Holding

Section 8(1)(a) of the Arbitration Act, 1940 is inapplicable where the arbitration clause names a specific authority for appointment, and consequently the trial court’s appointment of an arbitrator was invalid.

Issues considered

Whether Section 8(1)(a) of the Arbitration Act, 1940 applies when the arbitration agreement names a specific authority to appoint the arbitrator.
Whether Section 8(1)(b) applies to fill a vacancy arising under the same agreement.
Whether the trial court had jurisdiction to appoint an arbitrator in lieu of the contractually appointed authority.
Whether the respondent forfeited its right to appoint an arbitrator after the petitioner’s notice under Section 8.
Whether the ex‑parte award rendered by the court‑appointed arbitrator is valid.

Legislation cited

Arbitration Act, 1940s. 20, s. 21, s. 4, s. 5, s. 6, s. 8

Subjects

ArbitrationSection 8 Arbitration Act 1940Appointment of arbitratorContractual arbitration clauseTerritorial jurisdictionEx‑parte awardSpecial Leave Petition

Judgment

A HARBANS SINGH TULi AND SONS BUILDERS PVT. LTD. ...

-
v.
UNION OF INDIA
•
FEBRUARY 11, 1992
B
[T.K. THOMMEN AND S. MOHAN, JJ.]

Arbitration Act, 1940: Sections 5 and 21>-Arbitrato~Appointment
of-Contract comaining clauses regarding appointment-Whether and when
C could be relied upon--Court appointing arbitrator-ln place of arbitrator ap- ~ _
pointed as per contract-Validity of

The respondent entrusted certain construction work to the
petitioner, and the petitioner executed the con.tract. During the course of
the contract, the petitioner was required to do some extra work for which
D a claim for payment was made and on that account, a dispute arose. Since
clause 70 of the contract provided for arbitration, the petitioner asked for
the appointment of arbitrator. Accordingly, an arbitrator was appointed.

E
The petitioner protested against the appointment of the arbitrator and
the procee!lings dragged on. On his retirement fro~ the Army, the ap-
pointment of the arbitrator came to an end. The same was the case with
-
the two successive arbitrators appointed thereafter. Subsequently another
arbitrator was appointed and he too relinquished the charge as the
petitioner did not cooperate with him for more than 4 years. Thus, the
matter was pending adjudication for about nine years, and a notice under
Section 8 of the Arbitration Act was issued by the petitioner calling upon
F the Respondent to appoint an arbitrator. But no such appointment was
made. Thereafter the petitioner filed an application before the trial court
for appointment of an arbitrator by the Court. The respondent contested
the suit on merits and also ,on the ground of lack of territorial jurisdic-
tion. The trial. court allowed the application and appointed an arbitrator;
G It also revoked the appointment of the arbitrator made by the respondent
during the pendency of the application before the trial court.

Aggrieved against the said order, the respondent approached the
High Court by way of a Civil Revision. The High Court gave its finding
that there was want of jurisdiction on the part of the trial court; and that
H Section 8(1) (b) of the Arbitration Act did not apply since there was no
602
TULi & SONS v. U.0.1. 603

negligence or refusal by the respondent to appoint an arbitrator. Accord- A
ingly, the High Court set aside the order of the trial court appointing an
arbitrator, who later made an ex-parte award without affording adequate
opportunity to the respondent.

Against the High Court's order, the petitioner preferred the present
special leave petition. B

On behalf of the petitioner, it was contended that the appointment
of the arbitrator made by the trial court should not have been interfered;
that where a notice was issued by the petitioner ·calling upon the respon-
dent to appoint an arbitrator, after the expiry of 15 days of that notice, the C
right to appoint arbitrator is forfeited; and since a part of the cause of
action had arisen, within the territory as payment was made there by
cheque, there was no lack of territorial jurisdiction.

