Universal Construction And ... vs Garhwal Mandal Vikas Nigam Ltd. ... on 8 October, 2003

    Universal Construction And Trading Company vs Garhwal Mandal Vikas Nigam Ltd.
And Ors. on 8/10/2003

JUDGMENT

   1. The parties to the proceedings entered into an agreement on 19-1-1996
whereby the petitioner was appointed as Commissioning Agent to promote the sale
of the product of flush doors; a product of the opposite parties in various
divisions including Faizabad, Lucknow, Gorakhpur, Varanasi, Allahabad, Azamgarh,
Bareilly and Kanpur etc. This agreement was valid for a period upto 31-3-1997.
The agreement was extended for a period ending 31-3-2002 vide agreement dated
18-10-1996. There is Arbitration Clause in the agreement, which is as follows
:--

     "14. That in case of any dispute arises, the same shall be referred to the
sole arbitration of the Managing Director, Garhwal Mandal Vikas Nigam Ltd. 74/1
Rajpur Road, Dehradun, U.P. whose decision shall be final and binding on the
both the parties."

   2. The aforesaid agreement was executed in Dehradun which was in Uttar
Pradesh on the date of the execution of the agreement.

   3. A dispute arose between the parties. On 5-1-2000, the petitioner made a
written request for making a reference to the arbitrator for decision. This
letter was addressed to Garhwal Mandal Vikas Nigam through its General Manager
and the Managing Director, Garhwal Mandal Vikas Nigam. Instead of entering into
the reference the opposite parties conveyed to the petitioner's firm that no
amount is due to the petitioner's firm. On 3-10-2001, the petitioner moved an
application under Section 11 of the Arbitration and Conciliation Act, 1996
(hereinafter to be referred as 'Act'). Admittedly the General Manager
(Administration) Garhwal Mandal Vikas Nigam referred the matter for arbitration
to the Managing Director on 19-2-2002. The petitioner filed objection under
Section 13(2) before the Arbitrator and conveyed to the Managing Director
working as Arbitrator that in the absence of the reference of the dispute to the
Arbitrator by the General Manager, Garhwal Mandal Vikas Nigam within the
prescribed period, the petitioner had filed an application under Section 11(6)
of the Act for appointment of the Arbitrator before the Lucknow Bench of
Allahabad High Court.

   4. An application of the petitioner under Section 11(6) of the Act remained
pending and it has been informed by the supplementary affidavit that the
Managing Director, Garhwal Mandal Vikas Nigam who was designated Arbitrator in
the agreement has given an award on 11-7-2003.

   5. The opposite parties have filed the counter affidavit and opposed this
application on several grounds. Firstly, that the petitioner has not challenged
the agreement and in view of Clause 14 of the agreement, the Managing Director
of the Nigam is the only person who can act as Arbitrator between the parties
and therefore, the petition under Section 11 of the Act is totally misconceived
because once the arbitrator is already decided between the parties, the only
thing remains to be that he has to proceed with the arbitration and that too has
already been done by the Arbitrator. Secondly, the petitioner can file an
application for appointment of the Arbitrator before the Chief Justice under
Section 11(5) of the Act. Section 11(5) of the Act is as follows :--

     11(5). Falling any agreement referred to in Sub-section (2), in an
arbitration with a sole arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of a request by one party from the
other party to so agree the appointment shall be made, upon request of a party
by the Chief Justice or any person or institution designated by him."

   6. In view of the above provisions, it has been contended that if the parties
do not agree on a procedure for appointing the Arbitrator or Arbitrators under
Sub-section (2) of Section 11 only then the provisions of Sub-section (5) may be
invoked.

   7. Thirdly, it has been contended by the opposite parties that under Section
11(12)(b) of the Act, a reference to the Chief Justice under Sub-section (5) of
the Act shall be construed as a reference to the Chief Justice of the High Court
within whose local limits the principal Civil Court referred to Section 2(1)(e)
of the Act is situate. Section 11(12)(b) of the Act is as follows :--

     "Where the matters referred to in Sub-sections (4), (5), (6), (7), (8) and
(10) arise in any other arbitration, the reference to "Chief Justice" in those
sub-sections shall be construed as a reference to the Chief Justice of the High
Court within whose local limits the principal civil Court referred to in Clause
(e) of Sub-section (1) of Section 2 is situate and, where the High Court itself
is the Court referred to in that clause to the Chief Justice of that High
Court."

