Paragraph numbers below are the court’s original numbering, recovered from the source text.
7. The observations made by their Lordships are very clear and Their Lordships negatived the contention that 30 days should not be read in sub- section ( 6) of Section 11 of the Act if the opposite party has not made an B appointment within 30 days of demand, the right to make appointment is not forfeited but continues. Their Lordships in paragraph 20 have also very categorically held that in the present case the respondent made the –". appointment before the appellant filed the app 1 lication under section 11 ( 6), though it was beyond 30 days from the date of demand, the appointment of c the arbitrator by the respondent was valid and it cannot be said that the right was forfeited after expiry of 30 days from the date of demand. Their Lordships were also very clear in their mind in paragraph 21 and observed, "we need not decide whether for purpose of sub-sections (4) and (5) of Section 11, which expressly prescribe 30 days, the period of 30 days is mandatory or not. " We are only concerned with reading of 30 days within sub-section (6) of D Section 11. So far as the period of 30 days with regard to Section 11(6) is concerned, there is no manner of doubt that their Lordships had not invoked -i- . 30 days as mandatory period under Section 11(6) and beyond that it cannot .I. be invoked by the appointing authority. Therefore, it is totally misnomer to read 30 days in Section 11 ( 6) of the Act, though Shri Sorabjee, learned senior counsel appearing for the appellant tried to emphasize that the decision in Datar has been affirmed by a three Judge Bench and therefore, 30 days should be read in Section 11(6) of the Act is also not correct.
8. In the case of Punj Lloyd Ltd. (Supra), Their Lordships only quoted paragraph 19 in part and not in full. Full paragraph 19 of the judgment in F Datar (supra) has been reproduced above. In fact subsequent observation of their Lordships, "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", this portion of order was not reproduced. Therefore, it is not a case that the decision given by two Judge Bench in Datar (supra) has been reaffirmed and G this is binding on us. We regret to say this is not correct. In the case of Punj Llyod Ltd Their Lordships only set aside the order and remitted the matter back to the High Court for appointment of arbitrator by the Chief Justice. But the ratio laid down in Datar (supra) holds good and it is not negatived, the period of 30 days cannot be read in Section 11(6) of the Act. The relevant H portion of Punj Lloyd's case (supra) reads as under:- …, t _r ACE PIPELINE CONTRACTS PRl".ATE LTD. v. BHARAT PETROLEUM CORPORATION LTD. [A. K. MATHUR, J.J787 "Having heard the learned counsel for the parties, we are satisfied A that the appeal deserves to be allowed. The learned counsel for the appellant has placed reliance on the law laid down by this Court in the case of Datar Switchgears Ltd v. Tata Finance Ltd. (SCC p.158, para 19) wherein this Court has held as under : "So far as Section 11 ( 6) is concerned, if one party demands the B 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 C under Section 11(6), ifthe 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."
9. The aforesaid quotation would clearly reveal that the crucial words in paragraph 5 were not quoted in the aforesaid case which has been reproduced above.
10. Our attention was also invited to a decision of this Court in the case E of Union of India v. Popular Construction Co., [2001) 8 SCC 470, This was in relation to Section 34(3) of the Act. This is with regard to the period of limitation for moving the Court under Section 34 of the Act for setting aside the award i.e. the period of limitation was prescribed in Section 34 itself. Therefore, Section 5 of the Limitation Act was not made applicable. This is not the case before us in the present controversy.
11. Our attention was also invited to a decision of this Court in the case of The State of Uttar Pradesh & Ors. v. Babu Ram Upadhya, [f961] 2 SCR 679, In that case, their Lordships have dealt with the interpretation of the statute and they have referred to "Statute Law" by Craies and "The Interpretation of Statutes" by Maxwell. Their Lordships have quoted a passage G from Maxwell which reads as under: "On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or H [2007) 4 S.C.R. ·'r- injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or, in other words, as directory only. The neglect of them ·may be penal, indeed, but it does not affect the validity of the act done in disregard of them." This observation, so far as this case is concerned, has no relevance as we have already mentioned above that the period of 30 days cannot be read in Sub-secti<~n (6) of Section 11 of the Act as the statute does not pennit it. c Therefore, this case does not help the case of the appellant in any manner.