On behalf of the respondent, it was contended that Section 8 (I) (a)
of the Arbitration Act had no application to a case in which the agreement D

- '
provided for appointment of an arbitrator by one of the parties or by
nominated persons; that where the parties have consented to a named
person to be appointed as arbitrator; there was no application of Section
8 of the Act; and that merely because the arbitrator had hurried, that
would not constitute failure of justice. E
Dismissing the special leave petition, this Court,

HELD: (Per Mohan, J.) I. Sub-section (I) (a) of Section 8 of the
Arbitration Act would apply to a case of initial appointment of an ar-
bitrator or arbitrators. The implication is in the arbitration agreement F
>--
... that the arbitrator or arbitrators must not have been named. Where,
therefore, they are named, this section will have no application. Similarly,
the arbitrator or arbitrators are required to be appointed by all parties to
the reference with consent. On the contrary, if there is some other mode
of appointment, say Section 4, where the parties to the agreement agree
G
that the arbitrator has to be appointed by a person designated in the
agreement either by name or held, for the time being in office, certainly,
this section will not apply. [611C-F)

Prabhat General Agencies etc. v. Union of India Anr. etc., (1971) 2 SCR
• • 564; Union of India and Anr. v. M/s. Amarnath Aggarwal Constrnction Pvt. H
604 SUPREME COURT REPORTS (1992) 1 S.C.R.

-
A Ltd., 1988 (2) Punjab Law Report 678; Executive Engineer, Prachi Division,
Bhubaneswar v. Gangaram Chhapolia & Anr., AIR 1980 Orissa 51; A.B.C.
Laminart Pvt. Ltd. and Anr. v. A.P. Agencies, Salem, AIR 1989 SC 1239; ·
Union of India v. Om Prakash, (1976) 3 SCR 998; Ved Prakash Mithal v.
The Union of India and Ors., AIR 1984 Delhi 325; General Manager, South
.B Eastern Railway, Calcutta v. S. V. Krishna Rao, AIR 1970 Madhya Pradesh
48, referred to~

2. In view of clanse 70 of the General Conditions of the Contract
it would be clear that the arbitrator is to be appointed by the Engineer·
in-Chief. Of course, if that arbitrator resigns or vacates his office or is
C unable or nnwilling for some reason or other, then he may appoint
another arbitrator. The Engineer-in-Chief acted in accordance with .
clause 70 and appoint.ed an arbi.trator. Even the vacancy arising from
time to time was actnally supplied by him. It cannot therefore be said
that the respondent forfeited the right to appoint an arbitrator. There
D was no refusal or negligence on the part of the Engineer-in-Chief. As
snch the qnestion of applicability of Snb-section (1) (b) of Section 8 of
the Arbitration Act did not arise. [612E-H; 6138)

Union of India v. Mis Ajit Mehta and Associates, Pune and Ors., 1990
(Bombay) 45; Chander Bhan Harbhajan Lal v. The State of Punjab, AIR
E 1977 (2) SC 1210; Executive Engineer, · Prachi Division Bhubaneswar v.
Gangaram Chhapolia and Anr, AIR 1980 Orissa 51, referred to.

3. The trial cou'1 ought not have appointed the arbitrator. The
appointment of arbitrator by the court, has caused immense prejudice to
F the respondent. First. and foremost there was not even an application on --{
behalf of the petitioner nnder Section 12 for revocation of the appointment +
of the arbitrator made by the respondent. Then, again, the arbitrator
appointed by the trial court took charge on 1.9.90 and issued a direction
to the respondent to submit its defence on or before 20.9.90. The hearing
date was fixed between 4th and 7th of October, 1990, A request was made
G though a telegram from the Chief Engineer not to proceed with the
arbitration. However, the arbitrator not finding the statement of defence
forthcoming before 20th. September, directed the same be filed before 1st
of October. Even then no statem.ent was filed. The Union of India bad not
entered appearance. An ex-parte award was made on 8.10.1990 for a huge
•
H sum of Rs. 90.67 !akhs. While the petitioner could not give details of the
TULi & SONS v. U.O.l. [THOMMEN, J. AND MOHAN, J.] 605

four claims before the arbitrator earlier appointed, he tiled as many as 29 A
claims before this arbitrator and they are all accepted. The arbitrator had
given 335% as escalation with regard to claims No. 1 to 24. Apart from the
haste with which the arbitrator had proceeded, the matter has not been
considered in its proper perspective through a process of reasoning.
[615B-E]
B
PER TH OMMEN, J. In view of the peculiar facts and circumstances
of the .present case, the challenge made against the High Court judgment
is unsustainable. [605E-FJ

CIVIL APPELLATE JURISDICTION Special Leave Petition C
(Civil) No. 13530 of 1991.

