ORDER This is an application by Alpine Housing Development Corporation Limited, represented by its Managing Director Mr. S.A. Kabeer, under sub-sections (2) and (6) of Section 11 of the Arbitration and Conciliation Act, 1996 ('Arbitration Act", for brevity) seeking appointment of a sole arbitrator to resolve the disputes in relation to and arising out of the Agreement bearing No.W.456/PSC/1 in 8½/TO/2005-2006/Wadi dated 09-10-2006 between the applicant Corporation and the respondents-South Central Railway. 2. The applicant Corporation is carrying on business of manufacture and supply of concrete sleepers to the Indian Railway. The respondents-railway had called for tenders for manufacture and supply of 75 sets of 'Pre-stressed Mono Block Concrete Sleepers' [1 in 8½ Turnout Sleepers] in pursuance of which the applicant Corporation submitted its initial offer on 16-8-2005 and subsequent to negotiations furnished its 'negotiated offer on 20-12-2005 to the respondents-railway. The respondents-railway considered the applicant's offer and issued letter of counter offer dated 16-5-2006. Ultimately, the parties entered into an agreement for supply of 75 sets of 'Prestressed Mono Block Concrete Sleepers', vide agreement No.W.456/PSC/1 in 8 ½/TO/2005-2006/Wadi dated 09-10-2006. The applicant-Corporation manufactured 23 sets of Sleepers as on October 2006. But the respondents did not take delivery of all the inspected Sleepers and the respondents-railway short closed the contract by levying penalty at the rate of 5% of the value of the unsupplied Sleepers apart from recovery of Rs.6,75,928/- from the amounts payable under various bills. The applicant Corporation disputed the action of the respondents-railway and requested for referring the dispute to an arbitrator. There being no response to the request made by the applicant Corporation, the instant application has been filed seeking the relief stated supra. Paragraphs 6 to 8 of the affidavit filed in support of the application need to be noted and they are thus:- "6. I state that the severe space constraints; the liquidity crisis and the resultant labour unrest at the petitioner's factory left the petitioner with no other alternative but to slow down its production. I state that out of the 75 sets in 1 in 8 ½ Turn out Sleepers', the petitioner had duly manufactured and supplied 44 sets and the Respondents subsequently short-closed the said contract and the petitioner was not required to supply the balance 31 sets. I state that out of the 75 sets in 1 in 8 ½ Turn out Sleepers', the petitioner had duly manufactured and supplied 44 sets and the Respondents subsequently short-closed the said contract and the petitioner was not required to supply the balance 31 sets. I state that the Respondents short closed the contract by having a penaly at the rate of 5% of the value of the unsupplied Sleepers. Furthermore, the respondents have also recovered by deducting from the petitioner's various bills an amount of Rs.6,75,928/- for allegedly failing to meet the 'schedule of supplies' stipulated under the contract. 7.1 state that the petitioner disputed the Respondent's action of levying penalties and sought for the refund of the amounts that were illegally recovered from its Bills. All the petitioner's letters and reminders in this regard were in vain. Hence, the petitioner had no other alternative but to seek for the reference of the disputes and claims arising out of the above contract to Arbitration. I state that the Petitioner's letters dated 10-03-2009 addressed to the Deputy Chief Engineer/TS. South Central Railway, Secunderabad and the final letter dated 08-07-2009 addressed to the first respondent demanding arbitration were in vain. 8. I state that both the Respondents' 'Detailed Letter of Acceptance' No.W.456/PSC/1 in 8 ½/TO/2005-2006 dated 30-06-2006; and the Contract bearing Agreement No.W.456/PSC/1 in 8 ½/TO/2005-2006/Wadi dated 09-10-2006; make it clear that all the provisions of the Indian Railways Standard Conditions of Contract will form a part and parcel of the instant contract. The Clause No. 2900 of the said Indian Railways Standard Conditions of Contract stipulate that all disputes arising out of the contract must be referred to Arbitration and that in contracts entered into by the Zonal Railways; the Arbitrator will be appointed only by the General Manager of the concerned Zonal Railway (the First Respondent in the instant case)". 3. Notice before admission came to be 0rdered on 17-12-2009. The respondents entered appearance through a counsel and filed counter. One J.N. Gupta, Deputy Chief Engineer, Track-II, Office of the Chief Track Engineer, South Central Railway, Secunderabad, has sworn to the counter affidavit filed on behalf of the respondents. 