JUDGMENT V.S. Sirpurkar, J. - Admit. Heard finally with the consent of the parties, 2. This judgment shall govern appeal against Order Nos. 120/96 and 121/96 as the facts and even the parties are practically identical. By these appeals, the orders passed by the Civil Judge, Senior Division, Chandrapur appointing an arbitrator under Section 20 of the Arbitration Act, 1940 are challenged By both the orders one Shri. S.G. Mahjan of Pune is appointed as a sole arbitrator. 3. Factual Matrix is as follows: Respondent M/s. Seth Construction Company was awarded two contract of Fifty Five Lacs and one Crore Rupees approximately. In the stage of settlement of final account certain claims were denied by the appellant department and the respondent, therefore, gave a notice dated 20-9-1993 for appointment of an arbitrator in both these contracts. Probably because of the apathy on the part of department to do anything in the matter of appointment of arbitrator, the respondent proceeded to file the two applications in respect of the two contracts under Section 20 of the Arbitration Act, 1940. In these applications, it was contended that there an arbitration, clause in both the contracts which was as follows: "To execute all works referred to in the said documents upon the terms and conditions contained or referred to therein and as detailed in the General Summary hereinafter and to carry out such deviations as may be ordered vide Condition 7 of IAFW 2249 upon a maximum of Ten per cent and further agree to refer all disputes as requires by condition 70 of IAFW 2249 to the sole arbitrator of an Engineer Officer to be appointed by Engineer-in-Chief or in his absence the officer officiating as Engineer-in-Chief or Director General of Works. It specially delegated in writing by Engineer-in-Chief, Army Head Quarters, New Delhi, whose decision shall be final, conclusive and binding." It was complained in the said applications that the differences were placed for settlement by the applicant in his various communications but the same were not resolved and in fact the appellant No. 3 herein the Union of India had informed by Letter dated 31-1-1994 that there was no objection to the appointment of the arbitrator but had failed to appoint the sole arbitrator. It was further stated that the said appointment of the arbitrator should have been made within 15 days of the notice of claims and reference for arbitration which was dated 20-9-1993 and admittedly was not made and as such the application under Section 20 of the Arbitration Act was being filed. 4. A reply thereto was given by the present appellants wherein it was contended that the defendants had taken action for the appointment of arbitrator as per the contract agreement and though there was delay in appointment of arbitrator, the appointment was made property and this was conveyed to the applicant by them. It was signified that the arbitrator could be appointed only by the appointing authority named in the contract agreement and since such appointment was already made, there was no question of further appointment of the arbitrator by the Court. It was further suggested that the plaintiff/applicant could not have suggested the three names as he had done for the appointment of a sole arbitrator. Objection was also taken to the three names suggested by the plaintiff. The applications stood allowed as has already been stated earlier necessitating the present appeals. 5. Shri M. G. Bhangde, the learned Counsel for the appellants, very strenuously urged that the Court could not have taken upon itself to appoint an arbitrator of its choice particularly when the arbitrator was appointed by the Chief Engineer as contemplated in the arbitration agreement on 28-8-1995 itself. According to Shri Bhangde, even if the application was filed on 5-5-1995, the subsequent appointment before the application was ordered upon would have the effect of rendering the said application under Section 20 infractuous. Shri Bhangde stressed heavily on sub-section (4) of Section 20 of the Arbitration Act and contended that even if it was held that no arbitrator was appointed by the Engineer-in-Chief, the Court could appoint only such arbitrator as was already appointed by the parties. He pointed out that the parties had already consented for the appointment of an arbitrator in the contract agreement by a particular mode in that the parties had agreed that the arbitrator shall be such person as would be appointed by the Engineer-in-Chief. Therefore, where the Engineer-in-Chief had already made an appointment on 28-8-1995, there was no question of the Court appointing any other arbitrator. Therefore, where the Engineer-in-Chief had already made an appointment on 28-8-1995, there was no question of the Court appointing any other arbitrator. He also invited the attention of the Court to Section 4 to suggest that the parties to an arbitration agreement could agree for the arbitrator being appointed by any other person designated in the agreement either by name or as holder of any office or appointment. According to the learned Counsel, Section 20(4) has to be read in the light of Section 4 and it was liable to be hold that the words "arbitrator appointed by the parties" in sub-section (4) of Section 20 would mean and include an arbitrator agreed upon in terms of Section 4 meaning in this case any person appointed by the Engineer-in-Chief. According to Shri Bhangde, if such a person was available, then there would be no question of the Court appointing any arbitrator of its choice as has been done in the present case. In support of his contention. Shri Bhangde has relied on the Division Bench decision of this Court reported in Union of India v. M/s. Ajit Mehta & Associates, Pune ( AIR 1990 Bom. 45 = 1990(1) Arb. LR 166), as also the judgments of the other High Courts including Madhya Pradesh, Kerala and Delhi High Court. 