   8. Section 2(1)(e) is as follows :--

     " 'Court' means the principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions forming the subject
matter of the arbitration if the same had been the subject matter of a suit, but
does not include any civil Court of a grade inferior to such principal Civil
Court, or any Court of Small Causes."

   9. In view of the aforesaid provisions, it has been contended by the opposite
parties that the agreement was executed at Dehradun which is situated in the
State of Uttaranchal. The jurisdiction in such cases in the matter of suit would
be determined by the provisions of Section 20 C.P.C., which is as, follows :--

     "20. Other suits to be instituted where defendants reside or cause of
action arises -- Subject to the limitations aforesaid, every suit shall be
instituted in Court within the local limits of whose jurisdiction--

     (a) the defendant, or each of the defendants where there are more than one,
at the time of the commencement of the suit, actually and voluntarily resides,
or carries on business, or personally works for gain; or

     (b) any of the defendants, where there are more than one, at the time of
the commencement of the suit, actually and voluntarily resides, or carries on
business, or personally works for gain, provided that in such case either the
leave of the Court is given, or the defendants who do not reside, or carry on
business, or personally work for gain, as aforesaid, acquiesce in such
institution; or

     (c) the cause of action, wholly or in part, arise.

     (Explanation) -- A Corporation shall be deemed to carry on business at its
sole or principal office in (India) or, in respect of any cause of action
arising at any place where it has also a subordinate office, at such place."

   10. According to the opposite parries since the suit would have been
instituted in the Principal Civil Court at Dehradun, therefore, the reference to
the Chief Justice under Section 11(12)(b) means the Chief Justice of Uttaranchal
High Court.

   11. Fourthly, the petitioner had already submitted its reply before the
arbitrator designated in the agreement under Section 13(2) of the Act. It means
that the petitioner had accepted the jurisdiction of arbitral Tribunal and the
question of jurisdiction of arbitral Tribunal shall be decided by the Tribunal
itself. Now the Arbitrator has given the award. The award is a decree as
provided under Section 36 of the Act and the petitioner has the remedy under
Section 34 by moving an application for setting aside the arbitral award. This
decree cannot be set aside in the proceedings under Section 11 of the Act
because the proceedings are administrative in nature.

   12. I have heard Shri N.K. Seth, Advocate for the applicant and Shri Umesh
Chandra for the opposite parties at length on the contentions raised before
passing an order appointing an arbitrator under Section 11 of the Act.

   13. So far as the first and second contentions raised by the learned counsel
for the opposite parties are concerned, after seeing the counter affidavit, it
appears to me that the opposite parties are under the impression that the
applicant has moved this application under Section 11(5) of the Act. The
position is quite different after seeing the contents of the application in the
instant case. For this purpose first of all, I would like to refer that there
are three sub-sections to Section 11 of the Act in which there is a provision
when Chief Justice can appoint the Arbitrator. For this purpose, I would like to
refer Section 11(7)(11) of the Act which are as follows :--

     11. (7) A decision on matter entrusted by Sub-section (4) or Sub-section
(5) or Sub-section (6) to the Chief Justice or the person or institution
designated by him is final.

     (11) Where more than one request has been made under Sub-section (4) or
Sub-section (5) or Sub-section (6) to the Chief Justices of different High
Courts or their designates, the Chief Justice or his designate to whom the
request has been first made under the relevant sub-section shall alone be
competent to decide on the request."

   14. The provisions under Sub-sections (7) and (11) cited above make it amply
clear that the request to the Chief Justice can be made either under Sub-section
(4) or Sub-section (5) or Sub-section (6) to Section 11 of the Act; For this
purpose I cite all these subsections as follows :--

     "11(4). If the appointment procedure in Sub-section (3) applies and --

     (a) a party fails to appoint an arbitrator within the thirty days from, the
receipt of a request to do so from the other party; or

     (b) the two appointed arbitrators fail to agree on the third arbitrator
within thirty days from the date of their, appointment., the appointment shall
be made, upon request of a party, by the Chief Justice or any person or
institution designated by him.

     (5) Failing any agreement referred to in Sub-section (2), in an arbitration
with a sole arbitrator, if the parties fail to agree on the arbitrator within
thirty days from receipt of a request by one party from the other party to so
agree the appointment shall be made, upon request of a party, by the Chief
Justice or any person or institution designated by him.

     (6) Where, under an appointment procedure agreed upon by the parties,--

     (a) a party fails to act as required under that procedure; or

     (b) the parties, or the two appointed arbitrators, fail to reach an
agreement expected of them under that procedure; or

     (c) a person, including an institution, fails to perform any function
entrusted to him or sit under the procedure,

     a party may request the Chief Justice or any person or institution
designated by him to take the necessary measure, unless the agreement on the
appointment procedure provides other means for securing the appointment."

