TMI Blog2007 (4) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... t the instance of the appellants was also rejected. 3. Notice was issued on the application for condonation of delay and also on the special leave petitions by this Court on 12th September 2005. After exchange of affidavits an order was passed by this Court on 5th January 2007 in which one of us was a party. The said order of this Court may be relevant for our decision which is as follows: Having regard to the facts of the case, we suggested to the parties that the Municipal Corporation may be directed by this Court to constitute a Board of Arbitrators under Clause 29 of the Agreement without any preconditions. Such an appointment should be made within three weeks from this Court's order and the Board of Arbitrators will take up the matter from the stage at which it has reached before the Arbitrator appointed by the High court. The Board of Arbitrators shall thereafter conclude the proceedings within six months. However, this suggestion of this Court made on 5th January 2007 was not accepted by the respondent and for that reason, we heard the appeal on merits. 4. The appellants floated a notice inviting tender for construction of a road. Finally, half of the job was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion at all. b) The Corporation may at any time effect any change in the personnel of the Board and the new members or members appointed to the Arbitration Board shall be entitled to proceed with the reference from the stage it was left by his or their predecessors. c) The party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute(s). d) Where the party invoking arbitration is the contractor no reference for arbitration shall be maintainable, unless the contractor furnishes a security deposit of a sum determined according to the table given below, and the sum so deposited shall on the determination of arbitration proceeding, be adjusted against the cost, if any awarded by the Board against the party and the balance remaining after such adjustment or in the absence of the such cost being awarded the whole of the sum shall be refunded to him within one month from the date of the award. Amount of Claim Rate of Security Deposits For claim below Rs. 10000/-. 5% of amount clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd deposited by the contractor. [III] The Corporation shall constitute a Board called 'Arbitration Board' for arbitration which shall consist of three members of whom one shall be chosen from among the officers belonging to the Urban Administration and Development Department not below the rank of B.E., one Retired Chief Engineer of any Technical Department and City Engineer, Nagar Nigam, Jabalpur; subject to compliance of (I) and (II) as noted herein above. 7. At the risk of repetition, we may reiterate that the High Court while allowing the application under Section 11(6)(c) of the Act directed appointment of the Arbitrator in terms of Clause 29 of the contract, which contained the aforesaid provisions. It may be kept on record that, on instruction, Mr. Ranjan Mukherjee, appearing on behalf of the Corporation, submitted that the Corporation was ready and willing to constitute an Arbitration Board in compliance with Clause 29 of the contract without any reference being made to the Chief Engineer, or in case of failure of the Chief Engineer to take decision or give instruction in writing to file an appeal before MPL Com. and that the Arbitration Board shall proceed fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r securing the appointment of an arbitrator, the same shall be followed. 9. It was contended by Mr. Ranjan Mukherjee, learned counsel appearing for the appellants, that it was not open to the High Court to appoint an arbitrator without complying with Clause 29 of the contract. According to him, as noted herein earlier, the High Court by its own order dated 7th May 2003 directed appointment of an arbitrator in compliance with Clause 29 of the contract which clearly provides a procedure for appointment of an arbitrator and also indicates who shall be appointed arbitrator and how he shall be appointed. Mr. Mukherjee had brought to our notice that Clause 29 of the contract clearly stipulated that no person other than the Arbitration Board constituted by the Corporation would act as arbitrator provided that the party invoking arbitration clause furnishes a security deposit of a sum determined according to the table given in the contract itself. After such determination and on deposit of the said sum by the party invoking arbitration clause, it would become the duty and obligation of the Corporation to constitute an Arbitration Board as provided in Clause 29 of the contract. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated herein earlier, that if any dispute arises between the parties, the party seeking invocation of the arbitration clause, shall first approach the Chief Engineer and on his failure to arbitrate the dispute, the party aggrieved may file an appeal to MPL Com, failing which, the Corporation shall constitute an Arbitration Board to resolve the disputes in the manner indicated in Clause 29. However, before doing so, the party invoking arbitration clause is required to furnish security of a sum to be determined by the Corporation. 11. In this case, admittedly, the security has not been furnished by the respondent to the Corporation. We, in fact, asked Mr. Sharma, appearing on behalf of the respondent to ascertain on the date of the hearing of the appeal, whether the security deposit was made or not. On instruction, Mr. Sharma informed us that such security has not yet been deposited. Such being the position even today, we hold that the obligation of the Corporation to constitute an Arbitration Board to resolve disputes between the parties could not arise because of failure of the respondent to furnish security as envisaged in Clause 29(d) of the contract. Therefore, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. In that context, it was held by this Court that if one party makes a demand for appointment of an arbitrator to the opposite party and the latter does not make an appointment within 30 days of demand, the right of appointment of arbitrator does not get automatically forfeited after expiry of 30 days. This Court held that 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 still continues. However, the right of the opposite party ceases when an application under Section 11 seeking appointment of an arbitrator is filed. This is not the factual situation in the present case, nor are we concerned with this aspect in the present case. So far as the case of Punj Llyods Ltd. (supra) is concerned, it is true that this decision of this Court was rendered by a bench of three Judges which affirmed the decision in the case of Datar Switchgears Ltd. (supra). Since we are not concerned in the facts and circumstances of the present case with the question decided by this Court in the aforesaid two decisions, we are unable to rely on those decisions. 13. For the reasons aforesaid, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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