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2011 DIGILAW 1294 (CAL)

UNION OF INDIA v. Supriya Kumar Saha

2011-09-19

ASHOKE KUMAR DASADHIKARI

body2011
Judgment : ASHOKE KUMAR DASADHIKARI, J. The petitioner Union of India filed the application under Section 34 of the Arbitration and Conciliation Act through the General Manager, Eastern Railway under the Ministry of Railways thereby questioning the award passed by the learned Arbitrator on 15th June, 2007. The petitioner issued the open tender in the month of May, 1996 being Tender No. 8/96-97. In response to that open Tender the respondent submitted his quotation in the prescribed form sold by the Railway Administration on 23rd May, 1996. The value of the said Tender was Rs.1 crore according to the notice of invitation of Tender 8/96-97. After some negotiations took place by and between the parties the offer of the respondent was accepted for a sum of Rs.84,90,009.20P. The acceptance of said offer was communicated by a letter bearing No. 222-S/I/W-II dated 14th May, 1997. Thereafter a formal agreement in writing was signed by the respondent on 22nd August, 1997 and was issued on 9th September, 1997 being No. 146/T/I was entered into by and between the parties. The Railway Administration duly employed the respondent for construction of additional platform with provision of 24 coaches including all ancillary works at Sealdah at the rate of and on the said terms and conditions contained in the said agreement. For the purpose of execution of the said works the respondent employed various skilled and unskilled men and labour force and arranged requisite machineries and equipments after receiving the letter of acceptance dated 14th May, 1997. There were some reciprocal obligation i.e. to hand over the site free from all encumbrances, site plan and full drawing and necessary materials, etc., to give timely decision and render necessary assistance as and when required, to maintain law and order problems and to ensure of every payment of running account bills in time by taking proper measurement. The period of completion of work was 15 months. It was alleged that due to latches on the part of the Railways authorities the work could not be completed within 15 months and the same was prolonged for another seven and half months. The respondent issued letters regarding the reasons for non-completion of the aforesaid work within the stipulated period and letters were duly received by the Railway Administration. It was alleged that due to latches on the part of the Railways authorities the work could not be completed within 15 months and the same was prolonged for another seven and half months. The respondent issued letters regarding the reasons for non-completion of the aforesaid work within the stipulated period and letters were duly received by the Railway Administration. In the aforesaid letter the respondent explained why the work was delayed and could not be completed and also demanded expenses, loss of profit, extra expenses and other miscellaneous expenses which are incurred by the claimant due to default and/or latches from the part of the petitioners. The respondent also issued two letters dated 15th March, 1999 and 28th April, 1999 for price escalation. Although, a letter was issued by the petitioner on 17th June, 1999 requesting the respondent to be present at the site to witness the measurement for finalisation of bills, the respondent attending the site for witnessing the measurement did not find anyone on behalf of the petitioners at the site and the respondent wrote a letter to the official of the Railway Administration on 2nd July, 1999 which was duly received. Subsequently, several representations were made by the respondent to the Railway Administration for finalisation of the bills and also requested to give time for completion of the balance agreemental work. But no steps were taken by the respondent. By a letter dated 17th August, 2000 the Railway Administration communicated the respondent that the contract of the above work has been closed, duly approved by the competent authority without showing any reason and/or cause thereof. The balance agreemental work was assigned to the other contractor without intimating respondent. Which according to the respondent is contrary and arbitrary to the general principles of law as well as violating the principle of Indian Contract Act, 1872. It was claimed that within the extended period i.e. 28th January, 1999 the respondent completed his part of work and also extra work and new items within full and final satisfaction of the Railways. Which according to the respondent is contrary and arbitrary to the general principles of law as well as violating the principle of Indian Contract Act, 1872. It was claimed that within the extended period i.e. 28th January, 1999 the respondent completed his part of work and also extra work and new items within full and final satisfaction of the Railways. It is alleged that after completion of the aforesaid agreemental works and extra works and new items about two and half years passed but the Railway Administration neither released the balance principal amount of Rs.3 lakhs along with 2 lakhs for new items and extra work nor released the security deposit nor settled the loss and damages including price escalation of the respondent. The respondent raised a dispute/claim for