M. K. Chawla ( 1 ) BY this judgment I propose to dispose of four connected suits bearing Nos. 211-A, 212-A, 213-A and 214-A of 1982, under Section 8 read with Section 20 of the Arbitration Act praying for the filing of the arbitration agreement in Court and for the appointment of an arbitrator. As a common question of law and facts arises they are being disposed of by this judgment. ( 2 ) THE relevant facts are that National Building Construction Corporation Ltd. , New Delhi, (defendant) had entered into three contracts with the Public Housing Corporation on 2nd May, 1977, 3rd February, 1979 and 7th April, 1979, for the construction of (i) one thousand houses (ii) school buildings and (iii) public utility services in Beniwalid, Libya. On 17th October, 1977, the defendant entered into a sub-contract with the plaintiff, M/s. Kerala State Construction Corporation Ltd. , Trivandrum a Government of Kerala Under-taking, by which the plaintiff agreed to construct 234 houses out of one thousand houses (S. No. 212-A of 1982), on 27th July, 1979, three sub-contracts were also executed between the defendant and the plaintiff by which the plaintiff agreed to construct (a) additional 100 houses (S. No. 211-A/82), (b) three school buildings (213-A/82) and (c) public utility services (S. No. 214-A/82) in Beniwalid, Libya. The terms and conditions of all the four sub-contracts are also similar. There is an arbitration clause in all the four sub-contracts which provides that in case of any dispute or differences arising between the parties in regard to the construction work or the contract, the same shall be referred to arbitration. The disputes having arisen between the parties the plaintiff preferred to file the present four suits. ( 3 ) AS S. No. 211-A of 1982, is first in time, the detailed facts are taken into account along with the defence for the purpose of deciding the issues framed in this case. The plaintiff had undertaken to construct 100 houses on the sub-contract basis for which an agreement dated 27th July 1979 was executed, stipulating the time of completion of the work as on 31st March, 1980. The plaintiff had undertaken to construct 100 houses on the sub-contract basis for which an agreement dated 27th July 1979 was executed, stipulating the time of completion of the work as on 31st March, 1980. Immediately on the execution of the agreement the plaintiff made all arrangements with all earnestness, hoping to complete the work within the targeted period, but the plaintiff was prevented from so completing the work on account of the failure of the defendant and the concerned officers incharge of the work by not discharging the obligations as envisaged ; that the plaintiff had to solely depend upon the defendant for financial resources, particularly when the works were to be executed in a foreign country utilising foreign currency; that it was obvious that unless adequate financial resources which comprise of mobilisation, advance, prompt payment of bills and bridging finance to make up the deficit in cash flow are provided by the respondents, the execution of work could not be progressed or programmed even in the matter envisaged by the petitioners; that the respondents did not comply with this provision of the agreement resulting in huge financial losses, unbearable injuries and thwarting of the entire programme of the petitioner; that the respondents also did not agree to make payments as agreed to causing much difficulties and pecuniary losses; that there was inordinate delay in providing unhindered possession of site ; that the respondents also failed to supply the material such as cement, steel, metal aggregates etc. resulting into the delay in execution of the work; that the respondent, however, with a view to comoflague their very many laches and lapses they terminated the agreement alleged to be at the risk and cost of the petitioner, which action of the respondents is illegal, unreasonable, improper and unsustainable in law and on facts; that very many claims made by the petitioner towards the work done are pending settlement with the respondents, but all these claims have either been rejected or not even respondent to at all ; that many other claims have also arisen between the parties due to the alleged termination of the agreement; that under the agreement dated 27th July, 1979, executed between the parties all disputes or differences arising out of or touching the agreement shall have to be referred to the arbitration by the Ministry of Works and Housing in the Government of India by either of the parties; that this arbitration clause according to the petitioner is a vague provision, uncertain regarding the identity of arbitrator and as such is void and is liable to be ignored to the extent regarding the personal of arbitrator; that the petitioners sent a registered notice to the respondents dated 2-11-1981 requiring them to concur with the petitioner, in pursuance of the agreement in the appointment of a sole arbitrator for the purpose of reference from out of panel given there-in and also informed that in