Judgment

Special leave is granted.

The facts necessary to decide this Civil Appeal are that an incentive scheme to patronize cottage industry of carpet weaving was formulated by the State of Jammu and Kashmir. Applications on behalf of the persons who wanted to take advantage of the scheme were invited up to 16th August, 1980. The respondent was one of the applicants. An agreement between the parties was arrived at on 24th September, 1980. One of the clauses of the agreement, namely, clause (12) was with regard to reference of any dispute, arising out of the agreement, being made to the arbitration of the Managing Director of Jammu and Kashmir Handicrafts Corporation. An application was made by the respondent under Section 20 of the Jammu and Kashmir Arbitration Act for appointment of an Arbitrator on the ground that a dispute under the agreement has arisen between the parties. By an order dated 25th July, 1986 a retired District Judge was appointed as an Arbitrator. He entered into reference on 8th August, 1986. Notice was issued to the appellant which put in appearance and filed objection. Subsequently, however, there was default in appearance on behalf of the appellant and an ex p