Heard Admit. 1. The petition, at the request of learned counsel for the parties is taken up for final disposal. 2. The petitioner, through medium of instant writ petition, calls in question Arbitration Clause (clause 14) in License Deed dated 25 April 2008 executed by and between the petitioner and respondent no. 1 on 25 April 2008, in so far as it relates to appointment of respondent no. 2 as sole arbitrator on the ground of being volatile of section 12(3)(a) J & K Arbitration and Conciliation Act 1997 (hereinafter referred to as Act). The petitioner also throws challenge to order dated 20 November 2010 passed by respondent no. 2 in the arbitration proceedings tilted M/s SAI Advertisers v. Jammu Municipal Corporation. The petitioner further prays for a writ of prohibition prohibiting respondent No. 2 from proceeding with the arbitra­tion proceedings and an order directing appointment of an independent arbitrator in accordance with sections 7,8 and 11 for resolution of the dispute claimed to have arisen out of the aforementioned contract. 3. The background facts are as under: The petitioner, a partnership firm engaged in advertising business, re­sponded to a tender notice dated 25 February 2008 floated by respondent No. 1 inviting offers for advertising rights in and within extended areas of Jammu Municipal Corporation. The petitioner succeeded in his bid and was given advertising rights within the area notified in the aforementioned NIT in consideration of payment of annual fee of Rs.91,11,111/- to be deposited within the stipulated time. The petitioner claims to have depos­ited the agreed amount of Rs.91,11,111/- with the respondent Corporation on 16 April 2008 where after a formal Licence Deed was executed by the respondent Corporation in favour of the petitioner on 25 April 2008. The petitioner's case is that the petitioner was not in a position to exercise exclusive advertising rights within the notified area till 14 October 2008 because of a writ petition touching the matter, filed by M/S Selvel Media Services Private Limited and also because of failure of the respondent Corporation to remove existing advertising material hoisted and displayed unauthorisedly within the notified area. It is pleaded that the respondent corporation, in terms of the Licence Deed, was under a contractual obliga­tion to remove such material so as to enable the petitioner to exercise exclusive advertising rights within the aforesaid notified area. It is pleaded that the respondent corporation, in terms of the Licence Deed, was under a contractual obliga­tion to remove such material so as to enable the petitioner to exercise exclusive advertising rights within the aforesaid notified area. It is pleaded that the petitioner was also deprived of right otherwise available under the Licence Deed in question to exercise and enjoy the advertising rights in Trikuta Nagar area on the plea that respondent corporation was yet to receive a "No Objection Certificate" (NOC) from Jammu Development Authority. The respondent Corporation, it is pleaded, despite inability of the petitioner to enjoy the exclusive rights of advertising within the notified area because of litigation and thereafter failure to take steps to make possible exercise of such rights, laid a demand of full licence fee amount for the year 2010-11, in violation of the terms and conditions of the Licence Deed. The events set out in detail in the petition, according to the petitioner, v have resulted in a dispute between the parties arising out of the contract (Licence Deed in question) and the respondent Corporation in terms of clause 14 of the Licence Deed has referred the dispute to respondent no.2 for resolution/settlement. 4. The petitioner admits to have been conveyed the decision regarding appoint­ment of respondent no.2 as sole arbitrator vide notice dated 29 September 2009 and asked to appear before the arbitrator on 1st. October 2009 at 11 AM. It is averred that on second date of hearing before the arbitrator i.e. 10 November 2010 the petitioner found the arbitrator (respondent no.2) visibly partisan and not ready to conduct the proceedings in an impartial and non-partisan manner. It is insisted that having regard to the relationship between respondent corporation and respondent no.2 commissioner of respondent corporation, the petitioner has a reason to believe that respondent no.2 would not be independent and impartial; that the petitioner laid formal application on 16 November 2010 before respondent no.2 under section 12(3)(a) of the Act urging therein that respondent no.2 because of his being an employee of the respondent no.1 was disabled from discharging his duties as arbitrator in terms of said provision and requested the respondent no.2 to desist and refrain from proceeding any further with the arbitration. The respondent is said to have vide order dated 20-11-2010 dismissed the application in a slipshod manner. 5. The respondent is said to have vide order dated 20-11-2010 dismissed the application in a slipshod manner. 