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2000 DIGILAW 666 (DEL)

AKSHAYA JAIN v. AIRPORT AUTHORITY OF INDIA

2000-08-10

MUKUL MUDGAL

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Mukul Mudgal ( 1 ) THIS is an arbitration petition, on behalf of the petitioner, under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the act ) seeking the appointment of an arbitrator. ( 2 ) THE petitioner s case is as follows:- (a) The petitioner is a firm of Architects and Interior Design Consultants. The respondent is the Airports Authority of India. A design competition was held for the work of construction of a Civil Aviation Training Centre at Bamrauli, Allahabad. After being successful in the design competition, the petitioner entered into an Agreement on 20th November, 1989 with the respondent (which was formerly known as National Airports Authority of India and is now known as Airports Authority of India) for the construction of a Civil Aviation Centre at Bamrauli. The petitioner was to provide architectural and engineering services as per the said Agreement. The petitioner was able to complete the work with due diligence on 30th April, 1997 and the said project was awarded JITA Award-1999 for "excellence in Architecture" by the Indian Institute of Architects. Despite the aforesaid award and completion of work the respondent failed to release the dues to the petitioner and wrongly withheld the amounts due to the petitioner. It is. the case of the petitioner that even though the bills of the petitioner were to be settled within six months from the completion, the bills were not so settled. The petitioner addressed several letters to the respondent for payment of its dues and settlement of its pending bills but there was no response from the respondent though verbal assurance were given to the petitioner. Finally the petitioner issued a letter dated 26. 5. 1999 calling upon the respondent to clear the dues of the petitioner within one month failing which the petitioner stated that it would invoke the arbitration clause. There was no response to the said letter dated 26. 5. 1999 and petitioner sent another letter dated 5th July, 1999 calling upon the respondent to appoint within 30 days the Sole Arbitrator in terms of the Agreement between the parties. The arbitration clause in the agreement between the parties reads as follows:- "12. Arbitration: In case of any dispute arising out of this agreement, the same will be referred to the Sole Arbitrator to be appointed in writing by the Chairman, National Airports Authority. The arbitration clause in the agreement between the parties reads as follows:- "12. Arbitration: In case of any dispute arising out of this agreement, the same will be referred to the Sole Arbitrator to be appointed in writing by the Chairman, National Airports Authority. The decision of the Chairman, National Airports Authority will be final and binding for all matters arising out of this agreement. However, the provisions of Indian Arbitration Act, 1940 will apply to such proceedings. " ( 3 ) BY its letter dated 28th July, 1999, the respondent did not release any payment to the petitioner demanded in the letter dated 26th May, 1999 and failed to appoint the Arbitrator. Significantly the letter of the respondent dated 28. 7. 1999 did not even refer to the petitioner s letter dated 5. 7. 99 relating to the demand for appointment of an arbitrator within 30 days. Thereafter several reminders were given to the respondent to appoint the arbitrator but no action was taken by the respondent to do so. Following the letter of the respondent dated 28th July, 1999, the petitioner sent a reply on 28th September, 1999 replying to the averments of the respondent in the said letter dated 28th July, l999 reiterating the delay in processing and clearing their bills. On l2th October, 1999 the petitioner sent another letter to the respondent reiterating the quest lor appointment a Sole Arbitrator within 30 days which request was first made on 5th July, 1999. There was no response to the said letter. Another reminder was sent on 26. 11. 1999 again reiterating the demand for an appointment of an Arbitrator within thirty days made on 5th July, 1999 and no reply was received even to the said letter. Thereafter having waited for a period of about 5 months, the present petition was Filed. By this said petition appointment of an independent arbitrator preferably a retired Judge of this Court was sought as the respondent failed to appoint an arbitrator in spite of repeated demands. This petition came up for hearing on 1st May, 2000 and notice. was issued on the said date. The order-of this Court issuing Notice also stated that if the notice is served within a week, the reply to the petition was to be filed within four weeks from the date of receipt of notice and notice was made returnable on 17th July, 2000. was issued on the said date. The order-of this Court issuing Notice also stated that if the notice is served within a week, the reply to the petition was to be filed within four weeks from the date of receipt of notice and notice was made returnable on 17th July, 2000. On 17th July, 2000 the counsel for the respondent appeared in this Court and slated that the respondent after the issue and service of notice by this Court, had appointed one Mr. M. P. Patkar of Bombay as arbitrator. The Court was also informed by the petitioner that the Council of Architecture which is a statutory body under the Architects Act, 1972 was involved in selecting the best design in the competition lor the project of Civil Aviation Training Centre. For this purpose, the petitioner had relied upon Clause 2. 1 of the Document for. Limited Architectural Competition for the Civil Aviation Training Centre issued by the respondent involved in the present ease. The said jury panel incorporates the President of the Council of Architecture of India as a Member. As per clause 3. 