ORDER : A. Rajasheker Reddy, J. This Application is filed under Section 11(6)(a) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) for appointment of sole arbitrator for adjudication of the disputes between the parties. 2. It is the case of the applicant that the applicant-Vijay Nirman Company Private Limited (hereinafter referred to as ‘petitioner company’) is an engineering and construction company incorporated and registered under Companies Act, 1956, having its registered office at Pandurangapuram, Visakhapatnam, Andhra Pradesh and branch office at Srinagar Colony, Hyderabad. The respondent-M/s.U.P. Rajkiya Nirman Nigam Limited (an UP Government Undertaking) Hyderabad Unit, is engaged in undertaking engineering, construction works on Turn Key basis and represented through its project Manager Mr. A.K.Agarwal). 3. Initially M/s.Employees State Insurance Corporation (ESIC), a Central Government institution constituted under the provisions of ESI Act, 1948, having its headquarters at New Delhi, awarded the work of construction of ESI Hospital Building at Sanathnagar, Hyderabad vide Turn Key Agreement dated 04.09.2009. The respondent, in turn, entered into contract with the petitioner company for the construction of ESI Hospital at Sanathnagar, Hyderabad vide Contract Agreement No.02/UPRNN/HYD/Med Col, dated 21.12.2009 (hereinafter referred to as CA). The scope of work includes Engineering, Construction, building, furnishing and equipping the hospital building and completion in all respects, within a period of 24 months from the start of the work and estimated value of the work was Rs.389,41,21,127/-. The petitioner completed the work and the building was officially handed over to the respondent on 23.04.2016 and the respondent also issued letter dated 30.01.2017 to that effect. It is asserted that the work could be completed with delay of five years, which is not attributable to the petitioner, as the delays were caused by the respondent leading to cost over run and consequential losses incurred by the petitioner. Thereafter disputes arose between the parties in regard to compensation of losses incurred by the petitioner for the following reasons: 1. Losses incurred due to Cost overrun in Overheads, Admn charges, Hire Charges of Plant & machinery because of the delay in completion of the project, Retention of BG amounts by the respondents, additional costs due to delay in Start period etc., 2. Non-refund of Labour Cess recovered by the Respondent beyond the contractual terms. 3. Difference in applying Price Adjustments clauses to different materials used. 4. Non-refund of Labour Cess recovered by the Respondent beyond the contractual terms. 3. Difference in applying Price Adjustments clauses to different materials used. 4. Due to additional costs incurred in purchase of steel from specified sources instead of from amongst approved vendor list. 5. Due to additional costs incurred due to variation in Autoclaved Aerated Concrete Block masonry quantities. 6. Interests on the above delayed payments etc., It is asserted that the aforesaid issues were brought to the notice of the respondent from time to time and efforts made by the petitioner to settle the disputes amicably through mutual discussions failed. The Contract Agreement provides for settlement of all the disputes either by referring the same to a Dispute Adjudicating Board (DAB) to be constituted by the parties or by referring the same to arbitration under the Act of 1996. Clause 20.2 of GCC provides for appointment of DAB. 4. It is asserted that if a list of potential members is included in the Contract, the members shall be selected from those on the list, other than anyone who is unable to unwilling to accept appointment to the DAB. The contract provides for Particular Conditions of Contract at Appendix ‘B’ to be read in addition to the General Conditions of the Contract which supersedes and prevails over the General Conditions of Contract, in case of any inconsistency or conflict between the General Conditions of Contract and Particular Conditions of Contract. Clause No.20.2 in Particular Conditions of Contract reads as follows: “Mr. N.K. Agarwal, Retd Chief Engineer, A-16, Ground Floor, Eldeco Green Meadows, Sector-P, Greater Noida shall be the sole member of the Dispute Adjudication Board.” As per clauses in General Conditions of Contract and Special Conditions of Contract, the petitioner got issued a letter dated 18.08.2017 requesting the respondent to refer the disputed matters to the DAB or alternatively to refer the same to arbitration. A copy of the said letter was also marked to the Director General, ESIC, the appointing authority of the arbitrator. The respondent replied to the same on 04.10.2017 denying liability and disputed the claim of the petitioner. Since the respondent failed to take any steps as provided under Particular