1. By filing this application under section 11 of Arbitration and Conciliation Act, 1996 (‘the Act’), the petitioner has prayed for appointment of an arbitrator for adjudicating the dispute between the petitioner and the respondents, in terms of agreement dated 19.8.2011 entered into by the petitioner and the respondent No. 3 for the work of “Setting up State Date Centre” for the State of Arunachal Pradesh. 2. The State counsel for IT a E-Governance (respondent No. 3) was entrusted to implement “setting up of State Data Centre” for the State of Arunachal Pradesh under National E-Governance Programme (NEGP), a scheme designed implemented and funded by the Government of India through Department of Information and Technology, Ministry of Communication and Information Technology, New Delhi. 3. There was delay in execution of the work which according to petitioner was attributable to the respondents, as the respondent could not provide the site for work in question. The dispute also arose between the parties with regard to encashment of the bank guarantee furnished by the petitioner for an amount of Rs. 9,20,40,074 only. The matter went up to the hon’ble Supreme Court and hon’ble Supreme Court in SLP (Civil No. 33604/12 vide order dated 9.11.2012 observed that However, as we are informed that petitioner has already resorted to arbitration, let the encashment of bank guarantee by the respondent State be abide by the decision of the Arbitration”. 4. Mr. Biswas, learned counsel for the petitioner submits that in the contract agreement, clause 26, is a arbitral clause and as the dispute arose between the parties, the petitioner, initially sent a notice to refer the dispute to arbitration vide letter dated 4.5.2012 and then again on dated 6.8.2013. The petitioner mentioned the name of the arbitrator as proposed by him but the respondent failed to communicate their consent. Instead of resolving the dispute through arbitration, the respondent sent a notice dated 1.8.2013 alleging breach and termination of contract. According to the petitioner, the dispute is arbitral dispute which could be settled through arbitration. There is a valid arbitration clause but the respondents are not inclined to resolve the dispute and, thus, depriving the petitioner of his chance to agitate his grievance before the agreed adjudicatory body. According to the petitioner, the dispute is arbitral dispute which could be settled through arbitration. There is a valid arbitration clause but the respondents are not inclined to resolve the dispute and, thus, depriving the petitioner of his chance to agitate his grievance before the agreed adjudicatory body. For implementation of said scheme, the petitioner was invited and after finding the technical and commercial proposal satisfactory, an agreement dated 19th August, 2011 was entered into by the petitioner and the respondent No. 3, for execution of the aforesaid work. 5. Respondent Nos. 3 and 4 in their affidavit-in-opposition have averred that M/s. Price Water House Coopers Ltd. was appointed as the consultant, for the State data centre project, by the Department of Information and Technology, Government of India vide letter dated 3.4.2008 for preparation of DPR bid management and complete handholding. Based on this request for proposal was also made. The petitioner submitted a proposal (technical and commerce) to the Government of Arunachal Pradesh to forgo the RFP process, which apparently was in violation of CVC guidelines and also against national E-Governance plan. The RFP was created and subsequently RFP meeting of the said E-Governance Advisory Council was held on 20.8.2009 and it was decided to entrust the work in favour of M/s. Keonics without any tender process. In«pursuance to said decision, deed of agreement dated 19.8.2011 was executed, the petitioner also furnished the Bank Guarantee. The fact remains that no transparent bidding process was adopted preceding execution of the agreement dated 19.8.2011. Department of Information and Technology questioned the aforesaid process and advised the State to issue its RFP following a transparent bidding process with a due Price discovery Mechanism. Again vide letter dated 31.7.2012, the State was advised to cancel the work order. Thus, the contract agreement between the petitioners, being void ab initio should be treated as non est. According to the respondents, if contract itself is illegal and void, an arbitration clause, which is one of the terms thereof, must also perish along with it. According to the respondents the validity of contract can be determined by the court and not by any arbitrator. Since the original contract agreement dated 19.8.2011 has no legal existence, the arbitration clause also cannot operate and therefore, appointment of arbitrator cannot be justified. 6. According to the respondents the validity of contract can be determined by the court and not by any arbitrator. Since the original contract agreement dated 19.8.2011 has no legal existence, the arbitration clause also cannot operate and therefore, appointment of arbitrator cannot be justified. 6. In the cited case of Reva Electrical Car Company Ltd. v. Green Mobil, (2012) 2 SCC 93 , it was held that : “27. In matters where the intervention of the Chief Justice of India has been sought for appointment of a sole arbitrator under sections 11(4), (5) and (6) of the Arbitration Act, 1996, the Chief Justice or his designate will have to decide certain preliminary issues, It would be apposite to notice her relevant observations made in para 22, which are as follows: “22…. This court identified and segregated the preliminary issue that may arise for consideration in an application under section 11 of the Act into three categories, that is, (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issue which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. “22. 1 The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application} has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under section 11 of the Act, is a party to such an agreement. “22. 