JUDGMENT 1. Petitioner seeks appointment of an Arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996 ('the Act' for short) to resolve the disputes between the petitioner and the respondents arising out of a contract dated 20th February 2006. 2. Facts in brief are that the petitioner is a Private Limited Company registered under the Companies Act, 1956. The petitioner is engaged in the business of pollution control and environment engineering services. The petitioner entered into an agreement dated 20th February 2006 with the respondent Oil and Natural Gas Corporation and its officers for a turnkey project of construction of 6000 cubic meter capacity of effluent treatment plant at one of its units located at Ankleshwar. It is not necessary to take note of the detailed terms of such contract. Suffice it to note that such contract contained the arbitration clause in following terms : “26.1 Except as otherwise provided in the contract in the event of any dispute or difference, question or disagreement arises, at any time before or after the completion or abandonment of the work, between the parties hereto or their respective representatives or assignees, at any time in connection with construction, meaning, operation, effect, interpretation or out of the contract or breach thereof the same shall be decided by an Arbitral Tribunal consisting of three Arbitrators. Each party shall appoint one Arbitrator and the Arbitrators so appointed shall appoint the third Arbitrator who will act as Presiding Arbitrator. The party desiring the settlement of dispute shall give notice of its intention to go for arbitration clearly stating all disputes to be decided by the arbitral tribunal and appoint its own arbitrator and call upon the other party to appoint its own arbitrator within 30 days. In case a party fails to appoint an arbitrator within 30 days from the receipt of the request to do so or the two Arbitrators so appointed fail to agree on the appointment of third Arbitrator within 30 days from the date of their appointment, upon request of a party, the Chief Justice of India or any person or institution designed by him (in case of International Commercial Arbitration) shall appoint the second arbitrator and/or presiding Arbitrator. In case of domestic Contacts, the Chief Justice of High Court or any other person or institution designated by him within whose jurisdiction the subject purchase order/contract has been placed/made shall appoint the Arbitrator/Presiding Arbitrator upon request of one of the parties. If any of the arbitrator or arbitrators so appointed dies, resigns, incapacitated or withdraws for any reason from the proceedings, it shall be lawful for the concerned party/Arbitrators to appoint a new person in his place in the manner as aforesaid. Such person shall proceed within the reference from the stage where his predecessor had left if both parties consent for the same, otherwise he shall precede de nova. It is a term of the contract that the party invoking arbitration shall specify all disputes to be referred to arbitration at the time of invocation of arbitration and not thereafter. It is also a term of the contract that neither party to the contract shall be entitled for any ante-lite (pre-reference) or pendente-lite interest on the amount of the award. The arbitral tribunal shall give reasoned award and the same shall be final, conclusive and binding on the parties. The venue of the arbitration shall be the place from where the purchase order/contract has been placed/made. It is term of the Contract that the cost of the arbitration will be borne by the parties in equal shares. Subject to as aforesaid the provisions of the Arbitration and Conciliation Act, 1996 and any statutory modification or re-enactment in lieu thereof shall apply to the arbitration proceedings under this clause.” As per the said agreement, the petitioner was to start the work of construction of ETP in February 2006 and complete the same within 18 months, i.e., by middle of August 2007. It is the case of the petitioner that due to reasons attributable to the respondents, the construction did not commence as envisaged in the agreement. The construction was, however, completed some time in January 2009. 3. In course of execution of such contract, serious disputes surfaced between the petitioner and the respondents. Various claims of the petitioner were rejected by the respondents. In view of such disputes, the petitioner desired to resort to arbitration in terms of the arbitration agreement between the parties. The petitioner, therefore, issued a notice dated 8.8.2011. 