4. The counter affidavit, in brief, is:- The issuance of purchase order in favour of the applicant Corporation is not disputed. The respondents entered appearance through a counsel and filed counter. One J.N. Gupta, Deputy Chief Engineer, Track-II, Office of the Chief Track Engineer, South Central Railway, Secunderabad, has sworn to the counter affidavit filed on behalf of the respondents. 4. The counter affidavit, in brief, is:- The issuance of purchase order in favour of the applicant Corporation is not disputed. As the applicant failed to supply the scheduled quantity in the first quarter of the year, slow progress notice was issued to the applicant, vide letter dated 18-10-2006. The applicant Corporation had manufactured 27 sets and supplied till January 2007. The applicant Corporation under letter dated 29-05-2007 requested for extension of time for delivery of the balance quantity till 31-12-2007. The applicant Corporation failed to supply the balance quantity even during the extended period. The contract was cancelled on 29-4-2008. Thereupon, the applicant corporation under letter dated 11-11-2008 req.uested the respondents-railway to refer the matter for arbitration. The respondents-railway under letter dated 28-11-2008 rejected the request of the applicant Corporation. The applicant Corporation renewed their request for referring the matter to arbitrator. The respondents-railway reiterated their stand under letter dated 18-8-2009. However, the respondents-railway took a decision to refer the matter for arbitration and appointed Sri Vinod Bampal, CE/C-II/SC as Arbitrator for adjudication of the dispute, as per the Agreement conditions vide clause No. 2900 of Indian Railways Standard Conditions of Contract and communicated the same to the applicant Corporation, vide letter dated 28-01-2010. Paragraphs 4 and 5 of the counter affidavit need to be noted and they are thus:- "4. I submit with respect to paragraphs 3 and 4 are factually correct and hence require no comments. I submit with respect to Paragraph 5, Applicant's statement regarding progress of production is not factually correct. The actual progress of production vis-a-vis scheduled production is as under: Month Supply Schedule Actual supply Shortfall in sets in sets in sets August, 2006 07 Nil 7 September, 2006 07 Nil 7 October, 2006 07 Nil 7 Total 21 Nil 21 Further the above said aspect was not stated by the Applicant in its letter dated 11-11-2008 wherein the Applicant requested for arbitration. In fact the applicant was issued notice for slow progress vide letter dated 18-10-2006 as they have failed to supply any quantity by that time against the scheduled quantity of 21 sets. In fact the applicant was issued notice for slow progress vide letter dated 18-10-2006 as they have failed to supply any quantity by that time against the scheduled quantity of 21 sets. I submit that the Respondents Railways replied vide letter dated 18-08-2009 to the applicant's letter dated 08-07-2009 that the expected production stated in the Para-4 of the said letter of the applicant is incorrect as the required quantity of supply of the contract quantity of 75 sets to be supplied during 11 months of the contract works out to about 7 sets per month. I submit as per the terms of the agreement, the Applicant has to present the turnout sets manufactured under the contract for inspection of the Railways representative nominated for the work. The Applicant had more than one contract during the said period thereby the turn cut sets manufactured during the period by the Applicant has to refer the particular sets against the particular contract. Hence, the applicant's statement that 23 sets manufactured during the first three months is not correct and denied. As stated above the applicant was given a notice by the Respondents Railways vide letter dated 18-10-2006 that till October, 2006 there were no supplies made against the subject contract. The applicant has not submitted the details of contracts at that time and the break up of the total production with the documentary evidence. The applicant did not submit any documentary evidence substantiating their statement that the respondents failed to take delivery of all the inspected sleepers. In this connection, it is submitted that the Railways were in very much need of the concrete sleepers at that time, in view of safety of running Trains and public transportation. I submit that Central Railway under whose jurisdiction the sleeper plant at Wadi is functioning had informed the Respondents railways vide letter dated 16-05-2007 that the Applicant was not able to supply the sleepers at the required place against the contract with Central Railway on hand at that time. 5. I submit that Central Railway under whose jurisdiction the sleeper plant at Wadi is functioning had informed the Respondents railways vide letter dated 16-05-2007 that the Applicant was not able to supply the sleepers at the required place against the contract with Central Railway on hand at that time. 5. I submit with respect to Paragraphs 6 and 7 that the applicant