NON REPORTABLE

IN THE SUPREME COURT OF INDIA                        CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5075 OF 2009   Arising out of SLP© No.19288 of 2008]

Union of India        … .Appellant

VERSUS

M/s. Premier Files Ltd.  ...Respondent

J U D G M E N T

TARUN CHATTERJEE, J.

1. Leave granted.

2. An agreement  was  entered  into  between  M/s.  Premier  

Files  Ltd.,  the  respondent  herein,  with  the  appellant-

Union of India for piling work in respect of which clause  

25 provides for settlement of disputes in relation to the  

said work. The work agreement was completed and final  

bill  for the said work was paid along with incentive for  

one week early completion of work under clause 34 of the  

Agreement. Some differences and disputes in relation to  

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the said work arose between the parties. The respondent  

requested  the  appointing  authority  of  the  appellant  to  

appoint  an  Arbitrator  as  per  arbitration  clause  to  

adjudicate the dispute between the parties. The appellant  

appointed  one  Shri  O.P.Gaddhyan  as  an  Arbitrator  to  

adjudicate the said dispute. The said Arbitrator entered  

into  the  reference  and  thereafter  Shri  O.P.Gaddhyan  

resigned.  After  his  resignation,  the respondent  filed an  

arbitration application for appointment of an Arbitrator  

before the High Court at Calcutta.  It  is not in dispute  

that when the application for appointment of Arbitrator  

was pending before the High Court,  another Arbitrator  

was  appointed  by  the  appointing  authority  on  14th of  

July, 2006. However, by the impugned order,  the High  

Court had disposed of the said application filed by the  

respondent appointing a senior advocate of the Calcutta  

High Court as an Arbitrator in terms of Section 11(6) of  

the  Arbitration  and  Conciliation  Act,  1996  (hereinafter  

referred to as the ‘Act’).  

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3. Feeling aggrieved, the Union of India has come up to this  

Court by way of a special leave petition which, on grant  

of leave, was heard in presence of the learned counsel for  

the parties.

4. It is not in dispute that clause 25 provides for settlement  

of  dispute in relation to the  work agreement for  piling  

work. It is also not in dispute that the work agreement  

was  completed  and  final  bill  was  passed.  Since  some  

differences  and  disputes  arose,  an  Arbitrator  was  

appointed by the competent authority who subsequently  

resigned. After the resignation of the Arbitrator appointed  

by the competent authority,  no appointment was made  

by  the  competent  authority  after  the  resignation  for  

about  two  months.  As  noted  herein  above,  a  lawyer  

Arbitrator  was  appointed  by  the  High  Court  by  the  

impugned  order.  In  our  view,  in  the  facts  and  

circumstances  of  the  present  case  and  in  view  of  the  

specific  clause  being  clause  25  of  the  Arbitration  

Agreement,  the  impugned  order  appointing  a  lawyer  

Arbitrator in the aforesaid matter must be said to be in  

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violation of the provisions of clause 25 of the agreement  

which clearly says that the Arbitrator must be appointed  

by  the  competent  authority.  That  apart,  before  the  

appointment  of  a  lawyer  Arbitrator  in  the  matter,  the  

competent  authority  has  already  appointed  Shri  

S.C.Padhi as an Arbitrator and in fact the said Arbitrator  

has already entered appearance and proceeded with the  

arbitration and,  therefore,  it  would not  be  justified for  

appointing a lawyer Arbitrator at that stage. Considering  

the fact that the Arbitrator has already been appointed in  

terms of the agreement and that such appointment was  

made before the final order was passed under section 11  

of  the Act appointing a lawyer Arbitrator  to decide the  

disputes between the parties, we set aside the order of  

the High Court and restore the order of the competent  

authority appointing Shri S.C.Padhi as a sole Arbitrator  

to decide the disputes between the parties. The learned  

Arbitrator is directed to pass an award within six months  

from the date of communication of this order to him after  

giving hearing to the parties and pass a reasoned award  

in accordance with law.

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5. For  the  reasons  aforesaid,  the  impugned  order  is  set  

aside.  The  appeal  is  allowed  to  the  extent  indicated  

above.  The  application  filed  by  the  respondent  under  

Section 11(6)  of  the  Act,  therefore,  stands rejected.  No  

order as to costs.

……………………..J. [Tarun Chatterjee]

New Delhi; ……………………..J. August 04, 2009.  [R.M.Lodha)

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