3. In course of execution of such contract, serious disputes surfaced between the petitioner and the respondents. Various claims of the petitioner were rejected by the respondents. In view of such disputes, the petitioner desired to resort to arbitration in terms of the arbitration agreement between the parties. The petitioner, therefore, issued a notice dated 8.8.2011. Under such notice, the petitioner appointed one Shri Sanat V. Pandya, Consulting Engineer, Infrastructure Projects, Vadodara as Arbitrator from the petitioner's side and called upon the respondents to appoint an Arbitrator of their choice upon receipt of the letter to adjudicate the claims raised by the petitioner under its letter dated 17.6.2011. In the notice, the petitioner stated that if the respondents fail to appoint its Arbitrator, further steps will be taken in the matter. The respondent, instead of appointing the Arbitrator, replied to the petitioner's notice vide their communication dated 25.8.2011. In such communication, it was conveyed that the ONGC proposed to follow the revised arbitration clause, a copy of which was enclosed with such communication. Such revised arbitration clause envisaged a time-frame progress of the arbitration and also put a ceiling on the fees of the Arbitrator. According to the ONGC, such revised term would be more economical to both the sides. 4. The petitioner, however, did not agree to any such modification. This was conveyed by the petitioner by letter dated 1.9.2011. In the said letter, the petitioner reiterated that in view of the petitioner's inability to accept the revised arbitration clause, the respondents should act within the time as per the letter dated 8.8.2011. 5. It is not in dispute that within 30 days from the receipt of the petitioner's notice dated 8.8.2011 or even till the petitioner filed the present arbitration petition on 10th October 2011, the respondent did not appoint its Arbitrator in terms of the above noted clause 26 of the agreement. The respondent however, on 8.11.11, addressed a letter to Justice A.P. Ravani, Retired Judge of this Court conveying his appointment as an Arbitrator in connection with the disputes with the petitioner. A copy of such letter was marked to the petitioner as well. 6. Since the respondents did not appoint an Arbitrator, the petitioner filed this petition seeking appointment of an Arbitrator in terms of section 11(6) of the Act. In response to the notice issued, the respondents have appeared. A copy of such letter was marked to the petitioner as well. 6. Since the respondents did not appoint an Arbitrator, the petitioner filed this petition seeking appointment of an Arbitrator in terms of section 11(6) of the Act. In response to the notice issued, the respondents have appeared. In the reply affidavit filed on behalf of the respondents, it is stated that ONGC has vide its letter dated 8.11.11 appointed Hon'ble Justice A.P. Ravani (Retd.) as Arbitrator. 7. Counsel for the petitioner submitted that since the respondents did not act within 30 days of receipt of notice dated 8.8.2011 and till the present arbitration petition was filed, it is now open for the Chief Justice or his designate to appoint any person as an Arbitrator and even consider referring the entire disputes to a sole Arbitrator. In fact, much of the thrust of the argument of the petitioner's counsel was that, I should, in the present case, exercise such powers and place the matter before a Sole Arbitrator which in his opinion would be less expensive and more efficient mechanism for resolving the disputes. In this regard, the counsel relied on a decision of the Andhra Pradesh High Court in the case of K. Venkateshwarlu v. State of A.P., 2003 (3) Arb. LR 440 (AP) wherein it was observed that when the agreement between the parties for appointment of a panel of three Arbitrators had ceased to be in operation, the Court can appoint an Arbitrator and in such situation, it need not necessarily be a panel of three Arbitrators only. 8. On the other hand, learned counsel Shri Ajay Mehta for the respondents opposed such a request contending that in view of the respondents not having appointed their Arbitrator till filing of the arbitration petition, even if it is open for the court to make such an appointment, the procedure provided for appointment of arbitrator as provided in clause 26 of the agreement should not be ignored. He relied on certain decisions of the Apex Court in support of this contention, reference to which will be made later. He submitted that no special grounds are made out by the petitioner for discarding such procedure. 9. In view of the above controversy, one may peruse the arbitration agreement more closely. The arbitration clause envisages resolution of any disputes or differences through an arbitral panel comprising of three Arbitrators. He submitted that no special grounds are made out by the petitioner for discarding such procedure. 9. In view of the above controversy, one may peruse the arbitration agreement more closely. The arbitration clause envisages resolution of any disputes or differences through an arbitral panel comprising of three Arbitrators. Such panel is to be constituted by each party appointing one Arbitrator and such Arbitrators so appointed to appoint the third Arbitrator who would be the presiding Arbitrator. The agreement further provides that in case a party fails to appoint an Arbitrator within 30 days from the receipt of the request to do so or the two Arbitrators so appointed fail to agree on the appointment of third Arbitrator within 30 days from the date of their appointment, upon request of a party, the Chief Justice of the High Court or any person or institution designated by him in case of a domestic contract shall appoint an Arbitrator/Presiding Arbitrator. 