor by letters dated March 27, 1967 and July 3, 1967, requested the Chief Administrative Officer, D.B.K. Railway Projects, Waltair, Andhra Pradesh, to refer the disputes to the arbitration of two Arbitrators under Clause 63(a)(ii) of the General Conditions of Contract. In fact, the Plaintiff claimed such additional payment as early as March 2, 1963 and March 2, 1966, but such claim was rejected by the Engineer-in-Chief of Jagadalpur in letters dated March 8, 1963 and June 6, 1966. In my opinion, the genuineness of the Plaintiff''s claim is itself a dispute and, as such, can only be decided by the two Arbitrators as agreed upon by the parties. After the Court makes an order for filing the agreement, the Court can only appoint an Arbitrator if the parties cannot agree about any particular Arbitrator or Arbitrators. If the arbitration Clause refers to a named person as the Arbitrator, the Court shall refer the dispute to the named Arbitrator. Similarly, if the parties have already appointed an Arbitrator otherwise than under the arbitration agreement, even in such case the order of Reference must be to the agreed Arbitrator. The Court''s power to appoint an Arbitrator only arises when there is difference of opinion as to the person who is to be Arbitrator. In the instant case, there is a detailed machinery in the arbitration Clause itself by which two Arbitrators are to be appointed. The agreement as to selection of the Arbitrators can only arise when the persons'' names are suggested. In the present case, there was no occasion for the parties to select or suggest any particular Arbitrator as laid down in the arbitration Clause itself. The Defendant has disputed the Plaintiff''s claim and that the dispute has to be settled by the Arbitrators, as stated earlier. But, neither the Defendant has sent any panel of Arbitrators nor the Petitioner has selected his nominee. Thus the difference of opinion as to the selection of the Arbitrators has not yet arisen. In this connection, reference may be made to the observations of Bachawat, J. in a Bench decision of this Court in Union of India (UOI) Vs. Himco (India) Private Ltd., :

The arbitration agreement contains adequate and exhaustive machinery for appointment of "Arbitrators including substitutional appointments in case the appointed Arbitrator refuses to act etc. The fact that the appointed Arbitrator has not yet signified his willingness to act as arbitrator does not debar the Court from making an order of Reference of the dispute to him. If he subsequently refuses to act as the Arbitrator the procedure laid down in the arbitration agreement will prevail and will have to be followed: See the observations in paragraph 26 read with paragraphs 6, 7 and 23 in the judgment of the Supreme Court in Dhanrajamal Gobindram Vs. Shamji Kalidas and Co., at pages 1293-94 read with pages 1288-89 and 1292.

Relying on the principles of law laid down in the said decision, I cannot accept Mr. Bholanath Sen''s contention that I should appoint an Arbitrator in this case. It is true that the Defendant did not agree with the Plaintiff in sending the matter to arbitration on the ground that there was no dispute at all. But, because the Defendant has not concurred in referring the dispute to arbitration, it does not follow that the Defendant would not concur in the appointment of Arbitrators as laid down in the arbitration Clause itself.

I, therefore, direct that the arbitration agreement set out in para. 3 of the petition be filed in this Court. I also direct that all matters of difference between the parties mentioned in the said petition including the question of the costs of the Reference are referred to the two Arbitrators who would be appointed in accordance with the procedure laid down under Sub-clauses (3)(a), (b), (c), (d) & (e) of Clause (63) of the General Conditions of Contract, as set out in the annexure to the affidavit of Yedatore Krishnaswami Srikanta affirmed on January 25, 1968. The costs of this application will be the costs in the arbitration proceedings. The Arbitrators who will be appointed by the parties in accordance with the relevant Clauses are directed to make the award within six months from the date of appointment. This order is made at the request of the Defendant to expedite the arbitration proceedings.