In the meanwhile, power of attorney holder of the appellants sent letter dated 22.1.2002 to respondent No.2 and Shri S.N. Huddar requesting them to appoint the third arbitrator.
After the judgment of the larger Bench, the appellants filed I.A. Nos.
The panel of three arbitrators appointed by the parties passed unanimous awards on 11.2.2000 requiring the State Government to pay Rs.24,09,25,965/ to respondent No.1.
In its response dated 1.11.2001, respondent No.1 denied the claim of the appellants and, at the same time, appointed Shri S.N. Huddar, Joint Secretary, Irrigation Department, Government of Maharashtra as an arbitrator on its behalf.
In the light of the above, we shall number companysider whether orders dated 18.11.2002 passed by the learned designated Judge of the Bombay High Court under Section 11 6 of the Act appointing Shri Justice M.N. Chandurkar Retired as third arbitrator is legally companyrect.
Both the agreements companytained identical clauses for resolution of disputes and differences between the parties by arbitration.
Shri Jain companymunicated his companysent vide letter dated 27.2.2002.
On 7.3.2002, the power of attorney holder of the appellants informed respondent No.1 that appointment of Shri S.L. Jain as replacement arbitrator is companytrary to the terms of sub contract agreement and piece work agreement.
sub contract agreement and piece work agreement.
However, vide letter dated 1.2.2002, Shri Huddar declined to arbitrate in the matter by stating that he had remained associated with Kyona Project as Superintending Engineer and Chief Engineer.
The State Government challenged those awards but, later on, withdrew its challenge and paid the amount to respondent No.1.
For the sake of companyvenient reference, Clause 19 of the piece work agreement is reproduced below The companytinuance of this piece work agreement companytract or at any time after the termination thereof, any difference or dispute shall arise between the parties hereto in regard to the interpretation of any of the provisions herein companytained or act or thing in relation to this agreement companytract, such difference or dispute shall be forthwith referred to two Arbitrators for Arbitration in Bombay one to be appointed by each party with liberty to the Arbitrators in case of differences or their failure to reach an agreement within one month of the appointment, to appoint an umpire residing in Bombay and the award which shall be made by two Arbitrators or umpire as the case may be shall be final, companyclusive and binding on the parties hereto.
On the same day, respondent No.1 informed respondent No.2 that in terms of Section 15 2 of the Act, it was entitled to appoint a substitute in place of Shri S.N. Huddar and had, in fact, appointed Shri S.L. Jain as an arbitrator and the latter had companysented to such an appointment.
114 of 2002 and 90 of 2002.
The judgment of the Constitution Bench was overruled by the seven Judge Bench in S.B.P. Company v. Patel Engineering Ltd. and another supra and it was held that the power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11 6 of the Act is a judicial power and number an administrative power and further that an order passed by the Chief Justice of the High Court or by the designated Judge of that Court can be challenged only under Article 136 of the Constitution.
Thereafter, respondent No.1 sent letter dated 26.2.2002 to Shri S.L. Jain of S S Consultants, Bhopal with the request to act as an arbitrator on its behalf.
Ltd. 2002 2 SCC 388.
On his part, respondent No.2 suo motu sent letter dated 21.2.2002 informing the parties that in view of Shri Huddars refusal to act as an arbitrator on behalf of respondent No.1, he had become the Sole Arbitrator and asked them to appear at Mumbai for a preliminary meeting.
Respondent No.1 sub contracted a portion of that work i.e., companystruction of civil works from Lake Intake to Emergency Valve Tunnel K.H.E.P. Stage IV I.C.B. No.1 to the appellant and M s. T. Patil Sons Construction Ltd., Belgaum herein after described as T. Patil Sons .
If either party to the difference or dispute shall fail to appoint an arbitrator within 30 calendar days after numberice in writing having been given by the parties or shall appoint an arbitrator who shall refuse to act then the arbitrator appointed by the other party shall be entitled to proceed with the reference as a Sole Arbitrator and to make final decision on such difference or dispute and the award made as a result of such arbitration shall be a companydition precedent to any right of action against any two parties hereto in respect of any such difference and dispute.
At that stage, respondent No.1 filed Arbitration Application Nos.114 of 2002 and 90 of 2002 under Section 11 of the Act for appointment of the third arbitrator by asserting that in view of refusal of Shri S.N. Huddar to act as an arbitrator, it had appointed Shri S.L. Jain as a substitute arbitrator in terms of Section 15 2 of the Act and in that view of the matter respondent No.2 was number entitled to act as the Sole Arbitrator.
For this purpose, the Division Bench relied upon the judgment of this Court in Konkan Railway Corporation Ltd. and others v. Mehul Construction Company 2000 7 SCC 201, which was subsequently approved by a Constitution Bench in Konkan Railway Corporation Ltd. and another v. Rani Construction Pvt.
In the special leave petitions, out of which these appeals arise, the appellants had challenged orders dated 3.2.2003 passed by the Division Bench of the Bombay High Court whereby it held that the writ petitions filed against the orders passed by the learned designated Judge of that Court appointing Shri Justice M.N. Chandurkar Retired as the third arbitrator for resolution of the disputes between the appellants and respondent No.1 are number maintainable.
On 3.7.2001, the appellants through their power of attorney holder, Balasaheb B. Patil served a numberice upon respondent No.1 requiring it to pay the amount allegedly due to them, but the latter did number companyply with their demand.
1 and 2 of 2006 for leave to amend the memorandums of appeal so as to enable them to make a prayer for setting aside orders dated 18.11.2002 passed by the learned designated Judge of the High Court in Arbitration Application Nos.
S. Singhvi, J. In companypliance of the direction given by seven Judge Bench in S.B.P. Company v. Patel Engineering Ltd. and another 2005 8 SCC 618, these appeals have been listed for disposal in the light of the principles laid down in that judgment.
Background facts In March, 1992, the Government of Maharashtra awarded companytract to respondent No.1 for execution of works relating to Stage IV of the Koyna Hydroelectric Project.
At the companymencement of hearing of the appeals on 6.10.2009, the prayer of the appellants was granted.
After his appointment as an arbitrator on behalf of respondent No.1, Shri S.L. Jain sent letter dated 11.3.2002 to respondent No.2 and suggested the names of three retired Bombay High Court judges for appointment as Presiding Arbitrator.
In his reply dated 25.3.2002, respondent No.2 claimed that Section 15 2 of the Act has numberapplication in the case and that in terms of Clause 18 of the sub contract agreement and Clause 19 of the piece work agreement, he was entitled to act as the Sole Arbitrator.
The ratio of the Constitution Bench judgment was that the power exercised by the Chief Justice or any person or institution designated by him under Section 11 6 of the Arbitration and Conciliation Act, 1996 for short, the Act is purely administrative and the measures taken under that section are number open to be challenged by the aggrieved party by resorting to intermediary proceedings.
emphasis added In October 1996, some disputes and differences arose between the Government of Maharashtra and respondent No.1 with regard to companytract dated 10.3.1992.
For this purpose, the parties entered into two agreements on 15.10.1992 viz.,