default the Court will be moved by the petitioners in the matter; that the respondents by a reply dated l3-11-1981. informed the petitioners that the arbitration clause in the contract is not vague and uncertain and that the disputes can be referred only to the Ministry of Works and Housing is the Government of India and they cannot agree to any arbitration as suggested by the petitions that the stand taken by the respondent is untenable and unsustainable; that 15 clear days have passed after the service of the said notice and in view of the attitude of the respondant it has become necessary to move this Court, praying for the filing of the arbitration agreement in Court and the appointment of an arbitrator out of the panel of arbitrators already indicated by the petitioner or any other independent arbitrator for settlement of the aforesaid disputes and diffences between the parties. ( 4 ) THE respondents in their written statement raised two preliminary objections inter alia alleging that the present suit is not maintainable against the defendants as under the terms and conditions of the agreement dated 27th July, 1979, any dispute between the parties was referable only to the Works and Housing Ministry for which the plaintiff himself referred the dispute for arbitration by their letter dated 29th July, 1981 ; that the Works and Housing Ministry appointed Shri G. V. G. Krishna Murthy, Arbitrator in the Ministry of Works and Housing as a sole arbitrator to adjudicate upon the disputes and informed about the same to the petitioner by its letter dated 2nd February 1982; that the parties received a letter dated 5th February, 1982, from the arbitrator directing them to submit their claim and counter-claim and as such the dispute having already beenreferred to the named arbitrator, the present suit is not maintainable; that the requirements of Section 8 of the Arbitration Act have not been complied with and this Court will have to jurisdiction to entertain the suit under Section 8/20 of the Arbitration Act; that the suit is even otherwise not maintainable as the plaintiff has already submitted to the arbitration of the Works and Housing Ministry, that the suit is bad for non-joinder of necessary party, i. e. Union of India through Ministry of Works and Housing when the arbitration was still pending. On merits the defendants took up the stand that payments much in excess as contemplated under the agreement were made to the plaintiffs, who even then failed to complete the job or return the excess paid amount; that the site was handed over to the plaintiffs as soon as it was demarcated by the principal employer as contemplated under the agreement; that the defendant did not commit any breach of the agreement as alleged while on the other hand the plaintiffs miserably failed to perform their part of the contract; that the defendants bad no other option but to terminate the agreement in order to fulfil their obligations towards the principal employer; that the plaintiffs have not suffered any losses as alleged; that there was no vagueness in clause 8 of the agreement as there is well set procedure for conducting arbitration in the Ministry of Works and Housing through an arbitrator from the panel of arbitrator appointed by the President of India; that suitable reply to the plaintiff s notice was sent that the present suit is misconceived and is not maintainable and as such is merits dismissal. ( 5 ) IN the replication the plaintiffs contravened the pleas raised by the defendant in the written statement and reiterated the facts as stated in the main suit. ( 6 ) ON the pleadings of the parties the following issues were framed on 6th October, 1983 : " (1) Whether the suit under Section 8 read with section 20 of the Arbitration Act is maintainable in the circumstances of the case ? (2) Whether the Article 8 of the agreement in question is vague in respect of the personnel of the and as such is ineffective ? (3) Whether the letter dated 29th July, 1981 of the plaintiffs to the Works and Housing Ministry amounts to a submission to arbitration if so what is its effect ? (4) Whether the alleged arbitrator failed to act on the letter dated 29th July, 1981 within a reasonable time ? If so thwart effect ? (5) Whether arbitrator is to be appointed in this suit to decide the alleged disputes between the parties ? An additional issue was framed on 24th November, 1983 : (6) Whether under Article 8 of the agreement in dispute can the Works Ministry appoint an arbitrator ? (7) Relief". If so thwart effect ? (5) Whether arbitrator is to be appointed in this suit to decide the alleged disputes between the parties ? An additional issue was framed on 24th November, 1983 : (6) Whether under Article 8 of the agreement in dispute can the Works Ministry appoint an arbitrator ? (7) Relief". ( 7 ) I have heard the arguments of the counsel for the parties and with their help gone through the record carefully. My finding on the issues is as under: "issue No. 1" ( 8 ) ACCORDING to the learned counsel for the plaintiff both the parties do not dispute the execution