   15. Sub-section (4) of Section 11 of the Act applies when the appointment
procedure given under Sub-section (3) applies and either a party fails to
appoint an arbitrator within thirty days or the two appointed arbitrators fails
to agree on the third appointed arbitrator.

   16. Sub-section (5) of Section 11 of the Act applies when if the parties
fails to act in accordance with the arbitration clause in the agreement within
thirty days from receipt of a request by one party from the other party, the
appointment shall be made by the Chief Justice. Sub-section (6) of Section 11 of
the Act applies in three contingencies in a case wherein an appointment
procedure is already agreed upon by the parties. These three contingencies are
as follows :--

     (a) if a party fails to act as required under the procedure; or

     (b) the parties, or the two appointed arbitrators, fail to reach an
agreement expected of them under the procedure; or

     (c) a person, including an institution, fails to perform any function
entrusted to him or it under that procedure."

   17. In either of the aforesaid three contingencies a party may request the
Chief Justice to appoint an arbitrator.

   18. Now, I refer Clause 14 of the agreement cited above. This Clause does not
provide the procedure how the arbitrator shall be appointed. This Clause
Indicates that both the parties had agreed that in case of dispute, the Managing
Director of the Corporation shall be the sole arbitrator. When the agreement is
silent how a party shall proceed then the procedure as prescribed under the Act
should be followed. Here in the instant case the applicant sent a request to the
opposite party No. 1 on 5-1-2000 and specifically requested for the reference of
the dispute to the arbitrator. The opposite party No. 1 remained silent on the
reference of the dispute to the arbitrator. The applicant initially did not
demand any thing against Clause 14 of the agreement. In reply, the opposite
party No. 1 rejected the claim on 23-3-2000. In accordance with the arbitration
clause, the Managing Director of the Corporation was to act as Arbitrator. The
Managing Director did not act as Arbitrator before filing of this application on
3-10-2001. It appears to me that there was a reference for referring the matter
to the agreed arbitrator. The agreed arbitrator did not enter into the
reference. In these circumstances, it is only under Section 11 Sub-section (6)
that a party may make request to the Chief Justice for appointment of the
arbitrator.

   19. Both the learned counsel for the parties has referred a decision of the
Supreme Court in Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151 :
(2000 AIR SCW 3925). The learned counsel for the opposite parties has referred
this decision to show that the finding of the Supreme Court in which it has been
held that the appointment of the Arbitrator by the respondents is valid even
after expiry of thirty days from the date of the demand. The learned counsel for
the opposite parties has further referred the observations of the Supreme Court
in which it has been said that as to whether thirty days time for the purpose of
Sub-section (4) and Sub-section (5) is mandatory or not has not been decided.
The learned counsel for the applicant has also relied on this Judgment by saying
that it has been clearly held by the Supreme Court that the ratio of this
decision shall not be in support of the contentions of the opposite parties. For
this purpose the learned counsel for the applicant has referred the findings of
the Supreme Court in paras 19 and 20 of the judgment which are as follows :--

     "19. So far as cases falling under Section 11(6) are concerned-- such as
the one before us -- no time limit has been prescribed under the Act. Whereas a
period of thirty days has been prescribed under Section 11(4) and Section 11(5)
of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one
party demands the opposite party to appoint 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 arising 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.

     20. In the present case the respondent made the appointment before the
appellant filed the application under Section 11(6) though it was beyond 30 days
from the date of demand. In our view, the appointment of the arbitrator by the
respondent is valid and it cannot be said that the right was forfeited after
expiry of 30 days from the date of demand."

   20. In the Instant case as stated above the opposite parties have made
reference to the arbitrator long after filing of the application under Section
11(6) of the Act on 19-2-2002. In view of the decision of the Supreme Court
cited above, no doubt, there is no bar of 30 days for reference to the
arbitrator by one party from the date of the request of the other party; as held
by the Supreme Court but the right to appointment of the arbitrator is fortified
after filing of the application under Section 11(6) of the Act.

