JUDGMENT :

1. In this petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, two questions arise for consideration. Firstly, as to whether the Petitioner is entitled to seek appointment of Arbitrator by invoking an Arbitration clause contained in an agreement executed between the parties and if so whether the Arbitration Clause is hit by Section 12(5) read with the Seventh Schedule to the said Act. Secondly, whether the Respondent forfeited its right to appoint Arbitrator, having failed to appoint one after expiry of the period specified in the notice invoking Arbitration issued by the Petitioner and upon the Petitioner filing the present petition before this Court.

2. Before discussing the position of law, in order to answer the aforesaid questions, in the light of the judgments brought to the notice of this Court, it would be appropriate to briefly state the facts, leading up to filing of the present petition.

3. The Petitioner is a company engaged in the business of construction and the Respondent is the Bhiwandi Nizampur City Municipal Corporation. The Petitioner was a successful bidder in a tender floated by the Respondent – Corporation for construction of Dwelling Units for Economically Weaker Sections under the Pradhan Mantri Awas Yojana at Bhiwandi. The Petitioner tendered a security deposit, in compliance with the tender document and work order was issued. It appears that the execution of the construction project was delayed due to various issues. In this backdrop the parties exchanged correspondence, in order to find a solution and in the process the parties blamed each other for the delay.

4. On 08th June, 2021, the Commissioner of the Respondent – Corporation issued a show cause notice to the Petitioner, alleging that the project was delayed due to the Petitioner and despite the Respondent – Corporation being ready to consider an extension of 12 months in the backdrop of the Covid-19 pandemic, it was found that the Petitioner was unnecessarily raking up issues, resulting in delay in execution of the project. The notice specifically called upon the Petitioner to submit explanation within seven days, failing which appropriate action would be taken in the matter.

5. On 14th June, 2021, the Petitioner sent its response to the aforesaid notice, stating the reasons why the execution of the project was delayed. It was stated that the show cause notice was without any justification, particularly when the Engineer-in-charge of the project had not taken any steps against the Petitioner.

6. Since the show cause notice issued by the Commissioner threatened to invoke Clause 3(2) of the Contract against the Petitioner, it was constrained to file an application under Section 9 of the aforesaid Act, before the District Court at Thane. Although initially the aforesaid Court restrained the respondent from invoking of Bank Guarantee, by order dated 09th September, 2021, the application was dismissed. The Petitioner has filed an Appeal against the same under Section 37 of the said Act.

7. In the meanwhile, on 30th July, 2021, the Petitioner issued notice to the Respondent – Corporation stating its grievances, thereby raising disputes and it invoked the Arbitration Clause of the Tender Document read with Work Order and the Agreement executed between the parties. The Petitioner proposed the name of a former Chief Justice of this Court as a sole Arbitrator for resolution of disputes between the parties.

8. On 11th August, 2021, the Respondent – Corporation sent its reply through Advocate to the invocation notice of the Petitioner. The Respondent – Corporation denied the claims made in the said notice and specifically stated that the Petitioner, by proposing the name of a sole Arbitrator, was seeking to deviate from procedure agreed between the parties for appointment of an Arbitral Tribunal. It is significant that the Arbitration Clause in the present case specified that the Petitioner would appoint its nominee on the