of the agreement and the arbitration clause contained therein. Article 8 is the relevant clause which is reproduced below: "article-8 : All disputes or differences arising out of or touching this agreement shall be referred to the arbitration by the Ministry of Works and Housing. In the Government of India by either of the parties0, whose decision in the matter shall be final and binding on both the parties. The provision of Indian Arbitration Act, 1940, as modified from time to time shall apply". ( 9 ) IT is the case of the plaintiff that since the defendants have failed to agree to the appointment of an arbitrator for the settlement of the disputes which have arisen out of the contract the provisions of Section 8 read with Section 20 will come into play. Furthermore, according to him before the filing of the present suit notice was also issued to the defendants for the appointment of an arbitrator out of the panel given therein and the defendants having failed to comply with this offer, they cannot now come forward and allege that the present suit is not maintainable. The only contention on behalf of the learned counsel for the defendants is that in compliance with the wishes of the plaintiff the Ministry appointed an arbitrator who in turn directed the parties to submit their claim and counter claim and the plaintiff having failed to appear before the arbitrator, this Court will have no power to appoint an arbitrator. ( 10 ) PRIMA facie I do not propose to agree with the submissions of the learned counsel for the defendants. ( 10 ) PRIMA facie I do not propose to agree with the submissions of the learned counsel for the defendants. At this stage the only point under consideration is a to whether the present suit under Section 8 read with Section 20 of the Arbitration Act is maintainable or not. Once the parties do not deny the execution of the agreement containing an arbitration clause and the disputes having arisen between the parties resulting in the the termination of the agreement by the defendants, certainly the plaintiffs will be within their rights to move an application to this Court praying for the filing of the agreement and the appointment of an arbitrator to settle the disputes. The question as to whether the arbitration clause is vague or uncertain is the subject matter of issue No. 2, but as at present advised, I do not see any legal bar in the maintainability of the present suit. This issue is, therefore, decided in favour of the plaintiff. Issue No. 2 : ( 11 ) THIS issue is the most material issue in the case, determination of which will decide the present suit. The main contention of the learned counsel for the plaintiff is that arbitration clause referred to above is vague, uncertain regarding the person. Learned counsel further contends that by virtue of this clause no authorisation has been given to the Ministry to appoint any other person as an arbitrator and as such the stand taken by the defendants that the Ministry is competent to appoint their officer as an arbitrator is neither here nor there. The nature of the arbitration work according to the learned counsel being judicial or quasi-judicial, the arbitrator is required personally to call for the claims, examine witnesses, bear the parties and decide the disputes. ( 12 ) THIS can only be done by a human agency and the Ministry of Works and Housing of the Government of Indian is thus incapable of doing this, though it may be a legal entity. ( 12 ) THIS can only be done by a human agency and the Ministry of Works and Housing of the Government of Indian is thus incapable of doing this, though it may be a legal entity. The present arbitration over the disputes between the two non-governmet parties is not a governmental function and the fact that the parties agree to the arbitration by the Government does not make the arbitration work administrative in character for being carried out by any of the officer of the department, hence the present arbitration clause in the agreement being vague and uncertain regarding the person of the arbitrator, which is a sine qua non for a person being called an arbitrator, this Court will be within its right to either appoint one of the arbitrators, the panel of which was forwarded to the defendants or an independent arbitrator to decide the disputes. In support of his submissions learned counsel places a reliance on an observation made in Halsbury award of England, Vol. II, page 258 to the effect that an arbitration agreement must be an agreement to refer the disputes to some person or persons other than a court of competent jurisdiction. ( 13 ) THE submission of the learned counsel for the defendant is that the Court has to presume the reasonableness of the agreement. Even though, the Ministry cannot act without the human agency, but as all the acts have been performed by some human agency the parties must be presumed to have understood the implication of this clause and agreed to refer the matter to the Ministry. According to the learned counsel the Ministry of Works and Housing have many wings, one of which