Ratnakar Pradhan vs Mahanadi Coalfields Limited and Others

P.K. Misra, J.—This is an application u/s 11 of the Arbitration and Conciliation Act, 1996, for appointment of Arbitrator to decide disputes arising out of a contract between the parties for execution of the Work land Escaping of "Ananta Township at Jagannah Area". Clause 9 of the Agreement envisages that all disputes and dues arising between the parties shall be settled by sole Arbitrator appointed by C.M.D. of Mahanadi Coalfields Ltd. The petitioner asserts that in spite of notice regarding appointment of Arbitrator which was received by opposite party No. 2 on 26.7.1999, no Arbitrator was appointed and accordingly petition u/s 11 was filed on 25.8.1999.

The opposite parties in counter, apart from denying the tenability of the claims made have contended that the Chairman-cum-Managing Director has already appointed the General Manager, M.T.I., MCL, Sambalpur, as the sole Arbitrator vide order dated 14.10.1999 to decide the disputes. It is, therefore, submitted that the application has become infructuous.

A perusal of the order dated 27.8.1999 indicates that Shri B. N. Mohanty, Advocate, had accepted notice on behalf of the opposite parties and pursuant to the said order, copy of the petition was served on 30.8.1999. Thus, it is obvious that after receipt of notice regarding filing of M.J.C. No. 295 of 1999, opposite party No. 2 proceeded to appoint an Arbitrator.

The learned counsel appearing for the petitioner has submitted that there is no specific time limit indicated in the Arbitration and Conciliation Act, 1996, for appointment of Arbitrator after receipt of notice. Keeping in view the purpose of the new Act, it must be taken that Arbitrator should be appointed as expeditiously as possible within a reasonable period without any undue delay. In the present case, it appears that notice was served on 26th July, 1999, and after having awaited for thirty days. the petitioner has filed this application in this Court.

Learned counsel for the opposite parties contended that unlike the old Act (Arbitration Act, 1940) which provided for giving 15 days notice for appointment of Arbitrator, no time having been prescribed under the new Act, the authority, namely the C.M.D. had the discretion to appoint the Arbitrator at any time. It is further contended that the new Act itself contemplates that possibility of conciliation should be explored before appointing any Arbitrator and as such the period of thirty days cannot be considered as a reasonable period for appointment of Arbitrator.

Provisions under the new Act contemplate that there can be conciliation even after appointment of Arbitrator and as such there cannot be any justification for the opposite parties to contend that they did not appoint arbitrator as they wanted to explore the possibility of conciliation. It is apparent that the Arbitrator has been appointed by the opposite parties only after it was brought to their notice that application had already been filed in the High Court. In such view of the matter, the opposite parties cannot insist that the petition has become infructuous. nor can they insist that the poor regarding appointment of arbitrator should be left to them, as complated in the Agreement. The opposite parties having failed to exercise their power within a reasonable period cannot thereafter insist that the Arbitrator appointed by them even after being made aware of the filing of the application u/s 11 of the Act must continue. It has been held in the decision reported in G. Ramachandra Reddy and Co. Vs. Chief Engineer, Madras Zone, Military Engineering Service, (of course, under the old Act), that if the party does not appoint arbitrator within the period prescribed, he cannot subsequently insist that the procedure laid down in the Agreement relating to appointment of Arbitrator must be followed. Similar view has been expressed in the decisions reported in AIR 1996 Ori. 19 (Union of India and Anr. v. Prahallad Moharana) : 48(1979) CLT241 (Banahehari Das v. Executive Engineer, R.E.Division, Puri and Anr.). In case arising under the new Act, similar view has been expressed. (See 88(1999) CUT 457 (M/s. Devee Supply Syndicate v. General Manager, South Eastern Railway and Ors.). The High Court of Andhra Pradesh has taken a similar view in the decision reported in 1998 (2)ALR 175 (Marshall Corporation Ltd., Vishakhapatnam v. Union of India rep. by the Engineer-in-Chief, Army Head Quarters, New Delhi and Anr.). In the decision reported in M/s. Anuptech Equipments Private Ltd. Vs. M/s. Ganpati Co-op. Housing Society Ltd. and others, similar view has been expressed.

During pendency of the proceeding, I had called upon the counsel for the opposite parties to suggest names of Arbitrator without prejudice to the contentions of the parties. However, in spite of such opportunity being given, the counsel did not submit any name, but submitted that the Arbitrator already appointed should continue as Arbitrator. He also submitted that the opposite parties may be given opportunity in future for objecting to the name suggested by the petitioner. The nature of dispute does: not require that a technical man should be appointed as Arbitrator. Keeping in view the nature of disputes and to ensure impartiality, rather it would be more appropriate to appoint a retired Judge of the High Court as Arbitrator. The counsel for the petitioner has furnished names of five persons, but the counsel for opposite parties has objected to such appointment. Having regard to the facts and circumstances of the case, Shri Justice S.C. Mohapatra, Former Judge of Orissa High Court and Allahabad High Court, is appointed as the Arbitrator. If the parties have any objection to the appointment of Shri Justice S.C. Mohapatra as Arbitrator, they can raise the question before the Arbitrator in accordance with Section 16 of the Arbitration and Conciliation Act, 1996.

Subject to the aforesaid direction, the M.J.C. is disposed of. There will be no order as to costs.