2 The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are: (a) Whether the claim is a dead (long-barred) claim or a live claim. (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. “22.3 The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted excluded from arbitration). ” 7. In the case of Damodar Valley Corporation v. K.K. Kar, (1974) 1 SCC, it was observed in paras 7, 8, 11 and 13, are as under: “7. ” 7. In the case of Damodar Valley Corporation v. K.K. Kar, (1974) 1 SCC, it was observed in paras 7, 8, 11 and 13, are as under: “7. The contention that has been canvassed before us is that as there has been a full and final settlement under the contract, the rights and obligations under the contract do not subsist and consequently the arbitration clause also perishes along with the settlement. If so, the dispute whether there has or has not been a settlement cannot be the subject of and arbitration. There is, in our view, a basic fallacy underlying this submission. A contract is the creature of an agreement between the parties and where the parties under the terms of the contract agree to incorporate an arbitration clause, that clause stands apart from the rights and, obligations under that contract, as it has been incorporated with the object of providing a machinery for the settlement of disputes arising in relation to or in connection with that contract. The questions of unilateral repudiation of the rights and obligations under the contract or of a full and final settlement from putting an end, to the arbitration clause, they fall within, the purview of it. A repudiation by one party alone does not terminate the contract. It takes two to end it, and, hence, it follows that as the contract subsists for the determination of the rights and obligations of the parties, the arbitration clause also survives. This is not a case where the plea is that the contract is void, illegal or fraudulent, etc. , in which case, the entire contract along with the arbitration clause is non est, or voidable. As the contract is an outcome of the agreement between the parties it is equally open to the parties thereto to agree to bring it to an end or to treat as if it never existed. It may also be open to the parties to terminate the previous contract and substitute in its place a new contract or alter the original contract in such a way that it cannot subsist. In all these cases, since the entire contract is put an end to, the arbitration clause, which is a part of it, also perishes along with it. In all these cases, since the entire contract is put an end to, the arbitration clause, which is a part of it, also perishes along with it. Section 62 of the Contract Act incorporates this principle when it provides that if the parties to a contract agree to substitute a new contract or to rescind or alter it, the original contract need not be performed. Where, therefore, the dispute between the parties is that the contract itself does not subsist either as a result of its being substituted by a new contract or by rescission or alteration, that dispute cannot be referred to the arbitration as the arbitration clause itself would perish if the averment is-found to be valid. As the very jurisdiction of the arbitrator is dependent upon the existence of the arbitration clause under which he is appointed, the parties have no right to invoke a clause/which perishes with the contract”. “8. In certain circumstances, it may be that there has been a termination of the contract unilaterally and, as a consequence the parties may agree to rescind, the contract. In such a situation the rescission would put an end to the performance of the contract in juturo, but it may remain alive for claiming damages either for previous breaches of for the breach which constituted the termination”. 11. In such a situation the rescission would put an end to the performance of the contract in juturo, but it may remain alive for claiming damages either for previous breaches of for the breach which constituted the termination”. 11. After a review of the relevant case law, Subba Rao, J, as he then was, speaking for the majority enunciated the following principles: “(I) An arbitration clause is a collateral term of a contract as distinguished from its substantive terms; but none the less it is an integral part of it; (2) however, comprehensive the terms of an arbitration clause maybe, the existence of the contract is a necessary condition for its operation; it perishes with the contract; (3) the contract may be non est in the sense that it never came legally into existence or it was void ab initio; (4) though the contract was validly executed, the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities there-under; (5) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void; in the latter case, as the original contract is extinguished by the substituted one, the arbitration clause of the original contract perishes with it; and (6) between the two falls many categories “of disputes in connection with a contract, such as the question of repudiation, frustration, breach, etc. In those cases it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. As the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes.” In those cases, as we have stated, it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. We think as the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes. 13. We think as the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes. 13. In this case, we are not troubled with the question whether there has been novation, rescission or substitution of the contract, nor have the parties in their pleadings ever contended that the contract is non est as it has been substituted by a new contract. Where, however, as in this case, there was a termination of the contract due to non-performance, the existence of the contract has been assumed for the purposes of such termination. Similarly the question whether there has been a settlement of all the claims arising in connection with the contract also postulates the existence of the contract. The principle laid down by Sarkar, J, in Kishorjlal Gupta Bros, case that accord and satisfaction does not put an end to the arbitration clause was not dissented to by the majority. On the other hand proposition (6) seems to lend weight to the views of Sarkar, J. In these circumstances, the question whether, the termination was valid or not and, whether damages are recoverable for such wrongful