From the Judgment and Order dated 14.5.1991 of the Punjab and
Haryana High Court in Civil Revision No. 2934 of 1990.

Rajinder Sachar, E.C. Agrawala, Ms. Purnima Bhat Kak, A.V. Palli D
and Atul Sharma for the Petitioner.

- V.R. Reddy, Addi. Solicitor General, Ms. Sushma Suri, Ms. Kitty
Kumaramangalam and P.S. Narasimha for the Respondents.

The Judgments of the Court were delivered by · E
THOMMEN, J. In view of the peculiar facts and circumstances of
the case I agree with my learned brother, Mohan, J ., that the challenge
against the impugned judgment is unsustainable. Accordingly the Special
Leave Petition is dismissed.
F
MOHAN, J. The facts relating to the case are as follows:-

The petitioner herein offered his tender for entering into a contract
for provision of officer's mess and single officer's quarters. On 13.3.1970,
the tender was accepted and the acceptance was communicated. There-
after, a contract was signed at Lucknow. In 1973, the petitioner executed G
the contract. During the course of contract, he was required to do some
extra work for which he made a claim. A dispute arose concerning this.
Clause 70 of the contract enabled the parties to go by way of arbitration.
. He applied to the Engineer-in-Chief, Army Headquarters, New Delhi for
appointment of arbitrator. Accordingly, Brig. EMA Da Co'sta, Chief En- H
606 SUPREME COURT REPORTS (1992] 1 S.C.R.

A gineer, Pune and Rajasthan zone was appointed as an arbitrator on
23.11.73. The petitioner vide his letter dated 2.12.73, protested against the
appointment of Brig. Da Costa. It ·appears that the proceedings were
dragged on and nothing useful turned out. In February 1976, when Brig.
Da Costa was relieved from the Army, his appointment as arbitrator came
to an end. Thereafter by an order dated 27.4.76, Brig. SOL Jaini was
B appointed as an arbitrator. Even then no progress took place in the
arbitration, he also retired on.18.3.76. On 29.4.78, one Mr. G.R. Mirchan-
dani was appointed as an arbitrator. He relinquished the appointment on
11.4.80 since he was to retire on 31.7.80. '.fhe next appointment was that of
Mr. V. Badrinath dated 12.6.80. He also relinquished the charge on 14.9.84
c since the petitioner did not cooperate with him for more than 4 y~ars. In
·the meanwhile, the question arose as to who had the competence to
represent the contractor in the arbitration proceedings. The petitioner was
required to obtain the succession certificate from the Collector, since the
original contractor died in June, 1982. Thereafter, the matter was pending
D without any adjudication. Therefore, a notice was issued under section 8
of the Arbitration Act, on 28.3.83; Calling upon the respondent to appoint
an arbitrator but no such appointment was made. Therefore, he filed an
application for the appointment of an arbitrator before the learned Sub-
ordinate Judge, Chandigarh. One of the contentions raised was after the
filing of the application under Section 8 since the respondent had not .
E appointed an arbitrator, as required under Section 8 (1) (b) of the Act, the
right to make such an appointment had been forfeited. Therefore, the only
course left open to the court was to appoint an arbitrator as required under
Section 8 of the Act.

The application was contested on behalf of the respondent not only
F on merits but also on the ground of want of territorial jurisdiction of the
court. It is seen that the appointment of Mr. YNR Rao and Mr.
Gopalkrishnan took place during the pendency of the application of the
petitioner under Section 8 before the learned Subordinate Judge, Chan-
digarh.
G
The following 5 issues were set down for trial:

(i) Whether there are sufficient grounds for the appointment of an
Arbitrator for referring the matter in dispute ?

H (ii) Whether the petition is within time ? •
TULi & SONS v. U.0.1. [MOHAN, J.) 607

(iii) Whether the present petition is not maintainable ? A
(iv) Whether this court does not have the territorial jurisdiction to try
the present suit.

(v) Relief.
B
· On issue number 1, the learned Subordinate Judge came to the
conclusion that there e~sts a dispute between· the parties and hence there
was need to appoint an arbitrator.

