TaxTMI 
TaxTMI 
2001 (2) TMI 965
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....ase as the short prayer in the petition is the appointment of an Arbitrator and referring to him all the disputes having arisen between the parties for adjudication. The fact that the contract contains the following Arbitration clause is not disputed. 3. General Conditions of Contract contains clause 56 which is reproduced as under : "Clause 56. Arbitration and Laws.-Arbitration except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein-before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the General Manager of Delhi Electric Supply Undertaking and if the General Manager is unable or unwilling to act, to the sole ar....
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...., as may be decided by the arbitrator(s). In the event of disputes or differences arising between one public sector enterprise and a Govt. Department or between public sector enterprises the above stipulations shall not apply, and the provisions of B.P.E. office memorandum No. BPE/GL-001/76/MAN/2[11057BPE(GMII)] dated 1st Jan., 1976 or its amendments for arbitration shall be applicable." The petitioners claimed that the work could not be completed due to various reasons attributable to the respondents. The petitioners wrote a number of letters raising various claims against the respondents but when the respondents failed to give a positive response, the petitioners invoked the arbitration clause by giving a legal notice to the respondents on 15-5-1996 for referring the disputes to arbitrator and thereafter further representations were made time and again and finally called upon the General Manager of the respondents vide letter dated 30-12-1997 to act as a sole arbitrator and enter upon the reference and decide the disputes arisen between the parties. The petitioners specified the disputes together with claim amount. The claim amount was Rs. 314 lakhs. When the respondents failed....
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.... amounts claimed as under: DisputesAmount claimed against the specified dispute ** ** ** " Despite this letter the respondents did not take any steps for appointment of an arbitrator for reasons best known to them. The petitioners under tremendous compulsion had to move the present petition under section 11(6). The petition was filed on 13-4-1998 and was put up before the Court on 16-4-1998, on which date notice was issued to the respondents for 23-7-1998 which was served on them on 1-5-1998 and thereafter the respondents appointed the arbitrator on 24-6-1998. 6. It is urged that once the petitioners invoke the jurisdiction of the Court under section 11(6), the respondents forfeit the right to appoint an arbitrator and the appointment of an arbitrator after two years of invoking of the Arbitration clause and after filing the petition is a nullity. 7. The argument of the learned counsel for the respondents is that there being no time limit in the Arbitration agreement for appointment of an arbitrator, the filing of an application under section 11(6) does not preclude the respondents from appointing an arbitrator even after the filing of the application. According to the learned....
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....tes arose between the parties and the petitioners invoked Arbitration clause and requested the respondents for appointment of an arbitrator to adjudicate the disputes between the parties. When the respondents failed to appoint an arbitrator, the petitioners filed an application under section 11(6) for appointment of an independent arbitrator. It was after filing of the application that the respondents appointed an arbitrator. The Andhra Pradesh High Court held that in view of section 11(6) read with sub-section (8) of section 11, the respondents had forfeited his right to appoint an arbitrator after the expiry of thirty days from the date of demand for the appointment of an arbitrator. The Court appointed an arbitrator under section 11(6). 12. The learned counsel for the petitioners has further placed reliance on a decision of the Delhi High Court in the case of B.W.L. Ltd. v. M.T.N.L. 2000 (2) Arb. LR 190. In this case over a year had elapsed since the demand for arbitrator was raised. The respondents had failed to make the appointment of an arbitrator on the grounds that they had unfettered right to unilaterally decide to recover liquidated damages and this right would not have....
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....t 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 rising 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. 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." (p. 158) The conclusion thus derived from the findings in the above-mentioned Supreme Court case is that under section 11(6) where no time limit is prescribed if the opposite party has not made an appointment within a period of thirty days of the demand to appoint an arbitrat....