JUDGMENT

P. N. BHAGWATI,J :— This appeal, by special leave, is directed against a judgement of the High Court of Delhi setting aside an award madeby an arbitrator on the ground thathe was not a validly appointed arbitrator and hence had no jurisdiction to arbitrate and make an award. The facts giving rise to the appeal are few and may be briefly stated as follows.

2. The respondents - a partnership firm - entered into a contract with the appellant for the supply of 30,000 tons of East German sugar at the rate and on the terms and conditions set out in a letter dated 3rd July, 1954 addressed by the Secretary to the Government of India, in the Ministry of Food and Agriculture to the respondents. The Ministry of Food and Agriculture was concerned with the subject-matter of this contract and hence clause (9) provided that "superintendence and inspection of quality, weight and packing of sugar shall be made by a reputable superintending agency to be approved by the Government of India, in the Ministry of Food and Agriculture" and clause (10) stipulated for delivery to be made to "authorities or parties nominated by the Ministry of Food and Agriculture." There was provision for arbitration made in clause (17) and that clause also referred to the Ministry of Food and Agriculture. It was in the following terms:

"ARBITRATION : All questions, disputes or differences whatsoever which may at any time arise between the parties to the agreement touching the agreement or the subject-matter thereof, arising out of or in relation thereto and whether as to construction or otherwise shall be referred to a single arbitrator for decision. Such a single arbitrator shall be nominated by the Secretary to the Government of India in the Ministryof Food and Agriculturein his absolute discretion and the decision of such arbitrator shall be final and binding upon the parties. The reference to the arbitrator shall be governed by the provisions of the Indian Arbitration Act, 1940 as amended from time to time and the rules made thereunder.:"

It appears that disputes arose between the appellant and the respondents in regard to the fulfilment of this contract. The appellant made a claim for payment of Rs. 3,29,107-8-0 against the respondents by a letter dated 11th August, 1956 and threatened to recover it from the security furnished by the respondents through their bankers. The respondents disputed the claim of the appellant and by letter dated 23rd August, 1956 pointed out that it was not competent to the appellant to recover the amount of the demand from the bankers of the respondents without first establishing its claim by arbitration and suggested that it would be better still, it a special case for the opinion of the Court were stated under Section 90 of Code of Civil Procedure. The respondents also claimed to recover from the appellant under the contract diverse amounts aggregating to Rs.6,05,689. There was no response to this letter from the appellant and no steps were taken by the appellant to have the disputes referred to an arbitrator nominated by the Secretary in the Ministry of Food and Agriculture as provided in clause (17) of the Contract. In the meantime, as a result of an order made by the President under clause (3) of Article 77 of the Constitution, the Ministry of Food and Agriculture was bifurcated into two separate Ministries, one of Food and the other of Agriculture, with effect from 19th October, 1956 and sugar, the subject-matter of the contract, came to be allotted to the Ministry of Food. The respondents, by their letter dated 9th November, 1956, pointed out to the Secretary, Ministry of Food that by reason of this bifurcation, the Ministry of Food and Agriculture has ceased to exist and there was no Secretary in the Ministry of Food and Agriculture and the arbitration agreement contained in clause (17) of the contract had, therefore, become a deadletter and was no longer enforceable and once again called upon the appellant to agree in st