a sum of Rs.69,32,887 along with interest up to 20th October, 2001. The demand raised in the letter dated 22nd October, 2001, wherein the respondent demanded a settlement of the said disputes and differences in terms of the Clause 62 of the general condition forming part of the contract and in default refer the same before the arbitration in terms of the arbitration agreement contained in the aforesaid Clause 62 of the general condition of the contract. Even in spite of receipt of such letter for more than a month, the petitioners did not appoint any Arbitrator nor they could take any step to appoint any Arbitrator in accordance with the aforesaid arbitration agreement. Since the Railway Administration fail to appoint Arbitrator as per written request made on 22nd October, 2001, the respondent being dissatisfied with the aforesaid conduct on the part of the petitioner, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before this Hon’ble High Court on 8th December, 2001 being A.P. No. 302 of 2001. By and under order dated 14th August, 2001, the Hon’ble Mr. Ashok Kumar Mathur the then Chief Justice passed an order appointing the learned Arbitrator who has passed the impugned award which is under challenged in the instant petition. Mr. P. S. Basu, learned Counsel appearing for the petitioner submitted that according to the contract, the completion period was to expire on 13th August, 1998. Ashok Kumar Mathur the then Chief Justice passed an order appointing the learned Arbitrator who has passed the impugned award which is under challenged in the instant petition. Mr. P. S. Basu, learned Counsel appearing for the petitioner submitted that according to the contract, the completion period was to expire on 13th August, 1998. Since the respondent could not complete the work within the original contractual period, the time to complete the said work under the contract was extended from time to time and upto 31st March, 1999. Yet the respondent could not complete the work. Mr. Basu, submitted that the construction of additional platform as per the contract was very urgently required in order to meet the demand and to cater to the adequate train services for the passengers. It was submitted that in spite of requests and reminders made both in writing and also verbal the respondent could not make any progress of the work even within the extended period and upto the date of the last extension till 31st March, 1999. The respondent could complete only 15% of the work which was negligible considering the volume of the work under the contract. Since the respondent sat tight over the matter after expiry of 31st March, 1999, the petitioner instead of taking immediate penal action against the respondent, was desirous to allow the said work to be done by the respondent and accordingly did not take any harsh action against the respondent. Prior to expiry of the extended period the respondent was alarmed by a notice dated 12th October, 1997 which is known as seven days notice under Clause 61(1) of General Conditions of Contract, 1969 with a request to commence a work immediately. Notwithstanding the receipt of such notice the respondent did not show any intention to have progress in the matter and to complete the same. It was contended that the petitioner was paid its all running account bills excepting a sum of Rs.1,38,420 for the completed works only to the extent of 15%. Notwithstanding the receipt of such notice the respondent did not show any intention to have progress in the matter and to complete the same. It was contended that the petitioner was paid its all running account bills excepting a sum of Rs.1,38,420 for the completed works only to the extent of 15%. On repeated calls the respondent did not choose to turn up to sign the said measurement book without showing any reason for the same and ultimately as per the prior notice the petitioner got the said measurement book ready through its authorised representative/officer which is a conclusive proof of the work done by the respondent and is binding on the respondent in accordance with the provisions of the General Conditions of Contract. It was also submitted that the respondent fail to deliver diverse quantities of raw materials like cement, rod, etc. which was supplied to him for the aforesaid construction but could not be used by him. Since the respondent could do the work only to the extent of 15%. The unused materials were not returned to the petitioner deliberately. The petitioner was invited a tender for completion of the remaining work of additional platform at Sealdah by a tender notice bearing No.229/2000-01. Ultimately, the offer of one M/s. S.S. Construction was accepted at a total cost of Rs.1,62,21,319.04. For failure on the part of the respondent the petitioner had to re-tender the work and had to bear additional cost unnecessarily and conclusively for the fault and/or breach on the part of the respondent. The petitioner became liable to reimburse such additional sum of respondent. It was submitted that respondent made claim for a huge amount of money on different heads which were not at all tenable in law. It was further submitted that the said demand was not made in accordance with the procedure laid down on the General Condition of the Contract. It was submitted that instead of waiting of the decision of the Railway Authority the respondent invoked