JUDGMENT :

Nitin Jamdar, J.

This appeal filed under section 37 of the Arbitration and Conciliation Act, 1996, challenges the judgment and order passed by the learned Single Judge dated 5 June 2006 in the arbitration petition filed by the Respondent- Ion Exchange (India) Limited. By the impugned order, the learned Single Judge had set aside the arbitral award dated 31 March 2005 passed in favour of the Appellant-Paramount Limited, the Claimant before the Arbitrator.

2. In this judgment, the Appellant- is referred to as "Paramount". Respondent- Ion Exchange (India) Limited is referred to as “Ion Exchange”. Briefly, the dispute arose in the following facts. The Gujarat Electricity Board had invited tenders for the Turnkey Project for the Sikka Thermal Power Project Pretreatment Plant. Paramount and Ion Exchange signed a Memorandum of Understanding to bid with the Gujarat Electricity Board (Board) for the design, construction, supply execution, painting, testing and commissioning of the pretreatment plant and connected civil, mechanical, electrical and instrumentation plant work. The Memorandum of Understanding (M.O.U.) was signed at Mumbai. Pursuant to the M.O.U. bid was submitted to the Board. The Board accepted the tender and issued a Letter of Intent on 28 December 1994.

3. Disputes arose between the parties. On 26 February 2002, Paramount put forth its claim and called upon Ion Exchange to settle it and make payment. On 28 March 2002, Ion Exchange replied and denied the claim. On 13 April 2002, Paramount wrote to Ion Exchange stating that Ion Exchange was not making payment as called upon as per the letter dated 26 February 2002, and differences and disputes had arisen. The M.O.U. contained an arbitration clause stating that if a dispute arises between Paramount and Ion Exchange, each one will make a reference for the arbitration of such dispute as cannot be mutually resolved. It was agreed that both parties would nominate/ appoint one arbitrator each, and two arbitrators would appoint an umpire. It was agreed that if one party fails to appoint an arbitrator after due notice, the arbitrator appointed by the other party will be the sole arbitrator. Such a reference was to be treated as a submission to arbitration under the Indian Arbitration Act of 1940, as amended. The notice dated 13 April 2002 stated that the matter is required to be resolved through arbitration and called upon Ion Exchange to send the name of one of the arbitrators. Paramount informed Ion Exchange that it has nominated Mr. Sanat Pandya as the arbitrator. Paramount called upon Ion Exchange to appoint its arbitrator. On 17 May 2002, Paramount informed Ion Exchange that since Ion Exchange did not appoint its arbitrator, the arbitrator appointed by Paramount, Mr. Pandya, would act as a sole arbitrator to resolve the disputes and differences as per the arbitration clause.

4. On 21 May 2002, Mr Pandya, the Arbitrator, issued notice for a preliminary hearing. On 14 June 2002, Ion Exchange communicated to Paramount that it had not consented to appoint a sole arbitrator and was in the process of nominating an arbitrator. By letter dated 17 June 2002, Ion Exchange informed that it had nominated a retired learned Judge of this Court as its arbitrator and gave the address and contact number. Mr. Pandya adjourned the meeting. After that, on 2 July 2002, Mr. Pandya conveyed that he is the Sole Arbitrator and, in case Ion Exchange is able to show that it has the right to appoint/ nominate its arbitrator, then he will act accordingly. By communication dated 8 July 2002, Ion Exchange informed Mr. Pandya that it has filed Arbitration Application (L) No.365/2002 (thereafter numbered as Arbitration Application No.124/2002) in this Court under section 11 of the Act and furnished a copy. The learned Single Judge, by order dated 30 November 2002, disposed of the Arbitration Application No.124/2002, leaving it open for the parties to agitate the issue regarding jurisdiction before the