10. What clearly emerges from the said arbitration agreement is that the parties agreed to Arbitral Tribunal consisting of three Arbitrators. In case of failure to constitute such Arbitral Tribunal on account of either party failing to appoint an Arbitrator of his choice despite a notice or the failure of the two Arbitrators already appointed to nominate the third Arbitrator, as the case may be, one could approach the Chief Justice or his designate. Thus insofar as the parties are concerned, in clear terms they agreed to refer the disputes to an Arbitral Tribunal comprising of three Arbitrators. Manner of constituting such Tribunal was also provided. 11. From the record, it further emerges that though the petitioner appointed an Arbitrator of its choice and also called upon the respondents to do so, they on their part failed to exercise such a choice within 30 days from the receipt of such notice. The respondents, instead desired to modify the arbitration clause itself. To such a request, the petitioner did not agree. The petitioner then filed the present petition on 10th October 2011. Till that time, the respondent did not appoint any Arbitrator. It was only on 8.11.11, the respondent addressed a letter to Justice A.P. Ravani appointing him as Arbitrator. 12. The respondents, instead desired to modify the arbitration clause itself. To such a request, the petitioner did not agree. The petitioner then filed the present petition on 10th October 2011. Till that time, the respondent did not appoint any Arbitrator. It was only on 8.11.11, the respondent addressed a letter to Justice A.P. Ravani appointing him as Arbitrator. 12. In view of the above undisputed facts, I am of the opinion that the respondents have lost their right to nominate an Arbitrator of their choice in the Arbitral Tribunal to be constituted in terms of clause 26 of the agreement. By series of decisions of the Apex Court, such position stands settled. In the case of Datar Switchgears Ltd v. Tata Finance Ltd., (2000) 8 SCC 151 , it was held that if a party having responsibility of appointing arbitrator does not do so within 30 days of demand being made by the other party, still has a right to make appointment and such right is not forfeited and such appointment could still be made before the other party moves the Court under section 11 of the Act. It was held by the Apex Court as under : “19. So far as cases falling under S. 11(6) are concerned - such as the one before us - no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, 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 the first party has moved the Court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited.” In the case of Punj Lloyd Ltd. v. Petronet MHB Ltd., (2006) 2 SCC 638 , the above ratio of the decision in the case of Datar Switchgear Ltd (supra) was noted with approval. There is a long line of decisions reiterating this well settled legal position. It is not necessary to take note of all of them. 13. Under the circumstances, it would be open for the Chief Justice or his designate to make appointment of an Arbitrator on behalf of the respondents and thereafter leave the two Arbitrators, i.e. one already appointed by the petitioner and another to be appointed by this order to nominate the third Arbitrator who will act as the Presiding Arbitrator. Request of the petitioner, however, is to refer the disputes to a Sole Arbitrator. In that context, the question is whether I have power to do so and if the powers do exist, are there grounds to exercise such powers in the present case. 14. Before taking note of the statutory provisions and the decisions of the Apex Court touching this aspect, I may record that the decision of the Andhra Pradesh High Court in the case of K.Venkateswarlu (supra) relied upon by the petitioner cannot be a guiding factor in the present case. This is so because the Andhra Pradesh High Court has placed heavy reliance on the decision in the case of Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd., (2002) 2 SCC 388 , ratio of which decision has been disapproved by the Apex Court in a later decision in the case of SBP & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618 . 15. Section 11 of the Act pertains to appointment of Arbitrator, relevant portion of which reads as under : "11. Appointment of arbitrators -(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. 15. Section 11 of the Act pertains to appointment of Arbitrator, relevant portion of which reads as under : "11. Appointment of arbitrators -(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in sub-section (3) applies and - (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties, - (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. (8) 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. .........” Sub-section (2) of section 11 provides that subject to sub-section (6), the parties are free to agree on a procedure for appointment of an arbitrator. Sub-section (6) of section 11, in turn pertains to the power of the Chief Justice or any person or institution designated by him to take necessary measures where under an appointment procedure agreed upon by the parties, either a party fails to act as required under that procedure or the parties or the two appointed arbitrators, fail to reach an agreement under such procedure or a person including an institution fails to perform any function entrusted to him under such procedure. 