vide its letter 11-11-2008 has stated the reasons for poor supply of cement from M/s. Cement Corporation of India Limited, Tandur, which are completely contrary to the reasons now stated in Para 6 of the affidavit as severe space constraints, liquidity crisis and labour unrest of the Applicant's factory resulted in situation leading to slow down its production. I submit that the respondents have taken the decision to cancel the contract as the applicant failed to adhere to the terms of the contract for supplying the Concrete Sleepers within the delivery period i.e., up to 30-06-2007. Further, the applicant has been given full opportunity to complete the contract quantity by extension of the delivery period by 5 more months, i.e., upto 30-11-2007 as per the terms and conditions of contract. Thus an additional time of about 5 months i.e., 45% more time was given to the applicant to complete the contract. In spite of the opportunity given to the applicant, they have failed to complete the contract and requested for further extension of 5 months up to 20-4-2008 vide their letter dated 09-01-2008. I state that the applicant did not make any progress even during the extended delivery period of the Contract. Accordingly, the Respondent Railways have taken the action to cancel the contract as they failed to complete the contract. Ultimately, the contract was cancelled on 29-04-2008 for the unsupplied quantity of 33 sets by imposing liquidated damages @ 5% of the cost of non-delivered stores as per the terms and conditions of the Contract, as the Applicant failed to adhere to the terms of the Contract. I submit that the applicant has stated that an amount of Rs.6,75,928/- was recovered towards penalty for delay in supplies as per delivery schedule of the contract is not correct, but, however, the amount which was recovered is Rs.2,88,055/- towards liquidated damages as per the terms of the contract. I submit that the applicant has stated that an amount of Rs.6,75,928/- was recovered towards penalty for delay in supplies as per delivery schedule of the contract is not correct, but, however, the amount which was recovered is Rs.2,88,055/- towards liquidated damages as per the terms of the contract. Hence, it is respectfully submitted that levying of penalties is not illegal and the same is valid and is as per the terms and conditions of the contract i.e., as per Clause 6 of the agreement." 5. Heard Smt. R. Lakshmi, learned counsel appearing for the applicant and Sri C. Rajiv Reddy, learned counsel representing Mrs. C.V.Vinitha Reddy, learned counsel appearing for the respondents. 6. Learned counsel appearing for the applicant-Corporation submits that the applicant invoked the arbitration clause as per Clause 2900 of the Indian Railway Standard Conditions of Contract and since the respondents-railway failed to respond to the request of the applicant Corporation, the applicant Corporation approached this Court under sub-sections (2) and (6) of Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator. A further submission has been made by the learned counsel that the respondents' right to appoint an arbitrator ceases the moment the applicant Corporation filed this instant application after waiting for a statutory period of 30 days, and therefore, appointment of an arbitrator allegedly made by the respondents railway after applicant's moving the instant application seeking appointment is contrary to the provisions of Section 11 of the Arbitration Act, and in which case, the appointment of arbitrator by the respondents-railway is invalid and ineffective. In support of her submissions, reliance has been placed on the following decisions:- 1. Datar Switchgears Ltd., v. rata Finance Ltd., and others (1) (2000) 8 SCC 151 = 2000 (6) ALT 26 (SC) 2. Punj Lloyed Ltd., v. Petronet MHB Ltd., (2) (2006) 2 SCC 638 3. BSNL and others v. Subash Chandra Kanchan and another (3) (2006) 8 SCC 279 = 2006 (6) ALT 3 (SC) 4. Union of India v. M/s. Bharat Battery Manufacturing Co., (4) 2007 (5) Supreme 934 = 2007 (5) ALT 61 (SC) = 2007 (6) SCJ 366 5. Bharat Sanchar Nigam Limited v. Motorola India Private Limited (5) (2009) 2 SCC 337 = 2009 (2) SCJ 207 = 2010 (1) ALT 1 (DNSC). 6. Siddharardha Constructions Pvt. Ltd. v. Union of India (UOI) rep. Bharat Sanchar Nigam Limited v. Motorola India Private Limited (5) (2009) 2 SCC 337 = 2009 (2) SCJ 207 = 2010 (1) ALT 1 (DNSC). 