JUDGMENT Sanjib Banerjee 1. IN this petition under sections 11 and 15 of the Arbitration and Conciliation Act, 1996 the petitioner seeks appointment of an arbitrator consequent upon the erstwhile arbitrator having apparently abandoned the reference. 2. FOLLOWING a notice inviting tender of June 19, 2007 the petitioner made a bid for the work of handling, loading, transporting and removing iron ore from certain mines operated by the respondent. A letter of intent was issued on August 3, 2007 in favour of the petitioner. Disputes and differences arose between the parties within a few months. By a letter of May 6, 2008 the petitioner sought a reference of the disputes to arbitration and requested the Chairman-cum-Managing Director of the respondent to appoint an arbitrator. Such official did not respond to the request with reasonable despatch. There is no dispute that there is an arbitration agreement contained in the notice inviting tender which binds the parties. There is no dispute either that the Chairman-cum-Managing Director of the respondent is the appointing authority under the arbitration agreement. Upon the appointing authority failing to pay heed to the petitioner's request of May 6, 2008, the petitioner carried a previous petition under section 11 of the 1996 Act to this Court. A petition under section 9 of the 1996 Act was also filed. During the pendency of the earlier petition under section 11 of the 1996 Act, AP No. 430 of 2008, the Chairman-cum-Managing Director nominated an arbitrator. This was intimated by advocate representing the respondent to the petitioner by a letter of September 6, 2008. The petitioner accepted the nomination and the earlier section 11 petition was disposed of accordingly. 3. THE reference progressed for a while but the arbitrator issued a letter on June 12, 2009 withdrawing himself from the reference. The letter was addressed to the Chairman-cum-Managing Director of the respondent and a copy thereof was marked to either party. It appears from the arbitrator's letter that Advocate representing the respondent had requested the arbitrator to withdraw from the reference. On June 15, 2009 the petitioner called upon the appointing authority to nominate another arbitrator. The petitioner suggested certain names. The appointing authority did not respond to the petitioner's letter, whereupon a reminder was issued on June 30, 2009. It appears from the arbitrator's letter that Advocate representing the respondent had requested the arbitrator to withdraw from the reference. On June 15, 2009 the petitioner called upon the appointing authority to nominate another arbitrator. The petitioner suggested certain names. The appointing authority did not respond to the petitioner's letter, whereupon a reminder was issued on June 30, 2009. On the same day, Advocate representing the respondent replied to the petitioner's letter to the appointing authority issued on June 15, 2009 and informed the petitioner that an investigation had commenced, at the behest of the concerned ministry in respect of the procedure adopted for awarding the contract to the petitioner and that such investigation was being conducted by the Central Bureau of Investigation. The CBI had apparently recommended that the "offer" to the petitioner should not be "revived." Following the obvious rejection of the plea for appointing another arbitrator, this petition was filed on July 10, 2009. 4. THE respondent says that since both the petitioner and the respondent are ultimately controlled by the Central Government, this petition should not have been carried to Court. The respondent relies on the judgments reported at 1995 Supp (4) SCC 541 (Oil and Natural Gas Commission vs. Collector of Central Excise) and another reported at 2004(6) SCC 437 (Oil and Natural Gas Commission vs. Collector of Central Excise) to suggest that the present petition is in derogation of the Supreme Court directions contained in such judgments. There is a history to how the orders in the two judgments cited came to be made. In an order of September 11, 1991 [1992 Supp (2) SCC 432 (ONGC vs. CCE)] the Supreme Court observed at paragraph 3 as follows: "3. This Court has on more than one occasion pointed out that Public Sector Undertakings of Central Government and the Union of India should not fight their litigations in Court by spending money on fees of Counsel, Court fees, procedural expenses and wasting public time. Courts are maintained for appropriate litigations. Court's time is not to be consumed by litigations which are carried in either side at public expenses from the source. Notwithstanding these observations repeated on a number of occasions, the present cases appear to be an instance of total callousness. The letter of October 3, 1988, indicated that the Cabinet Secretary was looking into the matter. Court's time is not to be consumed by litigations which are carried in either side at public expenses from the source. Notwithstanding these observations repeated on a number of occasions, the present cases appear to be an instance of total callousness. The letter of October 3, 1988, indicated that the Cabinet Secretary was looking into the matter. That has not obviously been followed up as an instance of wasting public time and energy this matter involves a principle to be examined at the highest level." THE first judgment placed by the respondent is the order made by the Supreme Court on October 11, 1991. Upon noticing the report of the Cabinet Secretary submitted to Court, the Supreme Court