is that of arbitrators who are always appointed by the President of India. This post being in existence, clause 8 of the agreement cannot be interpreted otherwise than keeping in mind the appointment of an arbitrator of the Ministry. Under these circumstances the plaintiff cannot contend that this clause is either vague or the Ministry has no power/authority to appoint another arbitrator. ( 14 ) THERE is much substance in the submission of the learned counsel for the defendants. In order to arrive at a correct conclusion, one has again to refer to clause 8 which is an arbitration clause. ( 14 ) THERE is much substance in the submission of the learned counsel for the defendants. In order to arrive at a correct conclusion, one has again to refer to clause 8 which is an arbitration clause. It lays down that all disputes and differences arising out or touching this agreement shall be referred to the arbitration by the Ministry of Works and Housing in the Government of India by either of the parties, whose decision in the matter shall be final and binding on both the parties. The word "by" appearing before "the Ministry of Works and Housing. . . . " is important and has much significance. In the normal course it must be presumed that the parties at the time of enteric into the agreement had understood the meaning of this word. The only interpretation put on the work by appearing in this Clause can be that both the parts agreed or understood that the disputes and differences arising out of this agreement shall be referred to an arbitrator by the Ministry of Works and Housing. ( 15 ) LEARNED counsel for the petitioner, at this stage pointed out that in two of the connected cases, in place of the word "by" appearing in clause 8 of the agreement, the word to is mentioned. According to the learned counsel, it will make a lot of difference in the interpretation of the clause. The vagueness will be apparent on the face of the clause as it cannot be said with certainty as to whom in the Ministry the dispute can be referred. ( 17 ) TO my mind the mentioning of the word to will not change the scope of clause 8 of the agreement for two reasons. Firstly the bare reading of the contents of paragraph 15 of the plaint will make the position clear. It reads: "15. The petitioner bonafide, but mistakenly though that Article 8 provided an arbitration by the Ministry of Works and Housing in the Government of India. The petitioner sought legal advice in the matter and was advised that the clause providing for arbitration by the Ministry of Works and Housing in the Government of India is a vague provision, it is uncertain regarding the identity of arbitrator and so the said clause is void and is liable to be ignored to the extent regarding the personal of arbitrator. " ( 18 ) THIS averment/admission goes to show that the petitioners were fully aware of the consequences which will flow on the interpretation of the arbitration clause, at the time the agreement was executed between the parties. They changed their mind only after obtaining a legal advice and till then they had no doubt in their mind about the true scope of Article 8 of the agreement. Secondly the subsequent conduct of the plaintiffs further goes to show that they had understood the meaning of the arbitration clause as is now sought to be interpreted by the defendants, when by their letter dated 20th July, 1981 the plaintiff requested the Ministry to appoint an arbitrator in terms of the agreement. ( 19 ) NO other interpretation can be put to this clause nor the same can be said to be a vague one. At the time of entering into the agreement both the parties were clear in their minds and were fully aware of the person who is going to be appointed an arbitrator by the Ministry. The subsequent change of mind of the plaintiff is not relevant nor any importance can be attached to the same. In fact, this plea is now sought to be raised with a view to stop the defendants from realising their dues which have arisen out of the termination of the contract and its completion by another party. In order to stop the defendants from encashing the bank guarantee which the plaintiff had furnished at the time of entering into the contract, they preferred to file a writ petition before the Kerala High Court, obtained the stay which was subsequently vacated. ( 20 ) THE plaintiff again attempted to refrain the defendants from encashing the bank guarantee by filing a civil suit in the Subordinate Court, which was ultimately dismissed and appeal against the said order also met with the same fate. Present suits appear to have been filed for the same purpose. Till this date the plaintiffs have succeeded in restraining the defendants from encashing the bank guarantee. ( 21 ) AS per the definition clause, the "arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. It is not necessary that the name of a particular officer should have been mentioned in the arbitration clause itself. ( 21 ) AS per the definition clause, the "arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. It is not necessary that the