The court has the authority to appoint a new arbitrator in place of the named arbitrator in the arbitration clause if the arbitrator neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy.

HARI LAL AGRAWAL, J.

1. This application under Sec.115 of the Civil P. C. arising out of an order passed under Section 8 of the Arbitration Act (briefly the Act) by the court below on an application filed by opposite party No. 1. has been referred to the Division Bench by a learned single Judge as some important points of law are involved in this case. The main question of law is as to whether the court exercising powers under Section 8 of the Act could appoint a new arbitrator in place of the named arbitrator in the arbitration clause of the agreement between the parties.

2. The relevant facts are these: According to the case of opposite party No. 1 (being the managing partner of the firm of the petitioner), the petitioner had entered into a contract with M/s. Heavy Engineering Corporation for erection of a steel structure work of about 950 metric tonnes and machinery repairing, and other equipments, for boiler house and Gas producer plant of bio-proximately 1800 metric tonnes. This job was entrusted to opposite party No. 1 under a work order dated 4-2-1971 containing an arbitration clause to the effect that in case of any, dispute between the parties i.e. the petitioner, and opposite party No. 1, it will be decided through arbitration Which will be binding on both the parties and Sri. Manohar Singh Sahay will be the sole arbitrator.

The Work Order was executed by opposite party No. 1 in accordance with the terms of the agreement which was relating to 6000.00 tonnes Hydrolic press in E. O. T. cranes and also some extra work Opposite Party No. 1 is thus said to have carried the work for over Rs. 4,00,000.00 (Four Lacs). The petitioner, however, did not settle the claim and accordingly the opposite party No. 1 requested the petitioner on 21-9-1974 to refer the matter to opposite party No. 2 for arbitration.

3. Having received no reply, opposite party No. 1 requested the arbitrator (opposite party No. 2) to enter upon the reference. Opposite party No. 2, however, did not enter upon the reference for a pretty long time so much so that by a letter dated 24-7-1976 (sic) (annexure-4) addressed to opposite party No. 1, it was stated that :

"We do not agree that the matters sought to be referred by you are now arbitrable."

In the circumstance mentioned above, opposite party No. 1 sent a notice on. 16-7-1975 to the petitioner informing him that as the named arbitrator had neglected to arbitrate in the matter, he would appoint Sri D.N. Chatterjee Advocate as the arbitrator in his place requesting him to concur with the said appointment. On receipt of this notice, opposite party No. 2, by his setter dated 28-7-1975, however informed opposite party No. 1 that he would enter into the reference. Notwithstanding the said attitude of the other side, opposite party No. 1 made an application in the court below as mentioned above on the ground the named arbitrator having neglected to enter upon the reference for such a long time rendered himself unfit to act as the arbitrator and that opposite party No. 1 had also lost his confidence in him on account of his being the managing partner of the debtor firm.

4. In the show cause filed by the petitioner, inter alia, he took the stand that the sole arbitrator having already entered upon the reference on 28-7-1975 asking both the parties to submit their written statements or counter-claims, the application was not maintain able inasmuch as opposite party No. 1 in spite of submitting to the arbitrator, has filed this application with false and fictitious grounds.

5. The court below, on taking into consideration all the facts and circumstances, mentioned above, and the series of letters addressed by opposite party No. 1 to the arbitrator and his replies, came to the conclusion that "the arbitrator should have entered upon the reference within one month of the receipt of the letter dated 10-1-1975 (Ext.A). But, admittedly he did not enter into the reference and, for the first time, sent a letter d