jurisdiction of this Hon’ble Court under Section 11 of the Arbitration and Conciliation Act, 1996 and on that application the Arbitrator was appointed. The learned Arbitrator entered upon reference and had given direction for filing the statement of claim as well as the defence statement. The respondent being the claimant made a claim of Rs.69,32,887 on fourteen separate heads including the alleged loss of profit, damage, etc. The learned Arbitrator entered upon reference and had given direction for filing the statement of claim as well as the defence statement. The respondent being the claimant made a claim of Rs.69,32,887 on fourteen separate heads including the alleged loss of profit, damage, etc. The petitioner being the respondent in the arbitration proceedings filed counter statement of claim. In the said counter statement the petitioner disputed the entire claim of the respondent. It was stated in that statement that the respondent had committed breach of contract and had failed to complete the work under the contract in spite of several opportunities being given to him. It was further stated that the respondent know that time was the essence of the contract, notwithstanding, the same the respondent failed and neglected to fulfil his obligations under the contract. Over and above the said dispute with regard to claim of the respondent, the petitioner took the following points before the learned Arbitrator:- “(a) That the Arbitrator had no jurisdiction to adjudicate the dispute in view clause 63(3) of the General Conditions of Contract as the Ld. Arbitrator was not a Gazetted Officer within the meaning of the said clause. (b) That a portion of the claim which was covered under the final measurement by the petitioner was excepted matter under the provision of General Conditions of Contract and the same was thus non-arbitrable. (c) That the claim for arbitration by the respondent was in any event premature since the respondent prior to approaching the Court for appointment of Arbitrator did not follow the procedure laid down in the General Conditions of Contract.” The learned Arbitrator heard the matter and passed his award on 15th June, 2007 which was received by the petitioner from the Advocate at 25th June, 2007. It was submitted that the learned Arbitrator rejected the preliminary points as raised by the petitioner but while rejecting the same learned Arbitrator did not deal with the point of jurisdiction of the Arbitrator to adjudicate the matter in view of Clause 63(3) of the General Conditions of Contract. It was submitted by Mr. Basu, learned Senior Counsel appearing for the petitioner that at the time of hearing the petitioner raised the point taken by them in their counter statement that the Arbitrator had no jurisdiction to decide the matter. It was submitted by Mr. Basu, learned Senior Counsel appearing for the petitioner that at the time of hearing the petitioner raised the point taken by them in their counter statement that the Arbitrator had no jurisdiction to decide the matter. Since the appointment made by the Hon’ble High Court was not in terms of the agreement entered into by and between the petitioner and the respondent. It was submitted that Clauses 63 and 64 of the General Conditions of Contract, 1969 of Eastern Railway read with all correction slips issued thereto from time to time and subsequently reprinted in 2001 will make it clear that in the present case, two arbitrators who are required to be appointed Gazetted Railway Officers of equal status and this not having been done, the award of the learned Arbitrator who was not a Gazetted Railway Officer and not having been appointed in the manner provided in the said agreement is not sustainable in law and the award should be set aside under Section 34 of the Arbitration and Conciliation Act, 1996. It was submitted that the said point was specifically taken by the petitioner in it’s counter statement under Paragraph A-2 filed before the learned Arbitrator and argued as the preliminary point and it would appear from Paragraphs 6 and 7 of the impugned award. It was submitted that the learned Arbitrator have come to a finding, interalia, that there is no substance in the preliminary objection raised by Railway inasmuch as the Arbitrator appointed by the High Court cannot decide the validity of the order of the Hon’ble High Court and if the party was aggrieved by such appointment in that event, in view of the latest law settled before the Hon’ble Supreme Court, they should have moved the Hon’ble Supreme Court to get the order set aside. It was also held by the learned Arbitrator that the order passed by the Hon’ble Chief Justice of Calcutta High Court was held be an administrative order but the said view had been changed and, therefore the preliminary objection has no force. It was submitted by Mr. Basu that the law laid down by the Hon’ble Apex Court is otherwise. He cited the case of (S.B.P.Co. Vs. Patel Engineering Ltd. & Another) reported in 2005 Vol. It was submitted by Mr. Basu that the law laid down by the Hon’ble Apex Court is otherwise. He cited the case of (S.B.P.Co. Vs. Patel Engineering Ltd. & Another) reported in 2005 Vol. 8 SCC Page 618, Paragraph 47 wherein under Sub-para (i) it was held that the exercised by the Chief Justice of under Section 11(6) of the Act is not administrative power but it is judicial power. It was also held