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Issues: (i) Whether the respondent, having failed to appoint an arbitrator under the agreed procedure after invocation of the arbitration clause, had forfeited its right to make the appointment and the Court was required to appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996; (ii) Whether the High Court could direct constitution of the arbitral tribunal under clause 64(3)(b) of the General Conditions of Contract when the contract did not incorporate or bind the parties to that regime.
Issue (i): Whether the respondent, having failed to appoint an arbitrator under the agreed procedure after invocation of the arbitration clause, had forfeited its right to make the appointment and the Court was required to appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Analysis: The parties were bound by their arbitration agreement, which contemplated appointment of a sole arbitrator by the General Manager of the Railways. Once the dispute was invoked and the respondent failed to act in accordance with the agreed procedure, the right to appoint stood forfeited. In such circumstances, the jurisdiction under Section 11(6) was attracted, and the Court was required to appoint the arbitrator.
Conclusion: The issue was answered in favour of the appellant. The respondent had lost its right to appoint an arbitrator, and a sole arbitrator was required to be appointed under Section 11(6).
Issue (ii): Whether the High Court could direct constitution of the arbitral tribunal under clause 64(3)(b) of the General Conditions of Contract when the contract did not incorporate or bind the parties to that regime.
Analysis: The General Conditions of Contract were neither signed by the parties nor incorporated into the agreement, and the principal contract contained no reference to them. The later GCC regime was stated to operate prospectively, and therefore could not govern an earlier contract that was not made subject to it. The High Court's reliance on clause 64(3)(b) was therefore misplaced.
Conclusion: The issue was answered in favour of the appellant. The direction to constitute the arbitral tribunal under clause 64(3)(b) could not be sustained.
Final Conclusion: The dispute had to be referred to a sole arbitrator under the agreed arbitration clause, and the contrary direction based on the GCC was set aside.
Ratio Decidendi: Where the agreed appointment procedure is not followed and the appointing authority fails to act after invocation of arbitration, its right to appoint stands forfeited, and the Court under Section 11(6) must appoint the arbitrator; an unincorporated and prospectively operating contract regime cannot be applied to vary that result.
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