3 even the fees payable to, and conditions of appointment of the architect selected by the Jury was to be fixed by the promoters in consultation with the Jury and was to be comparable to the scales of fees recommended by the Council of Architecture. The learned counsel for the petitioner has also relied on Explanatory Notes in respect of limited architectural competition conducted by the respondent for the present project and the answer given by the respondent in response to a query was that the fees payable to the selected Architect would be accordance with the recommendations of the Council of Architecture. The above clauses emanate from the documents of the respondents which were handed over in court by the learned counsel for the petitioner and taken on record and there is no dispute that these are the documents of the respondent. ( 4 ) SINCE the respondent itself had involved the council of Architecture in the selection of the Architects and the fees and terms were comparable to the fees and terms as fixed by the council, this Court had issued notice on 17th July, 2000 to the Council of Architecture to suggest 3 names for appointment as arbitrators. ( 4 ) SINCE the respondent itself had involved the council of Architecture in the selection of the Architects and the fees and terms were comparable to the fees and terms as fixed by the council, this Court had issued notice on 17th July, 2000 to the Council of Architecture to suggest 3 names for appointment as arbitrators. Pursuant to the Order of this Court dated 17th July, 2000, a penal of three names had been sent by the Council of Architecture. ( 5 ) THE learned counsel for the respondent has sought to resist the appointment of in arbitrator by this Court by saying that on 13th June, 2000 the, Chairmen of the respondent-Airports Authority of India has appointed Mr. M. P. Patkar of Bombay as the sole Arbitrator as per Clause 12 of the Agreement and it was pleaded that the petition has become infructuous and deserved to be dismissed. It has been further pleaded that the it is desirable to appoint an arbitrator according to the terms of the contract and the appointing authority has not been recalcitrant in appointing an arbitrator after considering the request and ascertaining the dispute and admissibility thereof. It has also been pleaded that the present petition is barred under sub-section (2)and (3) of Section 69 of the Partnership Act. as no proof has been submitted that the petitioner-firm is registered under the Partnership Act. ( 6 ) THE learned counsel for the respondent was asked whether he had objection to any of the three names sent by the Council of Architecture for appointment as Arbitrator. He was in fact asked to indicate which of the three names was acceptable to him. He was further asked what purpose, if any, was to be served by having an Arbitrator in Mumbai in respect of the claims raised, as the petitioner and the respondent are both based in Delhi. The learned counsel for the respondent stated that he could not support the appointment of an arbitrator at Bombay and that the said Arbitrator in Bombay could be substituted but he submitted that instead of substitution from the panel given by the Council of Architecture, the substitution should be from panel of 5 names now given by the respondent. The learned counsel for the respondent stated that he could not support the appointment of an arbitrator at Bombay and that the said Arbitrator in Bombay could be substituted but he submitted that instead of substitution from the panel given by the Council of Architecture, the substitution should be from panel of 5 names now given by the respondent. When the learned counsel for the respondent was asked as to whether he had any objection to any of the names suggested, by the Council of Architecture, he was not agreeable to the first and second name. He had no comments to make about the three name. ( 7 ) IT is significant to not that since 5th July 1999, when the petitioner sought the appointment of arbitrator within 30th days, the petitioner had been repeated requesting the respondent to appoint an arbitrator, reminder was sent on l2th October, 1999 as well as 26. 11. 1999. The respondent in fact had gone to the extent denying the claims; of the petitioner by its latter dated 5th July, 1999 in response to letters dated 26. 5. 1999 and 5. 7 sent by the petitioner. Thus the respondent in the month 5th July, 1999 had denied the claims of the petitioner. Thereafter there was another reminder by the petitioner 28. 9. 1999 for release of their payment. On 12. 10. 1999 reminder was sent for reiteration of the latter dated July, 1999 for appointing an arbitrator and then again 26. 11. 1999 a reminder was sent by the petitioner reiteration of the letter dated 5th July,1999 and 12. 10. 1999 for appointment of an arbitrator. No action of any kind taken by the respondent even after the third reminder action appears to have been taken only after the service this Court s notice issued on 1st May. 2000 and signification even the reply as stipulated by this Court s order dated 1st May,2000 was not filed within the time specified even the notice was served on 8th May, 2000 within one week the date of the issue of the order dated 1st May,2000. Thus it is clear that the respondent have been indifferent and indeed negligent in responding to the pleas of the petitioner in appointing an Arbitrator. The-respondents have totally ignored the three letters sent by the petitioner for appointment of an arbitrator for almost 11 month. Thus it is clear that the respondent have been indifferent and indeed negligent in responding to the pleas of the petitioner in appointing an Arbitrator. The-respondents have totally ignored the three letters sent by the petitioner for appointment of an arbitrator for almost 11 month. In fact to begin with the respondents totally denied, the claims raised by the petitioner. The appointing of an Arbitrator in Mumbai in respect of the petitioner and the respondent. . Who are both in Delhi, is prima facie inexplicable. The question, therefore involved in the present petition is, as to whether upon the refusal of the respondent to appoint an arbitrator in spite of three reminders for over almost a year is