in Sub-para (k) that since all were guided by the decision of the Hon’ble Supreme Court delivered in (Konkan Rly. Corpn. Ltd. Vs. Reni Construction (P) Ltd.) reported in 2002 Vol. 2 SCC Page 388, an order under Section 11(6) of the Act has been made based on the position adopted in that decision, it was clarified that appointment of arbitrators or Arbitral Tribunals thus made, are to be treated as valid and all objections being left to be decided under Section 16 of the said Act on and from this date, the position as adopted in the judgment of S.B.P.Co. will govern even pending applications under Section 11(6) of the Act. It was submitted by Mr. Basu that in the instant case order of Arbitrator made by the Hon’ble Calcutta High Court on 14th August, 2003 and accordingly all objections are to be decided by the learned Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996. It was further submitted by him that the learned Arbitrator erred in holding, interalia, in the impugned award to the effect that the preliminary objection of the Railways has no force and such finding is based upon an erroneous interpretation of the aforementioned Apex Court decision. It was submitted by Mr. P. S. Basu that Section 16(2) of the said Act, interalia, provides that a plea of jurisdiction shall be raised not later than the submission of the statement of defense and in the instant case the petitioner has done same. It was also submitted by Mr. P. S. Basu that for questioning the jurisdiction of the Arbitral Tribunal, it is not at all mandatory to make a separate application. Mr. Dipak Basu, learned Senior Counsel representing the respondent submits that the respondent herein submitted his quotation on 23rd May, 1996 in response to the open tender issued in the month of May, 1996 by the petitioner. The said quotation was accepted by the Railways. Mr. Dipak Basu, learned Senior Counsel representing the respondent submits that the respondent herein submitted his quotation on 23rd May, 1996 in response to the open tender issued in the month of May, 1996 by the petitioner. The said quotation was accepted by the Railways. It was communited by their letter of acceptance dated 14th May, 1997 for a sum of Rs.84,90,009.20 for construction of additional platform with a provision of 24 coaches including all ancillary work at Sealdah. Subsequently, on 19th September, 1997 a formal agreement was entered into by and between the parties. It was submitted that as per the aforesaid agreement the respondent to complete the work within 15 months, but due to various lapses and defaults on the part of the Railway the respondent was unable to complete the said work within the stipulated period of 15 months. Subsequently, the Railway wrote a purported letter to the claimant On 17th August, 2000 in which it was informed that the above work has been closed which is approved by the competent authority. It was also submitted that disputes and differences started between the parties and request was made to the Railways to appoint an Arbitrator in terms of Clause 63 of the General Conditions of Contract on 1969 within a period of 30 days as prescribed in law. Since, no Arbitrator was appointed by the Railways, the Respondent moved an application before the Hon’ble High Court, Calcutta and the High Court was pleased to pass an order dated 14th August, 2008 appointing the learned sole Arbitrator to adjudicate upon the dispute between the parties in A.P. No. 296 of 2007 under Section 11 of the said Act. Ultimately, the award was passed and published by the learned Arbitrator. Mr. Basu submitted that if the petitioner fail to appoint the Arbitrator in accordance with the arbitration clause after demand of appointment is made to the appointing authority before filing of the application under Section 11(6) of the Act. Mr. Basu cited three judgments in support of his contention. First one is reported in 2000 Vol. 8 SCC 151 (Datar Switchgear Ltd. Vs. Tata Finance Ltd. & Anr.), second one reported in 2006 Vol. 2 SCC 638 (Punj Lloyd Ltd. Vs. Petronet MHB Ltd) and the third one is reported in 2007 Vol. 8 SCC 684 (Union of India Vs. Bharat Battery Manufacturing Co. Pvt. Ltd.). First one is reported in 2000 Vol. 8 SCC 151 (Datar Switchgear Ltd. Vs. Tata Finance Ltd. & Anr.), second one reported in 2006 Vol. 2 SCC 638 (Punj Lloyd Ltd. Vs. Petronet MHB Ltd) and the third one is reported in 2007 Vol. 8 SCC 684 (Union of India Vs. Bharat Battery Manufacturing Co. Pvt. Ltd.). It was submitted by Mr. Basu, learned Senior Counsel representing the respondent that the right to appoint Arbitrator in terms of arbitration clause lapses altogether, after filing of the application under Section 11(6) and accordingly the petitioner cannot vindicate the said extinguished right indirectly through the court of law. Mr. Basu submitted that the instant case the petitioner failed to appoint Arbitrator in terms of arbitration clause and, therefore, the petitioner could not have insisted that Chief Justice under Section 11(6) of the Act must appoint a Gazetted Railway Officer as arbitrator in terms of the arbitration clause. The next point raised by Mr. Basu that the Hon’ble Chief Justice is not bound by the terms of arbitration clause while appointing the Arbitrator under Section 11(6) of the Act. Mr. Basu referred Section 11 Sub-section (6) of the said Act and submitted that the Chief Justice or the person or institution designated by him in appointing an Arbitrator shall have due regard to any qualification required of the Arbitrator by the agreement of the parties and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. Mr. Basu in support of his contention cited the following judgments:- 1. Ministry of Railways Vs. Patel Engineering reported in 2008 Vol. 10 SCC 240. 