S. B. SINHA, J. ( 1 ) THIS application under section 11 (5) and 11 (6) of the Arbitration and Conciliation Act, 1996 (for short the act ) has been filed by the petitioner herein for appointment of an independent arbitrator for adjudication of the claims and disputes between the parties hereto. Facts: ( 2 ) THE applicant-company manufactures oxo-alcohols i. e. , 2-Ethyl Hexanol, N. Nutanol etc. , in their plant at Visakhapatnam. An agreement was entered into by and between the parties on 29-5-1989 for supply of raw material proplylene. The respondent failed to supply the raw material between the period from 14-9-1997 and 15-5-1998. The defence of the respondent is that raw material could not be supplied due to fire explosion occurred in their plant on 14-9-1997. Regular full-scale supply of raw material was resumed by the respondent in February, 2001. It is alleged that the applicant suffered losses on account of the omissions and commissions on the part of the respondent. Differences and disputes having arisen between the parties as regard the compliance of the terms and conditions of the agreement, the applicant herein raised a claim for damages. By letter dated 21-8-2000, the applicant proposed the name of Sri Justice M. N. Rao, (a former Chief justice, High Court of Himachal Pradesh) as sole arbitrator and in case the respondent is not agreeable, it was requested to send a panel of three names to select one amongst them as sole arbitrator as per the arbitration clause. The respondent by letter dated 25-8-2000 indicated that the name proposed by the applicant was not acceptable and they would be sending a panel. The respondent failed to send the names within the period of 30 days. It was stated that the respondent by a letter-dated 20-9-2000 received by it on 2/-9-2000 indicated three names and requested the applicant to choose one amongst them as arbitrator. According to the applicant, the letter of the respondent dated 20-9-2000 is ineffective and contrary to clause (10) of the agreement. Hence the application for appointment of an independent arbitrator. Submissions of the Applicant: ( 3 ) THE learned Counsel appearing for the applicant would submit that in the instant case, the condition contained in clause 10 of the agreement was violated and as such the claim is an arbitrable one.
Hence the application for appointment of an independent arbitrator. Submissions of the Applicant: ( 3 ) THE learned Counsel appearing for the applicant would submit that in the instant case, the condition contained in clause 10 of the agreement was violated and as such the claim is an arbitrable one. Learned Counsel would contend that in a case of this nature, where appointment had not been made in terms of clause 10, this Court has jurisdiction to nominate an arbitrator in exercise of its jurisdiction under Section 11 (6) of the Act. Learned Counsel would further urge that in terms of sub-section (5) of Section 11 if the parties failed to agree on the arbitrator within thirty days, the agreement becomes inoperative. The learned Counsel in support of the aforementioned contentions relied upon the decision of this Court in Explosives consultation and Application Pvt. , Ltd. v. IDL Industries Ltd. , 2001 (2) ALD 475 = 2000 (1) DT (AP) 284 = 2001 ARB. WLLJ 442. The learned Counsel would contend that the names proposed by the respondent cannot be accepted as they were in employment of the respondent. The said contention having not been disputed in the counter- affidavit, the Court may appoint an arbitrator. The learned Counsel would further contend that in a case of this nature, the Court can appoint any independent arbitrator. Submissions of the Respondent: ( 4 ) THE learned Counsel appearing on behalf of the respondents, on the other hand, would submit that the period of thirty days is contemplated in terms of sub-section (5) of Section 11 and not for the purpose of sub-section (6) of Section 11 thereof which is applicable in the instant case. ( 5 ) IN any event, learned Counsel contends, as the respondent has acted in terms of the aforementioned clause, the requirement of the aforementioned clause of the agreement must be held to have been complied with. Strong reliance in this connection has been placed on Datar switchgears Ltd. v. Tata Finance Limited, 2000 (8) SCC 151 , Shetty s Construction company v. Konkan Railway Corpn. , 1999 (8) SCC 604 . The learned Counsel would contend that Section 11 of the Act is a self- contained code as has been held by a division Bench of this Court in Balu Builders v. General Manager, South Central Railway, secunderabad, 2001 (2) ALD 197 .