6. Shri S. P. Dharmadhikari, the learned Counsel for the respondent, however, very strenuously urged that the legal position is no more res integra stood concluded by a decision reported in (1994)5 SCC 142 also reported in Ram Chandra Reddy & Co. v. Chief Engineer M.E.S. Madras Zone ( (1994)5 SCC 142 = 1994(2) Arb. LR 61 = AIR 1994 SC 2381 ). He has pointed out that this decision is a complete answer and it holds that if no arbitrator is appointed in terms of the contract when the notice for the same is given by the other party, the administrative head who is authorised to appoint the arbitrator is deemed to have abdicated himself of the power given to him by the contract to appoint arbitrator and as such the Court before whom an application under Section 20 is made is entitled to appoint the arbitrator of its choice. 7. 7. Considering the rival contentions, it will have be to seen as to whether while entertaining an application under Section 20, the Court can appoint an arbitrator of its choice or is bound to appoint only such person who has been already agreed to be appointed in the contract agreement in terms of sub-section (4) of Section 20 Shri Bhangde insists upon giving a strict construction to sub-section (4) and contends that where no sufficient cause is shown against filing of the agreement in the Court, the Courts as a first step would direct the parties to file the agreement but thereafter the Court has to refer the dispute to the arbitrator appointed by the parties, whether in agreement or otherwise. According to the learned Counsel, the respondent had agreed in the agreement for an appointment of an arbitrator as per the choice of Engineer-in-Chief or his representative. It would, therefore be incumbent upon the Court to appoint only such person and it would be only where the parties did not agree upon the arbitrator that the Court would proceed to appoint an arbitrator of its choice. Thus, according to Shri Bhangde, even if the matter of arbitration does not take place itself by the consent of the parties and is required to be taken to the Court under Section 20 and is channelise through it, the arbitration clauses in the agreement would have to be adhered to Shri Bhangde falls back on Section 4 where the arbitrator could be agreed to be appointed by a designated person in the agreement. Therefore, the words in sub-section (4) "arbitrator appointed by the parties" according to the learned Counsel also refer to such an arbitrator who is agreed to be appointed by any designated person and particularly in this case by the Engineer-in-Chief. According to the learned Counsel, therefore, where such a person is available, the Court has no choice but to appoint only such person as appointed by the Engineer-in-Chief. Shri Bhangde then as a necessary corollary to his argument submits that since the appointment was already made on 28-8-1995, there is no question of the Court appointment anybody else excepting the one who has been appointed by the Engineer-in-Chief. Considering plainly the language of Section 20(4), such construction does not appear to be a proper construction. Shri Bhangde then as a necessary corollary to his argument submits that since the appointment was already made on 28-8-1995, there is no question of the Court appointment anybody else excepting the one who has been appointed by the Engineer-in-Chief. Considering plainly the language of Section 20(4), such construction does not appear to be a proper construction. It will be seen that the occasion to file an application under Section 20 comes in where the difference arises in any matter to which an arbitration agreement applies. In fact, after such difference arise, the party has a choice to proceed under Chapter II where intervention of the Court would not be necessary, that is essentially to proceed to give the notice under Section 8 and where in spite of the notice no appointment is made within the prescribed time, the Court could be approached under Section 8 of the appointment of any arbitrator. However, if the party does not proceed under Section 8 it may only call upon the other party to file the agreement in the Court. Sub-section (3) provides that the Court would direct a notice to be given to all the parties to the agreement and require them to show cause as to why the agreement should not be filed, sub-section (4) then provides that where no sufficient cause is shown against the filing of the agreement in the Court, the Court would order the agreement to be filed and then make an order of reference. The real controversy comes here. 8. The controversy is as to whether the Court has to necessarily appoint an arbitrator who has already been appointed in the agreement or otherwise or whether the Court has a choice to appoint an arbitrator. From the plain language of Section 4, it does appear that once the agreement is filed, a choice lies in the party not to agree upon a particular arbitrator. The words "arbitrator appointed by the parties" may mean the arbitrator who is agreed to be appointed by any designated person in terms of Section 4. However, the further clause "or where the parties cannot agree upon an arbitrator" does provide discretion to the parties at that stage not to agree upon an arbitrator contemplated by the contract agreement and in the event of such disagreement, the Court would have all the discretion to appoint an arbitrator of its own. However, the further clause "or where the parties cannot agree upon an arbitrator" does provide discretion to the parties at that