The court held that the department had not complied with the procedure contemplated under Section 8 of the Arbitration Act. The court further held that the court below had erred in entertaining the application filed by the department without examining whether the department had complied with the requirement of Section 8 of the Act.

MOTILAL B. NAIK, J.

( 1 ) THESE two revision petitions can be disposed of by a common order, as the questions raised therein are one and the same.

( 2 ) C. R. P. No. 2010 OF 1993 arises out of the judgment dated 31. 3. 93 passed in O. P. No. 27 of 1992 on the file of the Subordinate Judge, Karimnagar and C. R. P. No. 9 of 1994 arises out of the judgment dated 18. 11. 1993 passed in O. P. No. 69 of 1993 on the file of the same court.

( 3 ) PETITIONER is a contractor. He was entrusted with the work relating to "each work excavation and forming embankment of DBM-31 from K. M. 5. 00 to K. M. 7. 00 of Kakatiya canal of Sri Ramsagar Project" vide agreement No. 1/1982-93, dated 24. 4. 1982 by the Government. According to one of the clauses in the agreement, the petitioner has to complete the work within twelve months from the date of handing over the site, which was handed over on 5. 3. 1982. It is also one of the clauses that if any dispute arises between the parties in respect of execution of work, the same may be referred to arbitrators named in the said agreement. According to clause (3) of the agreement, a panel of arbitrators is named as per the value of the dispute between the parties. If the claim is upto Rs. 20,000. 00, the Superintending Engineer I. and P. D. Godavari Valley Circle, Jagtial; the claim is of Rs. 20,000. 00 and above upto Rs. 1 lakh the Chief Engineer, Investigation, Irrigation and Power (Convenor); Superintending Engineer, Irrigation Circle Hyderabad and Director of Accounts, Srisailam Project and the claim is of Rs. 1 lakh and above, the Chief Engineer, Investigation, Irrigation and Power (Convenor) : Sri P. M. Mohan Rao Deputy Secretary to Government, Finance and Planning Department and Director of Accounts, Srisailam Project, are named as arbitrators to settle the dispute, if any, arises.

( 4 ) WHILE so, certain disputes arose between the Government and the contractor in respect of execution of work and the contractor preferred to go for arbitrator as per the arbitration clauses in the agreement. A controversy arose between the parties with regard to interpretation of clause (3) of the agreement and as per that clause, the dispute has to be referred panel or arbitrators consisting of Chief Engineer, Investigation, Irrigation and Power (Convenor); Shri P. M. Mohan Rao, Deputy Secretary to Government, Finance and Planning Department and the Director of Accounts, Srisailam Project on account of the fact that in value of claim is more than Rs. 1 lakh. Since one of the arbitrators viz. , Sri P. M. Mohan Rao, Deputy Secretary to Government, Finance and Planning Department had retired from service, the Cheif Engineer, Investigation, Irrigation and Power (Convenor), who is named as one of the arbitrators, requested the Government to fill up the vacancy caused due to retirement of Sri Mohan Rao, to conduct the arbitration proceedings. The Government Preferred a petition under Sections 8 to 12 of the Indian Arbitration Act - O. P. No. 27 of 1992 - before the Sub-Court, Karimnagar seeking filling up of the vacancy caused due to retirement of the said Mohan Rao. While so, the contractor, realising that the arbitrators are not entering into reference and settle the dispute, issued a notice to the department as contemplated, to agree with the names suggested for appointing sole arbitrator, The department chose to reply negativing the request while intimating that the department had already moved the civil court for filling up the vacancy caused due to retirement of Mohan Rao. In the absence of the department not co-operating, the contractor filed O. P. No. 69/93 on the file of the Sub-Judge, Karimnagar for appointment of sole arbitrator.

( 5 ) THE learned Subordinate Judge, interpreting clause (3) of the agreement, came to the conclusion that as Sri Mohan Rao, Deputy Secretary to Government, Finance and Planning Department, has retired from service and his where about were not known, his vacancy shall be filled up by a

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