16. Thus, even if there is any agreement between the parties about the procedure of appointment of an arbitrator or arbitrators as envisaged in sub-section (2) of section 11, the same is subject to the provisions contained in sub-section (6). Sub-section (6), as already noted, gives power to the Chief Justice or his designate to appoint an arbitrator or arbitrators under certain circumstances. In that view of the matter, once a petition for appointment of an arbitrator is presented before the Chief Justice or his designate and it is found that conditions for appointment of an arbitrator under section 11(6) exist, he is not bound as a rigid proposition to follow the procedure agreed between the parties under the arbitration agreement. The expression “unless the agreement on the appointment procedure provides other means for securing the appointment” appearing in sub-section (6), in my opinion, is a reference to resorting to some other methodology for appointment of an arbitrator instead of invoking the powers of the Chief Justice or his designate under section 11(6) of the Act, if it is so agreed between the parties in the arbitration agreement. However, in absence of any such agreement, once the concerned party approaches the Chief Justice or his designate for appointment of an arbitrator under section 11(6) of the Act, and if it is found that there are grounds on which such appointment can be made, it can hardly be suggested that such appointment must be made as per the procedure envisaged by the parties in the arbitration agreement. 17. In this context, one may also refer to section 11(8) of the Act which provides that the Chief Justice or his designate, while appointing an arbitrator shall have due regard to any qualifications 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. Thus, one of the important considerations for the Chief Justice or his designate while making appointment of an arbitrator is to secure appointment of an independent and impartial arbitrator. Combined reading of the provisions contained in sub-sections (2), (6) and (8) of section 11, it emerges that while making an appointment of an arbitrator under section 11(6) of the Act, the Chief Justice or his designate cannot be held to be bound down by the procedure for appointment of arbitrator as agreed between the parties under such arbitration clause. 18. In the case of Ace Pipeline Contracts (P) Ltd v. Bharat Petroleum Corpn. Ltd., (2007) 5 SCC 304 , the Apex Court expressed an opinion that if it is found that it would not be conducive in the interest of parties or for any other reasons, it would be open to go beyond the designated persons or institutions in appropriate cases. Normally, however, such procedure should be adhered to in terms of the arbitration clause and appoint the named person except in exceptional cases for reasons to be recorded. The Apex Court observed as under : “20. 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. 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 conducive 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.” In the case of Union of India v. Bharat Battery Mfg. Co. (P) Ltd., (2007) 7 SCC 684 , the Apex Court held that once a party files an application under section 11(6) of the Act, the other party extinguishes its right to appoint an arbitrator in terms of the clauses of the agreement thereafter. The right to appoint an arbitrator under the clause of agreement ceases after petition for appointment of an arbitrator under section 11(6) has been filed by the other party before the Court. 18. The decisions in the case of Ace Pipeline Contracts (P) Ltd. (supra) and Bharat Battery Mfg. Co. Ltd. (supra) were considered by a Three Judge Bench of the Apex Court in the case of Northern Railway Admn. Ministry of Railway v. Patel Engg. Co. Ltd., (2008) 10 SCC 240 . In the context of the power of the Chief Justice or his designate to appoint an arbitrator under section 11(6) of the Act, the Apex Court made the following observations : 11. The crucial expression in sub-section (6) is "a party may request the Chief Justice or any person or institution designated by him to take the necessary measures" (underlined for emphasis). This expression has to read along with requirement in sub-section (8) that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have "due regard" to the two cumulative conditions relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. 12. This expression has to read along with requirement in sub-section (8) that the Chief Justice or the person or an institution designated by him in appointing an arbitrator shall have "due regard" to the two cumulative conditions relating to qualifications and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. 