IMPORTANT POINT
Once the arbitrator enters into reference, challenge to his jurisdiction questioning his independence or impartiality or otherwise has to be made before the Arbitrator himself.

Sangeet Lodha, J.—This writ petition is directed against order dated 17.10.04 by the Sole arbitrator whereby an application preferred by the petitioner-non claimant u/s 16 of the Arbitration and Conciliation Act, 1996 (in short “the Act’) questioning the jurisdiction of Arbitral Tribunal to proceed with the arbitration proceedings, stands rejected.

2. The facts relevant in nutshell are that the petitioner, a Government company issued a Notice Inviting Tender (‘NIT’) dated 28.8.95 for the work “Transporation of Gypsum (Rom) From Ballar Gypsum Mines To Lalgarh Railway Siding And Anoopgarh Railway Siding”. In pursuant thereto, the respondent No. 1 and some other persons submitted their tender. The rates quoted by the respondent No. 1 was the lowest accordingly, its tender was accepted and the work order dated 9.2.96 was issued by the petitioner company In favour of the respondent No. 1 on the terms and conditions set out in the NIT as modified after negotiation. The term of the contract was three years from the date of start of the work. However, the work could not commence on account of alleged non creation of working conditions by the petitioner company and therefore, the respondent No. 1 vide letter dated 7.8.96 raised a claim against the petitioner company for a sum of Rs.35,90,087.65 on account of the losses suffered by it and requested for payment thereof within a period of three weeks. After due deliberations, the matter was amicably settled between the parties and afresh work order dated 4.3.99 was issued in favour of the respondent No. 2 and accordingly, the respondent No. 2 withdrew all its claim and agreed to work as per the rates agreed upon under the fresh work order dated 4.3.99.

3. In pursuance of the fresh work order, the respondent No. 1 started the work on 6.5.99 however, a contract was executed between the parties on 23.6.99. After commencement of the work as aforesaid, the petitioner company felt that contract is not viable and the rates agreed upon were excessive pre judicial and against the interest of the petitioner company, therefore, the General Manager of the petitioner company terminated the contract granted in favour of the respondent No. 1 by giving 30 days notice invoking clause 17.3 of the contract which reads as under:

“17.3”—Notwithstanding anything hereinabove, the Company in its absolute discretion, made at any time, terminate the contract without assigning any reason thereof by giving. 30 days’ notice in writing to the contractor at their last known notified address and in that event, the contractor shall not be entitled to raise any claim or demand for compensation and/or damages and/or loss by reason of such earlier termination on any ground whatsoever,”

4. The notice was replied by the respondent no.1 vide communication dated 19.11.99 alleging therein that the contract has been wrongly terminated and the action of the respondents in terminating the contract is outcome of mala fide. The said communication was not responded therefore, the respondent No.1 made an application to the Chairman of the petitioner company for appointment of an Arbitrator which was rejected by the Chairman vide communication dated 31.1.2000. In these circumstances, the respondent No.1 preferred an application

u/s 11 of the Act before the District Judge, Bikaner for appointment of an Arbitrator and also preferred an application for grant of temporary injunction u/s 9(e) of the Act read with Order XXIX Rule 1 and 2 of the Civil Procedure Code, 1908 praying therein that till the disposal of the application u/s. 11 of the Act by the Court, the petitioner company herein may be restrained from treating the work contract granted in favour of respondent no.1 herein as cancelled. However, the application preferred by the respondent No.1 for injunction as aforesaid, was disposed of by the District Judge holding that it will not be appropriate to restrain the respondents from issuing the fresh work order.

5. After terminatio