5. The petitioner's case is that the Arbitration clause (Clause 14 of the Licence Deed) to the extent it relates to appointment of commissioner of the respondent no.1 as sole arbitrator offends section 12(3)(a) of the Act, because of the relationship between the respondent no.1 and respondent no. 2, and that the Arbitration clause to said extent is non-est in law and void abinitio. It is pleaded that as a sequel to the ground questioning validity of Arbitration clause to the said extent, the appoint­ment of respondent no. 2 as sole arbitrator is also violative of section 12 (3) (a) of the Act. The petitioner also assails the order dated 20-11-2010 passed by respondent no. 2 on petitioner's application under section 12 (3)(a) of the Act on the grounds that it suffers from non-application of mind and mis-appreciation of the settled legal position. The petitioner against the backdrop of above factual matrix seeks reliefs summarized above. 6. The petition is opposed on the grounds that the petitioner is estopped from questioning validity of Arbitration Clause (Clause 14) of the Licence deed dated 25 April 2004 to the extent it relates to appointment of respondent no. 2 as sole arbitrator, inasmuch as the petitioner has been a party to the Licence Deed and has agreed to the appointment of respondent no. 2 as the sole arbitrator. The petitioner, it is insisted, having failed in his challenge to Arbitration clause has in terms of section 13(4) of the Act to participate in the arbitration proceedings and throw challenge, if so required, to the arbitral award under Section 34 of the Act. It is pleaded that in terms of Section 5 of the Act, the writ petition is not maintainable inasmuch as an effective and alternate remedy is available under section 34 of the Act. The respondents insist that the petitioner after enjoying the rights available under the Licence Deed for the years 2009 and 2010, is using litigation as a tool to avoid payment of licence fee for the third year and obtained an exparte order of injunction in a petition filed under section 9 of the Act before Principal District Judge, Jammu, later dismissed as withdrawn vide order dated 18 November 2009. The respondent no. 3 is said to have already served notice no. The respondent no. 3 is said to have already served notice no. JMC/RB/2216-18 dated 1st. October 2010 on the petitioner requiring him to deposit the licence fee of Rs 91,11,111/- within seven days. It is averred that the petitioner to avoid the payment has first resorted to litigation before the Principal District Judge, Jammu and thereafter filed the instant petition to use it as a device to avoid deposit of the licence fee. It is denied that respondent no. 2 at any stage of the arbitral proceedings acted in a partisan or partial manner or is otherwise not in a position to act in a non-partisan and impartial manner. The order dated 20-11-2010 whereby the re­spondent no. 2 dismissed the petitioner's application under section 12 (3) (a), according to the respondents, is in conformity with law. It is insisted that a party aggrieved of appointment of arbitrator can press into service section 12 of the Act instead of resorting to litigation not permissible under the Act. 7. Heard and considered. 8. J&K Arbitration and Conciliation Act 1997 is a complete code in itself dealing with all aspects of domestic arbitration. As evident from its preamble, the Act is a legislative effort to consolidate and amend the law relating to domestic arbitration and the matters connected therewith and incidental thereto. Sections 12 and 13 of the Act reflect intention of the legislature to ensure transparent and bias free arbitral proceedings and give the parties an option to voice and get addressed their apprehensions regarding partiality of the arbitral tribunal at the earliest so that either of parties to a dispute do not feel compelled to participate in the arbitral proceedings despite their reservations as regards impartiality and independence of arbitral tribunal. Section 12 (3) (a) confers right on a party to a dispute referred to arbitration, to challenge the arbitrator if "circumstances exist" that give rise to "justifiable doubts as to the independence or impartiality of the arbitrator". Having regard to the present controversy the focus is to remain on section 12 (3) (a) of the Act only and reference to other grounds of challenge available under Section 12 is unwarranted. Section 13 of the Act lays down the procedure to be followed in the event either of the parties decides to challenge the arbitrator. Having regard to the present controversy the focus is to remain on section 12 (3) (a) of the Act only and reference to other grounds of challenge available under Section 12 is unwarranted. Section 13 of the Act lays down the procedure to be followed in the event either of the parties decides to challenge the arbitrator. Section 13(1) of the Act gives freedom to the parties to agree on a procedure for challenging an arbitrator. However, such procedure must not debar arbitral tribunal from contin­uing with the arbitral proceedings, in the event the challenge thrown is not success­ful. In absence of