J. D. JAIN ( 1 ) THIS is a petition under S. 20 of the Arbitration Act (hereinafter referred to as the Act) by the Pood Corporation of India (for short F. C. I.) for filing of the arbitration agreement as embodied in Cl. 16 of the General Conditions of the Contract No. E. K (23-0/72-STC. III dt. 2nd Mar. , 1973, between the parties and referring the disputes between them to the sole arbitrator to be appointed in accordance with the said clause. It is averred that pursuant to the aforesaid contract which was entered into between the parties for supply of 750 rolls of black polythene roll at the rate of Rs. 8. 58 per kg. , f. o. r. destination station, the petitioner-F. C. I. placed a supply order with the respondent for supply of the aforesaid quantity of the goods and the delivery was to be completed within two months of the date of acceptance of the tender. However, the respondent offered only 146 rolls within the original delivery period. The same on inspection by the officer concerned of the petitioner were not found according to the specifications contained in the tender and as such were rejected on 26th May, 1973. Thereafter, the delivery period was extended initially up to 25th June, 1973 and then to 12th Nov. , 1973 at the request of the respondent subject to levy of liquidated damages as envisaged under Cl. 14 of the General Conditions of the Contract. Thereupon, the respondent offered 10 more rolls for inspection within the extended period of delivery. However, the same too were found to be not according to specifications and were eventually rejected on 14th Dec. , 1973. It is further averred that since the respondent failed to discharge its obligation under the contract and committed breach of the contract, the petitioner cancelled the contract at the risk and cost of the respondent in accordance with Cl. 6 of the contract and forfeited the security amount of Rs. 8,109. 00 which had been deposited by the respondent in terms of the contract. HOWEVER, the petitioner suffered a loss of Rs. 2,00,655. 00 as general damages as a sequel to the breach of contract by the respondent. The latter was called upon to pay the same but in vain. 8,109. 00 which had been deposited by the respondent in terms of the contract. HOWEVER, the petitioner suffered a loss of Rs. 2,00,655. 00 as general damages as a sequel to the breach of contract by the respondent. The latter was called upon to pay the same but in vain. Hence, the petitioner has prayed for reference of the disputes to the arbitrator in terms of the arbitration clause (No. 16) contained in the contract which stipulates that all disputes and differences arising out of or in any way touching or concerning the contract in question shall be referred to the sole arbitration of any person appointed by the Managing Director of the F. C. I. ( 2 ) THE application is vehemently resisted by the respondent primarily on the ground that the alleged agreement of arbitration is void. being unconscionable and against public policy. He has even refuted the contention of the petitioner that the parties have entered into a valid and binding contract by acceptance of the tender. Further they have sought to explain and justify short supplies made by them on the ground of power cut and shortage of raw-material etc. at the relevant time. They assert that 146 rolls of black polythene offered by them to the petitioner were illegally and improperly rejected by the inspecting authorities. Similarly, they challenge the legality and propriety of the extensions of delivery period on the ground that the terms were onerous and favourable to the petitioner. Thus, it is submitted that since no valid and binding contract came into existence between the parties, the question of discharge of his obligation by the respondent did not arise. It is denied that the respondent committed any breach of the alleged contract or that the petitioner-F. C. I. had any right to rescind the alleged contract at the risk and cost of the respondent and to forfeit the security deposit of the respondent. ( 3 ) THE following issues were accordingly framed: 1. Whether there exists a valid arbitration agreement between the parties ? 2. Whether no valid contract was executed between the parties? 3. Whether there is any ground for not referring the disputes to arbitration? ( 4 ) ALL these issues are closely linked and inter-related and as such can be conveniently disposed of together. Whether there exists a valid arbitration agreement between the parties ? 2. Whether no valid contract was executed between the parties? 3. Whether there is any ground for not referring the disputes to arbitration? ( 4 ) ALL these issues are closely linked and inter-related and as such can be conveniently disposed of together. The petitioner has placed on the record attested copies of various documents and correspondence which, inter alia, include the terms and conditions for supply of the tendered items and the correspondence which was exchanged between the parties subsequently culminating in the cancellation of the contract and forfeiture of security by the petitioner vide letter dated 14th Jan. , 1974 and their effecting risk purchase and claiming general damages vide letter dated 7th July, 1976, from the respondent. While authenticity and correctness of the allegations contained in the petition and the facts stated inarious documents and letters which were exchanged between the parties have been duly sworn by Shri L. M. Chavan, Deputy Manager (Storage) in the F. C. I. in the supporting affidavit filed by the petitioner, the counter-affidavit filed by Sh. Mahesh Kumar; sole proprietor of the respondent, is quite vague and non-committal in nature. He has simply deposed that contents of the reply filed by him are true. Having regard to the subsequent dealings between the parties, the conclusion is inescapable that they entered into the contract in question and even supplies were offered by the respondent to the petitioner which, as stated above, were rejected as not conforming to the specifications given in the tender. Indeed the respondent has not specifically