name of a particular officer should have been mentioned in the arbitration clause itself. It could be by virtue of the office also. It is well established principle of law that terms of the agreement should be interpreted reasonably. Two principles have to be kept in mind, the first that there must be a clear intention of the parties, which is beyond the possibility of any dispute, that the parties intend to act according to the agreement entered into an secondly the construction to be placed on a deed ought to be such as to render it reasonable rather than unreasonable and will make it just to both the parties rather than unjust to one of them. The sum and substance of the discussions leads to the only conclusion that both the parties entered into an agreement knowing full the implications thereof. Both of them acted rationally by agreeing to refer the disputes to the Ministry. Even though the nomination of the arbitrator was not by name, but by virtue of the office, the dispute could be referred to the Ministry of Works and Housing. Under the circumstances Article 8 of the agreement cannot be held to be vague. This issue is, therefore, decided against the plaintiffs. Issue No. 3 ( 22 ) IN order to arrive at a correct conclusion one has only to minutely go through the contents of the letter of the petitioners alleged to have been received by the defendants on 29th July, 1981. The date of writing of this letter by the plaintiff is not mentioned. By writing this letter the plaintiffs have incorporated the statement of facts and claims before the arbitrator, reserving his right to amend, add or modify this statement after perusing the papers and records in the custody of the defendants. The heading of the letter shows that it was addressed to the Hon ble Arbitrator, Ministory of Works and Housing, Government of India, New Delhi. Further on it specifically mentioned the arbitration agreement in relation to the contract for the work of "construction of 235 houses in Beniwalid, for National Housing Corporation of Libya" pursuant to the agreement executed on 17-10-1977. Further on it specifically mentioned the arbitration agreement in relation to the contract for the work of "construction of 235 houses in Beniwalid, for National Housing Corporation of Libya" pursuant to the agreement executed on 17-10-1977. In the statement of facts and claims the plaintiffs not only referred to the execution of the agreement in dispute but also tried to hold the defendants responsible for committing the branch of the terms and conditions of the agreement, thereby frustrating their all efforts for the successful completion of the contract itself. The grievance was also raised that the defendants in order to comoflague their laches and lapses have terminated the agreement alleged to be at the risk and cost of the claimant as a result of which disputes and differences have arisen between the parties. In para 12 the plaintiffs specifically alleged that these disputes and differences have to be decided through arbitration only and the named arbitrator under the agreement is the Ministry of Works and Housing, Government of India, New Delhi. Finally it was submitted that an Hon ble Arbitrator may be pleased to enter on the reference and to pass an award on all the disputed issues. This communication is addressed to the arbitrator by Shri T. S. Krishnamurthy, Secretary of the plaintiff. ( 23 ) ON the receipt of this letter Shri S. C. Pandey, Joint Secretary to the Government of India, Ministry of Works and Housing, vide his letter dated 2nd February, 1982, appointed Shri C. V. G. Krishnamarthy Arbitrator in the Ministry of Works and Housing as the sole arbitrator to decide and make his award regarding the claims of the plaintiff corporation and the counter claims of the N. B. C. C if any. The copies of the said letter were forwarded to the plaintiff, the defendants and the arbitrator. Immediately the learned arbitrator vide his letter dated 5th February, 1982, called upon the claimants to submit their statements of facts and claims along with the copies of the documents, if any, upon which they intend to rely, within 15 days from the receipt of the notice and the defendants were further directed to file the counter claim, if any, within 30 days thereafter. After submissions by the parties of their statements, they were required to be present at the hearing, the date. time and venue whereof be notified by the arbitrator. After submissions by the parties of their statements, they were required to be present at the hearing, the date. time and venue whereof be notified by the arbitrator. They copy of this letter was sent to the parties by registered A. D. post as well as to Shri S. C. Pandey for information. ( 24 ) THE contention of the learned counsel for the plaintiff is that the letter dated 29th July, 1981 even though was written by the plaintiff but it related only to the subject matter of S. No. 2h-A/82. Similar letter was not sent in other suits. His further submission is that when the Ministry did not care to take notice of this letter, the plaintiff