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2003 DIGILAW 3 (AP)

Principal Secretary to Government Of A. P. , Transport, Roads and Buildings Department, Hyderabad v. P. Prabhakar Reddy

2003-01-02

V.V.S.RAO

body2003
V. V. S. RAO, J. ( 1 ) THE Principal Secretary to the government of Andhra Pradesh and two others assail the order of the Senior Civil judge, Cuddapah, dated 28-2-2000 in arbitration Application No. 1 of 1998 in this writ petition filed under Article 226 of the constitution of India. By the impugned order, the learned Senior Civil Judge, as nominee of the Chief Justice of the High Court of andhra Pradesh, as per the Scheme framed and published in Andhra Pradesh Gazette part II (Extraordinary), dated 24-7-1996, appointed a retired District Judge as sole arbitrator for the interpretation of the agreement conditions and resolving the disputes raised by the first respondent herein. ( 2 ) THE first respondent was entrusted with the work of construction of high-level bridge across the river Araniar and an agreement was entered into on 21-7-1993. The first respondent was asked to commence the work immediately on 21-7-1993, but he did not commence the work and, therefore, the contract was terminated on 25-5-1996. Aggrieved by the same, the first respondent preferred a writ petition being W. P. No. 13176 of 1996, which was dismissed on 21-7-1997. The first respondent, therefore, filed an arbitration application under Section 11 (5) of the arbitration and Conciliation Act, 1996 ( the act ) and the same was allowed by judgment dated 28-2-2000. The petitioners herein opposed the application inter alia on the ground that as per the agreement between the petitioners and the first respondent, the dispute has to be placed before a panel of arbitrators appointed. The objections were overruled and arbitrator was appointed. ( 3 ) THE question as to whether a writ petition would lie and a Chief Justice or his nominee can appoint an arbitrator under section 11 (5) of the Act is no more res integra. The Supreme Court, in Ador Samia private Limited v. Peekay Holdings Limited*, concluded that an order appointing an arbitrator passed by the Chief Justice or any person or institution designated by him is an administrative order and does not attract the provisions of Article 136 of the Constitution of India. Subsequently, on a reference, a three-Judge Bench of the Supreme Court in konkan Railway Corpn. Ltd. v. Mehul construction Co. (Konkan I), affirmed the view in Ador Samia Private Limited v. Peekay Holdings Limited. But, later a two- judge Bench in Konkan Railway Corpn. Subsequently, on a reference, a three-Judge Bench of the Supreme Court in konkan Railway Corpn. Ltd. v. Mehul construction Co. (Konkan I), affirmed the view in Ador Samia Private Limited v. Peekay Holdings Limited. But, later a two- judge Bench in Konkan Railway Corpn. Ltd. v. Rani Construction Pvt. Ltd. (Konkan II) referred the matter to a Larger Bench for reconsideration of the decision of the three Judge Bench in Konkan Railway-I. A constitution Bench of the Supreme Court in konkan Railway Corpn. Ltd. v. Rani construction Pvt. Ltd. , (Konkan III) considered the ambit and scope of the provisions of the Arbitration and Conciliation act vis-a-vis Article 136 of the Constitution of india and held thus:. . . . . SECTION 11 did not require the Chief justice or his designate to perform any adjudicatory function. All that the Chief justice or his designate was required to do was to nominate an arbitrator if a party to an arbitration agreement had failed to do so within the specified time after a request to it to do so had been made, and in so nominating an arbitrator the Chief Justice or his designate was to have regard to the qualifications that were required of the arbitrator by the agreement of the parties and to other considerations which were likely to secure the appointment of an independent and impartial arbitrator. This the Chief justice or his designate had to do on an ex facie basis; no element of adjudication came into it. ( 4 ) THEIR Lordships also observed that all the grounds in opposition to the appointment of arbitrator or the jurisdiction of the arbitrator can be raised before the arbitrator under section 16 of the Act. ( 5 ) A Division Bench of this Court, to which I was a member, in Union of India v. Vengamamba Engineering Co. , Juputi, krishna Dist. 5, considered the question whether a writ petition would be maintainable against an order passed