denied the execution of the contract and has not given any particulars to show how the contract in question was tainted or vitiated by any illegality or invalidity and his only contention is that the arbitration agreement being unconscionable, unjust and opposed to public policy is void. The precise arguments advanced on behalf of the respondent is that composition of the arbitral tribunal is lopsided inasmuch as the sole arbitrator to be appointed under the reference clause may be an employee of the petitioner and this fact in itself is inferential of the partiality and bias on the part of the arbitrator who must otherwise be an impartial and disinterested person. In other words there is bound to be a departmental bias on the part of arbitrator to be appointed by the petitioner. At any rate, he may be prejudicially disposed of towards the respondent. This argument is carried further to attack even the validity of the main contract on the ground that the arbitration agreement constitutes an integral part of the main contract and as such the latter too is rendered invalid. Further, it is contended that the arbitration clause has apparently conferred the option of going to arbitration solely on the petitioner-F. C. I. and provides that no person other than the person appointed by the petitioner as indicated in the reference clause should act as an arbitrator and if for any reason that is not possible the matter is not to be referred to arbitration at all. It is thus urged that this particular stipulation negates the power of appointment of an arbitrator vested in the court by virtue of Ss. 8, 12 and 20 of the Act ( 5 ) ON a consideration of the whole matter and having regard to the wording of the arbitration clause, I do not think that the contentions raised and misgivings spelt out by the learned counsel for the respondent are well-founded. As for the principal contract for supply of goods, the learned counsel for the respondent has not been able to point out any term and conditionthereof which would even ostensibly render it unconscionable and heavily loaded in favour of the petitioner. The only crucial point for determination is whether the submission clause incorporated therein can be said to be unjust or unfair to the respondent in the sense that he may be relieved of his obligation thereunder. The. constitution of the arbitral tribunal and the manner in which it is to be appointed are primarily a matter for the parties to arbitration agreement to determine. If a special method of appointment is prescribed by the submission, that method must be strictly adhered to. No doubt mat the parties are as a matter of rule entitled to expect from an arbitrator complete impartiality and indifference and an objection may be taken that the arbitrator lacks the qualifications essential in any tribunal i. e. impartiality and disinterest. If a special method of appointment is prescribed by the submission, that method must be strictly adhered to. No doubt mat the parties are as a matter of rule entitled to expect from an arbitrator complete impartiality and indifference and an objection may be taken that the arbitrator lacks the qualifications essential in any tribunal i. e. impartiality and disinterest. However, if the parties to a dispute, with full knowledge of the facts, select an arbitrator who is not an impartial person, or who has to perform other duties which will not permit of his being an impartial person, the Court will not in general release them from the bargain upon which they have agreed; and if a party to a contract submits to the jurisdiction of a tribunal which has an interest of its own in the decision, the Court will not in general on that account release him from the bargain (however improvident it may be) so long as the Court is satisfied that he is aware or ought to have been aware of the terms of the bargain he has entered into. To disqualify an arbitrator so appointed, it is insufficient to show that he might be suspected of partiality; it must be shown, if not that he actually is biased, at least that there is a strong probability that he will be biased, and to such an extent as to be incapable of fairly and honestly giving a decision (See Russell on the Law of Arbitration, 18th Edn. , pp. 117-118 ). The instant case surely stands on a strong footing for the petitioner inasmuch as the latter has been simply vested with the power to appoint an arbitrator of their choice. No arbitrator has yet been appointed and as such it will be absolutely premature even to speculate or surmise as to who would be the likely choice for this office. It is well known that in most of the contracts entered into by the Govt. Departments/undertakings or Corporations etc. for execution of works or supply of articles, there is, generally speaking an arbitration clause providing for arbitration by a personnel designate or his nominee who may or may not be a wholly unbiased person. It is well known that in most of the contracts entered into by the Govt. Departments/undertakings or Corporations etc. for execution of works or supply of articles, there is, generally speaking an arbitration clause providing for arbitration by a personnel designate or his nominee who may or may not be a wholly unbiased person. It may as well be that an engineer or an architect who is himself associated with the execution or supervision over the work to be executed, as an employee of one of the parties to the contract, may sometimes be entrusted with the task of adjudication upon the disputes between the parties as an arbitrator in relation to or arising out of such contract. But even then the party agreeing to his selection as an arbitrator with full knowledge of these facts cannot be released from the bargain upon which it has agreed. As observed by Lord Justice Bowen in the case of Jackson v. Barry Railway Co. , (1893) 1 Ch 238: "technically, the controversy is one between the plaintiff and the railway company; but virtually, the engineer, on such an occasion, must be the Judge, so to speak, in his own quarrel. Employers find it necessary in their own