Issue number 2 was answered in favour of the petitioner, while issue
number 3 was not pressed. As regards issue number 4, the court was of C
the view that having regard to clause 26 and in view of the case A.B.C.
Laminart Pvt. Ltd. & Another v. A.P. Agencies, Salem, A.I.R. 1989 SC 1239,
the Civil Court at Chandigarh had jurisdiction, as part of cause of action
arose at Chandigarh. This order was pronounced on 30th July, 1990. In
continuation of that judgment by order dated· 20th August, 1990, Mr. D
Puranjit Singh, Superintending Engineer, Capital Project, Chandigarh was
appointed as arbitrator with effect from 1.9.90. It was specifically men-
tioned that the order revoked the appointment of Mr. A.V. Gopal Krishnan
who was appointed as arbitrator on 25.7.90 for the socond time during the
pendency of the petition. '
E
Aggrieved by this, the matter was taken up in Civil Revision No. 2934
of 1990 by the Union of India to the High Court. The Division Bench
consisting of the learned Acting Chief Justice and Justice Bedi heard the
matter. On the two points argued before the Bench, viz. ( 1) territorial
jurisdiction and (2) the matter did not fall under the purview of Section 8
of the Arbitration Act, it came to the conclusion that in so far as the
F
objection to jurisdiction had been taken at the earliest, and no part of cause
of action had arisen within the jurisdiction of Chandigarh court, there was
want of jurisdiction.

On the second point, it found that Section 8 (1) (b) of the Act would G
not apply to the instant case. The reasonings of the Bench were :-

(i) There was no negligence or refusal by the Engineer-in-Chief
in fact, but the arbitrator had been appointed.

(ii) Having regard to the terms of clause 70, the vacancy was H
608 SUPREME COURT REPORTS (1992) 1 S.C.R.

A to be filled. In, fact, on 20.8.90, an arbitrator had been ap-
pointed.

(iii) Where the arbitration clause in the contract provides for
an appointment of an .arbitrator by a named authority and not
by consent of parties, the provisions of Section 8 could not be
B invoked. It relieved ,on the ruling of the Bombay High Court in
Union of India v. Ajit Mehta and Associates, Pune & Others,
A.I.R. 1990 Bombay 45. Thus it was concluded that the ap-
pointment made by the learned Subordinate Judge was non est,
and therefore, the, award 'rendered by him was liable to be set
c aside.

It was under these circumstances, the Special Leave Petition has
come to be preferred. Mr. Rajinder Sachar, learned, counsel for the
petitioners submitted that the appointment of the arbitrator made by the
Trial Court should not have been interfered with by the High Court.
D Section 8 occurs under Chapter II which deals with the case of arbitration
without intervention Qf court, while Section 20 occurs under Chapter III
through the intervention of court. It is incorrect to say that if the contract •
contains a clause that a named party is to appoint an arbitrator and if the
,appointment of arbitrator is not by consent of parties, Section 8(2) will not
E apply. The scope of Sections 8 and 20 has been succinctly dealt with in
Prabhat General Agencies etc. v. Union of India and Anr, [1971] 2 S.C.R.
564 and Union of India and another v. M/S. Amamath Aggarwal construction
Pvt.Ltd., 1988 (2) Punjab Law Report 678.

Then again, where a notice was issued by the petitioner calling upon
F the respondent to appoint an arbitrator after the expiry of 15 days of that
notice, the right to appoint is forefeited, as laid down in Executive Engineer,
Prachi Division, Bhubansewar v, Gangaram Chhapolia & Another, AIR 1980
. Orissa 51 & 52.

G On the question of territorial jurisdiction, since a part of cause of
action had arisen, within the territory of Chandigarh, namely, the payment
by cheque at Chandigarh, there was no lack of territorial jurisdiction. For
this argument reliance is placed on A.B. C. Laminatt Pvt. Ltd. and another

H
v. A.P. Agencies, Salem, AIR 1989 SC 1239 @ 1243 (para 15).

Lastly, it is submitted that prejudice or failure of justice should be with
.•
TULi & SONS v. U.0.1. [MOHAN, J.j 609

reference to trial. Merely because the arbitrator has hurried that would not A
constitute failure of justice under Section 21 of the Code of Civil Procedure.
This important aspect of the matter had not been borne in mind by the Court.