6. Siddharardha Constructions Pvt. Ltd. v. Union of India (UOI) rep. by General Manager, South Central Railway and others (6) 2009 (2) ALT 440 7. Bharat Sanchar Nigam Ltd. and another v. Dhanurdha Champatiray (7) 2009 (14) SCALE 545 = 2010 (2) SCJ 369 8. B.H.C. Agro (India) Pvt. Ltd. V. Director of Horticulture, Government of A.P. and others (8) 2007 (6) ALT 327 9. Nucon India (P) Ltd. V. Delhi Vidyut Board (DESU) (9) AIR 2001 Delhi 227 10. Union of India v. M/s. Premier Files Ltd. (10) 2009 (3) R.A.J. 624 (SC) 7. Sri C. Rajiv Reddy, learned counsel for the respondents submits that the applicant's letter invoking arbitration clause is ambiguous since it relates to two contracts, and therefore, a clarification has been sought for from the applicant Corporation to indicate their claim in respect of each of the contracts, for which appointment of arbitrator has been sought for, and in spite of applicant Corporation not submitting its clarification, the respondents-railway proceeded to appoint an arbitrator and issued proceedings accordingly, and thereby, the present application moved by the applicant Corporation before this Court has become infructuous and the same is liable to be dismissed. In support of his submissions, reliance has been placed on the following decisions:- 1. Ace Pipeline Contracts (P) Ltd., v. Bharat Petroleum Corporation Ltd. (11) 2007 (7) SCJ 360 = (2007) 5 SCC 304 2. Union of India v. M.P. Gupta (12) (2004) 10 SCC 504 3. Union of India v. Singh Builders Syndicate (13) 2009 (4) SCJ 158 = (2009) 4 SCC 523 = 2010 (3) ALT 2 (DNSC) 4. Northern Railway Administration, Ministry of Railway, New Delhi v. Patel Engineering Company Limited (14) 2008 (5) ALT 60 (SC) = 2008 (7) SCJ 167 = (2008) 10 SCC 240 Much emphasis has been laid by the learned counsel on para 15 of the judgment in Union of India v. Singh Builders Syndicate (13 supra), which reads as hereunder:- "The object of the alternative dispute resolution process of arbitration is to have expeditious and effective disposal of the disputes through a private forum of the parties' choice. If the arbitral Tribunal consists of serving officers of one of the patties to the dispute, as members in terms of the arbitration agreement, and such tribunal is made non-functional on account of the action or inaction or delay of such party, either by frequent transfers of such members of the Arbitral Tribunal or by failing to take steps expeditiously to replace the arbitrators in terms of the arbitration agreement, the Chief or his designate, required to exercise power under Section 11 of the Act, can step in and pass appropriate orders." 8. Learned counsel by referring the above cited judgment contends that when the arbitration is by the tribunal consisting of serving officers, cost of officers is very low and therefore, a serving officer is required to be appointed as an arbitrator to lessen the cost of arbitration and this object has been achieved by the respondents railway by appointing a serving officer as an arbitrator in the instant case, and therefore, the application filed by the applicant seeking appointment of an arbitrator to resolve the dispute between the parties is liable to be dismissed. 9. I do not want to make the judgment bulky by referring the propositions of law laid down in the cases cited by the learned counsel appearing for the parties. It is suffice to refer the judgment in Datar Switchgears Ltd. (1 supra), Bharat Sanchar Nigam Limited v. Motorola India Private Limited (5 supra) and Bharat Sanchar Nigam Ltd. and another v. Dhanurdha Champatiray (7 supra). In Bharat Sanchar Nigam's case (7 supra), the earlier two decisions have been cited with approval. In Datar Switchgears Ltd. case (1 supra), it has been held by the Supreme court that as per Section 11(6) of the Arbitration and Conciliation Act, 1996, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before first party has moved the Court under Section 11 that would be sufficient. Only then the right of the opposite party ceases. This decision has been quoted with approval in Punj Lloyed Ltd. v. Petronet MHB Ltd. (2nd supra). If the opposite party makes an appointment even after 30 days of the demand, but before first party has moved the Court under Section 11 that would be sufficient. Only then the right of the opposite party ceases. This decision has been quoted with approval in Punj Lloyed Ltd. v. Petronet MHB Ltd. (2nd supra). The proposition of law laid down in Datar Switchgears Ltd (1 supra) and Punj Lloyed Ltd. v. Petronet MHB Ltd. (2 supra) has been quoted with approval by the Supreme Court in Union of India v. M/s. Bharat Battery Manufacturing Co. (4 supra). 10. In Bharat Sanchar Nigam Limited v. Motorola India Private Limited (5 supra), the Supreme Court referred the earlier two decisions in Datar Switchgears Ltd. and Punj Lloyed. Ltd (1 and 2 supra) and held that a party having right to appoint arbitrator under an agreement loses the said right when the opposite party moves the Court after expiry of time prescribed under the Act. 11. There is no dispute with regard to existence of arbitration clause in respect of the agreement NO.W.456/PSC/1 in 81/2/TO/2005-2006/Wadi, dated 09-10-2006. As per the agreement conditions, vide Clause No.2900, in the event of any question, dispute or difference arising in connection with the contract, the same shall be referred to a Gazetted railway officer appointed by the General Manager in the case of contracts entered into by the Zonal railways and production units; by any member of the Railway Board in the case of contracts entered into by the Railway Board and by the Head of the Organization in respect of contracts entered into by the other Organizations under the Ministry of Railways. 