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.” In the case of Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd., (2009) 8 SCC 520 , the Apex Court once again considered the question whether when the arbitration agreement envisages reference to a named arbitrator, the Chief Justice or his designate can appoint some other person ignoring such procedure. In this context, the Apex Court held as under : “48. In the light of the above discussion, the scope of Section 11 of the Act containing the scheme of appointment of arbitrators may be summarised thus : xxxx (iii) Where the arbitration agreement specifies the appointment procedure, then irrespective of whether the arbitration is by a sole arbitrator or by a three-member Tribunal, the Chief Justice or his designate will exercise power under sub-section (6) of Section 11, if a party fails to act as required under the agreed procedure (or the parties or the two appointed arbitrators fail to reach an agreement expected of them under the agreed procedure or any person/institution fails to perform any function entrusted to him/it under that procedure). xxxx (vi) The Chief Justice or his designate while exercising power under sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause. xxxx (vi) The Chief Justice or his designate while exercising power under sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause. .......” In the case of Denel (Proprietary Limited) v. Government of India, (2012) 2 SCC 759 , the Apex Court reiterated that in normal circumstances, the Court while exercising jurisdiction under section 11(6) of the Act would adhere to the terms of the agreement as closely as possible. But if the circumstances warrant, the Chief Justice or the nominee of the Chief Justice is not debarred from appointing an independent arbitrator other than the named arbitrator. 19. In a more recent decision in the case of Bipromasz Bipron Trading SA v. Bharat Electronics Ltd. (2012) 6 SCC 384 , the Apex Court rejected the submission of the respondent that the Court was bound to appoint the named arbitrator. Referring to the earlier decisions, the Apex Court held that under section 11(6), a person other than the named arbitrator can also be appointed. The Apex Court held that the Court would have the power to appoint a person other than the named arbitrator upon examination of the relevant facts, which would tend to indicate that the named arbitrator is not likely to be impartial. In the said case, the designate of the Chief Justice proceeded to appoint a person other than the named arbitrator. 20. From the aforesaid decisions it clearly emerges that once the petition is filed with a prayer for appointment of an arbitrator invoking the powers of the Chief Justice or his designate in terms of section 11(6) of the Act, though as a normal rule, procedure agreed between the parties to secure appointment of an arbitrator should be respected, as an exception, if special circumstances so warrant, departure from such a procedure is not totally impermissible. When the above noted decisions of the Supreme Court refer to appointment of any person other than the named arbitrator, necessarily, there would be departure from the procedure which was previously agreed between the parties in the arbitration agreement. The same principle, in my opinion, can also be applied when question of any other procedure for appointment of arbitrator comes up for consideration. 21. The same principle, in my opinion, can also be applied when question of any other procedure for appointment of arbitrator comes up for consideration. 21. I am therefore unable to uphold the contention of the counsel for the respondent that under no circumstances once the parties agreed to refer the disputes to an Arbitral Tribunal comprising of three arbitrators, under section 11(6) of the Act, reference could be made to a Sole Arbitrator. 22. In the present case, the question is whether any such exceptional circumstances have been demonstrated to permit such departure. The petitioner in the petition except narrating the circumstances in which it was compelled to move this arbitration petition has not brought out any special facts why the agreed procedure for drawing the Arbitral Tribunal should not be followed in the present case. It is, of course, true that the respondents did not name their Arbitrator within the time envisaged in the arbitration agreement and even till filing of the present petition. This may result into the respondents forfeiting their right to nominate an arbitrator of their choice, but would not per-se mean that I should discard the procedure of drawing the arbitration panel of three arbitrators and instead, refer the whole dispute to a Sole Arbitrator. 23. To reiterate, I do not find any special facts brought on record by the petitioner to discard the procedure even if I am of the opinion that in a given case such power can be exercised. As already noted, the petitioner has already appointed one Shri Sanat V. Pandya as one of the Arbitrators. 24. In the result, Hon'ble Shri M.S. Parikh, retired Judge of this High Court is appointed as the Second Arbitrator. The two Arbitrators would between them appoint a third Arbitrator as provided in clause 26 of the agreement. The petition stands disposed of accordingly.