The learned Additional Solicitor General, Mr. Reddy, after taking us
elaborately through the various provisions of Arbitration Act would submit
that Section 8 (l)(a) is attracted unless the agreement provides for ar- B
bitrator by consent of parties or where there is no concurrence in the
appointment In other words, two ingredients are necessary to apply Sec-
tion 8 which are as follows:-

(i) There must be an agreement to appoint an arbitrator ..
c
(ii) The parties do not concur in the appointment.

Therefore, the said sub-section has no application to a case in which
the agreement provides for appointment of an arbitrator by one of the
parties or by nominated person. D
Reliance is also placed on Union of India v. Oni Prakash, 1976 (3)
- S.C.R. 998, 1002-3 in support of the sub-section.

In contract, Section 20 confers power-
E
(i) to order the agreement to ·be filed; and

(ii) to make an order of reference to the arbitrator appointed
by the parties or where the parties cannot agree to the appoint-
ment of an arbitrator appointed by court.
F
Where, therefore, the clause in the agreement provided arbitrator to
be appointed by Engineer-in-Chief, if he refuses, recourse to Section 8 (1)
(a) or (1) (b) cannot be had. It must be under Section 20 (4). The case
directly on point is Ved Prakash Mitha/ v. 17ie Union of India and others,
AIR .1984 Delhi, 325 (Full Bench) and Prabliat General Agencies etc. v.
Union of India andAnr, [1971] 2 SCR 564. It is further submitted that these G
two sections, i.e. Sections 8 and 20 operate in different fields, as laid down
in Union of India .through General Manager, South Eastern Railway,
Calcutta v. S. V. Krishna Rao AIR 1970 Madhya Pradesh 48. Even under
Section 6 the appointment of an arbitrator is not automatic. The court will
have 10· exercise its discretion. H
610 SUPREME COURT REPORTS [1992] 1 S.C.R.

A Finally, it is submitted, the authorities are uniform in that Section 8
will not apply where the parties have consented to a named person to
appoint an arbitrator, as seen from Union of India v. Mis Ajit Mehta and
Associates, Pune and others, 1990 (Bombay) 45, which case has been relied
upon by the High Court. Hence no exeption could be taken to the judgment
of the High Court.
B
Clause 70 of the General Conditions of the Contract reads as follows:-

"70. All disputes between the parties to the contract (other than
those for which the decision of the CWE or any other person
is by the contract expressed to be final and binding) shall after
c written notice by either party to the contract to the either of
them be referred to the sole arbitration of an Engineer Officer
to be appointed by the authority mentioned in the tender
documents. Unless the parties otherwise agree such reference
shall not take place until after the completion, alleged comple-
D tion or abandonment of the works or the determination of the
contract.

If the Arbitrator so appointed resigns his appointment or
vacates his office or is unable or unwilling to act due to any
reason whatsoever, the authority appointing him may appoint
E a new arbitrator to act in his place.

The arbitrator shall be deemed to have entered on the refer-
ence on the date he issue notice to both the parties, fixing the
date of hearing. ·
F The arbitrator may, from time to time, with the .consent of the
parties, enlarge the time, for making and publishing the award.

The arbitrator shall give his award on all matters referr_ed to
him and shall indicate his findings, alongwith the sums awarded,
G separately on each individual item of dispute.

The venue of the arbitration shall be such place or places as
may be fixed by the arbitrator in his sole discretion.

The award of the arbitrator shall be final and binding on both
H the parties to the contract."
TULi & SONS v. U.0.1. [MOHAN, J.] 611

Therefore, it would be clear that the arbitrator is to be ap- A
· pointed by the Engineer-in-Chief. Of course, if that arbitrator
resigns or vacates his office or is unable or unwilling for some
reason or other, then he may appoint ano.ther arbitrator.

Section 8 of the Arbitration Act 9ccurs under Chapter II which deals
with arbitration without intervention of court, while Section 20 falls under B
Chapter III which deals with arbitration with intervention of court.

In our view, Section 8 provides a simple machinery for appointment
of an arbitrator, initially, as seen from Sub-section (1) (a) or for supplying
the vacancy as seen from Sub-section .(1) (b) if the said vacancy occurs C
during the period of arbitration.