Conditions of Contract or as per clause No.20.2 of the General Conditions of the Contract, there is no DAB in place constituted by both parties. The respondent replied to the same on 04.10.2017 denying liability and disputed the claim of the petitioner. Since the respondent failed to take any steps as provided under Particular Conditions of Contract or as per clause No.20.2 of the General Conditions of the Contract, there is no DAB in place constituted by both parties. Consequently, the provisions at Clauses 20.3, 20.4 & 20.5 could not be made applicable, as such, it is deemed that the respondent waived off his right to constitute the DAB. Therefore, the petitioner has to refer the dispute to arbitration as provided under arbitration clause 20.8(b) in the General Conditions of the Contract (GCC) of the Contract Agreement. 5. Since the disputes raised by the petitioner under the regime of Amended Arbitration Act which came into effect from 23.10.2015, the appointment of arbitrators must be done in accordance with the provisions of Sections 12(3)(e) and Section 12(5) to be read along with the Fifth and the Seventh Schedules of the new Amended Act for ensuring impartiality and independence of the arbitrators. Since the power to appoint a sole arbitrator was given to the Director General of ESIC, New Delhi, who is the employer of the respondent in the subject agreement, it is presumed that he would be having an interest in the outcome of the arbitration proceedings and would be in a position to influence the decision of the Sole Arbitrator, so appointed by him, as such, he stands disqualified to appoint a sole arbitrator as per Clause 20.6 of the PCC. In order to avoid such apprehension, the petitioner issued a letter dated 10.10.2017 nominating Hon’ble Sri Justice E.Padmanabhan (Retd.,) as their nominee arbitrator and requested the respondent to nominate any independent arbitrator from their side to pave the way for constitution of the arbitral Tribunal. Though the respondent received the same, but failed to respond positively and issued letter dated 27.10.2017 seeking reply from the petitioner to his letter dated 04.10.2017. The petitioner replied to the same conveying his disagreement with the stand taken by the respondent vide its letter dated 10.11.2017 and reiterated its earlier stand and requested the respondent to refer the matter to arbitration. The petitioner received no reply from the respondent even after 50 days. Hence, this application. 6. The petitioner replied to the same conveying his disagreement with the stand taken by the respondent vide its letter dated 10.11.2017 and reiterated its earlier stand and requested the respondent to refer the matter to arbitration. The petitioner received no reply from the respondent even after 50 days. Hence, this application. 6. Counter affidavit is filed by the respondent denying the averments in the affidavit filed in support of the application stating that the respondent was the contractor and the petitioner was the sub-contractor and all the bills raised and placed by the petitioner would be forwarded by the respondent to the ESI Corporation, which in turn, would be the final authority to release the payment to the petitioner. It is stated that in the letter of allotment issued to the petitioner, it was clearly mentioned that the conditions would be similar to those applicable to UPRNNL by ESIC. That on the request of the petitioner to issue handing over letter, the respondent issued letter dated 30.01.2017 confirming that the building was handed over to the respondent on 23.04.2016 and the defect liability period was also completed and that the petitioner came up with the alleged dispute, after completion of the defect liability period and after handing over letter dated 30.01.2017. The reasons mentioned by the petitioner in its letter dated 18.08.2017 for the delay in the execution of the project is not attributable to the respondent. The claim of the petitioner is not as per the terms of the agreement. The petitioner has not submitted the settlement of the final bill to the ESIC, as such, the matter of completion of work and handing over/taking over does not arise. It is stated that the claims are to be approved by the ESIC but not the respondent, as the payments to the petitioner shall be made on item rates after completion of the stages of the work and realization of payments from ESIC, as per the Agreement. It is mandatory under Clause 20.1 that any variation or increase in the values of the prices shall be intimated to the respondent within 28 days of such occurrence and after the lapse of such period, the petitioner do not have right to claim. The petitioner never raised the issues nor has issued any requisition letters to that effect. It is mandatory under Clause 20.1 that any variation or increase in the values of the prices shall be intimated to