12. Our attention was invited to a Full Bench decision of the High Court of Delhi J. V. v. Union of India & Ors., decided on 31.8.2006 and a decision of the Calcutta High Court in Great Eastern Shipping Co.Ltd (supra). Both these decisions are in total ignorance of the law laid down by this Court in D Datar (supra). Therefore, they cannot hold good. We again reemphasize that in paragraphs 19, 20 & 21 Their Lordships have clearly negatived the submission ….. that period of 30 days cannot be read in sub-section (6) of Section 11 of the Act. Our attention was also invited to a decision of this Court in Shin Satellite Public Co.Ltd v. Jain Studios Ltd, [2006] 2 SCC 628. This decision was given by Hon'ble C.K. Thakker, J. in chambers. There also, no such view has been taken by learned Judge that the period of 30 days should be read in sub-section (6) of Section 11 of the 'Acl. Our attention was also invited to a decision of this Court in BSNL & Ors. v. Subash Chandi-a Kanchan & Anr., [2006] 8 sec 279. There also, the· question was whether the appellant was consenting party to appointment of arbitrator or not. Appointment of arbitrator F was made by the High Court with the consent of parties which was subsequently sought to be revoked on the ground that no instruction in that ….. behalf was given. But that contention was negatived by the Court and there also, the question of appointnient of arbitrator within the period of 30 days was not decided. In this connection a reference may also be made to a decision of this Court in the case· of-Union of India & Anr. v. MP.Gupta, G [2004] 10 SCC 504. In that case, arbitrator was appointed by the High Court directly a·Judge of the High Court because no arbi_trator was appointed by the Railway Authorities as per Clause 64 of their agreement. Their Lordships after considering the matter observed that the appointment of arbitrator by the High Court under Section 20 of the Arbitration Act, 1940 cannot be H upheld in view of Clause 64 of the agreement because. as per Clause 64 of ACE PIPEUNE CONTRACTS PRIVATE LTD. v. BHARAT PETROLEUM CORPORATION LTD. [A. K. MATHUR, J.J789 the agreement, two arbitrators have to be appointed who should be gazetted A –I· railway officers. Therefore, as per the terms of the agreement their Lordships held that the appointment of arbitrator by the High Court was not correct and set aside the order and directed the Railways to appoint arbitrators within 30 days. Similar issue came up before this Court in Union of India & Anr. v. Ml·. s. V.S. Engineering Pvt. Ltd, [2006] 12 SCALE 144. This Court after considering B the decision in Union of India & Anr. v. MP.Gupta, [2004] 10 SCC 504, and Datar Switchgears Ltd (supra) directed that as per Clauses 63 & 64 of the General Clauses of the Contract, only two gazetted officers of the railways have to be appointed as arbitrators. However, it was observed that failure on the part of the Department to take a decision for appointment of arbitrators would not defeat the right of the party to approach the High Court for c appointment of arbitrator. Direction was given to the Department for appointment of arbitrators within 30 days.
13. It may also not be out of place to mention that we are aware of the Departmental lethargy in making appointment of arbitrators in terms of the · arbitration clause. Therefore, mandamus can be issued by the Courts in D exercise of powers under Section 11 ( 6) of the Act but the demand should be 'f in the event of failure by the authorities to appoint arbitrators within the ,.J reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the E interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms of arbitration clause & appoint the arbitratonarbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name.
14. In the present case, in fact the appellant's demand was to get some retired Judge of the Supreme Court to be appointed as arbitrator on the ground that if any person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. Once a party has entered into an agreement with eyes wide open it cannot wriggle out of the situation that if any person of the respondent- BPCL is appointed as arbitrator he will not be impartial or objective. However, if the appellant feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the /r party to make an application under Section 34 of the Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact. H
15. In view of our above discussion, we find no reason to interfere with the order passed by the learned Single Judge of the High Court of'Delhi in Arbitration Petition No.181 of2005. The arbitrator has already been appointed. He should proceed in the matter and decide the dispute expeditiously. Consequently, the appeal is dismissed with no order as to costs. B B.B.B. Appeal dismissed. ………