1. Heard the Parties.
2. This appeal is directed against the judgment and order dated 23-2-2004 passed by the Division Bench of the Calcutta High Court in APOT No. 557 of 2002 upsetting the judgment of the Learned Single Judge.
3. For the disposal of this appeal it may not be necessary to recite the entire facts relating to the filing of the present appeal Suffice it to say that there was an agreement between the appellant and the respondent for a civil contract. Clause 64 of the agreement deals with the demand for arbitration which read:-
64 Demand of arbitration
(3)(a)(ii) Two arbitrators who shall be gazetted railway officers of equal status to be appointed in the manner laid in clause 64(3)(b) for all claims of Rs. 5,00,000 (Rupees five lakhs) and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The general manager shall be the sole Judge to decide whether the issues involved are of a complicated nature or not. In the event of the two arbitrators being undecided in their opinions, the matter under dispute will be referred to an umpire to be appointed in the manner laid down in sub clause (3)(b) for his decision.
(3)(a)(iii) It is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all.
4. Despite the aforesaid clause stipulated in the agreement the respondent filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ) before the learned Chief Justice of the Calcutta High Court Pursuant to the application the Learned Chief Justice appointed an Arbitrator. The arbitrator has made an award. The award was challenged before the learned single Judge under Section 34 of the Act which was allowed by the learned Single Judge setting aside the award.
5. Aggrieved thereby the claimant preferred an appeal before the Division Bench. By the impugned order the learned Division Bench upset the well reasoned judgment rendered by the learned Single Judge. Hence, the present appeal by special leave.
6. The learned Division Bench repealing the contention of the appellant that the appointment of Arbitrator was not in accordance with law has held that the order of the learned Chief Justice being an administrative in nature the contention raised by the appellant was not tenable. When the learned Division Bench rendered that order, judgment of the Constitution Bench of this Court in SBP & Co.Ltd. v. Patel Engineering Ltd. 2005 (7) SCJ 461 = (2005) 8 SCC 618 was not available. Be that as it may, in the Constitution Bench Judgment this Court has held that the order passed by the learned Chief Justice appointing the Arbitrator is a judicial order. Having regard to the subsequent order rendered by the Constitution Bench of this Court in SBP Co.Ltd. (1 supra) the observations of the Division Bench of the High Court that the order of the learned chief Justice is administrative in nature are no longer held to be appropriate and valid in the eyes of law.
7. With regard to the interpretation of the Clause 64 of the agreement the three Judge Bench of this Court examined the same Clause which is involved in the present case in Union Of India and another v. M.P. Gupta (2004) 10 SCC 504 and has held in paragraph 4 of judgment as under:
4. In view of the express provision contained therein that two gazetted railway officers shall be appointed as arbitrators. Justice P.K. Bahri could not be appointed by the High Court as the Sole Arbitrator. On this short ground alone, the judgment and order under challenge to the extent it appoints justice P.K. Bahri as sole arbitrator is set aside. Within 30 days from today the appellants herein shall appoint two gazetted railway officers as arbitrators. The two newly appointed arbitrators shall enter into reference within a period of another one month and therafter the arbitrators shall make their award within a period of three months.
8. Therefore, the decision rendered in M.P. Gupta s case (2 supra) is squarely covered in the case at hand. In view thereof the order passed by the Division Bench of the Calcutta High Court is not tenable in law and is accordingly set aside. The order of the learned Single Judge is restored. The appeal is allowed. No costs.
9. Considering that the matter has been pending for quite long time, we direct the appellant to appoint an arbitrator in terms of Clause 64 of the agreement within three weeks from today. The Arbitrator therafter shall make an award within 30 days from the date of entering into reference.
10. Pursuant to our order dated 24-9-2007 the awarded amount appeared to have been deposited before this Court. This Court further directed that the respondent is permitted to withdraw on furnishing bank Guarantee of a Nationalised Bank within six weeks from the date of deposit. It is submitted that the amount could not be withdrawn by the claimants as they are not able to furnish Bank Guarantee of a Nationalised Bank. In such event this Court directed that the Registry shall keep the amount in the Fixed Deposit in a Nationalised Bank for an initial term of one year. It appears that the Registry has deposited the amount in a Nationalised Bank for one year and by another order 16-12-05 the FDR is extended for a further period of one year. The FDR was extended for a further period of 6 months each on 7-12-2006 and 29-5-2007 by orders passed by the Registrar of this Court. Let the FDR remain in deposit as it is as ordered by the Registrar of this Court.