12. Indisputably, the General Manager of the South Central Railway is the competent authority to appoint a Gazetted Railway Officer as an arbitrator in the instant case. It is the case of the applicant Corporation that the contract was short closed by the respondents and whereas it is the case of the respondents railway that the contract came to be terminated because of the applicant Corporation not keeping up the schedule. The applicant Corporation addressed letter dated 10-3-2009 to the Chief Engineer/Construction-III/SC, and thereafter a letter dated 8-7-2009 addressed to the General Manager, South Central Railway seeking reference of the disputes to an arbitrator. There being no response to their letter, the applicant Corporation filed this instant application on 22nd September 2009. The applicant Corporation addressed letter dated 10-3-2009 to the Chief Engineer/Construction-III/SC, and thereafter a letter dated 8-7-2009 addressed to the General Manager, South Central Railway seeking reference of the disputes to an arbitrator. There being no response to their letter, the applicant Corporation filed this instant application on 22nd September 2009. Indisputably, the applicant Corporation filed this instant application after allowing 30 days period to the respondents railway to appoint the arbitrator. It is well settled that once the application is moved by the applicant seeking appointment of an arbitrator, the respondents ceased to have any right to appoint the arbitrator. 13. At this juncture, I deem it appropriate to refer Arbitration Clause No. 2900, which reads as hereunder:- "2009.Arbitration (a) In the event of any question, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or Special Conditions) the same shall be referred to the sole arbitration of a Gazetted Railway Officer appointed to be the arbitrator, by the General Manager in the case of contracts entered into by the Zonal Railways and Production Units; by any Member of the Railway Board, in the case of contracts entered into by the Railway Board and by the Head of the Organization in respect of contracts entered into by the other Organizations under the Ministry of Railways. The Gazetted Railway Officer to be appointed as arbitrator however will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the course of their duties as railway servant have expressed views on all or any of the matters under dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract. (b) In the event of the arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the Court for any reason, it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid. (b) In the event of the arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the Court for any reason, it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid. (c) It is further a term of this contract that no person other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all. (d) The arbitrator may from time to time with the consent of all the parties to the contract enlarge the time for making the award. (e) Upon every and such reference the assessment of the cost incidental to the reference and award respectively shall be in the discretion of the arbitrator. (f) Subject as aforesaid, the Arbitration and Conciliation Act, 1996 and the rules thereunder and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause. (g) The venue of Arbitration shall be the place from which the acceptance note is issued or such other place as the arbitrator at this discretion may determine. (h) In this clause the authority to appoint the arbitrator includes, if there by no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise." 14. It is pertinent to note from the above referred arbitration clause that if for any reason, it is not possible to appoint a Gazetted Railway Officer as arbitrator the matter is not to be referred to arbitration at ill. A similar provision came up for consideration before the Supreme Court in Union of India v. M.P. Gupta's case (12 supra). In the cited judgment, the Supreme Court held as hereunder:- "(3) The relevant part of clause 64 runs as under: "64. A similar provision came up for consideration before the Supreme Court in Union of India v. M.P. Gupta's case (12 supra). In the cited judgment, the Supreme Court held as hereunder:- "(3) The relevant part of clause 64 runs as under: "64. Demand for arbitration:- (3) (a) (ii) Two arbitrators who shall be Gazetted railway officers of equal status to be appointed in the manner laid in clause 64 (3) (b) for all claims of Rs.5,00,000.00 (Rupees five lakhs) and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager shall be the sale judge to