A court cannot appoint an arbitrator in place of the one nominated by a party to a contract, on the ground of apprehended bias, unless there is evidence of actual bias on the part of the nominated arbitrator.

P. S. Mishra, J.

for the The defendant in a proceeding under Section 20 of the Arbitration Act has come in appeal against an order setting out the dispute between the parties and referring the same to the sole arbitration of a retired judge of this court. The case in brief of the plaintiff-respondent has been that in pursuance of the notice inviting tenders issued by the defendant-appellant for the work of construction of marriage accommodation for MCPOS/CPOS/POS and junior sailors at Arakkonam, it submitted tender for the said work. The defendant by its letter dated 11.8.1988 accepted the same for a lump sum of Rs. 7, 54, 03, 216/-. During the course of execution of the work, the defendant, according to the plaintiff, acted in a way which was totally opposed to the terms of the contract. The contract period had to be extended due to reasons beyond the control of the plaintiff. Defendant granted extensions from time to time. But, according to the plaintiff, escalations in cost and other claims required additional compensation, which, however, was not accepted by the defendant. As a result of the same, the plaintiff was prevented from completing the contract within the specified time. The plaintiff had completed the work worth nearly Rupees seven crores, when the defendant illegally and without any justification terminated the contract by letter dated 10.7.1991 and seized the plaintiffs plant and equipments. As per Clause 70 of General Conditions of Contract, read with Clause 7(b) of the tender, all disputes between the parties after written notice by either party to the contract to the other, was required to be referred to the sole arbitration of an engineer officer to be appointed by the Engineer-in-Chief. The plaintiff addressed to the defendant invoking the above provisions and requested for appointment of an arbitrator. The defendant, however, failed to take any action. Stating thus that the defendant and the Engineer-in-Chief had lost their right to nominate an arbitrator in terms of the above clause and that a party cannot be an arbitrator in his own cause, the plaintiff moved the court in the suit. The defendant resisted the claim before the learned single Judge stating inter alia that tenders for construction were issued on 5.5.1988 and received back on 18.7.1988; on the basis of the lowest tender submitted by the plaintiff, a contract was concluded by Chief Engineer, Madras Zone, for an amount of Rs. 7, 54, 03, 216/- with a completion period of 21 months. From the beginning of the work, throughout the period of execution, the plaintiffs rate of progress was not at all commensurate with the requirement to achieve the completion within the stipulated period. Despite repeated notices, the plaintiff did not improve the rate of progress to the required extent, though a mobilisation advance of Rs. 3, 485/- lakhs was provided to it. On the stipulated date of completion, the progress of work achieved by the plaintiff was only 50.50 per cent. Provisional extensions were given to the plaintiff; but the plaintiff was not progressing with the work properly. So, the defendant had no other alternative except to cancel the contract, as per condition 54 of the General Conditions of the contract. Before the learned single Judge, the question posed was whether the dispute between the parties was to be referred to the sole arbitration of an engineer-officer to be appointed by the authority mentioned in the contract agreement or the court could appoint an arbitrator for the reason that the defendant-appellant and the Engineer-in-Chief had lost their right to nominate an arbitrator in terms of Clause 70 of General Conditions of contract read with Cl. 7(b) of the tender as well as for the reason of the apprehended bias. The learned single Judge has extracted in his order Clause 70, which for our benefit we too extract as follows :

"All disputes, between parties to the contract (other than those for which the decision of the C.M.E.