Sub-Section (1) (a) would apply to a case of initial appointment of
an arbitrator or arbitrators. The implication is in the arbitration agreement,
the arbitrator or arbitrators must not have been named. Where, therefore,

-
they are named, this section will have no application. . D
Similarly, the arbitrator or arbitrators are required to be appointed
by all parties to the reference with consent. On the contrary, if there is
some other mode of appointment, for example, Section 4, where the parties
to the agreement agree that the arbitrator has to be appointed by. a person
designated in the agreement either by name or hold, for the time being in E
office, certainly, this section will not apply. It has also been held by this
v.
Court in Chander Bhan Harbhajan Lal The State of Punjab AIR 1977 (2)
S.C.R. 1210 that even in cases where by agreement between the parties,
one of them alone is given powet to make the appointment without
consulting others, this Sub-Section would apply. F

Now, we come to sub-Section (1) clause (b). This Sub-Section covers
such of those cases where the arbitration is pending. However, a vacancy
has ariseri in aµy one of the following contingencies:-

(i) Death G
(ii) Incapacity

(iii) Refusal
...
(iv) Neglect to act H
612 SUPREME COURT REPORTS (1992) 1 S.C.R.

A It alsci requires to be noted that two other conditions are required
to be satisfied before the vacancy is sought to be filled up-

(i) The arbitration agreement did not indicate the vacancy wa.<;
not intended to be filled up,

B (ii) The parties could not concur in the chciice.

Therefore, without going into the· question as to whether Section
20(4) would have been resorted to or not, we find that the .conditions under:
Section 8 (1) (b) listed ·above, are not satisfied in this case. )._ •

C · It has already been seen that successive arbitrators had been ap-
pointed and they are De Costa, Jaini, Mirchandani and Baorinath, who
ultimately came to resign on 14.9.84. The contractor AB Tuli 'died on
16.6.82. The legal heirs were required to submit and prove theUCsuccession
certificate. There was an inordinate delay in the production ofstich certifi-
D cate. Thereafter, during tbe pendency of the proceedinis, YNR Rao was
appointed. Even after his relinquishment on 23.4.90, AV ·Gopal Krishnan
was appointed on 25.7.90. Thus, it would be clear that there was no refusal
or neglect to act (the question of dealth or incapacity not arising here).

From the above, it will follow that even the vacancy was actually
E supplied by the Engineer-in-Chief. ·The last condition about the concur-
rence in relation to the choice also does not arise here. It is somewhat
strange that when It was brought to the notice of the trial c6urt about the
appointment of YNR Rao, the Court did not even take congnizance of the
same. As a matter of fact, para 4.5 .of the Counter Affidavit of Union of
India specifically states as follows:
F
"That vide application dated 8.1.1990, the Union of India
brought it to the notice of the court that as per Clause 70 of
the Contract Agreement, Shri YNR Rao, Chief Engineer, a
member of the combined panel of Arbitrators had been ap-
pointed arbitrator in this case vide ·letter dated.4.12.1989"
G
Even thereafter, on 25.7.90, Gopal Krishnan was appointed. That is
taken cognizance of and by the order dated 20.8.90, the said appointment
was revoked and Puranjit Singh was appointed arbitrator. The court ap-
parently was of the view that since notice. had been given by the petitioner "4

H for the appointment of the arbitrator, on the expiry of 15 days of the notice,
TULi & ~NS v,:. U.0.1. [MOHAN, J.) 613

the ~espondent forfeited the ril!tit to appoint an arbitrator. As an abstract A
proposition of law, Mr. Sachar is right in relying on ~cutive Engineer,
Prachi Division Bhubaneshwar v. Gangaram Chhapo/ia and another, AIR
1960 (Orissa) 5i. Having regard to the facts of the case, as stated above,
such a .Situation does not arise at all.