stage not to agree upon an arbitrator contemplated by the contract agreement and in the event of such disagreement, the Court would have all the discretion to appoint an arbitrator of its own. In short, the disagreement or a difference between the parties prior to approaching of the Court is the key-factor which would make available the two courses to the parties - the first via Section 8 and the second via Section 20. Now here in the present case it is an admitted position that a notice to appoint an arbitrator was given on 20-9-1993 and till 5-5-1995 nothing was done by the Engineer-in-Chief who was empowered to appoint an arbitrator. It was because of this inaction on the part of the Engineer-in-Chief that the party proceeded to file an application under Section 20. It was only after the notice was given on this application that the Engineer-in-Chief proceeded to appoint an arbitrator of his choice on 28-8-1995. Shri Bhangde (sic) that this was a good appointment. However, if that contention is accepted then the words "where the parties cannot agree upon an arbitrator" would be rendered meaningless. After all here is a case where the difference have arisen in respect of the matters to which the contract agreement applies. The party has not stopped there but has also given a 15 days' notice for the appointment of an arbitrator. However, even that notice has been ignored completely for a period of almost one year and 8 months and it is then that the party has approached the Court via application under Section 20. To say then that still the appointing authority would retain its power to appoint an arbitrator of its choice would be a sheer injustice. Further to say that the Court would have no choice but to simply appoint an arbitrator strictly in terms of the arbitration agreement would also render the further clause as a mere legislative surplusage. To say then that still the appointing authority would retain its power to appoint an arbitrator of its choice would be a sheer injustice. Further to say that the Court would have no choice but to simply appoint an arbitrator strictly in terms of the arbitration agreement would also render the further clause as a mere legislative surplusage. The correct interpretation, therefore, would be that under such circumstances where the party is required to proceed under Section 20 and where the opposing party cannot give any sufficient cause for not filing the agreement in the Court, there lies a discretion in the party not to agree upon an arbitrator whether named in the agreement or otherwise. It does not mean that the party cannot agree on the named arbitrator in the agreement. It may in the given case still be prepared for an arbitrator named in the agreement or it may still be prepared to get an arbitrator appointed by the mode agreed to in the agreement. It would be certainly a matter of the choice of such party but where there is no agreement upon an arbitrator, the Court would have the power to appoint any arbitrator of its choice or at least it would not be bound to appoint an arbitrator named in the agreement. If the contention of the appellants were to be accepted, there would be eventuality as suggested in sub-section (4) of the parties not agreeing upon an arbitrator. Indeed if there was no such discretion contemplated by the legislators in the parties not to agree the clause would not have been there. The existence of the clause itself suggests that at that state the parties could have a discretion not to agree upon an arbitrator in which case the Court would proceed to appoint an arbitrator. 9. It has to be borne in mind that in the - matters of arbitration, the agreement between the parties is of essence. In the absence of any agreement the whole concept of arbitration suffers substantially. Therefore, where the differences arise and the parties to a contract ignore the agreement, the Court intervention would be the only possible result. The Apex Court in G. Rama Chandra Reddy's case ( AIR 1994 SC 2381 ) cited (supra) has harped on this disagreement only. In that case, the facts were almost identical. Therefore, where the differences arise and the parties to a contract ignore the agreement, the Court intervention would be the only possible result. The Apex Court in G. Rama Chandra Reddy's case ( AIR 1994 SC 2381 ) cited (supra) has harped on this disagreement only. In that case, the facts were almost identical. Even there, it was Engineer-in-Chief who was to appoint a sole arbitrator to adjudicate the dispute that arose between the parties. The parties accordingly had given the notices to the Engineer-in-Chief. However the Engineer-in-Chief had failed to appoint any arbitrator. The Court having been approached by the aggrieved party vide an application under Section 20 of the Arbitration Act proceeded to appoint an arbitrator. However, in appeal the Division Bench cancelled the appointment made by the learned single Judge and directed that the appointment of an arbitrator should be made in terms of the agreement meaning thereby that the respondent could make an appointment and if he failed to do so then alone the appointment of the arbitrator made by the learned single Judge was to be deemed to have been made under Section 20. In paragraph 4 the Apex Court made a reference to Union of India v. Prafulla Kumar ( (1979)3 SCC 631 = AIR 1979 SC 14 ), and pointed out that in Prafulla Kumar's case no notice was given by the appellant to appoint an arbitrator in terms of the contract before the suit was filed and no action was taken pending the suit except contending that the matter was under active consideration. The Apex Court then made a reference to the other case Nandyal Co-operative Spinning