decide whether the issues involved are of a complicated nature or not. In the event of the two arbitrators being undecided in their opinions, the matter under dispute will be referred to an umpire to be appointed in the manner laid down in sub-clause (3)(b) for his decision. (3) (a) (iii) it is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all." 15. The Supreme Court on considering the above referred provision, set aside the order of the High Court appointing P.K. Bahri as the sole arbitrator. Paragraph 4 of the cited judgment needs to be noted and it is thus:- "(4) In view of the express provision contained therein that two gazetted railway officers shall be appointed as arbitrators, Justice P.K. Bahri could not be appointed by the High Court as the sole arbitrator. On this short ground alone, the judgment and order under challenge to the extent it appoints justice P.K. Bahri as sole arbitrator is set aside. Within 30 days from today, the appellants herein shall appoint two gazetted railway officers as arbitrators. The two newly appointed arbitrators shall enter into reference within a period of another one month and thereafter the arbitrators shall make their award within a period of three months. 16. In Union of India v. V.S. Engineering (P) Ltd., the Supreme Court after referring the decision in M.P. Gupta's case (12 supra) has observed as hereunder:- "6. The two newly appointed arbitrators shall enter into reference within a period of another one month and thereafter the arbitrators shall make their award within a period of three months. 16. In Union of India v. V.S. Engineering (P) Ltd., the Supreme Court after referring the decision in M.P. Gupta's case (12 supra) has observed as hereunder:- "6. However, before parting with this case we may also observe that Railways and public institutions are very slow in reacting to the request made by a contractor for appointment of the arbitrator. Therefore, in case appointment is not made in time on the request made by the contracting party, then in that case the power of the High Court to appoint arbitrator under Section 11 of the Act will not be denuded. We cannot allow administrative authorities to sleep over the matter and leave the citizens without any remedy. Authorities shall be vigilant and their failure shall certainly give rise to cause to the affected party. In case the General Manager, Railways does not appoint the Arbitral Tribunal after expiry of the notice of 30 days or before the party approaches the High Court, in that case, the High Court will be fully justified in appointing arbitrator under Section 11 of the Act. It is the discretion of the High Court that they can appoint any railway officer or they can appoint any High Court Judge according to the given situation. 7. As a result of our above discussion, we allow these appeals and set aside the orders of the High Court. We direct the General Manager, Railways to appoint the Arbitral Tribunal within a period of 30 days from the date of receipt of a certified copy of this order. The Arbitral Tribunal so appointed shall enter into the matter and dispose of the arbitration proceedings as expeditiously as possible. Consequently, the appointment of Justice Y.V. Narayana as arbitrator is set aside. There would be no order as to costs". 17. In Ace Pipe line Contracts (P) Ltd. case (11 supra), the Supreme Court referred M.P. Gupta's case (12 supra) and V.S. Engineering (P) Ltd. case and also clause 64 of the agreement and observed as hereunder:- "In this connection a reference may also be made to a decision of this Court in the case of Union of India and another v. M.P. Gupta (2004) 10 SCC 504 . In that case, arbitrator was appointed by the High Court directly a Judge of the High Court because no arbitrator was appointed by the Railway Authorities as per Clause 64 of their agreement. Their Lordships after considering the matter observed that the appointment of arbitrator by the High Court under Section 20 of the Arbitration Act, 1940 cannot be upheld in view of Clause 64 of the agreement because as per Clause 64 of the agreement, two arbitrators have to be appointed who should be gazetted railway officers. Therefore, as per the terms of the agreement their Lordships held that the appointment of arbitrator by the High Court was not correct and set aside the order and directed the Railways to appoint arbitrators within 30 days. Similar issue came up before this Court in Union of India and another v. V.S. Engineering Pvt. Ltd. This Court after considering the decision in Union of India and another v. M.P. Gupta (2004) 10 SCC 504 and Datar Switchgears Ltd. (supra) directed that as per Clauses 63 and 64 of the General Clauses of the Contract, only two gazetted officers of the railways have to be appointed as arbitrators. However, it was observed that failure on the part of the Department to take a decision for appointment of arbitrators would not