directed as follows at paragraphs 3 and 4 of the report: "3. We direct that the Government of India shall set up a committee consisting of representatives from the Ministry of Industry, the Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry and Public Sector Undertakings of the Government of India and Public Sector Undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the committee and its clearance for litigation. Government may include a representative of the Ministry concerned in a specific case and one from the Ministry of Finance in the committee. Senior officers only should be nominated so that the committee would function with status, control and discipline. "4. It shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with." Even though the next judgment cited by the respondent was reported in the year 2004, it is actually an order of January 7, 1994 cited in the judgment reported at 2004(6) SCC 431 (Mohanagar Telephone Nigam Ltd. vs. Chairman, Central Board, Direct Taxes). In the order of January 7, 1994 the Supreme Court directed at paragraph 8 of the report that wherever appeals, petitions and the like were filed without the clearance of the high powered committee so as to save limitation, the appellant or the petitioner shall, within a month for such filing, refer the matter to the high powered committee with prior notice to the designated authority in the Cabinet Secretariat of the Government of India authorised to receive notices in that behalf. In Mohanagar Telephone Nigam Ltd. the Supreme Court quoted from its previous judgment in Chief Conservator of Forests vs. Collector, 2003(3) SCC 472 , where it was observed that the framers of the Constitution did not contemplate that two departments of a State or of the Central Government would fight a litigation in a Court of Law and opined that it was "neither appropriate nor permissible for two departments of a State or the Union of India to fight litigation in a Court of Law." The Court emphasised, in Chief Conservator of Forests vs. Collector, that the "(v) carious departments of the Government are its limbs and, therefore, they must act in coordination and not in confrontation." 5. THE petitioner attempts to assert that it is not under the control of the Central Government and, for such purpose, it relies on a judgment reported in AIR 1995 Del 44 (JS Ameja vs. National Cooperative Consumers Federation of India Ltd.) where it was held that the petitioner was neither an instrumentality nor an agency of the State within the meaning of Article 12 of the Constitution. The Delhi High Court relied on a judgment of the Madhya Pradesh High Court reported at AIR 1991 MP 63 [Ramu Ram Sahu vs. National Cooperative Consumers Federation of India Ltd.) which dwelt on the question at great length. The petitioner has also referred to an unreported judgment of the Karnataka High Court rendered on June 3, 2003 in W.P. No. 28014/1995 (S-DE) [D.G. Katti Shetty vs. National Cooperative Consumers Federation of India Ltd.) where again the petitioner has been held to be "neither financially nor functionally nor administratively controled by or dominated by the Central or State Government." 6. THE respondent relies on an unreported judgment of the Delhi High Court in C.W. No. 1755 of 2003 [National Co-operative Consumers Federation of India Ltd. vs. Union of India) (Along with CW No. 2363 of 2003) delivered on February 17, 2004. On a writ petition filed by the present petitioner, the Delhi High Court directed the high-powered committee to examine the matter. The respondent places the following paragraphs from the judgment and suggests that in view of such decision, which has come after the other judgments cited by the petitioner, it is no longer open to the petitioner to contend that the disputes between it and other wings of the Central Government cannot be sent to the relevant committee: "3. We are not commenting on the issuance of the said letter or the rate of duty or which rate of duty would be applicable etc. In view of the Apex Court decision in case of Oil and Natural Gas Commission vs. Collector of Central Excise, 1995(4) SCC 541, it would be just and proper to direct the Committee on Disputes to take a decision the matter and inform the parties. 4. THE Apex Court in case of ONGC (supra) has pointed out that the Cabinet Secretary has taken a proper initiative in view of the order made by the Court on 11.9.1991 and has reported that the dispute between the Government Departments and the Public Sector Undertaking of the Union of India has been settled. It is also noted that the Cabinet Secretary has issued instructions from time to time to all Departments of the Government of India as well as Public Undertakings of the Central Government to the effect that all disputes, regardless of the types, should be resolved amicably by mutual consultation or through the good office of empowered agency of the Government or through arbitration and recourse to litigation should be eliminated. THE same view has been reiterated by the Apex Court in case of Chief Conservator of Forests, Govt of A.P. vs. Collector and Ors., reported in 2003(2) SCR 180, at paragraph 14. "5. In view of the disputes between the parties, we direct the Committee on Disputes to examine the matter and to take an appropriate decision and communicate the same to the parties. "5. In view of the disputes between the parties, we direct the Committee on Disputes to examine the matter and to take an appropriate decision and communicate the same to the parties. The said exercise shall be done within a period of six months." Though the respondent has taken great pains to go through the Constitution and some of the bye-laws of the petitioner and points to the admission in the opening lines of the petition that the petitioner is under the administrative control of the Central Government, the body of authorities that the petitioner has brought to assert its non-Governmental status cannot be wished away. Despite the respondent asserting that the petitioner is almost invariably headed by a serving IAS officer and the petitioner obtains exemption of putting in earnest deposits (when participating in Government tenders) by citing its administrative subservience to the Central Government, it is not necessary to consider such aspect of the matter. 