the respondent within 28 days of such occurrence and after the lapse of such period, the petitioner do not have right to claim. The petitioner never raised the issues nor has issued any requisition letters to that effect. The petitioner has not objected to the terms of agreement, before or during the course of execution of work and that the petitioner has not objected while receiving payments from the respondent. It is asserted that the respondent is contesting the matter against the ESIC for refund of Labour Cess before the Delhi High Court. The petitioner has not referred the matter to the DAB’s decision under Clause 20.4, as per clause 20.2 of the Agreement, but the petitioner jumped to Clauses 20.6 and 20.8 of the agreement. It is asserted that both the parties are not at liberty to appoint arbitrators and that the Director General, ESIC is not an employer to the respondent, as such, the prohibition under Sections 12(3) and 12(5) of the Act of 1996 is not attracted against DG, ESIC. 7. Heard Sri S.V.S.Chowdhary, learned counsel representing Sri K.Suresh Kumar, learned counsel for the petitioner and Dr.P.B.Vijay Kumar, learned counsel for the respondent. 8. Learned counsel for the petitioner apart from reiterating the averments in the affidavit filed in support of the application submits that when disputes arose between the parties, it was brought to the notice of the same to the respondent for amicable settlement, but of no avail. He submits that though the petitioner issued notice invoking arbitration clause contained in the Contract Agreement, the respondent replied to the same denying the claim of the petitioner on merits, but not denied the existence of arbitration clause, as such, this application is to be allowed on that ground alone. He also submits that an Award, to be passed by the sole arbitrator, appointed by the Director General, ESIC, New Delhi, as per clause 20.6 of PCC, would be biased since the latter is the employer of the respondent in the agreement, as such, he seeks an appointment of independent arbitrator, for resolving the disputes between the parties, in terms of Sub-section (3) and (5) of Section 12 of the Amendment Act, 2015 by appointing an independent arbitrator. In support of his contentions, he relied on the judgments reported in Denel (Proprietary Limited) v. Government of India Ministry of Defence, AIR 2012 SC 817 and Bipromasz Bipron Trading SA v. Bharat Electronics Limited (BEL), 2012 (3) ARBLR 1 (SC) and Perkins Eastman Architects DPC and another vs. HSCC (India) Ltd., 2019 SCC Online SC 1517. 9. On the other hand, Dr. P.B.Vijay Kumar, learned counsel for the respondent while reiterating the averments in the counter affidavit, submits that there is no arbitral dispute between the parties for referring the dispute to the arbitration. He submits that since there is a DAB for resolution of disputes between the parties, petitioner cannot straight away file this application. He also submits that since the ESIC failed to refund the labour cess, Sri K.N.Agarwal, was appointed as an arbitrator, who passed an Award on 10.03.2017 ordering for reimbursement of Labour Cess. He further submits that they have also filed O.M.P (Comm) 272/2017, I.A.No.8344 of 2017 against ESIC, for refund of labour cess, as such, the filing of the present application by the applicant is premature. He further submits that since the Director General, ESIC, is not an employer of the respondent, the prohibition under Section 12(3) and 12(5) of the Act is not attracted against him. 10. In this case, it is to be seen that the ESIC awarded the work in favour of respondent vide Turn Key Agreement dated 04.09.2009. In turn, the respondent entered into a Contract Agreement (CA) with the petitioner on 21.12.2009, for the purpose of construction of ESI Hospital building at Sanathnagar, Hyderabad. The Contract Agreement contains General Conditions of Contract (GCC) and Particular Conditions of Contract (PCC). As per the CA, the petitioner was supposed to complete the construction of subject building within a period of 24 months, but he completed the same with delay of five years and officially handed over the building to the respondent on 23.04.2016 and a letter dated 30.01.2017 was addressed to the petitioner to that effect. Subsequently, disputes arose between the parties with regard to payment of dues, as the petitioner incurred heavy expenditure due to several reasons. Though the petitioner sought for amicable settlement of the same with the respondent, the said efforts of the petitioner failed. Subsequently, disputes arose between the parties with regard to payment of dues, as the petitioner incurred heavy expenditure due to several reasons. Though the petitioner sought for amicable settlement of the same with the respondent, the said efforts of the petitioner failed. Since the CA provides for settlement of