defeat the right of the party to approach the High Court for appointment of arbitrator. Direction was given to the Department for appointment of arbitrators within 30 days. (13) It may also not be out of place to mention that we are aware of the Departmental lethargy in making appointment of arbitrators in terms of the arbitration clause. Therefore, mandamus can be issued by the Courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within the reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conductive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But in large number of cases if it is found that it would not be conductive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms of arbitration clause and appoint the arbitrator/arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name". 18. In Union of India v. Bharat Battery Manufacturing Co. (4 supra) the Supreme Court referred M.P. Gupta's case (12 supra) and Punj Lloyed Ltd. case (2 supra) and Clause 11(6) of the Arbitration and Conciliation Act and held that once Section 11(6) petition is filed by one party seeking appointment of arbitrator, the other party cannot invoke arbitration clause of the agreement dealing with appointment of arbitrator. The Supreme Court noticing the two different views in the two decisions, i.e., Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corporation Ltd., (11 supra) and Union of India v. Bharat Battery Manufacturing Co., (4 supra) and referred the matter to a Larger Bench. In Northern Railway Administration v. Patel Engineering Company Ltd. (14 supra), a three Judge Bench of the Supreme Court considered the above referred two decisions and held that while considering an application under Section 11(6) of Arbitration Act, due regard has to be given to the two cumulative conditions relating to qualifications and other conditions as are likely to secure the appointment of an independent and impartial arbitrator. Paragraphs 12 to 14 of the cited judgment need to be noted and they are thus:- "(12) A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. In other words, the Court may ask to do what has not been done. The court must first ensure that the remedies provided for are exhausted. It is true as contended by Mr. Desai, that it is not mandatory for the Chief Justice or any person or institution designated by him to appoint the named arbitrator or arbitrators. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations. (13) The expression 'due regard' means that proper attention to several circumstances have been focused. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations. (13) The expression 'due regard' means that proper attention to several circumstances have been focused. The expression 'necessary' as a general rule can be broadly stated to be those things which are reasonably required to be done or legally ancillary to the accomplishment of the intended act. Necessary measures can be stated to be the reasonable steps required to be taken. (14) In all these cases at hand the High Court does not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other considerations necessary to secure the appointment of an independent and impartial arbitrator. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements of sub-section (8) of Section 11 have to be kept in view, considered and taken into account. If it is not done, the appointment becomes vulnerable. In the circumstances, we set aside the appointment made in each case, remit the matters to the High Court to make fresh appointments keeping in view the parameters indicated above." 19. It is also trite to note paragraph 10 of the cited judgment, which reads as hereunder:- (10) The crucial sub-sections are subsections (2), (3), (4), (5) and (6). Subsections (3) to (5) refer to cases where there is no agreed procedure. Subsection (2) provides that subject to subsection (6) the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-section (6) Sets out the contingencies when party may request the Chief justice or any person or institution designated by him to take necessary measures unless the agreement on the appointment procedure provides other means for securing the appointment. The contingencies contemplated in subsection (6) statutorily are (i) a party fails to act as required under agreed procedure or (ii) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure or (iii) a person including an institution fails to perform any function entrusted to him or it under the procedure. In other words, the third contingency does not relate to the parties to the agreement or the appointed arbitrators." 20. In other words, the third contingency does not relate to the parties to the agreement or the appointed arbitrators." 