2. State of Karnataka Vs. Ranganatha Reddy reported in AIR 1978 Supreme Court 215. Mr. Basu, further submitted while appointing the Arbitrator the Hon’ble Chief Justice is under a statutory obligation to have due regard to give proper attention to the twin requirements laid down under Section 11(8) of the said Act. It was also submitted that in the instant case the Hon’ble Chief Justice duly considered the two requirements under Section 11 Sub-section (8) and after considering the same an order was passed on 14th August, 2003 thereby the sole Arbitrator was appointed to adjudicate the disputes between the parties. Mr. It was also submitted that in the instant case the Hon’ble Chief Justice duly considered the two requirements under Section 11 Sub-section (8) and after considering the same an order was passed on 14th August, 2003 thereby the sole Arbitrator was appointed to adjudicate the disputes between the parties. Mr. Basu, learned Senior Counsel appearing for the respondent submitted further that the party aggrieved by the decision of the Hon’ble Chief Justice under Section 11(6) of the said Act must raise his objection by way of pleading under Section 2 of the said Act before the tribunal. It was submitted that application under Section 34 can be filed on the point of lack of jurisdiction when the party makes the pleading by way of an application in writing before the Arbitral Tribunal and such application is to be made at the earliest opportunity and the tribunal is to decide the plea taken under Section 16(2) and reject the same and thereafter pass an arbitral award. It was submitted that the petitioner herein has not at all pleaded under Section 16(2) that the Arbitral Tribunal do not have jurisdiction but they have raised a point that the tribunal not being a Gazetted Railway Officer was not competent and the said point was taken belatedly in the counter statement of facts. It was also submitted that there is not averment to show that such belated plea was admitted by the tribunal after considering the delay justified under Section 16(4) of the said Act. Therefore, it was contended that the petitioner did not raise the plea under Section 16(2) of the said Act that the Arbitral Tribunal does not have jurisdiction and, hence, the petitioner is not aggrieved under Section 16(6) of the said Act and further they do not have any right to raise such point in the instant application under Section 34. It was argued by the learned Counsel that the respondent Railways have voluntary participated before the learned Arbitrator, acquiesced and submitted to the jurisdiction of the tribunal and having done so, the Railways by their Act and conduct precluded from the point of lack of jurisdiction of the Arbitral Tribunal. It was argued by the learned Counsel that the respondent Railways have voluntary participated before the learned Arbitrator, acquiesced and submitted to the jurisdiction of the tribunal and having done so, the Railways by their Act and conduct precluded from the point of lack of jurisdiction of the Arbitral Tribunal. It was further submitted that the petitioner has neither raised the point of lack of jurisdiction of the tribunal by way of pleading under Section 16(2) nor sent a written statement of the reasons challenging the tribunal under Section 13(2) on the ground of lack of qualification of the Arbitrator and, therefore, they have waived their right to object the award within the meaning of Section 4 of the said Act, on the ground of lack of jurisdiction of the tribunal or on the ground of absence of agreed qualification of the Arbitrator. I have considered the submissions made by the respective Counsel appearing for the parties. It appears from the counter statement of facts submitted by the respondent that the petitioner have, in fact, questioned jurisdiction of the learned Arbitrator appointed by this Court. It was specifically mentioned that a panel of arbitrators were to be appointed as per Clause 64(3) (a)(ii) of the General Conditions of Contract since the claim amount is more than 10 lakhs but in this case the sole Arbitrator was appointed in contravention of arbitral agreement as well as in contravention of Section 10 of the Said Act. It was also pointed out that the Arbitrator should be a Gazetted Railway Officer not below the rank of a Junior Administrative Grade, which is a professional and trade education. It was further pointed out that the learned sole Arbitrator did not possess such qualification and the Court appointed him without respecting the arbitral agreement and in contravention of Section 11(8) of the said Act. Thus, the petitioner challenged the appointment of the sole Arbitrator. It appears from Clause 63(3)(ii) that two arbitrators, who shall be the Gazetted Railway Officers of equal status to be appointed in the manner laid down in Clause (3)(b) for all claims of Rs.3,00,000 and above, and for all claims irrespective of the amount of value of such claims if the issue involved are of a