this Court entitled to appoint an arbitrator? The learned counsel for the petitioner has relied upon the following judgments reported as Mohinder Kumar Jain v. Beas Construction Board and Anr. , 1999 (2) ALR 566 (SC); Larsen and Toubro Limited v. Konkan Railway Corporation Ltd. , 1999 (2) ALR 354 BOM; M/s. G. Ramachandra Reddy and Co. v. Chief Engineer Madras Zone, Military Engineering Service, 1994 (4) JT 181 ; Nandyal Coop. Spinning Mills Ltd v. K. V. Mohan Rao, 1993 (2) SCC 654 ; M/s. May fur Industries Ltd. v. Union of India, AIR 1998 Delhi 215 and K. C. Sharma v. D. P. A. , AIR 1998 Delhi 235 to contend thai an independent arbitrator can be appointed by the Court. The learned counsel for the respondent has relied upon the following judgments reported as Sundaram Finance Ltd v. NEPC India Ltd. , AIR. 1999sc565; Avtar Singh Cbadha v. MCD and Anr. , 1998 (1) ALR 397; S. S. Jetley v. DDA, 1998 (1) ALR 224; S. K. Gupta v. DDA, 2000 (1) ALR 562; Subhash Projects and Marketing Ltd. v. South Eastern Coalfield Ltd. , 1998 (Suppl) ALR 357 to contend that this Court could not appoint/substitute the arbitrator. ( 8 ) IT is also necessary to extract relevant provisions of Section 11 of the Arbitration and concilation Act, 1996 to consider the disputes raised to the present case. The relevantprovisions of Section 11 read as follows:- "11. Appointment of arbitrators. (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrators or arbitrators. The relevantprovisions of Section 11 read as follows:- "11. Appointment of arbitrators. (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrators or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one-arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding arbitrators. (4) If the appointment procedure in sub-section (3) applies and - (a) a Parly fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a solo arbitrator, if the parties fail to agree on the arbitrator within thir ty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties, (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; :or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means lor securing the appointment. " (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.- (8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to- (a) any qualifications required of the arbitrator by the agreement of the parties, and (b) other consideration as are likely to secure the appointment of an independent and impartial arbitrator. (9) The learned counsel lor the petitioner has relied upon a judgment in Nandyal Co-operative Spinning Mills ltd. v. K. V. Mohan Rao, (1993) 2 SCC 654 wherein it has been held that the application for appointment of an arbitrator by the Court is maintainable when an arbitrator has not been appointed after the expiry of 15 days as envisaged under Section 8 (1) (a) of the Arbitration and Conciliation Act. 1940. ( 9 ) THE Hon ble Supreme Court in the above judgment while analyzing Section 8 (1) (a) of Arbitration Act, 1940 held as follows:- "it would thus be clear that if no arbitrator had been appointed in terms of the contract within 15 days from the date of receipt of the notice, the administrative head of the appellant had abdicated himself of the power to appoint arbitrator under the contract. The Court gets jurisdiction to appoint an arbitrator in place of the contract by operation of Section 8 (1) (a ). " ( 10 ) THE Hon ble Supreme Court in M/s G. Ramachandra Reddy and Co. v. Chief Engineer, Madras Zone, Militry Engineering Service, JT 1994 (4) SC 181 held that when a notice was given to the opposing contracting parly to appoint an Arbitrator and if no action has been taken, it must be deemed that he has neglected to act upon the contract. Significantly in the above judgment the Hon ble Supreme Court held as follow: - "the Division Bench, therefore, was not right in holding that the respondent has by giving option to the arbitrator out of the five named persons had left it to the appellant to appoint an arbitrator and allowing appellant to appoint an arbitrator. " ( 11 ) EVEN in the present case after the notice of this petition was served, the petitioner has been sought to be given such an option by the respondent. " ( 11 ) EVEN in the present case after the notice of this petition was served, the petitioner has been sought to be given such an option by the respondent. ( 12 ) THE learned counsel for the petitioner has further relied upon a judgment in M/s Meryfur Industries Ltd. v. Union of India, AIR JW8 Delhi 215 to contend that the Arbitrator could be appointed by the Court. In the aforesaid judgment which is based on the 1940 Act while construing Section 8 this Court has held:- ". . . . . . . IN this case, arbitration clause in the contract provided for referring the disputes for arbitration to the Chief Engineer/director of Storage, Ministry of Food, Government of India and his decision was to be final and binding. However, the post of Director of Storage, Ministry of Food was abolished and no person holding that post was available for arbitration. Chief Engineer though available refused to act. On respondent-company moving the Court under Section 8 of the Act appoint another arbitrator, the contention put forward on behalf of the appellant was that there was a named arbitrator even though he was named by office it was not open to the Court to supply vacancy in his place under Section 8 (1) (b) of the Act. However, this argument was repelled holding that the Court had no power to supply the vacancy under Section. 8 (1) (b), only if the arbitration agreement did show that the parties did not intend to supply the vacancy and if no such intention could be called out from the arbitration clause, the Court could supply the vacancy. "it, may be noticed that the aforementioned sub-clause (iii) of clause 24 (arbitration clause) is identical to clause 65. 