termination does not affect the arbitration clause, or the right of the respondent to invoke it for appointment of an arbitrator. ” 8. The fact that as per directive of the State Advisory Council, the Supreme Committee formed of National E-Governance Programme invited the petitioner for discussion, presentation and submission of technical and commercial proposal for implementation of State Data Centre is not in dispute, it is also not disputed that the petitioner deputed their team of specialist who performed a detailed system study made presentation to the Departmental Officials and Submitted their technical and commercial proposal based on the request for proposal approved by DIT, Government of India. Subsequent to said proposal the State E-Governance Advisory Council decided to entrust the work in favour of the petitioner and then deed of agreement was entered into between the parties. As per the agreement the petitioner also furnished a Bank Guarantee of Es. 9,20,40,174. The respondents have alleged that no transparent bidding process was adopted preceding execution of the agreement dated 19.8.2011. The DIT, Government of India questioned the aforesaid process and advised the state to issue its RFP following a transparent bidding process with a due price discovering mechanism and later the State Government was advised to cancel the work order. 9. 9,20,40,174. The respondents have alleged that no transparent bidding process was adopted preceding execution of the agreement dated 19.8.2011. The DIT, Government of India questioned the aforesaid process and advised the state to issue its RFP following a transparent bidding process with a due price discovering mechanism and later the State Government was advised to cancel the work order. 9. The respondents are thus challenging their own conduct. They terminated the contract and enchased the petitioner’s Bank Guarantee terming the whole agreement as void. 10. After second round of litigation pertaining to issue of invoking un­conditional Bank Guarantee, the matter finally went up to the Supreme Court, where the Supreme Court in SLP (Civil) No(s). 33604/2012 vide judgment and order dated 9.11.2012 observed that “however, as we are inform that the petitioner has already resorted to arbitration, let the encashment of Bank Guarantee by the respondent State be abide by the decision of the arbitration. 11. Learned counsel for the respondent relying on the case of Union of India v. Kishorilal Gupta & Bros. , (1960) 1 SCR 493 and Waverly Jute Mills Co. Ltd. , Kelvin Jute Co. Ltd. v. Raymond & Company (India) (P. ) Ltd., (1963) 3 SCR 209 submitted that as the original contract is void because the contract in question was finalized without any bidding process, the arbitration clause perished with the original contract. In para 8, Kishori Lal Gupta’s case (supra), it has teen observed as under: “8. Uninfluenced by authorities or case-law, the logical outcome of the earlier discussion would be that the arbitration clause perished with the original contract. Whether the said clause was a substantive term or a collateral one, it was nonetheless an integral par of the contract, which had no existence de hors the contract. It was intended to cover all the disputes arising under the conditions of, or in connection with, the contracts. Though the phraseology was of the widest amplitude, it is inconceivable that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement. The fact that the new contract not only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement. The fact that the new contract not only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement. The fact that the new contract riot only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties gave up the terms of the old contracts, including the arbitration clause. The case-law referred to by the learned counsel in this connection does not in our view, lend support to his broad contention and indeed the principle on which the said decisions are based is a pointer to the contrary”. 12. Section 16(l)(a) of the Arbitration and Conciliation Act, 1996 provides that an Arbitration Clause which forms part of the contract shall be treated as an agreement independently of other terms of the contract. Section 16(1) is quoted as under: “16. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, - (a) an arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” 13. In the cited case of Reva Electric Car Company (P.) Ltd. (supra), in para 54, it has been observed as under: “Under section 16(1), the Legislature makes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, the arbitration clause which formed part of the contract, has to be treated as an agreement independent of the other terms of the contract. To ensure that there is no misunderstanding. Section 16(l)(b) further provides that even if the Arbitral Tribunal concludes that the contract is null an void, it should not result, as a matter of law, in an automatic invalidation of the arbitration clause. Section 16(l)(a) presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. Section 16(l)(a) presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. By virtue of section 16(1)(b), it continues to be enforceable notwithstanding a declaration of the contract being null and void.” 14. Here, in this case, the respondent taking into consideration that the petitioners company being experienced one, invited the petitioners company for execution of the project. They encashed the Bank Guarantee and then termed the agreement as void. 15. In the case of Everest Holding Ltd. v. Shyam Kumar Shrivastava and Ors. , it was held that irrespective of whether MoU is now existence or not, the arbitration clause could survive. In this case, the petitioner received the notice of cancellation of the contract and he replied the notice. His Bank Guarantee has been enchased and since then there dispute between the parties, which is yet to be resolved and there is an arbitration clause in the contract. The patter, therefore, needs to be referred to arbitration, therefore, both the parties are directed to mutually appoint an arbitrator preferably within 3 months to conduct the arbitration at Itanagar in accordance with the provisions of Arbitration and Conciliation Act, 1996.