, 1999 (8) SCC 604 . The learned Counsel would contend that Section 11 of the Act is a self- contained code as has been held by a division Bench of this Court in Balu Builders v. General Manager, South Central Railway, secunderabad, 2001 (2) ALD 197 . According to the learned Counsel sub- section (6) of Section 11 comes into play only where the parties have not only agreed on number of arbitrators but also on the procedure for the appointment of arbitrator. Strong reliance in this regard has been placed on Konkan Railway Corpn v. Mehul construction Co. , AIR 2000 SC 2821 , D. Raja Reddy v. Director General, National institute of Agricultural Extension management, Hyderabad, 1999 (3) ALD 74 = 1999 (2) ALT 414 , L. Nagireddy v. General manager, South Central Railways, secunderabad, 2000 (3) ALD 205 = 2000 (3) ALT 182 . The learned Counsel would also contend that even if it is held that 30 days time had been provided in terms of sub-section (6) or Section 11, as the panel of arbitrators had been sent to the applicant on 20-9-2000 within 27 days from 25-8-2000, on which date there was failure to agree for appointment of mutually acceptable arbitrator and on the 30th day of 22-8-2000 on which date the letter of the applicant dated 21-8-2000 was stated to have been received by the respondent, the application should be rejected. In any event, having regard to the decision of the Apex Court in datar Switch Gears Ltd. 30 days time cannot be said to be an outer limit. Findings: ( 6 ) THE applicant invoked the arbitration clause by letter-dated 21-8-2000, which was received by the respondents on 22-8-2000. The said letter which was addressed to the Director (Production)/ director (Refineries) reads thus: as you are aware that since the Vapour cloud - fire on 14-9-1997, there was a total non-supply of Propylene by Hindustan petroleum Corporation Limited to us. There regular full-scale supply was resumed only in February, 2000. We suffered losses as set out below. We have also been representing about the excess price collected from us. We have been making our best efforts to settle the matter by negotiations in view of our cordial business relationship as referred to in your letter - dated 13-2-1999. Unfortunately, we could not make any breakthrough despite our sincere and prolonged efforts.
We have also been representing about the excess price collected from us. We have been making our best efforts to settle the matter by negotiations in view of our cordial business relationship as referred to in your letter - dated 13-2-1999. Unfortunately, we could not make any breakthrough despite our sincere and prolonged efforts. Therefore, our following claims remain outstanding and we are now constrained to invoke clause (9) of our Agreement dated 29-5-1989 in respect of the ( 21 ) THE decision of this Court in explosives Consultation and Application Pvt. Ltd. v. IDL Industries Ltd. relied upon by the learned Counsel for the applicant arose in a different context. In the said case there was a dispute as regards the quantum of claim. The applicant therein made several requests to the opposite party to refer the matter to an arbitrator and lot of correspondence took place between the parties. The applicant appointed their own arbitrator and called upon the opposite party to appoint their arbitrator within fifteen days, but the opposite party has not responded to it. Under those circumstances, it was held that the respondent having failed to appoint an arbitrator within thirty days from the date of receipt of the request from the applicant, there was no bar in invoking the arbitration clause before this Court. Here the agreement provides for a procedure for appointment of arbitrator. The respondent herein having disagreed with the name proposed by the applicant promptly sent the panel of names of three arbitrators on 20-9-2000 for selection and appointment of sole arbitrator. Further, it may be noticed that even though applicant received the letter of the respondent dated 20-9-2000 on 27-9-2000, it kept silent and filed the present petition after a period of three months. Even otherwise, in view of the decision of the apex Court in Datar Switchgears Ltd. Since the respondent had exercised its right to make the appointment by sending the names of panel of arbitrators well before the applicant filed the present application under section 11 of the Act, though it was received beyond the period of 30 days from the date of demand, it cannot be said that the right of the respondent to appoint an arbitrator as per the agreed procedure was forfeited and such right of the respondent continues to exist.