1 of the contract in Nandyal Co-op. Sipining Mills Ltd. s case (supra ). It is admitted by the respondent that appointment of R. K. Gupta in place of B. N. Nani as arbitrator was made by DGSandd much beyond the period of 15 days from the receipt of the petitioner s notice under Section 8 of the Act. Thus thew ratio in Nandyal Coop. Mills case (supra) applies on all fours to the facts of this case. In these petitions Court gets the jurisdiction to appoint arbitrator (s) by operation of Section 8 (1) (b) of the Act. Thus thew ratio in Nandyal Coop. Mills case (supra) applies on all fours to the facts of this case. In these petitions Court gets the jurisdiction to appoint arbitrator (s) by operation of Section 8 (1) (b) of the Act. Submission referred to above advance on behalf of the respondent is, therefore, repelled being without merit. . . . " ( 13 ) THE learned Single Judge of this Court thus held that the ratio in Nandyal Coop. Spinning Mills case applied and the Court gets the jurisdiction to appoint an arbitrator when the arbitrator was substituted much beyond a period of 15 days from the receipt of the petitioner s notice by the respondent. The Court proceeded to appoint a retired Judge as an independent arbitrator in the aforesaid judgment. ( 14 ) IN the case of Larsen and Tourbo Limited v. Konkan Railway Corporation Limited, 1999 (2) Arb. L. R. 354 the Bombay High Court in para 11-has held as follows:- "from the above discussion, it is clear that when a party applied to the Chief Justice or the person designated by him. under. sub-section (6) of Section 11 \ of the Act for appointment of arbitrator/arbitrators on -the failure of the appointing authority to act as required under the agreed procedure, it is the duty of the Chief Justice or the, person designated by him to appoint arbitrator/arbitrators himself haying due regard to the considerations set out in sub-section (8) of Section 11 of the Act which, inter-alia, contemplates appointment of independent and impartial arbitrator. The power of the Chief Justice or the person designated by him under sub-section (6) of Section 11 of the Act is to take the necessary measure himself, that is, to make the appointment and not merely order the recalcitral party or the appointing authority to act. " ( 15 ) IN the case of Mohinder Kumar Jain v. Beas Construction Board and Another, 1999 (2) Arb. L. R. 566, the Hon bic Supreme Court in para 2,3, and 4 held as under:- "2. The appellant made a request to the Chief Engineer by serving a notice upon him to appoint an Arbitrator within 15 days of the receipt of the said notice on 7-2-1988. However, within the period stipulated in the notice, the Chief Engineer did not appoint the Arbitrator. The appellant made a request to the Chief Engineer by serving a notice upon him to appoint an Arbitrator within 15 days of the receipt of the said notice on 7-2-1988. However, within the period stipulated in the notice, the Chief Engineer did not appoint the Arbitrator. Thereafter the appellant filed an application as provided under Section S of the Arbitration Act, 1940 before the Court of Senior Sub-Judge, Chandigarh. The trial Court allowed the-application and directed the appointment of an Arbitrator. Aggrieved by that order, the respondent filed a revision petition in the High Court and the High Court look the view that an application under Section 8 of the Act was not proper and if at all the appellant ought to have invoked Section 20 therefore and thus there was no occasion for the Court to appoint an Arbitrator. The High Court allowed the appeal and dismissed the application filed by the appellant. That is why this appeal has been presented before us. 3. Learned counsel appearing for the appellant drew our attention to the decision of this Court in Nandyal Co-op. Spinning Mills Ltd. v. K. V. Mohan Rao, which has exhaustively considered an incidental situation and look the view that where a contract authorises a party to appoint an Arbitrator, but no Arbitrator is appointed by that party within lime stipulated in the notice served by the other party, Court would get jurisdiction in terms of Section 8 of the Act. 4. Applying the aforesaid principle to the facts of the present case, we set aside the order made by the High Court and restore that of the trial Court. Now the Arbitrator appointed by the trial Court shall proceed with the matter as expeditiously as possible. " ( 16 ) IN so far as the Section 11 of the Arbitration and Conciliation Act, 1996 is concerned, a judgment of the learned Single Judge of this Court in A. A. No. 45/98 with A. A. Nos. 46 and 47/98 dated 23rd February, 2000 entitled as B. W. L. Lid. v. MTNL held as follows:- "it has now become common place for persons who have retained this power of appointment of an Arbitrator, not to act at all or to act with such obduracy as to render an Arbitration clause totally meaningless. 46 and 47/98 dated 23rd February, 2000 entitled as B. W. L. Lid. v. MTNL held as follows:- "it has now become common place for persons who have retained this power of appointment of an Arbitrator, not to act at all or to act with such obduracy as to render an Arbitration clause totally meaningless. The vehemence with which the present Petition was opposed, often caused me to forget that it was only the appointment of an Arbitrator to adjudicate upon the claims raised by both the parties and not the disposal of Objections, that was in debate. After hearing lengthy arguments it would be an abdication of judicial duly if the Respondents: were still permitted to make an appointment of the Arbitrator. The state is expected to act without arbitrariness and with fairness and in furtherance of the well-being of its citizens. It is also expected to know the law, especially as laid down by the Supreme Court. It cannot be excused if its action tantamount to emasculation the laws - i. e. of expeditious disposal of disputes through arbitration. Apart from the logistic considerations, i. e. , encouraging vexatious and obdurate failure to act accordance with and in continuity with the contract between parties, there is one further consideration which has persuaded me to make an appointment of an independent person as an Arbitrator. The decision to oppose the present petition has been taken by the very officer who is to act as