all the disputes by referring the same to the DAB, the petitioner issued a letter to the respondent on 18.08.2017 requesting the respondent to refer the disputed matters to the DAB as per Clause 20.2 of GCC or alternatively to refer the same to arbitration. The respondent replied to the same denying his liability and disputed the claim of the petitioner vide letter dated 04.10.2017 and also failed to take steps to constitute DAB either with a Sole member Sri N.K.Agarwal, as provided in Clause 20.2 of PCC. For the sake of convenience, the said Clause 20.2 of GCC and Clause of 20.2 of PCC are extracted hereunder: Clause No.20.2 in General Conditions of Contract. Appointment of Dispute Adjudication Board. Disputes shall be adjudicated by a DAB in accordance with sub-clause 20.4 [obtaining Dispute Adjudication Board’s Decision]. The parties shall jointly appoint a DAB by the date 28 (twenty eight) days after a party gives notice to the Party of its intention to refer a dispute to a DAB in accordance with Sub-Clause 20.4. The DAB shall comprise, as stated in the Particular Conditions of either one or three suitably qualified persons (‘the members’). If the number is not so stated and the Parties do not agree otherwise, the DAB shall comprise three persons. If the DAB is to comprise three persons each Party shall nominate one member for the approval of the other Party. The two DAB members nominated by the Parties shall consult the Parties and shall agree upon the third member, who shall be appointed to act as chairman. Clause 20.2 in Particular Conditions of Contract: “Mr. N.K.Agarwal, Retd Chief Engineer, A-16, Ground Floor, Eldeco Green Meadows, Sector-P, Greater Noida shall be the sole member of the Dispute Adjudication Board.” 11. The two DAB members nominated by the Parties shall consult the Parties and shall agree upon the third member, who shall be appointed to act as chairman. Clause 20.2 in Particular Conditions of Contract: “Mr. N.K.Agarwal, Retd Chief Engineer, A-16, Ground Floor, Eldeco Green Meadows, Sector-P, Greater Noida shall be the sole member of the Dispute Adjudication Board.” 11. Since the respondent failed to take steps for referring the matter to the DAB, as per clause 20.2 of GCC, the only option left to the petitioner is to refer the dispute to arbitration as per clause 20.8 (b) of GCC, which reads as follows: “Clause 20.8: “If a dispute arises between the parties in connection with, or arising out of the Contract or the execution of the works and there is no DAB in place whether by reason of expiry of the DAB’s appointment or otherwise: (a) Sub-clause 20.4 (obtaining Dispute Adjudication Board’s decision) and sub-clause 20.5(amicable settlement) shall not apply and (b) The dispute may be referred directly to arbitration under sub-clause 20.6(Arbitration). Sub-clause 20.6 is to be read as given in the Particular Conditions of Contract (PCC), since it gives primacy over the same clause in the GCC, which reads as follows: Clause 20.6 of PCC: “In case of any disputes or differences in connection with or arising out of this agreement, the same shall be referred to the Sole Arbitrator to be appointed by the Director General, ESIC, New Delhi. The award of the sole Arbitrator shall be final and binding on both the parties.” 12. The petitioner was under the apprehension that if the power to appoint sole arbitrator is with the Director General of ESIC, New Delhi, who is none other than the employer of the respondent in the CA, he would be having an interest in the outcome of the arbitration proceedings and that he would influence the decision of the sole arbitrator, appointed by him. In order to avoid such apprehension, the petitioner got issued letter dated 10.10.2017, nominating Hon’ble Sri Justice E.Padmanabhan as their nominee arbitrator and requested the respondent to nominate arbitrator from their side. Though the respondent addressed letter dated 27.10.2017 seeking reply from the petitioner to their letter dated 04.10.2017, but neither nominated any arbitrator on their behalf nor disputed the existence of arbitration clause. 13. Though the respondent addressed letter dated 27.10.2017 seeking reply from the petitioner to their letter dated 04.10.2017, but neither nominated any arbitrator on their behalf nor disputed the existence of arbitration clause. 13. It is vehemently contended by the learned counsel for the petitioner that since the Amended Arbitration Act, 2015 came into force with effect from 23.10.2015, the appointment of arbitrator must be in accordance with Sections 12(3) & (5) of the Act, for securing impartiality and independence of arbitrators. In Perkins Eastman Architects DCP v. HSCC (India) ltd.(supra), the Hon’ble Supreme Court held as follows: “20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorized to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited, all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator. 21. But, in our view that has to be the logical deduction from TRF Limited. 