( 22 ) THE jurisdiction of the Chief Justice or his nominee to appoint an arbitrator in terms of Section 11 (6) of the Act has recently been considered by a Division Bench of this Court in Union of India v. Vengamamba Engineering Co. , 2001 (3) ALD 776 = 2001 (4) ALT 45 (DB), wherein it was held that when a party has not disputed the arbitration clause, it is bound to oblige to comply with the procedure laid down thereunder. ( 23 ) IN this view of the matter, it is not necessary to refer to the other decisions relied upon the learned Counsel appearing for the respondents. ( 24 ) ANOTHER contention of the appellant is that the names of panel of arbitrators sent by the respondent cannot be accepted as they were in the employment of the respondent. But, the applicant has not placed any material before the Court as to why none of the arbitrators proposed by the respondent could not be accepted or how it would be prejudiced if any one of the panel of arbitrators was appointed as sole arbitrator or how all the said persons are biased against the applicant. ( 25 ) DEALING the aspect of bias , the apex Court in Kumaon Mandal Vikas nigam Ltd. v. Girja Shankar Pant, AIR 2001 sc 24 , held: the word bias , in popular English [parlance stands included within the tributes and broader purview of the word malice , which in common acceptation mean and imply spite or ill-will (Stroud s Judicial Dictionary (5th Ed.) Volume 3) and it is now well settled that mere general statements will not be sufficient for the purposes of indication if ill-will. There must be cogent evidence available on record to come to the conclusion as to whether in fact there was existing a bias which resulted in the miscarriage of justice ( 26 ) IN Koneru Venkataratnam v. Union of India, 2001 (4) ALD 112 , this Court held that merely because the arbitrator is a standing Counsel for one of the parties to the agreement, the same does not disqualify him to act as an arbitrator. ( 27 ) IN State of A P. v. Subba Reddy, 1990 (1) ALT 398 , a learned Judge of this court, held:. . . . . .
( 27 ) IN State of A P. v. Subba Reddy, 1990 (1) ALT 398 , a learned Judge of this court, held:. . . . . . a general presumption cannot be drawn that merely because a named arbitrator has already worked in that department or is working he is having a bias. The general presumption must be that all the officers are honest and they are discharging the duties lawfully unless contrary is proved. There is no hard and fast rule that Government officials should not be appointed as arbitrators. The parties are bound by the agreement under which they agreed that an arbitrator from out of the panel of arbitrators can be appointed. After the award is passed the civil Court has got every right to go into the award and make it a rule of the Court. An appeal is also provided against the order to the High Court. When such safeguards are provided against the award, it cannot be said that officials should not be appointed as arbitrators or it cannot be said that such appointment would offence Article 21 of the constitution. Sometimes in some matters technical knowledge is required for passing an award. In such cases, officials having technical knowledge in that particular branch can be appointed as arbitrators. ( 28 ) REFERRING to the decision of this court in Raghunadharao v. State of A. P. , 1988 (1) ALT 461 and the decision of the apex Court in Secretary to Government, transport Department, Madras v. Munuswamy, AIR 1988 SC 2232 , a Full bench of this Court in Government of A. P. v. N. V. Choudary, 1993 (2) ALT 391, held that the judgment in Raghunadharao s case does not lay down correct law and held: therefore, we are of the opinion that as a matter of law or presumption, it cannot be said that the official arbitrators, who are employees of the State, will be biased in favour of the State, which is one of the parties to the agreement. ( 29 ) QUOTING the decision of this Court in State of A. P. v. Subba Reddy (supra) with approval, the Full Bench further held:. . . .
( 29 ) QUOTING the decision of this Court in State of A. P. v. Subba Reddy (supra) with approval, the Full Bench further held:. . . . we are of the opinion that as a rule or as a matter of presumption, bias cannot be attributed to the designated Government officials who are appointed as arbitrators only on the ground that they are Government servants. ( 30 ) THE Apex Court in International airport Authority of India v. K. D. Bali, air 1988 SC 1099 , held: the purity administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party. But we agree with the learned Judge of the High court that it is equally true that it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person. ( 31 ) THE above decision has been followed by the Apex Court in Delhi transport Corporation v. D. T. C. Mazdoor Congress, AIR 1988 SC 2232 , and held: vague suspicions of whimsical, capricious and unreasonable people should not be made the standard to regulate normal human conduct. In this country in numerous contracts with the Government, clauses requiring the Superintending Engineer or some official of the Government to be the arbitrator are there. It cannot be said that the Superintending Engineer, as such, cannot be entrusted with the work of arbitration and that an apprehension, simpliciter in the mind of contractor without any tangible ground, would be justification for removal. ( 32 ) FURTHER, in view of the provisions contained in Section 34 of the Act, all such questions can be raised only before the arbitrator and not before this Court, which exercises merely an administrative jurisdiction. ( 33 ) FOR the reasons aforesaid, I find no merit in the application, which is accordingly dismissed. No costs.