the Arbitrator. He has already then a view in the case and has issued instructions and then action for their implementation. The preponderance of. likelihood is that he or his nominee would uphold his view. Having already decided held that the Department is justified in claimed liquidated damages, and having declined the petitioner s request for the appointment of an Arbitrator, there is a strong pervading risk that a fair decision would not be rendered. Since this Officer also have the power to nominate an Arbitrator, presumably-also in service, it is quite possible that his bias would permiate to his nominee. Justice has not only to be done but must also appear to be done. As observed above had the respondents agreed to appoint an Arbitrator, albeit after some delay. I would have not felt compelled to appoint an Arbitrator de hors the Arbitrator Clause. Justice has not only to be done but must also appear to be done. As observed above had the respondents agreed to appoint an Arbitrator, albeit after some delay. I would have not felt compelled to appoint an Arbitrator de hors the Arbitrator Clause. The decision of the Apex Court in Rajan s case would not have application to the present circumstances in view of the recalcitrant refusal of the respondent to make an appointment of an Arbitrator. ( 17 ) IN my view the aforesaid judgment succinctly and felicitously summarizes the spirit behind Section 11 of the Arbitration Act and the malaise which impedes the expeditious disposal of disputes leading to avoidable litigation. A similar view has been taken in the judgment of this Court dated 8th August, 2000 in AA No. 344/1998 and the judgment of this Court in case International Security and Intelligence Agency Ltd. v. Municipal Corporation of Delhi, 1996 (I)Arb. L. R. 450. ( 18 ) THE learned counsel for the respondent has relied" upon judgment in Delhi Development Authority v. Kochhar Construction Work and Another, (1998) 8 SCC 559 to contend that the bar of institution of a suit by unregistered firm applies even to proceedings instituted under Section 20 of the Arbitration Act. The same view was taken in the judgment of this Court in Mis Paras Ram Darshan Lal v. Union of India and Another, AIR 1979 Delhi 135. The learned counsel for the petitioner disputed this averment and has since filed the Certificate of Registration of the petitioner-firm. Accordingly this plea of non-registration of the petitioner-firm has to merit and is rejected. ( 19 ) THE learned counsel for the respondent has relied upon a judgement of the Madhya Pradesh High Court in Subhash Projects and Marketing Ltd. v. South Eastern Coalfield Limited, 1998 (Suppl) Arb. L. R. 357 wherein the learned Single Judge of the Madhya Pradesh High Court held as follows:- "in the instant case, after the dispute was raised and a request for appointment of an arbitrator was made by the applicant company, the non-applicant might have failed to make the appointment within the notice period but for that reason alone it cannot be held that the non-applicant had lost its right to make an appointment in accordance with the agreed procedure contained in the arbitration clause. Merely because such appointment of sole arbitrator has been made during pendency of proceedings under Section 11, or is no ground to hold that the appointment made and the award passed were illegal. None of the provisions contained in various sub-sections of Section 11, particularly sub-sections (2) and (6), which alone are applicable to the facts of this case, contains any prohibition against any of the parties to the arbitration agreement to make appointment of an arbitrator in accordance with the arbitration clause. The question whether such sole arbitrator has acted fairly and independently is a question which cannot be gone into in these proceedings and that can be raised only by way of challenge to the arbitration award on the ground available under Section 34 of the Act. " ( 20 ) A similar view was also taken by the Madhya Pradesh High Court in Ashok Coal Depot v. South Eastern Coal Fields Ltd. , 2000 (2) ALR 286. ( 21 ) IN the case of S. S. Jetley v. Delhi Development Authority and Others, 1998 (1) Arb. L. R. 224 the learned Single Judge of this Court has held that the arbitrator was to be appointed within six weeks. However, there is no discussion of the scope and ambit of Section 11 (6) in so far as appointment of an independent arbitrator is concerned. Para 5 of the aforesaid judgment summarizes the main plea as under:- "the main plea which arises for consideration is as to whether the claims which are now submitted for adjudication are time-barred in terms of the provisions of clause 25 of the agreement. The applicant has, however, contested the averments of the respondents on the basis that the matter has been kept open by the respondents and they even continued to pay on account payments even in July, 1994 and October, 1994 and the respondents have not yet settled the final bail. These questions relate to the examination of facts and will require evidence to be recorded and the Arbitrator will also have to consider the interpretation of the terms of the agreement to adjudicate the claims of the applicant. The law is settled by the judgment of the Supreme Court in Union of India and Another v. Mis L. K. Ahuja and Co. The law is settled by the judgment of the Supreme Court in Union of India and Another v. Mis L. K. Ahuja and Co. , that such questions are required to be looked into by the arbitrator who has the exclusive jurisdiction to decide the questions when -both the parties have disputed the averments made by each other. Similar view has been taken by this Court in Budhiraj Electrical v. Mis. Riles. The arbitrator will be at liberty to construe the terms of the agreement and the effect of a particular clause and will be entitled to take a view after giving opportunity to both the parties to address on that question. " ( 22 ) I fail to see how this judgment is of any assistance to the set out by the learned counsel for the respondent. In the aforesaid judgment there is no discussion