Judgment :-

Tarun Chatterjee, J.

1. On or about 14th of December, 1983, a tender was floated by the U.P. Cooperative Federation Ltd. (hereinafter referred to as "the Federation") for construction of 4000 Metric Ton cold storage at Vashi, New Mumbai. The tender document mentioned the time of completion as twelve months. M/s Three Circles -the respondent herein, submitted a tender to get the contract. In the year 1984, a contract was executed with M/s Three Circles. Clause 10[f] of the Contract Agreement reads as follows:

"It is further agreed that all disputes or differences arising out of the provisions as contained in the preceding paragraphs, [a] to [f] of Clause 10 shall be referred to the Managing Director of Employer, whose decision shall be final, conclusive and binding and shall not be referred to arbitration or to any court of law."

Clause 11 of the contract reads as follows:

"All disputes and differences between the parties regarding the construction or interpretation of any of the terms and conditions herein contained or conditions of contract being the integral part of this contract [except those which are subject matter of the decision of Managing Director of the Employer or/are expressly forbidden and excluded from being referred to arbitrator under any clause by the contract documents and such decision shall be final, conclusive and binding upon the parties hereto] or determination of and liability or any disputes of whatever nature whether during the course of progress or work or thereafter or after recession of the contract, shall be referred to the arbitration as provided in the condition No.51 of the Heading "scope and performance" in the Tender documents and shall be deemed to be reference within the relevant provisions of the Indian Arbitration Act, 1940, and or any statutory modification of enactment there under."

Clause 51 of the General Conditions of contract provided for arbitration. This clause reads as follows:

"51. The contractor will become nominal member of the Federation and will abide by the rules and regulation laid down from time to time. Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other questions, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, order or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the Registrar Cooperative Societies Uttar Pradesh and if the Registrar is unable to or unwilling to act, to the sole arbitration of some other person appointed by the Managing Director, willing to act as such arbitrator. There will be no objection if the arbitrator so appointed is an employee of Federation and that he had to deal with the matters to which the contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Managing Director as aforesaid at the time of such transfer vacation of office or liability to act shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Managing Director as aforesaid should act as arbitrator and if for any reason, that is not possible the matter is not to be referred to arbitration at all. Cases w