JUDGMENT :

M.R. SHAH, J.

1. Being aggrieved and dissatisfied with the impugned judgment and order dated 19.06.2007 passed by the High Court of Uttaranchal at Nainital passed in A.O. No. 1489 of 2001 by which the High Court has allowed the said appeal and has set aside the award dated 08.01.1998 made by the learned Arbitrator and the order dated 20.04.2001 passed by the learned Civil Judge (Senior Division), Roorkee making the said award Rule of the Court, original claimant, M/s. Laxmi Continental Construction has preferred the present appeal.

2. The facts leading to the present appeal in nutshell are as under:-

2.1 A contract was entered into between the appellant and the respondents regarding the earthwork including lining of V.U.G.C. from KM 10 to KM 11 vide agreement dated 06.02.1988. During the contract work, various disputes and differences arose between the parties. All disputes and differences between the parties were required to be resolved through arbitration in pursuance of clause 52 of the agreement. Clause 52 of the agreement reads as under:-

“52. ARBITRATION:

All disputes or differences in respect of which the decision is not final and conclusive, shall be referred for arbitration to a sole arbitrator appointed as follows:

Within thirty days of receipt of notice from the contractor of his intention to refer the dispute to arbitration the Chief Engineer shall send to the contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The contractor shall within fifteen days of receipt of this list select and communicate to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select an officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do so the contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall then be the sole arbitrator.

The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The decision of the sole arbitrator shall be final and binding on the parties thereto. The arbitrator shall determine the amount of costs of arbitration to be awarded to either parties.

Performance under the contract shall continue during arbitration proceedings and payments due to the contractor by the owner shall not be withheld, unless they are the subject matter of the arbitration proceedings.

All awards shall be in writing and in case of awards amount to Rs.1.00 Lakh and above, such awards shall state reasons for the amounts awarded.

Neither party is entitled to bring a claim to arbitration if arbitrator has not been appointed before the expiration of thirty days after defect liability period.”

2.2 Arbitrator was required to be appointed as provided under clause 52 of the agreement. The Chief Engineer appointed one Shri S.S. Manocha, who at the relevant time was also a Chief Engineer, as an Arbitrator vide order dated 31.10.1992. The Sole Arbitrator entered into the Reference on 19.11.1992 and issued notice to the parties directing them to submit the relevant papers and documents etc. The claimant filed its claim giving all details. The respondents also filed their objections to the said claim of the claimant. The respondents, thus, participated in the proceedings before the Sole Arbitrator. On various dates, the arbitration proceedings were adjourned at the instance of the respondents. During the period, the learned Arbitrat