of Section 11 (6) and the case is related to the jurisdiction of the appointed arbitrator. ( 23 ) THE learned counsel for the respondent has. also relied upon a judgment of this Court in Avtar Singh Chadha v. MCD and Anr. , 1998 (1)ALR 397 to contend that an appointment made beyond the period stipulated would not vitiate the appointment of an arbitrator by the appointing authority. This judgment in Avtar Singh Chadha s case (supra) is, however, based upon the following factual foundation us recorded in the judgment:- * ". . . . . . . EVEN in the letter dated the 25lh January, 1997 whereby the petitioner invoked the arbitration dause and requested respondent No. 2 to appoint an arbitrator no such time-limit has been specified by the petitioner for the appointment of an arbitrator. On a perusal of the above said document, a copy of which is at pages 33 and 34 of the paper-book (documents file), it is apparent that a simple request to appoint an arbitrator in terms of the arbitration clause has been made by the petitioner to respondent No. 2 without specifying any time-limit. In the absence of the above facts, the argument advanced by the learned Counsel for the petitioner, that the appointment was not made within the stipulated lime-limit, in my opinion, is devoid of substance. In the absence of the above facts, the argument advanced by the learned Counsel for the petitioner, that the appointment was not made within the stipulated lime-limit, in my opinion, is devoid of substance. " ( 24 ) IN my view the Court in the above judgment proceeded inter alia on the basis that in the letter dated 25-1-1997 by which the petitioner invoked the arbitration clause no time limit has been specified by the petitioner in seeking the appointment of an arbitrator. The above judgment in my view does not assist the respondent as the said judgment is primarily based upon the failure of the petitioner/claimant in giving a specified lime in seeking the appointment of an arbitrator. In my view the facts of the present case arc clearly distinguishable as a clear time of 30 days was specified in the 1st notice dated 5th July, 1999 issued by the petitioner to appoint an arbitrator and the said request to appoint an arbitrator was reiterated in every subsequent reminder i. e. , these issued on l2th October, 1999 and 26th November, 1999. ( 25 ) RELIANCE has also been placed upon the case of S. K. Gupta v. Delhi Development Authority and Others, 2000 (1) Arb. L. R. 562 by the respondent. The above decision dealt with a failure to appoint an arbitrator in lime wherein the Court in condoning the delay in appointing the arbitrator has held hat the delay was on account of reasons stated in the affidavit and was neither deliberate nor due to any callous neglect or out of any intention of not complying with the orders given by this Court. The above judgment obviously cannot come to the aid of the respondent. In the present case no plausible explanation or indeed any explanation at all has been given for the prolonged delay in appointing the arbitrator. All that is stated in the reply is: "in any case, this Hon ble Court may be pleased to exercise sound judicial discretion as considering that it is desirable to appoint an Arbitrator according to the terms of the contract, the appointing authority has not been recalcitrant to appoint an Arbitrator after considering the request objectively and ascertaining (he existence of disputes and admissibility there of under the arbitration clause, and has appointed the Arbitrator in accordance with the arbitration. agreement between the parties. agreement between the parties. " ( 26 ) I would adopt and indeed am bound by the view taken by the aforesaid judgments of this Court relied upon by the petitioner and the Bombay High Court in Larsen and Tourbo s case (supra) in preference to the view of the Madhya Pradesh High Court expressed in Ashok Coal Depots case (supra) and Subhash Projects and Marketing Ltd. s case (supra ). ( 27 ) THUS there is no reason of any kind given to explain the delay of almost a year in appointing an arbitrator. In fact as per the letter of the petitioner dated 5th July, 1999 the respondent was reminded about the unpaid bills one of which was pending since 28th December, 1995. The facts of this case fall within the scope of the callous neglect referred by the aforesaid judgment of the learned Single Judge in S. K. Gupta v. DDA s case (supra) in considering the question of delay. In view of the facts of the present case it is not possible to accept the stand of the respondent that it had not been recalcitrant in appointing an arbitrator. In fact the recalcitrance of the respondent is accentuated by the fact that while both the parties are based in Delhi, an arbitrator from Bombay has been appointed in respect of a structure constructed at Bamrauli, Allahabad. This itself would have occasioned avoidable inconvenience and unnecessary to both the parties. However, the counsel for the respondent very fairly did not support the appointment of a Bombay based arbitrator. ( 28 ) THE learned counsel for the respondent also stated the decisions interpreting Section 8 of the 1940 Act would have no bearing on the present case as the Section is differently worded. ( 29 ) HE has relied upon M/s. Sundaram Finance Lid, v. M/s. NEPC India Ltd. , AIR 1999 SC 565 where the Hon ble Supreme Court has held as follows: "the 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually. lead to misconstruction, in other words the provisions of 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually. lead to misconstruction, in other words the provisions of 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. In order to get help in construing these provisions it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act. " ( 30 ) IN fact in Sundaram Finance Co. (supra) while observing that the interpretation of the Arbitration Act 1940, may not hold good for the interpretation of the 1996 Act, the Hon ble Supreme Court had observed that the interpretation should be guided by the UNICTRAL (United Notions