Mills Limited v. K. V. Mohan Rao ( (1993)2 SCC 654 = 1993(1) Arb. LR 469), and proceeded to quote therefrom to suggest that if the administrator had not appointed the arbitrator in terms of contract within the 15 days from the date of receipt of notice, he had abdicated himself of the power to appoint an arbitrator under the contract and the Court got the jurisdiction to appoint arbitrator. The Court relied upon the observations in Nandyal's case where by the Apex Court had distinguished between the appointment of a named arbitrator and the appointment of the arbitrator by the administrative head. In paragraph 5 the Court proceeded to hold as follows (Para 6 of AIR 1994 SC 2381 ): "5. The Court relied upon the observations in Nandyal's case where by the Apex Court had distinguished between the appointment of a named arbitrator and the appointment of the arbitrator by the administrative head. In paragraph 5 the Court proceeded to hold as follows (Para 6 of AIR 1994 SC 2381 ): "5. Thus when the notice was given to the opposite contracting party to appoint an arbitrator in terms of the contract and if no action had been taken it must be deemed that he neglected to act upon the contract. When no agreement was reached, even in the Court between the parties the Court gets jurisdiction and power to appoint an arbitrator. Even if Section 8(a) per se does not apply, notice was an intimation to the opposite contracting party to act upon the terms of the contract and his/its non-availment entails the forfeiture of the power to appoint an arbitrator in terms of the contract and gives right to the other party to invoke the Court's jurisdiction under Section 20. In the instant case the respondent did not appoint an arbitrator, after the notice was received. The respondent averred in the written statement that it was under consideration. Even before the learned single Judge he did not even state that he was willing to appoint an arbitrator. The learned single Judge rightly exercised the power under Section 20(4) of the Act and appointed the Arbitrator. The Division Bench therefore, was not right in holding that the appellant has by giving option to the respondent to agree for appointment of an arbitrator out of the five named persons had left it to the respondent to appoint an arbitrator and allowing respondent to appoint an arbitrator. On the other hand, the appointment of an arbitrator made by the learned single Judge must be deemed to have been approved by us." Shri Bhangde however, tried to get out of the rigors of this pronouncement by pointing out that in that case before the single Judge the appointment authority had not stated that he was willing to appoint an arbitrator while in the present case such willingness was, not only shown but in fact an appointment was made on 28-8-1995. I am afraid the learned Counsel is reading the said sentence in paragraph 5 out of its context. I am afraid the learned Counsel is reading the said sentence in paragraph 5 out of its context. The essence of the observations is the disagreement between the parties to begin with and inaction of one of the parties in the matter of appointment in spite of the notice which would drive the other party to the Court. The Court has come harshly on such an inaction and has ordained that such inaction divests the appointing party is the agreement such as the present one of his power to appoint. In this view, it has to be held that the appellants herein cannot insists upon the appointment of the arbitrator as per the arbitration agreement only. 10. In view of this clear-cut pronouncement it would be futile to consider the Division Bench Judgment of this Court in Union of India v. Ajit Mehta & Associates, (supra). Shri Bhangde's main thrust in this decision was on the observations in paragraphs 21 and 25. In paragraph 21 the Division Bench went on to depict the difference in the scheme of Sections 8 and 20 of the Arbitration Act and proceeded to hold that under Section 8 once an arbitrator was named by the Court the Court became functs officio and the subsequent proceedings should be strictly as per the arbitration agreement while in Section 20 the arbitration proceedings conducted by the arbitrator appointed by the Court could be controlled by the provisions of the Act and the Court could give the directions to the arbitrator from time to time. So far as the observations is paragraph 25 are concerned, it is not necessary to consider these observations because the pronouncement in G. Rama Chandra Reddy's case (supra) is more than clear and the Apex Court has held that even if Section 8(v), was not applicable to the matters if the notice given by one party was not acted upon by the other, the other party would forfeit its power to appoint the arbitrator. The observations in paragraph 25 of the decision are in the following terms : "It is only the provision of Section 20(4) that can be availed of in such circumstances and even in that case the only direction that the Court as give in the first instance, is to the appointing authority to name the arbitrator." In view of what has been held in G. Rama Chandra Reddy's case it must be held that the law laid down in paragraph 25 is impliedly over ruled. For the similar reasons the other decisions relied upon by Shri Bhangde in Parganihs & Agnihotri Raipur (Firm) v. Union of India (1977 MPLJ 252); Union of India v. Matahi ((1987) I Ker LT 259); Ved Prakash Mithal v. Union of India (AIR 1984 Delhi 325 = 1985 Arb. LR 443) and Government of NCT of Delhi v. M/s. Uttam Singh Duggal & Company Limited (1997(1) Arb. LR 227), cannot be of any consequence. 11. In the result for the reasons stated, the appeals are dismissed with costs. Appeals dismissed.