7. THE petitioner says that the petitioner is agreeable to go to arbitration if the arbitrator is nominated by the respondent or by its Chairman-cum-Managing Director. The petitioner says that a request under section 11 of the 1996 Act is not carried to a Court but it is a request that has to be made to a Chief Justice or his designate. For such purpose the petitioner relies on a decision of the Hon'ble Chamber Judge of the Supreme Court reported at 2006(11) SCC 651 (Rodemadan India Ltd. vs. International Trade Expo Centre Ltd.). The view was expressed in the context of the applicability of section 42 of the 1996 Act to a petition under section 11 thereof. 8. THE petitioner also relies on the unreported Delhi judgment to say that even in such case the Court recognised that disputes between two branches of the same Dovernment could be resolved through arbitration. The petitioner places a circular dated January 24,1994 issued by the Cabinet Secretariat, a copy whereof has been appended to the respondent's affidavit affirmed on August 7, 2009. In the opening sentence of such circular it is made clear that disputes between entities ultimately controlled by the Central Government should not be taken to a Court or Tribunal. The sentence reads as follows: "THE undersigned is directed to refer to this Sectt. O.M. No. 53/3/6/91- Cab. Dated 31st December, 1991 whereby a committee was constituted to give clearance to the,disputed (sic. The sentence reads as follows: "THE undersigned is directed to refer to this Sectt. O.M. No. 53/3/6/91- Cab. Dated 31st December, 1991 whereby a committee was constituted to give clearance to the,disputed (sic. dispute) between a Government Department and another and one Government Department and a Public Sector Enterprises and Public Enterprises themselves, before these are agitated in a Court/Tribunal. ..." The import of the Supreme Court decisions is that Government Departments should not clog up Courts or Tribunals by indulging in internal strife when the two warring parties answer to the same master. What the several orders of the Supreme Court imply is that protracted litigation by two departments under the same ultimate control should not be played out before a Court or a Tribunal unless clearance is first obtained from the high-powered committee. The Supreme Court order of October 11, 1991 accepted the Cabinet Secretary's report to the effect that departments of the Government of India and Public Undertakings of the Central Government should resolve their inter se disputes "amicably by mutual consultation or through the good offices of empowered agencies of the Government or through arbitration and recourse to litigation should be eliminated.'' Arbitration, therefore, is one of the mechanisms that had been referred to in the report and was accepted by the Supreme Court. 9. THE petitioner here, whether or not it is under the administrative control of the Central Government, does not seek the adjudication of its claim against the respondent in the present proceedings. All it seeks is that the disputes covered by the arbitration agreement should be referred to arbitration; and, the petitioner is willing to accept the nominee of the Chairman-cum-Managing Director of the respondent as arbitrator. This is certainly not in derogation of the directions given by the Supreme Court even it were to be assumed that the petitioner was an instrumentality of the Central Government. 10. IN any event, since the respondent had earlier appointed an arbitrator and the reference had commenced but the arbitrator withdrew from his office at the behest of the respondent, it may not be open to the respondent to urge that there can be no arbitration to resolve the disputes covered by the arbitration agreement. 10. IN any event, since the respondent had earlier appointed an arbitrator and the reference had commenced but the arbitrator withdrew from his office at the behest of the respondent, it may not be open to the respondent to urge that there can be no arbitration to resolve the disputes covered by the arbitration agreement. Since the mandate of the erstwhile arbitrator has stood determined upon his withdrawing from office and since the petitioner is agreeable to accept the nominee of the Chairman-cum-Managing Director of the respondent as arbitrator, AP No. 385 of 2009 is disposed of by directing the Chairman-cum-Managing Director of the respondent to nominate an arbitrator within a period of four weeks from the date of service of an authenticated copy of this order for the reference to be carried forward to adjudicate upon the disputes covered by the arbitration agreement. There will be no order as to costs. Urgent certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.