Commissions on International Trade Law) Model Law. Articles 6 of UNICTRAL Rules which relates to the procedure for appointment of an arbitrator reads as follow: - "6 (1), If a sole arbitrator is to be appointed, either party may propose to the other: (a) The names of one or more persons, one of whom would serve as the sole arbitrator, and (b) if no appointing authority has been agreed upon by the parties, the name or names of one or more institutions or person, one of whom would serve as appointing authority. (2) If within thirty days after receipt by a party of a proposal made in accordance with paragraph 1 the parties have not reached agreement on the choice of a sole arbitrator, the sole arbitrator shall be appointed by the appointing authority agreed upon by the parties. If no appointing authority has been agreed upon by the parties, or if the appointing authority agreed refuses to act or fails to appoint the arbitrator within sixty days of the receipt of a party s request therefore, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority. ( 31 ) THUS it is evident that even in international arbitration a time frame of 60 days has been provided after which on the failure of the appointing authority to appoint an arbitrator the appointing authority s right to appoint passes on to the Secretary- General of the Permanent Court of Arbitration who is required to designate an appointing authority. Therefore, the period within which the arbitrator, be appointed by the appointing authority in a domestic arbitration can in no event be more than sixty days. ( 32 ) THE only difference in Section 11 (6) and Section 8 (1) (a) is that the 15 days time is not prescribed under Section 11 (6 ). It is significant to consider in this respect the statement of objects and reasons of the Arbitration and Conciliation Act, 1996 which reads as follows:- "the law on arbitration in India is at present subsequently contained in three enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1963. It was widely felt that the 1940 Act, which contains ` the general law of arbitration, has become outdated. The Law Commission of India, several representative bodies of trades and industry and experts in the field of arbitration have proposed amendments to this Act to make it more responsive to contemporary requirements. It is also recognised that our economic reforms may not become fully effective if the law dealing with settlement of both domestic and international commercial disputes remains out of tune with such reforms. Like arbitration, conciliation is also getting increasing world-wide recognition as an instrument for settlement of disputes. There is, however, no general law on the subject in India. " "4. The main objectives of the Bill are as under:- (ii) To make provisions for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. " ( 33 ) THE key phrases in the above objectives are the efficient disposal of arbitration and to make the Act responsive to contemporary requirements. In the context of liberalisation and economic reforms and the development of information technology, an expeditious disposal is the obvious implication. One of the reasons for the enactment for the 3996 statute was to provide for expeditious disposal of the disputes by arbitration in view of the prolonged period taken in the arbitrations conducted under the 1940 Act. While the interpretation given by the Hon ble Supreme Court in (a) Nandyal Co-op. Spinning Mills (b) G. Ramachadra Reddy and (c) Mohinder Kumar Jain, based upon the 1940 Act may not have a direct bearing yet they may be of some assistance when considering the question of expedition. While the interpretation given by the Hon ble Supreme Court in (a) Nandyal Co-op. Spinning Mills (b) G. Ramachadra Reddy and (c) Mohinder Kumar Jain, based upon the 1940 Act may not have a direct bearing yet they may be of some assistance when considering the question of expedition. In fact the underlying rationale tor the 1996 enactment i. e. the key clement of dispatch, is discernible from various provisions of the Act such as Section 11 (4) [already extracted and Section 33 (1) (2) (5), Section 34 (3) and Section 36 which read as under:- "s. 33 (1): Correction and interpretation of award; additional award- (l) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties- (a) a party, within notice to the other parly, may request the arbitral tribunal to correct any compulation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award; (b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal. to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. . Section 34 (3): An application for setting aside may not be made after three months have elapsed from the dale on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the dale on which that request had been disposed of by the arbitral tribunal:. Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said periodof three months it may entertain the application within a further period of thirty days, but not thereafter. Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said periodof three months it may entertain the application within a further period of thirty days, but not thereafter. Section 36: Enforcement- Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (V of 1908) in the same manner as if it were a decree of the Court. ( 34 ) ALL the above provisions show that the dominant feature underlying the 1996 statute is expeditious disposal. In particular even Section 11 (4) and Section 11 (5) clearly set out a 30 day lime limit for taking action by a party when more than one arbitrator is to be appointed or parlies have failed to agree upon a procedure. Thus even though Section 11{6) does not stipulated an explicit lime limit, yet inherent in the 19% enactment and other sub-section of Section 11 is the element of expedition. Section 11 (4) and (5) certainly provides a guidances if not a limit to the lime taken by the appointing authority. By no stretch of imagination can a period of about 11 months, taken by the respondent after 5th July, 1999, when the first demand for