complicated nature. It appears from Clause 63(3)(ii) that two arbitrators, who shall be the Gazetted Railway Officers of equal status to be appointed in the manner laid down in Clause (3)(b) for all claims of Rs.3,00,000 and above, and for all claims irrespective of the amount of value of such claims if the issue involved are of a complicated nature. It would also appear from Clause (3)(ii)(d) that it would be no objection if the person appointed the Arbitrator, Arbitrators, Umpire are Government servants and in course of their duties as Government servants they have expressed views on all or any of the matters in dispute. Under Clause (e) it was specifically clarified that subject as aforesaid, Arbitration Act, 1940 and the Rules thereunder and any statutory modification thereof shall apply to the Arbitration proceedings under this clause. The point of jurisdiction and maintainability of the arbitration proceedings before the learned Arbitrator was argued as a preliminary point and the learned Arbitrator have considered the entire matter and upon such consideration the preliminary objection taken by the petitioner was rejected. In Paragraph 7 of the award the learned Arbitrator after taking note the facts have come to the conclusion to the following effect :- “In the instant case, there is no substance in the preliminary objections raised by the Respondent Railway inasmuch as the arbitrator’s appointment by the Hon’ble High Court at Calcutta cannot decide the validity of the order of the Hon’ble High Court at Calcutta by which the arbitrator was appointed. If the party was aggrieved by such appointment, in that event in view of the latest view of the Hon’ble Supreme Court they should have moved the Hon’ble Supreme Court to get the order set aside. The order of the Hon’ble Chief Justice of the Calcutta High Court was held to be an administrative order but that view has been changed and as such the preliminary objection has no force.” After careful consideration of the two judgments one is Konkan Rly. Corporation Ltd. and the other one is S.B.P. Co. (Supra) it appears to this Court that the Hon’ble Supreme Court in case of S.B.P. Co. have clarified the position in Sub-paragraph (k) of Paragraph 47 that “Since all were guided by the decision of this Court in Konkan Rly. Corpn. Ltd. Vs. Reni Construction (P) Ltd, reported in 2002 Vol. Corporation Ltd. and the other one is S.B.P. Co. (Supra) it appears to this Court that the Hon’ble Supreme Court in case of S.B.P. Co. have clarified the position in Sub-paragraph (k) of Paragraph 47 that “Since all were guided by the decision of this Court in Konkan Rly. Corpn. Ltd. Vs. Reni Construction (P) Ltd, reported in 2002 Vol. 2 SCC Page 388 and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus for made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. On and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act.” In the instant case by an order of this Hon’ble High Court dated 14th August, 2003 the Arbitrator was appointed and accordingly all objections are to be decided by the learned Arbitrator under Section 16 of the Arbitration and Conciliation Act and accordingly the learned Arbitrator have made a serious mistake thereby rejecting the preliminary point raised by the petitioners before him, on the plea that the learned Arbitrator cannot decide the validity the order of appointment passed by the High Court and the petitioner should have moved the Hon’ble Apex Court if they are aggrieved against the said order. The aforesaid two grounds which are the reasons for rejection of the preliminary objection are of no substance in view of the Apex Court judgment as referred hereinabove. In my view, the rejection of the preliminary objection by the learned Arbitrator is not lawful and also contrary to the law as laid down by the Hon’ble Apex Court. In this regard, Mr. Dipak Basu, learned Senior Counsel argued on behalf of the respondent that the aforesaid objection should have been taken at the threshold and that too by way of a written application in that regard. In this regard Section 16(2) of the said Act stipulates that a plea that the Arbitral Tribunal does not have jurisdiction shall be raised not letter than the submission of statement of defence, however, a party shall not be precluded from raising such a plea merely because that he has appointed or participated in the appointment of, an Arbitrator. In this regard Section 16(2) of the said Act stipulates that a plea that the Arbitral Tribunal does not have jurisdiction shall be raised not letter than the submission of statement of defence, however, a party shall not be precluded from raising such a plea merely because that he has appointed or participated in the appointment of, an Arbitrator. Thus, it cristal clear that the party to the concerned proceedings can raise the plea of jurisdiction even in the statement of defence and in the instant case the petitioner have done so. Nowhere it appears that a separate application is to be made nor there is any hard and first rule to the effect that a written application is to be taken out. The aforesaid plea could be raised even if any of the parties have participated in the appointment of the Arbitrator. Therefore, the submissions made by Mr. Basu on behalf of the respondent is of no substance in the eye of law. So far, the voluntary submission to the jurisdiction of the