served the defendants with notice dated 2nd November, 1981, requiring them to appoint an arbitrator from the panel of arbitrators suggested therein. The copy of this notice was also sent to the Secretary, Ministry of Works and Housing, Government of India. The defendants not having taken steps for the appointment of an agreed arbitrator. the plaintiff cannot beheld bound by their letter dated 29th July, 1981. Prima facie I do not find any substance in the arguments advanced by the learned counsel for the defendants. It may be that their letter dated 29th July, 1981, only pertained to the contract for the construction of 235 houses in Beniwalid, Libya but one cannot loose sight of the fact that arbitration clause in all the four agreements is exactly the same. Once having agreed to the appointment of an arbitrator by the Ministry of Works and Housing it must be presumed that the plaintiff agreed to the submission of the disputes to an arbitrator. It was on their request that the Ministry acted on the letter, appointing Sh. C. V. G. Krishnamurthy as an arbitrator who in turn directed the parties to submit their claims etc. The writing of this letter to my mind amounts to their submission to the arbitration. This issue is, therefore, decided against the plaintiff and in favour of the defendants. C. V. G. Krishnamurthy as an arbitrator who in turn directed the parties to submit their claims etc. The writing of this letter to my mind amounts to their submission to the arbitration. This issue is, therefore, decided against the plaintiff and in favour of the defendants. Issue No. 4 ( 25 ) THE learned counsel for the plaintiff in support of this issue contend that even though for the sake of arguments it be presumed, that the plaintiff agreed to the appointment of an arbitrator, to be appointed by the Ministry of Works and Housing, the defendants having failed to act on the said letter within 30 days, their consent for the appointment of an arbitrator should be ignored. The learned counsel places a reliance on the explanation to Section 9 of the Arbitration Act which lays down that in case of an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the "request may constitute a neglect or refusal to act within the meaning of Section 8 and this section. According to the learned counsel the alleged letter requesting for the appointment of an arbitrator was admittedly received by the defendants and the Ministry of Works and Housing on 29th July, 1981. The defendants took notice and acted on this letter only on 2nd November, 1982. This long delay has not been explained by the defendants and as such the Court must presume that the arbitrator neglected or refused to act within the meaning of Section 8 of the Arbitration Act. The period of 30 days naving expired no action on this letter could have been taken. Even this argument is devoid of any substance. The explanation attached to Section 9 will apply where there is a named arbitrator. Certainly in the present case there is no named arbitrator and as such the limitation period of one month will not be attracted. Even otherwise, the period of one month mentioned in the explanation to Section 9 cannot be construed as a period of limitation on the expiry of which the remedy of a party can be said to be barred. Even otherwise, the period of one month mentioned in the explanation to Section 9 cannot be construed as a period of limitation on the expiry of which the remedy of a party can be said to be barred. In this case the arbitrator cannot be said to have failed to act as immediately on the receipt of the letter from the Joint Secretary on 2nd February, 1982 he took steps to intimate the parties to file their statement of claims. It is not a case where no action was taken on the plaintiff s letter dated 29th July, 1981 within a reasonable time. This issue is. therefore, decided against the plaintiff. Issues Nos. 5 and 6 (a) ( 26 ) THE submission of the learned counsel for the plaintiff is that Article 8 of the agreement in dispute does not give the power to the Ministry of Works and Housing to appoint an arbitrator. This aspect has been considered at length under Issue No. 2. The mentioning of the word by in this Article gives an absolute power to the Ministry for the appointment of an arbitrator. ( 27 ) THE scope of the word to has also been taken note of. The plaintiff having agreed to refer the disputes to an arbitrator by sending their letter which was received by the Ministry on 29th July 1981, there is no scope for the plaintiff to allege that by virtue of this Clause the Ministry cannot appoint an arbitrator. Article 8 is wide enough and the disputes having arisen between the parties, an arbitrator has to be appointed to decide the same. ( 28 ) AS a result of the above discussion the matter is referred to the Secretary, Ministry of Works and Housing, Government of India, New Delhi, who may in turn appoint an arbitrator within a period of three months from today to decide the disputes and differences arisen between the parties within the statutory period. No order as to costs.