21. But, in our view that has to be the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, “whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator.” The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator an that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognized by the decision of this Court in TRF Limited.” In the instant case, as already discussed supra, the ESIC, a Central Government Institution awarded the contract in favour of respondent, who in turn, entered into contract with the petitioner for construction of ESIC Hospital Building at Sanathnagar. A perusal of clause 20.6 of PCC goes to show that in case of any disputes arose between the parties in connection with or arising out of CA, the same shall be referred to the Sole Arbitrator to be appointed by the Director General, ESIC, New Delhi and the Award of the sole arbitrator shall be final and binding on both the parties. Obviously, when a sole arbitrator is appointed by the DG, ESIC, for resolution of dispute between the petitioner and the respondent, there will always be scope for biased decision in favour of the respondent, since the power of appointment of sole arbitrator lies with the DG, ESIC, which is against the provisions of Section 12(3) and (5) of the Amendment Act, 2015. 14. Section 12 of the Act of 1996 was amended by way of Amendment Act, 2015, which came into force from 23.10.2015 for ensuring neutrality of arbitrators. A perusal of Section 12 of the Amendment Act, 2015 goes to show that when a person is approached in connection with the possible appointment as arbitrator, he is required to disclose in the writing the existence of any relationship or interest of any kind which is likely to give rise to justifiable doubts as to his neutrality. He is also required to disclose any circumstances which are likely to affect his ability to devote sufficient time to the arbitration and complete the arbitration within the specified period. A person having relationships as specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator; For example: The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party to the dispute; or the arbitrator is a manager, director or part of the management, or has a similar controlling influence over the parties to the dispute. 15. In view of mandate under Section 12 of the Amendment Act, 2015 coupled with the principle laid down in the aforesaid judgment of Hon’ble Supreme Court, which has considered the scope of Section 12 of the Act of 2015, the clause 20.6 of PCC is not only against the principle of law laid down by the Hon’ble Supreme Court in the aforesaid decision, but also against the provisions of Section 12(3) & (5) of the Amendment Act, 2015. Therefore, the contention of the learned counsel for the respondent that since the sole Arbitrator N.K.Agarwal, passed an award in respect of non payment of labour cess by the ESIC, the mandate of Section 12(3) & (5) of the Amendment Act, has no application, cannot be accepted. 16. Therefore, the contention of the learned counsel for the respondent that since the sole Arbitrator N.K.Agarwal, passed an award in respect of non payment of labour cess by the ESIC, the mandate of Section 12(3) & (5) of the Amendment Act, has no application, cannot be accepted. 16. I.A.No.1 of 2020 This application is filed by the respondent for impleading the Employees’ State Insurance Corporation (ESIC), as 2nd respondent on the ground that the 2nd respondent has to release the funds to the respondent, in order to pay, if any, to the petitioner, as such, he is proper and necessary party to the application. But, it is an admitted fact that the implead petitioner/proposed 2nd respondent is not a party to the CA between the petitioner and the respondent. It is the contention of the learned counsel for the respondent that the Director General, ESIC is the employer and beneficiary of the project, as such, prohibition under Section 12 (3) & (5) of the Act is not attracted. However, he again submits that ESIC is an interested party, who is ultimately liable to pay, if the claim is proved, which is contradictory in nature. If the respondent has to get payments from the ESIC, it is the responsibility of respondent and for that sake, 2nd respondent need not required to be made as party to the arbitration proceedings. That apart, the proposed 2nd respondent is not a party to the agreement between the petitioner and the respondent and that there is no lis pending between the petitioner and the proposed 2nd respondent. In view of above facts and circumstances, this application is allowed nominating Hon’ble Sri Justice Madan B.Lokur, former Judge, Supreme Court of India, as sole arbitrator, for adjudicating the dispute between the parties.