Arbitral Tribunal is concerned this Court do not find any merit in such submission, simply because of the reason that the point of jurisdiction specifically taken by the petitioners before the learned Arbitrator was rejected and the petitioner had no other alternative but to participate in the arbitration proceedings. Since there is no separate provision for questioning the order of such rejection, it was obligatory on the part of the petitioner to participate in the proceedings and to wait till final award is passed and then and then only aforesaid order of rejection could be challenged by filing application under Section 34 of the said Act. Therefore, the participation on the part of the petitioner before the arbitrator cannot be said to be acquiescence and/or submission of the jurisdiction of the tribunal. Thus the acts or conduct on the part of the petitioner do not preclude from taking the point of lack of jurisdiction of Arbitral Tribunal. In my opinion Section 12 and 13 have no manner of the application in the facts and circumstances of this case. Therefore, the point voluntary submission to the jurisdiction of tribunal as argued by Mr. Basu is also rejected. So far the argument made by Mr. In my opinion Section 12 and 13 have no manner of the application in the facts and circumstances of this case. Therefore, the point voluntary submission to the jurisdiction of tribunal as argued by Mr. Basu is also rejected. So far the argument made by Mr. Deepak Basu, learned Senior Counsel appearing on behalf of the respondent that if a party fails to appoint arbitrator in accordance with the arbitration clause after demand for appointment is made before filing the application under Section 11(6) of the Act the right of the former party to appoint arbitrator in terms of arbitration clause seizes. There is no dispute as regards the aforesaid proposition which is settled principle of law as laid down by the Hon’ble High Court in various decisions. The question herein arises whether the appointment made by the Hon’ble Chief Justice was in consonance with the terms of the arbitration clause and whether such appointment is violative of the arbitration clause which is binding upon the parties to the dispute and whether the Hon’ble Chief Justice is obliged to take note of the said clause while appointing arbitrator. In this regard, the provision contained under Sub-section (8) of Section 11 is very relevant and the said Sub-section (8) is quoted hereunder:- “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 considerations as are likely to secure the appointment of an independent and impartial arbitrator.” A plain reading of the aforesaid provision makes it clear that the statutory requirement is to have due regard to the qualification of the Arbitrator as agreed by and between the parties and other considerations as are likely to secure to appointment of independent and impartiality. Here in the instant case the Hon’ble Chief Justice while passing the order for appointment of arbitrator did not follow the aforesaid provision as well as the arbitral clause under the General Conditions of Contract. Since the appropriate clause of the General Conditions of Contract that is Clause 63(b)(ii) is applicable here, this Hon’ble Court ought to have taken into consideration of the same and could have passed the order in terms of the said clause but that was not done in the instant case. Since the appropriate clause of the General Conditions of Contract that is Clause 63(b)(ii) is applicable here, this Hon’ble Court ought to have taken into consideration of the same and could have passed the order in terms of the said clause but that was not done in the instant case. It was also not disclosed in the order under what exceptional circumstances the order of appoint was passed. In my view the requirement under Sub-section (8) of Section 11 is specific and the Hon’ble Chief Justice is bound to follow the same. In the instant case since the aforesaid provision have not been followed, the petitioner have got his right to question to the jurisdiction of the Arbitrator before the learned Arbitral Tribunal under Sub-section (2) of Section 16 of the said Act and the Arbitral Tribunal is also obliged under the law to decide the same taking note of the fact situation of the case as well as the arbitration clause of the agreement which was entered into and agreed upon by and between the parties. In my opinion the twine requirements of Sub-section (8) of Section 11 have to be kept in mind at the time of passing the order of appointment of the Arbitrator and also to consider the relevant clause of General Conditions of Contract. Therefore, it appears to this Court that the stand taken by the petitioners that the appointment of arbitrator should be made in terms of the provisions of the agreement and no arbitrator could be appointed who has not requisite qualification as mentioned in the agreement is justified. In this regard, the learned Counsel for the petitioner relied on the Apex Court decisions reported in 2000 Vol. 2 Arbitration Law Reporter Page 2 (Supra) and 2004 Vol. 10 SCC 504. There is also unreported decision of the Apex Court delivered in case of (Union of India Vs. Krishna Kumar) and further reference may be drawn from the two Division Bench judgments, one reported in All India Reporter 2009 Calcutta 59 and the other one reported in 