agreed procedure for challenging the arbitrator, section 13(2) steps in and requires a party intending to challenge an arbitrator to send a written statement of the reason for the challenge to the arbitral tribunal within 15 days of becoming aware of the constitution of arbitral tribunal or after it becomes aware of any circumstances referred to in section 12(3)(a) of the Act. Once the party signifies its intention to challenge an arbitrator, the matter may take any of the three courses mapped out in section 13(3) & (4) of the Act. The arbitrator may in view of the challenge thrown, of his/her own withdraw from his/her office or the other party may agree to the challenge. In both cases the controversy is to end and the voluntary relinquishment of office by the arbitrator or agreement of the opposite party result in displacement/removal of the arbitrator and pave way for appointment of a new arbitrator. However, if neither the arbitrator withdraws from his office nor does the party agree to the challenge, the arbitral tribunal is to consider the challenge and if on consideration merit is found in the challenge, the arbitral tribunal is to step aside for a new arbitral tribunal to step in. In case the challenge is not successful the arbitral tribunal in terms of section 13(4) of the Act is to continue with the arbitral proceedings and make arbitral award. In last case the party challenging the arbitra­tor has to wait till the arbitral award is made and to file an application, if necessary, for setting aside the arbitral award in accordance with section 34. In last case the party challenging the arbitra­tor has to wait till the arbitral award is made and to file an application, if necessary, for setting aside the arbitral award in accordance with section 34. The brief survey of the procedure laid down under sections 12 and 13 of the Act is made to appreciate, in right perspective, the arguments advanced by learned counsel for the parties in support of their respective stands. 9. It is argued by learned counsel for the petitioner that the case set up by the petitioner in the present petition is not to be mixed up and/or confused with right to challenge the Arbitrator available to a party, under section 12(3)(a) of the Act. It is submitted that the petition is not an effort to exercise rights available under section 12(3)(a) of the Act and thus adherence to procedure Under section 13(3)(4) is neither called for nor is order dated 20 November 2010 rejecting challenge to the arbitrator, going to have any negative fallout on the case projected in the petition. 10. Learned counsel or the petitioner insists that the Arbitration Clause (Clause 14) of the Licence Deed dated 25 April 2004 is in conflict with and violative of section 12(3)(a) of the Act to the extent it relates to appointment of respondent no. 2 as arbitrator and is thus liable to be quashed and so are the orders made by the arbitrator after entering upon the reference including order dated 20.11.2010 disallowing the petitioner's application under section 12(3)(a) of the Act. It is further submitted that as a sequel to the quashment of the arbitration clause to the extent it relates to the appointment of respondent no. 2 as arbitrator, a new arbitrator in terms of section 11(6) of the Act is required to be appointed. The learned counsel for the petitioner to bring home his point seeks to draw support from law laid down in: 2010 AIR SCW 3868 Danel (Proprietary Ltd) v. Bharat Electronic Limited and another 2008 (8) SCC 172 Primpri Chinchwad Municipal Corp. and others v. Gayatri Construction Company and another 2007 (3) Supreme 52 M/s Popcorn Entertainment and Another v. City Industrial Development Corp. & Another AIR 1985 SC 703 Chiif of the Army Staff and others v. Major Dharam Pal Kukrety 2006 (1) Supreme 575 L.K.Verma v. HMT Limited & Another AIR 1999 SC 22 Whirlpool Corp. and others v. Gayatri Construction Company and another 2007 (3) Supreme 52 M/s Popcorn Entertainment and Another v. City Industrial Development Corp. & Another AIR 1985 SC 703 Chiif of the Army Staff and others v. Major Dharam Pal Kukrety 2006 (1) Supreme 575 L.K.Verma v. HMT Limited & Another AIR 1999 SC 22 Whirlpool Corp. v. Registrar of Trade Marks, Mumbai & Ors. 1994 (3) SCC 569 Kartar Singh v. State of Punjab Kripa Shavkarrai v. State. 11. Learned counsel for the respondents on the other hand argues that the petitioner having already challenged the arbitrator in accordance with section 13 of the Act and his challenge having not met success, the only course available to the petitioner is to allow the arbitrator to take the arbitral proceedings to their logical conclusion and thereafter make an application under section 34 for setting aside the arbitral award. It is insisted that the present proceedings are nothing except a device to delay the arbitral proceedings and avoid payment of licence fee despite the same having since fallen due. Learned counsel for the respondents to buttress his argu­ment places reliance on law down in: AIR 1977 SC 1496 M/s Radha Krishna Agarwal and others v. State of Bihar and others (para 10) (2000) 6 SCC 293 Kerala State Electricity Board and another v. Kurien E Kalathil and others (para 11) (2008) 8 SCC 172 Pimpri Chinchwad Municipal Corp. and others v. Gayatri Cons traction tompany and another (paras 11,12,13 and 16) (2005) 8 SCC 618 SBP & Co. v. Patel Engineering Ltd. and another (paras 45,46, and 47) 12. The conceptual framework of arbitration rests on the edifice of contract. The arbitration as a mode of dispute resolution is in essence an extension of the right to enter into a contract. While the State in exercise of its sovereign power and in : discharge of its fundamental obligation strives to provide an efficient and result oriented justice delivery system, it at the same time gives the parties freedom to agree on a mode of dispute resolution other than one provided by the State and even to appoint a person(s) in whom the parties repose confidence to settle their dispute(s). It is in this context that Section 28 Exceptions 1 and 2 Contract Act take out, the contract to refer existing or future dispute arising out of a contract, outside the ambit of prohibition embodied in Section 28 against restraint of legal proceed­ings. 13. The State while prescribing procedure to govern fundamental aspects of arbitration, gives freedom to the parties to agree on some of its facets. Section 13 (1) of the Act is a ready example of such freedom. Having said so, it would be appropriate to dwell on some of the factual aspects of the present case. The petitioner of his own free will and volition put his hands unto the Licence Deed dated 25 April 2008, clause 14 whereof binds down the parties to settle any dispute arising out of the contract, through arbitration of Commissioner, Jammu Municipal Corporation. The petitioner acted upon the Licence Deed and drew benefits, what­ever due to the petitioner under the Licence Deed from the date of its execution, initiated the arbitration proceedings way back in the year 2009 as is evident from minutes of the proceedings; even pressed into service section 9 of the Act to seek interim measure from the Principal Civil Court (Principal District Judge) at Jammu and woke up to find the Arbitration Clause in conflict with section 12(3) (a) of the Act only after the Arbitration proceedings were pending for more than a year. The petition under Section 9 was dismissed as withdrawn and the application under Section 13(4) challenging the arbitrator met the same fate. Though failure of the petitioner to call in question, vires of Arbitration Clause soon after Licence Deed was executed may not by itself have a negative spill over on the petitioner's case, yet the facts and events assume significance being reflective of the conduct of the petitioner, and may help us to understand what is up his sleeve. 14. The right to enter into a contract to refer existing or future dispute to Arbitration available under section 28 Exceptions 1 and 2 does not debar reference of such dispute to an employee or relation of either of the parties. Relationship or employment, by itself, is not a disqualification for appointment as Arbitrator. 14. The right to enter into a contract to refer existing or future dispute to Arbitration available under section 28 Exceptions 1 and 2 does not debar reference of such dispute to an employee or relation of either of the parties. Relationship or employment, by itself, is not a disqualification for appointment as Arbitrator. The Arbitration Agreement/Clause that provides for reference to a dispute to an offi­cer/Director, or to a relation of one of the parties has been held as valid as long as the parties execute the agreement having full knowledge of such relationship. The sanctity attached to a contract is acknowledged to an extent that an award by a parry himself has been held to be valid, if the other party has agreed to refer the dispute to him. Section 12(3)(a) of the Act, does not restrict the choice of the parties in the matter of appointment of the Arbitrator/s. It does not lay down that challenge to Arbitration shall be competent where the Arbitrator is a relation or an employee of one of the parties. The provision makes room for challenge to the Arbitrator where "circumstances exist" that give rise to "justifiable doubt" as to the independence or impartiality the Arbitrator". It is not a mere doubt that would give the party a right under Section 12 (3) (a) of the Act to challenge the Arbitrator unless such doubt is "justifiable". In other words, the party challenging an Arbitrator under Section 12(3)(a) of the Act must not only nurse a doubt as to the independence or impartial­ity of the Arbitrator, but must have valid reasons for having such doubt. There may be, cases without number where an Arbitrator though relation or an employee of one of the parties is yet fiercely independent and reputedly impartial. We, day in and day out, come across Arbitration agreements that provide for reference of dispute arising out of the contract to senior most officer or one of the senior most officers in the hierarchy of a department - party to a dispute and in a good number of cases disputes are settled through Arbitrator(s) to the satisfaction of the parties, more so, when, as in present case, an officer who had a role in concluding the contract, and is by office designated as Arbitrator, is replaced by another officer by the time, dispute arises and the reference is made. 15. 