Judgement

VAIDIALINGAM, J.:- Civil Miscellaneous Petition No. 5801 of 1971, by the first respondent is an application under Sections 17 and 29 of the Arbitration Act, 1940 (hereinafter to be referred as the Act) to pass a judgment and decree according to the Award of the Arbitrator dated August 24, 1971 and to grant interest from the date of the decree, on the amount found payable by the appellant.

2. Civil Miscellaneous petition No. 5802 of 1971, by the State of Madhya Pradesh, the appellant in the Civil Appeal, is an application requesting this Court to decline to take the Award dated August 24, 1971 on its file. Without prejudice to the above prayer, there is a further request made to this Court to set aside or modify the award in certain respects.

3. The relevant facts leading up to the filing of the two applications may be adverted to: The erstwhile State of Madhya Bharat had entered into a contract with M/s. Saith and Skelton (P) Ltd., the first respondent, for the supply and erection of penstocks for Gandhi Sagar Power Station, Chambal Hydel Works. The acceptance of the contract was by tender No. Project/SR/2522-F/Z/25 dated June 5, 1956. Under the said contract, the first respondent firm was required to supply material for the five penstocks of F. O. R. Jhalwar Road, Railway Station at Rupees 1,570/- per M. Ton within the time stipulated, the total quantity being 463.939 M. Tons. The material was to be transported from Jhalwar Road Railway Station to the works site by the consignee, the Madhya Bharat Government, and the work of erection was to commence on the receipt at the work site of running length of 96 ft. for any of the penstocks. Clause 21 of the contract provided for any question or dispute, arising under the conditions of the contract or in connection therewith, to be referred to the arbitrators, one to be nominated by the State and the other by the firm. The said clause also provided for the matter being referred to an Umpire to be appointed by the arbitrators in case of disagreement between them. That clause also referred to certain other matters relating to arbitration proceedings.

4. Disputes arose between the appellant and the respondent firm with reference to the performance of the contract. The firm intimated the appellant on December 31, 1959 nominating one Shri T. R. Sharma, as an arbitrator under Clause 21 of the contract and also called upon the appellant, to nominate an arbitrator. The Directorate General of Supplies and Disposals, who were acting as the agent of the Madhya Bharat Government, nominated one Shri G. S. Gaitonde, as an arbitrator on behalf of the appellant. But the said arbitrator resigned his appointment and in consequence on April 26, 1960 on Shri R. R. Desai, was nominated as an arbitrator on behalf of the appellant. This nomination was also by the Directorate General of Supplies and Disposals. On September 6, 1960, the two arbitrators appointed one Sri R. C. Soni, as an Umpire. The two arbitrators disagreed in their views resulting in the matter being referred to the Umpire on October 20, 1961. According to the appellant, the appointment of Shri Gaitonde in the first instance and of Shri R. R. Desai, later, as an arbitrator, by the Directorate General of Supplies and Disposals was without any authority from the appellant. Later on, the Directorate General of Supplies and Disposals again reappointed Shri R. R. Desai as an arbitrator on behalf of the appellant on January 4, 1961.

5. According to the appellant the appointment of Shri R. C. Soni, as Umpire on September 6, 1960 was not valid. Accordingly, the appellant filed in the Court of the Additional District Judge, Mandsaur, Civil Miscellaneous Case No. 16 of 1962 under Section 5 of the Act for setting aside the nominations as arbitrators of Shri T. R. Sharma and Shri R. R. Desai, as well as the appointment by them of Shri R. C. Soni, as the Umpire. By order dated October 19, 1963, the Additional District Judge, Mandsaur held that the