2009 Vol. 4 CHN 252. In this regard the judgments cited by Mr. Basu, learned Counsel appearing for the respondent reported in 2007 Vol. 5 SCC Page 304. Krishna Kumar) and further reference may be drawn from the two Division Bench judgments, one reported in All India Reporter 2009 Calcutta 59 and the other one reported in 2009 Vol. 4 CHN 252. In this regard the judgments cited by Mr. Basu, learned Counsel appearing for the respondent reported in 2007 Vol. 5 SCC Page 304. Wherein it was held that failure of the appointing authority to appoint arbitrator within a reasonable time, mandamus can be issued under Section 11(6) to the authority concerned to appoint arbitrator, as far as possible as per arbitration clause, however, if in large number of cases it is found that it would not be conducive in the interest of parties or of any other reasons to be recorded in writing, the choice of arbitrator can go beyond the designated persons or institutions in appropriate cases. But, Court should normally adhere to terms of the arbitration clause except in exceptional cases for reasons to be recorded or where both parties agree for a common name. Therefore, it can safely be concluded that only in exceptional cases, for reasons to be recorded in writing the choice of the Arbitrator can go beyond the designated persons. Here in the instance case there is no such exception nor any reason is ever disclosed nor recorded in the order to justify the appointment of sole Arbitrator beyond the designated persons. In my view the aforesaid judgment supports the petitioner’s contention. The Court should normally adhere to the terms of the arbitration clause and here in the instant case that should have been done. The other decision reported in 2008 Vol. 10 SCC 240 wherein it was held that a bare reading of Section 11 shows that the emphasis on the terms of the agreement being adhered to and/or given effect as closely as possible. Although, it was held that it is true that it is not mandatory for the Chief Justice 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. In that decision it was also held that at the time of such appointment there is necessity to have due regard to the two cumulative conditions contained in Section 11(8) (a) (b) of the said Act. Although, it was argued by Mr. In that decision it was also held that at the time of such appointment there is necessity to have due regard to the two cumulative conditions contained in Section 11(8) (a) (b) of the said Act. Although, it was argued by Mr. Basu appearing for the that at the time of appointment of an Arbitrator the Chief Justice should have due regard to other considerations as are likely to secure of appointment of an independent and impartial arbitrator. In my view, the aforesaid consideration are to be made only when there is an allegation about the independence and/or impartiality of the Arbitrator but in the instant case there is no such allegation and furthermore the order of appointment do not disclose any such consideration that was made by the Hon’ble Chief Justice at the time of passing the order. So far the judgment cited Mr. Basu reported in 2009 Vol. 4 SCC 523 is concerned. It appears that in the said decision it was held by the Hon’ble Apex Court that a provision of serving officers of one party being appointed as arbitrator(s) brings out considerable resistance from the party, when disputes arises. Having regard to the emphasis on independence and impartiality in the new Act, Government, Statutory authorities and Government Companies should think of phasing out arbitration clauses providing for serving officers and encourage professionalism in arbitration. In my view, it is really in the nature of the suggestion and there is no legislation in that regard till today. Therefore, the aforesaid decision has no manner of the application in the instant case. The other decision cited by Mr. Basu reported in A.I.R. 2002 Supreme Court 1139 in the said decision objection as to the composition of Arbitral Tribunal was not taken before the Arbitral Tribunal itself as per requirement under Section 16(2) of the said Act and, therefore, in my view the said decision has got no manner of the application in the present case. The other decision cited by Mr. Basu reported in A.I.R. 2008 Calcutta 332 in the said case also authority of Arbitrator was not challenged in course of proceeding and the appellant all along without jurisdiction in objection. Therefore, in the facts and circumstances of the present case the said decision is not at all applicable. Therefore, I find substance in the submissions made by Mr. Basu reported in A.I.R. 2008 Calcutta 332 in the said case also authority of Arbitrator was not challenged in course of proceeding and the appellant all along without jurisdiction in objection. Therefore, in the facts and circumstances of the present case the said decision is not at all applicable. Therefore, I find substance in the submissions made by Mr. P. S. Basu appearing on behalf of the petitioner. In view of my aforesaid findings I set aside the award passed by the learned Arbitrator on 15th June, 2007 and accordingly the application filed by the petitioners under Section 34 of the said Act is allowed. However, this order will not prevent the parties to take appropriate steps in the matter of appoint of Arbitrator for deciding the issues in accordance with law.