15. In Indian Oil Corporation Limited and ors. v. Raja Transport Private Limited (2009) 8 SCC 520 . The Supreme Court has held:- "34. The fact that the named arbitrator is an employee of one of the parties i is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehen­sion about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other Department) to the officer whose decision is the subject-matter of the dispute. 35. Where however the named arbitrator though a senior officer of the Government/statutory body/government company, had nothing to do with the execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer(s) (usually Heads of/Depart­ment or equivalent) of a Government/statutory corporation/public sector undertaking, not associated with the contract, are considered to the inde­pendent and impartial and are not barred from functioning as arbitrators merely because their employer is a party to the contract." 16. The court after drawing distinction between a senior officer of Govern­ment/statutory body/government company and an employee of a company or body or individual other than State and its instrumentality, as regards existence of reasonable apprehension of bias, proceeded to observe: - ",......We hold that a person being an employee of one of the parties (which is a State or its instrumentality) cannot per se be a bar to his acting as an arbitrator." 17. Section 12(3)(a) of the Act, visualizes a situation where, after an Arbitration agreement or an agreement having Arbitration clause incorporated therein, is executed, either of the parties has a valid reason to apprehend that the arbitrator may not act independently or impartially. In such case the provision gives such party a right to challenge the arbitrator in accordance with the procedure laid down under section 13. 18. In such case the provision gives such party a right to challenge the arbitrator in accordance with the procedure laid down under section 13. 18. Viewed thus, there is no scope for testing an Arbitration Agreement/Clause on the touch stone of Section 12 (3) (a) of the Act, as the provision does not lay down any criteria for appointment of the arbitrator nor does it restrict the right of the parties to agree on appointment of arbitrator by designation or otherwise, but takes care of a post agreement/reference situation where one of the parties finds valid reasons for doubt as to independence or impartiality of the arbitrator. Since, the doubt is to be "justifiable" such doubt is to be considered by some authority-arbitral tribunal in terms of Section 13, so as to see whether the doubt voiced is "justifiable" i.e. well reasoned. 19. In the circumstances, the petitioner's challenge to the Arbitration clause (Clause 14) to the extent it relates to appointment of respondent no. 2 as sole arbitrator, on the ground of it being in conflict with Section 12(3)(a) of the Act is devoid of merit and destined to fail. Resultantly challenge to the Arbitration proceedings including the order dated 20th November, 2010 is not to succeed. No ground is made out for appointment of a new arbitrator. It needs to be pointed out that Section 11(6) of the Act, comes into play only where reference is yet to be made to the designated arbitrator or the arbitrator, is not appointed and not where the arbitrator stands appointed, has entered upon reference and gone ahead with the arbitral proceedings. In the event, the arbitrator has entered upon reference and one of the parties challenges the arbitrator, the only option available to such party is to proceed in accordance with Section 13 of the Act. Where the challenge fails, the party has to wait till arbitral award is made and thereafter question it under section 34 of the Act. 20. Reliance placed by learned counsel for the petitioner on Daniel (propri­etary limited) v. Bharat Electronics Ltd. and another 2010 AIR SCW 3868 is mis-placed. In the reported case, unlike case in hand, there was failure on part of the party, required under the Arbitration Agreement to appoint an arbitrator, in making appointment of arbitrator for resolving the dispute. 20. Reliance placed by learned counsel for the petitioner on Daniel (propri­etary limited) v. Bharat Electronics Ltd. and another 2010 AIR SCW 3868 is mis-placed. In the reported case, unlike case in hand, there was failure on part of the party, required under the Arbitration Agreement to appoint an arbitrator, in making appointment of arbitrator for resolving the dispute. It is against the said backdrop, that the prayer for appointment of arbitrator was allowed and an arbitrator other than designated arbitrator (Managing Director of the respondent company) appointed. 21. For the reasons discussed, the writ petition is meritless and is accordingly dismissed. All interim directions are vacated.