   21. The learned counsel for the applicant has referred a decision in Larsen
and Toubro Limited v. Konkan Railway Corporation Limited, 1999 (2) Arbi LR 354
(Bombay), the relevant portion of that decision is as follows :--

     "11. From the above discussion, it is clear that when a party applies to
the Chief Justice or the person designated by him under Sub-section (6) of
Section 11 of the Act for appointment of arbitrator/arbitrators on the failure
of the appointing authority to act as required under the agreed procedure, it is
the duty of the Chief Justice or the person designated by him to appoint
arbitrator/arbitrators himself having due regard to the considerations set out
in Sub-section (8) of Section 11 of the Act which, inter alia, contemplates
appointment of independent and impartial arbitrator. The power of the Chief
Justice or the person designated by him under Sub-section (6) of Section 11 of
the Act is to take the necessary measure himself, that is, to make the
appointment and not merely order the recalcitral party or the appointing
authority to act."

   22. In Delhi Development Authority v. Bumbrah Electrical Co., 2002 (Suppl)
Arbi LR 581 (Delhi), the respondent applied for appointment of arbitrator and
the petitioner had not sent any reply, the respondent applied for appointment of
arbitrator before the Chief Justice. Subsequently, the petitioner appointed the
sole arbitrator in accordance with agreement. The Delhi High Court relied on the
decision of the Supreme Court in Datar Switchgears Limited v. Tata Finance Ltd.,
(2000 AIR SCW 3925) (supra) and relying on the ratio of the judgment as
mentioned in para 19 of the judgment cited above held that right to make
appointment of the arbitrator shall not be forfeited if the appointment has been
made before moving an application under the Act by the other party. The same
view has also been followed in Nucon India (P) Limited v. Delhi Vidyut Board
(DESU), AIR 2001 Delhi 227. The relevant portion of that decision is as follows
:--

     "20. The conclusion thus derived from the findings in the above mentioned
Supreme Court case is that under Section 11(6) of the Act 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 arbitrator, the right to appoint is not
forfeited and continues, but such right of the opposite party ceases to exist or
forfeited if an application under Section 11 of the Act is moved for appointment
of an arbitrator. That is to say, that an appointment has to be made by the
opposite party of an arbitrator before filing of the application under Section
11(6) of the Act. If, the appointment is made after the filing of the
application under Section 11 of the Act then such an appointment is a nullity
and in fact no appointment in the eye of law. It is non-est."

   23. The learned counsel for the applicant has further relied on a decision of
Andhra Pradesh High Court in Rajeev Traders, Tarnaka v. General Manager, South
Central Railway, Secunderabad, 2003 (1) Arbi LR 624 (AP). In this case after
filing of the applications under Section 11 of the Act, the respondents
appointed the sole arbitrator. The Andhra Pradesh High Court held that the
respondents have forfeited their right to appoint arbitrator after filing
application under Section 11 of the Act and such appointment of arbitrator, made
by the respondents, is no appointment and is non-est in the eye of law. The same
view is taken in Sharma and Sons v. Engineer-in-Chief, Army Headquarters, New
Delhi, 2000(2) Arbi LR 31 (AP), wherein, it was held that the appointment made
by the appointing authority during the pendency of the application before the
High Court is no appointment in the eye of law and such appointment is non-est.

   24. In Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Limited,
2002 (1) Scale 465 : (AIR 2002 SC 778) it was held by the Supreme Court that
there is nothing in Section 11 that requires the party other than the party
making the request to be noticed. It does not contemplate a response from that
other party. It does not contemplate a decision by the Chief Justice or his
designate on any controversy that the other party may raise, even in regard to
its failure to appoint an arbitrator within the period of thirty days. That the
Chief Justice or his designate has to make the nomination of an arbitrator only
if the period of thirty days is over does not lead to the conclusion that the
decision to nominate is adjudicatory. In its request to the Chief Justice to
make the appointment the party would aver that this period has passed and
ordinarily, correspondence between the parties would be annexed to bear this
out. This is all that the Chief Justice or his designate has to see.

   25. In B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd. v. Konkan Railway
Corporation Ltd., 1998 (Suppl) Arbi LR 189, it was held that the provisions of
Sections 11(6) and (8) give wider jurisdiction to the Chief Justice than the
provisions of Section 8 of the repealed Arbitration Act. In the aforesaid case
the Court held that when the notice was given to the opposite contracting party
to appoint an Arbitrator in terms of the contract and if no action had been
taken, it must be deemed that he neglected to act upon the contract and the
Court gets jurisdiction and power to appoint an Arbitrator.