appointment of an arbitrator was made, be considered reasonable. ( 35 ) IF even under the 1940 Act a delay of fifteen days was frowned upon by the Hon ble Supreme Court in Nandyal Co-operative Spinuing Mills case (supra) and G. Ramachandra Reddy s case (supra) surely a delay of almost a year under the 1996 Act would support the case of the petitioner even more strongly. ( 36 ) THE conduct of the respondent shows that its attitude has been of indifference to the repeated demands for payment made by the petitioner as far back as 28th December, 1995. Initially there was total denial of all the claims raised by ihc petitioner. Thereafter there was no response whatsoever to the repeated demands made by the petitioner seeking arbitration and the petitioner had to come to Court to seek arbitration. Initially there was total denial of all the claims raised by ihc petitioner. Thereafter there was no response whatsoever to the repeated demands made by the petitioner seeking arbitration and the petitioner had to come to Court to seek arbitration. The petitioner did not file its reply within the time frame stipulated by this Court even though it was served in accordance with this Court s Order within a week of the issue of notice. What it did instead, while losing sight of its earlier total denial of all the claims of the petitioner, was to immediately refer the matter to arbitration that too to an arbitrator in Bombay. All this clearly goes to show the. respondents have been totally unconcerned about the expeditious disposal of the-dispute which is contrary to the spirit behind arbitration which is an alternate, and expeditious mode of disposal ol disputes. There is no explanation of any kind whatsoever why an Arbitrator from Bombay was appointed as both the petitioner and the respondent belong to Delhi. In fact the learned counsel for the respondent has fairly slated that the Arbitrator from Bombay could be substituted though he has suggested his own panel of names. In lights of this the pica by the learned counsel lor the respondent that in the present proceedings the appointment of an Arbitrator could not be set aside and could be done only by an action under S. 14 loses significance. Even otherwise this appointment is purported to be done in a subjudice mutter after issuing ol notice and service thereof on the respondent. ( 37 ) IN the facts of the present case it is clear that the petitioner arc professionals with an acknowledged decree of excellence as is evident from the Y. I. I. A. Award for 1999 for Excellence in Architecture for the structure constructed by the respondent under the supervision of the petitioner. In fact it should be a matter of pride for the respondent that the building in the present case has own the award for excellence in architecture. However, continued recalcitrance and indifference on the part of the public bodies should not lead to a situation where talented professionals avoid projects of public nature. Such a situation is fraught with danger which can only lower standards as in such circumstances only professionals of indifferent merit and achievements would strive for projects of public bodies. However, continued recalcitrance and indifference on the part of the public bodies should not lead to a situation where talented professionals avoid projects of public nature. Such a situation is fraught with danger which can only lower standards as in such circumstances only professionals of indifferent merit and achievements would strive for projects of public bodies. ( 38 ) IN view of the above discussion, the arbitrator should be appointed by this Court. However, in considering the appointment of an Arbitrator, I am not inclined to accept the prayer of the petitioner to appoint an arbitrator preferably a retired Judge. The appointment of a technical person is also indicated by (he provisions of sub-section (8) of Section 11 where it has been provided that in appointing an arbitrator due regard shall be had to any qualifications required by the arbitrator by the agreement of the parties and the other considerations as are likely to secure the appointment of an independent and impartial arbitrator. Since the dispute is of an extremely technical nature some professional dealing with the subject should be appointed. The respondent itself had involved the Council of Architecture in selecting the architect and in lying down the terms and conditions of the appointed architect. In that view of the matter, I had called upon the Council of Architecture to suggest a penal of these names. After the receipt of panel of three names, the first two name were not found acceptable by the learned counsel for the respondent. No comments were made about the third name. ( 39 ) IN this view of the matter the appointment of Shri M. P. Patkar is set aside and in substitution of the name of M. P. Patker, whose appointment was not supported before me by the counsel for the respondent, I appoint the third name on the panel sent by the Council of Architecture, Shri N. S. . Chakravarthy (Former Senior Director General), Department of Telecommunications), B-27b (1st Floor), Gangotri Enclave, Alaknanda, Kalkaji, New Delhi-110019 to adjudicated upon the disputes/claims raised by the petitioner as enumerated in Para 8 (I-VII) of the petition. The parlies to appear before the said Arbitrator on 28-8-2000 at 4. 30 p. m. or at any other time or date found suitable and convenient to the said arbitrator. The parlies to appear before the said Arbitrator on 28-8-2000 at 4. 30 p. m. or at any other time or date found suitable and convenient to the said arbitrator. The Arbitrator will dispose of the disputes enumerated in Para 8 (I-V1i) of this petition within a period of four months from the dale of entering upon the reference and will DC paid the fees in accordance with the Schedule stipulated by the Council of Architecture. In view of the above, the petition is accordingly allowed and disposed of with no order as to costs. A copy of this judgment be sent directly to the Arbitrator forthwith for necessary information and compliance.