by the chief Justice or his nominee appointing arbitrator in terms of sub-section (6) of section 11 of the Act. , Juputi, krishna Dist. 5, considered the question whether a writ petition would be maintainable against an order passed by the chief Justice or his nominee appointing arbitrator in terms of sub-section (6) of section 11 of the Act. After referring to konkan I and Konkan II (supra) and while holding that a writ petition in such a situation would not be maintainable, the Division bench further laid down thus: but, decision on a question as to whether an arbitration agreement exists at all or not inasmuch may attract the ambit of jurisdiction as even an administrative order can only be exercised provided the Chief Justice or his nominee satisfies himself as regards his jurisdiction under Sec. 11 (6) of the Act or not. A question as regards maintainability of a writ petition may further arise as would appear from one of those cases when an anomaly may be created by appointing an arbitrator where another arbitrator had validly been appointed. . . . . . . . Yet again in a case of the second nature where appointment of an arbitrator may instead of facilitating early settlement of the claim may give rise to a situation where further litigation would be a near certainty, a writ of certiorari, assuming that such order would be an administrative order, may issue. ( 6 ) THEREFORE, the law may be taken as well settled that when the Chief Justice or his nominee appoints an arbitrator, ordinarily, a writ petition would not be maintainable to challenge such an order. However, when the chief Justice or his nominee refuses to appoint an arbitrator, the same amounts to not exercising jurisdiction in which event a writ petition would be maintainable under article 226 of the Constitution to compel public authority to pass orders in exercise of powers vested in him. ( 7 ) SRI M. Jagannadha Sarma, learned govt. Pleader for Arbitration, placed strong reliance on the decision of the Supreme court in Wellington Associates Ltd. v. Kirit mehta6, in support of the submission that when the question as to the existence of arbitration clause or validity of such arbitration clause is raised, the Chief Justice or his nominee is not ousted with the power to decide the question under Section 11 notwithstanding Section 16 of the Act. It was held therein that Section 16 of the Act does not take away the jurisdiction of the Chief justice or his designate to decide the question as to the existence of arbitration clause even in an arbitration application. The learned Govt. Pleader placing reliance on wellington Associates Ltd. v. Kirit Mehta (6 supra) would, therefore, submit that the learned Senior Civil Judge, Cuddapah committed an error in not deciding the question as to the existence of arbitration clause. I am afraid, I cannot agree with the submission. ( 8 ) IN my considered opinion, the observations and the law laid down in wellington Associates Ltd. v. Kirit Mehta (6 supra) cannot be taken as permitting a writ petition against an order of the Chief justice or his designate appointing an arbitrator. Indeed, the Constitution Bench of five learned Judges in Konkan Railway III (4 supra) laid down as under: it might be that though the Chief Justice or his designate might have taken all due care to nominate an independent and impartial arbitrator, a party in a given case may have justifiable doubts about that arbitrator s independence or impartiality. In that event it would be open to that party to challenge the arbitrator nominated under Section 12, adopting the procedure under Sec. 13. There is no reason whatever to conclude that the grounds for challenge under Section 13 are not available only because the arbitrator has been nominated by the Chief Justice or his designate under Section 11. ( 9 ) IN view of the observations made by the Constitution Bench under Section 16 of the Act, a party is entitled to contend before the arbitral Tribunal that it had been wrongly constituted or that there are justifiable doubts about the arbitrator s independence and impartiality. The observations made in wellington Associates Ltd. v. Kirit Mehta (6 supra) are, therefore, required to be read with the observations made in Konkan railway Corpn Ltd. v. Rani Construction Pvt. Ltd. (Konkan III) (4 supra) by the Constitution bench. ( 10 ) IN the result, for the above reasons, the Writ Petition fails and is accordingly dismissed. There shall be no order as to costs.