   26. In view of the aforesaid catena of decisions by various High Courts, and
Hon'ble Supreme Court, I am of the view that this contention of the opposite
party, that it is only the arbitrator named in the Arbitration Clause who can
act as arbitrator, is misconceived. This contention of the opposite party is
also mis-conceived. That the applicant can only file an application under
Section 11(5) of the Act and the application under Section 11(5) can be moved
only if, a party does not agree on a procedure for appointing the arbitrator. As
stated above the various provisions under Section 11 of the Act are such that a
party to the agreement can request the Chief Justice either in Sub-section (4),
Sub-section (5) and Sub-section (6) of Section 11 of the Act. This application
has been moved after a long gap after making request for appointment of the
arbitrator on 5-1-2000 and the matter was referred to the arbitration on
19-2-2002.

   27. The third contention of the opposite party is with regard to the
jurisdiction according to the opposite parties, in view of the provisions under
Section 11(12)(b) of the Act read with Section 2(1)(e), it is the Court at
Dehradun which has jurisdiction if it would have been the subject matter of the
suit. Therefore, the reference to the Chief Justice shall be construed as a
reference to the Chief Justice, Uttaranchal High Court within whose local limits
the principal Civil Court at Dehradun is situate.

   28. As stated above, Section 2(1)(e) defines the Court. According to this
definition clause the jurisdiction lies in the Court where the same subject-
matter had been the subject-matter of the suit. For this purpose, the
jurisdiction is to be decided in accordance with the provisions under Section 20
C.P.C. cited above. Admittedly, the agreement was executed between the
petitioner-firm and the opposite parties at Dehradun and the petitioner was
appointed as a Commissioning Agent to promote the sale of flush doors in various
divisions including Faizabad, Lucknow, Gorakhpur, Varanasi, Allahabad, Azamgarh,
Barellly and Kanpur etc. and the commission shall be payable on bill on monthly
basis. The petitioner performs the business within the jurisdiction of Allahabad
High Court. The appointment of the petitioner-firm as commissioning agent has
been made for Lucknow and Faizabad divisions and other divisions in Uttar
Pradesh. The claim of the petitioner for payment of commission has been refused
to the petitioner-firm at Lucknow. The petitioner carries on business with the
Head Office at Lucknow. The payments were to be made at Lucknow and the contract
was to be performed at Lucknow. All these facts are not denied. The contention
of the opposite parties is that since the agreement was executed at Dehradun, it
is the Court at Dehradun which has the jurisdiction.

   29. The agreement between the parties does not contain any jurisdiction
clause. There is no clause excluding the jurisdiction of any Court. In A.B.C.
Laminart Pvt. Limited v. A.P. Agencies, Salem, (1989) 2 SCC 163 : (AIR 1989 SC
1239), it has been held that the jurisdiction of the Court in the matter of
contract will depend on the sites of the contract and the cause of action
arising through connecting factors. Under Section 20 C.P.C. subject to the
limitation stated therefore, every suit shall be instituted in a Court within
the local limit of whose jurisdiction the cause of action wholly or in part
arises. In A.B.C. Laminart Pvt. Limited (supra) case, the Supreme Court referred
explanation III of Section 20 C.P.C. which has now been omitted and observed
that Explanation III has now been omitted but nevertheless it may serve as a
guide. It was held that in the matter of a contract there may arise causes of
action of various kinds. In a suit for damages for breach of contract the cause
of action consists of the making of the contract and of, its breach, so that the
suit may be filed either at the place where the contract was made or at the
place where It should have been performed and the breach occurred. Ordinarily,
acceptance of an offer and its intimation result in a contract and hence a suit
can be filed in a Court within whose jurisdiction the acceptance was
communicated. So long as the parties to a contract do not oust the jurisdiction
of all the Courts which would otherwise have jurisdiction to decide the cause of
action under the law. It cannot be said that the parties have by their contract
ousted the Jurisdiction of the Court.

   30. In Patel Roadways Limited, Bombay v. Prasad Trading Company, (1991) 4 SCC
270 : (AIR 1992 SC 1514), it was held that a suit against a Corporation could be
instituted either at the place of its sole or principal office or at any other
place where the cause of action arises. The relevant portion of the this
judgment is as follows :--

