The appointment of a sole arbitrator deviated from the statutory requirements and terms of the arbitration agreement, making proceedings invalid under the Arbitration and Conciliation Act, 1996.

1. This appeal under S.37 of the Arbitration and Conciliation Act, 1996 (for short 'Act 1996') has been filed assailing the judgment and order dated 09.09.2013 passed by District Judge, Allahabad allowing objection under S.34 of the Act, 1996 in Arbitration Case No. 25 of 2008, Union of India v. M/s. Vidyawati Construction Company, against award dated 21.02.2008 made by the sole arbitrator.

2. Facts in nutshell, are that appellant was awarded a contract for construction of multistorey RCC frame building complex (Ground + 3 stories) for office of General Manager, Railway Electrification, Allahabad (now Prayagraj) for total cost of Rs.87,76,517/-, and a letter of acceptance of contract was issued on 13.03.1989. Due to administrative reasons, awarded work was reduced from G+3 to G+2 and original cost was revised and reduced to Rs.66,32,912/- and the work was to be completed within 18 months (i.e. by 18.09.1990). However, actual work was completed on 31.05.1993, and final amount paid to the appellant was Rs.68.77 lacs.

3. Appellant submitted his final bill for Rs.4,26,54,807/- on 15.04.1994. As respondents did not make full payment hence on 18.05.1996, appellant invoking the arbitration clause sent a registered letter requesting that panel of arbitrators under Clause 64(3)(b) of General Condition of Contract be forwarded to them for selection of an arbitrator. The respondents authorities on 27.06.1996, 07.10.1996 and 17.01.1997, through the said letters required details of the claim made by appellant.

4. Sometimes in January, 1997, appellant filed Civil Misc (Arbitration) Application No. 35 of 1997 for appointment of arbitrator under S.11 (4) of the Act of 1996. This application was contested by the Railway authorities and a counter affidavit was filed, wherein it was stated in para 6 that a panel of arbitrator was appointed by the General Manager. After hearing the parties, this Court on 26.08.1998 appointed one Smt. Tanuja Pandey, as railway nominee and Sri O.P. Narang as the appellant' s nominee, as arbitrators. The order further required that as per Clause 64 (3)(b), before entering into the reference two arbitrators were required to nominate an Umpire who shall be the Gazetted Officer and to whom the case may be referred in the event of any difference between the two arbitrators. It was on 05.10.1998 that both the arbitrators jointly agreed and appointed one Sri P.K. Sharma, Chief Engineer N.F. Railway, as Umpire. But a Civil Misc. (Arbitration) Application No. 47 of 1998 was filed by the appellant for complying the earlier order dated 26.08.1998 for appointment of an Umpire by the two arbitrators so appointed. In the counter affidavit filed by Railways, it was stated that both the arbitrators have jointly agreed for name of Sri P.K. Sharma. This Court on 01.11.1999 disposed of the application approving the name of P.K. Sharma as the Umpire.

5. The Arbitral Tribunal entered into reference and statement of claim was filed by appellant on 06.01.1999, while statement of defence was filed by respondents Railway on 06.04.1999.

6. The appellant in the year 2000 filed a Civil Misc. Review / Correction Application No. 101974 of 2000 in Arbitration Application No. 47 of 1998 with a prayer that the Umpire appointed by the Court may be treated as the presiding arbitrator of the Arbitral Tribunal in view of Act, 1996. This Court on 15.03.2002 allowed the application filed by appellant and held that the Umpire shall be treated as the presiding arbitrator of the Tribunal. It appears that on 24.04.2002, the presiding arbitrator, P.K. Sharma showed his unwillingness to act as a presiding arbitrator, thus, two arbitrators so appointed by this Court through letter dated 02.05.2000 informed the Registrar of this Court about refusal / resignation of Sri P.K. Sharma and requested for nominating presiding arbitrator so that the proceedings can be resumed.

7. Meanwhile on 10.09.2002, appellant filed a Civil Misc. Modification Application No. 8 of 200