interests, it seems, to impose such terms on the contractors whose tenders they accept, and the contractors are willing, in order that their tenders should be accepted, to be bound by such terms. It is no part of our duty to approach such curiously-coloured contracts with a desire to upset them or to emancipate the contractor from the burden of a stipulation which, however onerous, it was worth his while to agree to bear. To do so, would be to attempt to dictate to the commercial world the conditions under which it should carry on its business. " (See also in this context Smith, Coney and Barrett v. Becker, Grey and Co. , (1916) 2 Ch 86; Eckersley v. Mersey Docks and Harbour Board, (1894) 2 QB 667, and Ives and Barker V. Willans, (1894) 2 Ch 478 ). " (See also in this context Smith, Coney and Barrett v. Becker, Grey and Co. , (1916) 2 Ch 86; Eckersley v. Mersey Docks and Harbour Board, (1894) 2 QB 667, and Ives and Barker V. Willans, (1894) 2 Ch 478 ). ( 6 ) IN all these cases the arbitrator selected by the parties was the servant of one of them and it was held that he was not disqualified by the mere fact that under the terms of submission he may to decide disputes involving the question whether he has himself acted with due skill and competence in advising his employer in respect of the carrying out of the contract. (Reference be also made in this context with advantage to Shivlal Prasad v. Union of India, AIR 1975 Madh Pra 40; President of India v. Kesar Smgb, AIR 1966 J and K 113, and Srivenkateswara Constructions v. Union of India, AIR 1974 Andh Pra 278 ). It was urged in the last mentioned case that if a subordinate official was nominated by the General Manager of the Railways concerned to act as an arbitrator, there was bound to be departmental bias as such officers would not dare to decide against the department or the General Manager. This argument was repelled with the observation: "this is also an extreme contention out supported by any authority. " ( 7 ) NO doubt there can be cases in which the strict principle of sanctity of a contract may not be adhered to and a party may be released from the bargain if he can show that the selected arbitrator is likely to show a bias or there is sufficient reason to suspect that be will act unfairly or that he has been guilty of continued unreasonable conduct. Surely, there must be road inevery agreement of arbitration an implied term or condition that it would be enforceable only if the Court, having due regard to the several surrounding circumstances, thinks fit in its discretion to enforce it. (See Uttar Pradesh Co-operative Federation Ltd. v. Sunder Brothers, Delhi, AIR 1967 SC 249 ). But as observed earlier, that stage has yet to arrive in the instant case. (See Uttar Pradesh Co-operative Federation Ltd. v. Sunder Brothers, Delhi, AIR 1967 SC 249 ). But as observed earlier, that stage has yet to arrive in the instant case. Surely, if the arbitrator appointed by the petitioner is favourably inclined towards the petitioner or is prejudicially disposed towards the respondent, it is always open to the latter to ask for his removal in accordance with law, but he need not be apprehensive merely because the power of appointment of an arbitartor has been conferred solely on the petitioner under the submission clause. ( 8 ) THE second limb of the argument of the respondent is that the submission clause amounts to a negation of power vested in the Court to appoint an arbitrator of its own, choice even if the circumstances of the case so warrant and as such the arbitration agreement is bad in law and is equally ill-founded, A similar situation existed in Kishan Chand v. Union of India, 1974 Rajdhani LR 553 and the arbitration clause was couched in almost identical language. It categorically stated : "it is also a term of this contract that no person other than a person appointed by such Chief Engineer or administrative head of the C. P. W. D. , as aforesaid should act as arbitrator, and if, for any reason, that is not possible, the matter is not to be referred to arbitration at all. " ( 9 ) AFTER a comprehensive discussion of good deal of case law in the context of Section 8 (1) (b) of the Act the Division Bench comprising S. N. Andley, C. J. (as he then was) and T. P. S. Chawla, J. , held that: "obviously, the purpose of this stipulation was to negate the power of the Court to appoint an arbitrator under the Arbitration Act Conceivably no other authority or person could have or obtain me power to appoint an arbitrator to determine disputes arising out of the agreement. So absolute is the stipulation made, that if, for any reason it is not possible that an arbitrator be appointed by the Chief Engineer or the administrative head of the C. P. W. D. , the arbitration agreement itself is destroyed. Such a stipulation is not invalid. So absolute is the stipulation made, that if, for any reason it is not possible that an arbitrator be appointed by the Chief Engineer or the administrative head of the C. P. W. D. , the arbitration agreement itself is destroyed. Such a stipulation is not invalid. " (Emphasis supplied) ( 10 ) SO looking from any angle the respondent cannot get rid of the arbitration agreement in the instant case which he entered into with open eyes and full knowledge of the consequences which might flow therefrom. At any rate, it is too early to say anything about the integrity and rectitude of the arbitrator who may be appointed by the petitioner-F. C. I. because these are purely personal traits of an individual s character. ( 11 ) TO sum up, therefore, I find no force in the objections raised by the respondent in the instant case. The disputes adverted to in the petition clearly flow from the contract for supply of goods and fall within the purview of the arbitration clause. Hence, I allow this petition and order that the agreement of arbitration be filed in Court and the disputes between the parties, as embodied in the petition, be referred to the arbitrator to be appointed by the petitioner within three months from today. Under the circumstances, no order is made as to costs.