     "If the intention of the legislature was, as Is said on their behalf, that
a suit against a Corporation could be instituted either at the place of its sole
or principal office (whether or not the Corporation carries on business at that
place) or at any other place where the cause of action arises, the provisions of
Clauses (a), (b) and (c) together with the first part of the Explanation would
have completely achieved the purpose. Indeed the effect would have been wider.
The suit could have been instituted at the place of the principal office because
of the situation of such office (whether or not any actual business was carried
on there). Alternatively, a suit could have been instituted at the place where
the cause of action arose under Clause (c) (irrespective of whether the
Corporation had a subordinate office in such place or not). This was, therefore,
not the purpose of the Explanation. The Explanation is really an Explanation to
Clause (a). It is in the nature of a clarification on the scope of Clause (a)
viz. as to where the Corporation can be said to carry on business. This, it is
clarified, will be the place where the principal office is situated (whether or
not any business actually is carried on there) or the place where a business is
carried on giving rise to a cause of action (even though the principal office of
the Corporation is not located there) so long as there is a subordinate office
of the Corporation situated at such place. The linking together of the place
where the cause of action arises with the place where a subordinate office is
located clearly shows that the intention of the legislature was that, in the
cause of a Corporation, for the purposes of Clause (a), the location of the
subordinate office, within the local limits of which a cause of action arises,
is to be the relevant place for the filing of a suit and not the principal place
of business. If the intention was that the location of the sole or principal
office as well as the location of the subordinate office (within the limits of
which a cause of action arises) are to be deemed to be places where the
Corporation is deemed to be carrying on business, the disjunctive "or" will not
be there. Instead, the second part of the Explanation would have read "and, in
respect of any cause of action arising at any place where it has a subordinate
office, also at such place".

     13. As far as we can see the interpretation which we have placed on this
section does not create any practical or undue difficulties or disadvantage
either to the plaintiff or a defendant Corporation. It is true that normally,
under Clauses (a) to (c), the plaintiff has a choice of forum and cannot be
compelled to go to the place of residence or business of the Corporation and can
file a suit at a place where the cause of action arises. If a Corporation
desires to be protected from being dragged into litigation at some place merely
because a cause of action arises there it can save itself from such a situation
by an exclusion clause as has been done in the present case. The clear
intendment of the Explanation, however, is that, where the Corporation has a
subordinate office in the place where the cause of action arises, it cannot be
heard to say that it cannot be sued there because it does not carry on business
at that place. It would be a great hardship if, in spite of the Corporation
having a subordinate office at the place where the cause of action arises (with
which in all probability the plaintiff has had dealings), such plaintiff is to
be compelled to travel to the place where the Corporation has its principal
place. That place should be convenient to the plaintiff; and since the
Corporation has an office at such place, it will also be under no disadvantage.
Thus the Explanation provides an alternative locus for the Corporation's place
of business, not an additional one."

   31. Since in this case the part of cause of action has arisen within the
Jurisdiction of Lucknow Bench of Allahabad High Court therefore, the contention
of the opposite parties that the Chief Justice of Uttaranchal High Court has
jurisdiction has no force and it is rejected.

   32. The last contention of the opposite parties is that the designated
arbitrator has already given the award which is a decree as provided under
Section 36 of the Act. It has been further argued by the opposite parties that
the proceedings under Section 11 of the Act are administrative in nature and the
decree already passed by the arbitrator cannot be set aside. In my opinion, the
award given by the Managing Director is without jurisdiction. His right to
proceed ceases after moving of the application under Section 11 by the
petitioner. This view is supported by the decisions in Datar Switchgears Ltd. v.
Tata Finance Ltd. (2000 AIR SCW 3925) (supra) and Sharma and sons v. Engineer-
in-Chief, Army Headquarters, New Delhi, (2000 (2) Arbi LR 31) (supra). The award
given after moving of the application under Section 11 of the Act is non-est in
the eye of law.

   33. In Food Corporation of India v. Indian Council of Arbitration, (2003) 6
SCC 564 : (AIR 2003 SC 3011) relying on the ratio of the decision in Konkan Rly.
Corporation Limited v. Mehul Construction Co., (2000) 7 SCC 201 : (AIR 2000 SC
2821), it was held that when the matter comes before the Chief Justice or his
nominee under Section 11 it would not be appropriate for them to entertain any
contentious issues between the parties and decide the same and that the decision
of the Chief Justice or his nominee is merely an administrative order, the
nature of the function performed by them being essentially to aid the
constitution of an Arbitral Tribunal immediately, just by appointing an
arbitrator without wasting any time.

   34. Therefore, the application under Section 11(6) of the Act is allowed. I
appoint Justice Kamleshwar Nath (Retired) as an arbitrator. He will get Rs.
3,000/- (Rs. Three thousand only) per day as fee along with other expenses to be
borne by both the parties half and half. If, he conducts the meeting outside
Lucknow at the request of either party, the daily fees and other expenses shall
be borne half and half by both the parties. The applicant is directed to file
the claim before the arbitrator within a period of three weeks. Application
allowed.