20. In Union of India v. Singh Builders Syndicate (13 supra), the Supreme Court considered M.P. Gupta's case (12 supra) and Northern Railway case (14 supra) and expressed the view that having regard to the emphasis on the independence and impartiality of arbitrator(s), the Government should think of phasing out arbitration clauses providing for serving officers and encourage professionalism in arbitration. It is profitable to refer paragraphs 20 to 24 of the cited judgment and they are thus: "(2) Another aspect referred to by the appellant, however requires serious consideration. When the arbitration is by a Tribunal consisting of serving officers, the cost of arbitration is very low. On the other hand, the cost of arbitration can be high if the Arbitral Tribunal consists of retired Judge/s. 21. When a retired Judge is appointed as arbitrator in place of serving officers, the government is forced to bear the high cost of Arbitration by way of private arbitrator's fee even though it had not consented for the appointment of such non-technical non-serving persons as Arbitrator/s. There is no doubt a prevalent opinion that the cost of arbitration becomes very high in many cases where retired Judge/s are Arbitrators. The large number of sittings and charging of very high fees per sitting, with several add-ons, without any ceiling, have many a time resulted in the cost of arbitration approaching or even exceeding the amount involved in the dispute or the amount of the award. 22. When an arbitrator is appointed by a court without indicating fees, either both parties or at least one party is at a disadvantage. Firstly, the parties feel constrained to agree to whatever fees is suggested by the Arbitrator, even if it is high or beyond their capacity. Secondly, if a high fee is claimed by the arbitrator and one party agrees to pay such fee, the other party, who is unable to afford such fee or reluctant to pay such high fee, is put to an embarrassing position. Secondly, if a high fee is claimed by the arbitrator and one party agrees to pay such fee, the other party, who is unable to afford such fee or reluctant to pay such high fee, is put to an embarrassing position. He will not be in a position to express his reservation or objection to the high fee, owing to an apprehension that refusal by him to agree for the fee suggested by the arbitrator, may prejudice his case or create a bias in favour of the other party who readily agreed to pay the high fee. 23. It is necessary to find an urgent solution for this problem to save arbitration from the arbitration cost. Institutional arbitration has provided a solution as the arbitrators' fees is not fixed by the Arbitrators themselves on case to case basis, but is governed by a uniform rate prescribed by the institution under whose aegis the Arbitration is held. Another solution is for the court to fix the fees at the time of appointing the arbitrator, with the consent of parties, if necessary in consultation with the arbitrator concerned. Third is for the retired Judges offering to serve as Arbitrators, to indicate their fee structure to the Registry of the respective High Court so that the parties will have the choice of selecting an Arbitrator whose fees are in their 'range' having regard to the stakes involved. 24. What is found to be objectionable is parties being forced to go to an arbitrator appointed by the curt and then being forced to agree for a fee fixed by such Arbitrator. It is unfortunate that delays, high cost, frequent and sometimes unwarranted judicial interruptions at different stages are seriously hampering the growth of arbitration as an effective dispute resolution process. Delay and high cost are two areas where the Arbitrators by self regulation can bring about marked improvement." 21. With this background of propositions of law, I am left with two alternatives for proper disposal of the application. One is to direct the respondents to appoint Gazetted Railway Officer as an arbitrator as provided under Clause 2900 of Indian Railway Contract Conditions or to appoint a retired Judge of this Court as an arbitrator. With this background of propositions of law, I am left with two alternatives for proper disposal of the application. One is to direct the respondents to appoint Gazetted Railway Officer as an arbitrator as provided under Clause 2900 of Indian Railway Contract Conditions or to appoint a retired Judge of this Court as an arbitrator. Having given a thoughtful consideration to the facts and circumstances of the case, I am of the view that issuance of mandamus directing the respondents-railway to appoint a Gazetted Railway Officer as contemplated under Clause 2900 as an arbitrator would meet the ends of justice. Since the respondents-railway had already appointed a Gazetted railway officer and issued proceedings, there is no need to issue any Mandamus. The purpose for which this application is moved has been substantially worked out. Therefore, no further orders are required to be passed in this application. 22. Accordingly, the arbitration application is hereby dismissed. No order as to costs.