JUDGMENT

Leave granted.

2. This appeal arises from the judgment of the Division Bench of Madras High Court in O.S.A. No. 281 / 92 dated January 5, 1993 (reported in AIR 1993 Madras 265).

3. The appellants contract was terminated by the respondent and in consequence thereof, by notices dated July 23, 1991 and August 21, 1991, the appellants exercising the option under clause 17 of General Condition of Contract, called upon the Engineer in Chief to appoint sole Arbitrator, in terms of the contract, to adjudicate the dispute that had. arisen between them. Since no action was taken by the respondents, the appellants filed a suit on March 4, 1992 under S. 20 of the Arbitration Act, 1940 for short the Act, requesting the Court to appoint an arbitrator. Learned single Judge of the High Court by his judgment dated Sept. 23, 1992 appointed Justice M. A. Sattar Syeed, a retired Judge of the High Court as Sole Arbitrator. On appeal, a Division Bench of that High Court agreed with the single Judge that despite the issue of notice calling upon the respondent to appoint the Arbitrator in terms of the contract, no action was taken by the respondent. Its suggestion that the respondent could agree for appointment of anyone of the five arbitrators named in the list given by the appellant did not find favour with the respondent. Yet, the Division Bench directed the respondent to appoint an arbitrator within 15 days from that date and declared that in case the respondent failed to do so, the arbitrator appointed by the single Judge would be deemed, to have been appointed under S. 20. The appellant, feeling aggrieved against the judgment of the Division Bench, has filed the appeal.

4. Sri K. Parasaran, learned senior counsel for the appellant contended that once the appellant had issued notice to the respondent calling upon him to appoint an arbitrator in terms of the contract, the failure to do so had given right to the appellant to invoke the jurisdiction of the civil court under S. 20(4) of the Act and that Court got jurisdiction to appoint the Arbitrator of its choice. When the learned single Judge had exercised its jurisdiction under S. 20(4) of the Act and appointed the arbitrator, the Division Bench committed a manifest error of law in interfering with that appointment. Sri A. S. Nambiar, the learned senior counsel for the respondent, sought to support the Division Bench judgment, relying upon the judgment of this Court in Union of India v. Prafulla Kumar Sangal, (1979) 3 SCC 631, wherein this Court had observed that before appointing an arbitrator by the Court itself "it is desirable that the Court should consider the feasibility of appointing an arbitrator according to the terms of the contract" and the issuance of the notice giving 15 days time as contemplated under S. 8(a) of the Act did not arise on the facts in the present case. Therefore, his contention was that though the appellant had not appointed the arbitrator before the expiry of 15 days notice or before the matter was decided by the Division Bench, the respondent who had given the option to the appellant having failed to agree for appointment of anyone of the five named arbitrators, cannot question the option given by the Division Bench to the appellant to appoint an arbitrator in terms of the contract.

5. We find no force in the contentions of Sri Nambiar. This Court interpreting S. 20(4) of the Act, has, in Prafulla Kumars case (AIR 1979 SC 1457) itself, specifically laid down that sub-s. (4) requires "that the Court shall make an order of reference to the arbitrator appointed by the parties under the agreement or otherwise if such arbitrator, had not been appointed when the parties cannot agree to appoint an arbitrator, the Court may proceed to appoint an arbitrator by itself. In that case, the parties agreed before this Court, expressing their desire that the President should be asked to appoint an arbitrator as contemplated under Clause 29 within two months from the date of t