The relevant facts as to what happened during this period can be B
gathered from the following averments made in the counter !if"fidavit filed
on behalf of Union of India -

"That Shri lfarbans Singh Tuli, Sole proprietor of the firm died
on 15.6.82. Till 26 July, 1983, no steps were taken by anybody C
on behalf of the contractor in connection with the Arbitration
proceedings. On 26 July 1983, Shri Harkishan Singh Tuli, son
of late Shri Harlians Singh Tuli submitted to the Arbitrator an
affidavit stating that all legal heirs (six in numbers) have
authorised him to represent this case on their behalf.
D
That on 12.7.84, the Arbitrator wrote to the Union of India that
Shri Har Kishan Singh Tuli son of late Shri Harbans Singh Tuli
has informed that the sole proprietor of the firm Mis. Harbans
Singh Tuli and Sons had exiiired on 16.6.1982 and is survived
by six legal heirs. It may be confirmed that the legal heirs have E
been brought on record of enlistment and they can represent
the case on behalf of the firm and Arbitration can be continued.
On 8.8. 1984, the Union of India wrote .to the Arbitrator that
the legal heirs of the firm may ~lease be asked to prodqce
necessary succession certificate. 1
F
That on 4.9.1984, Shri Har Kishan •Singh Tuli without submit-
ting the succession certificate wrote·. to the Arbitrator that the
fu'm has· been reconstituted and it haS ,the approval of the Chief
Engineer Western Command, Shimla ...

That on 14.9.1984, !he Arbitrator wrote to the Engineer-in- G
Chief on the lines that "I was appointed as Arbitrator to
adjudicate the Dispute that has arisen between the parties to
the above mentioned contract. That more than four years have
... elapsed, but the Contractor has still to eollect the illformation
from the Govt. Due to the preoccupation with the other work, H
-l'.r
:i''."

614 SUPREME COURT REPORTS [1992] 1 S.C.R. :iii

A it may not be possible for me to finalise the case. I am,
•
therefore, resigning appointment as arbitrator in the above
case."

"That on 19 Nov. 1984, Har Kishan Singh Tuli purporting to

B
act on behalf of Tuli Construction Company Private Ltd. Chan-
digarh, wrote to the Engineer-in-Chief to appoint another ar-
•
bitrator. Again on 20.12.1984, Shri Har Kishan Singh Tuli
purporting to act on behalf of Tuli Construction.Company Ltd.,
Chandigarh again wrote to the E-in-C that since the contract
for the subject work was entered into with M/s Harbans Singh '>-..
c Tuli and Sons with late Sardar Harb.ans Singh Tuli as Sole
Proprietor all the legal heirs have decided to incorporate their
Sole Proprietorship into a Pvt. Ltd. Company under the name
and style M/s. Harbans Singh Tuli & Sons Builqers Pvt. Ltd.,
and this companY. is under incorporation. Till the incorporation
.;

..
is completed, please suspend all the action with the firm for
D the first being. This aspect is worth-noting to account for delay
on the part of the petitioner Contractor.

That for two years, nothing was heard in connection with the
Arbitration proceedings from the claimant and then on ~

E 05.7.1986, Shri Har Kishan Singh Tuli, purporting to act on
.behalf of Harbans Singh Tuli & Sons Builders Pvt. Ltd. wrote ~
to E-in-C's to appoint another Arbitrator.
i
That on 29.7.1986, the Engineer-in-Chief, Army Headquarters,
New Delhi wrote to Shri Har Kishan Singh Tuli, 359, Sector
~
F 9-D, Chandigarh that as ·per their records S. Harbans Singh ~
Tuli & Sons expired long time ago, and were requested to 11
intimate direct to Chief Engineer Bareilly zone, Bareilly as to
what was his status with the Sole proprietorship firm with whom
the contract under reference was entered into with the Chief
Engineer, alongwith succession certificate and their legal docu-
G ments so that further action can be taken in the matter.

That instead of supplying necessary information Shri Har
Kishan Singh Tuli & Sons sent to E-in-C, a copy of memoran-
'•
t

dum and Articles of Association of M/s, 'Harbans Singh Tuli & .....
H Sons and claimed that the new Company is the successor of
TULi & SONS v. U.0.1. [MOHAN, J.] 615

the Sole Proprietorship firm. Union of India asked Shri Har A
Kishan Singh Tuli to submit legal certificate issued by the
competent Civil Court."

Therefore, the trial court ought not have appointed the arbitrator.
The appointment of arbitrator by the court, namely, Puranjit Singh has
caused immense prejudice to the respondent. First and foremost there was B
not even an application on behalf of the petitioner under Section 12 for
revocation of the appointment of AV Gopal Krishnan. Then, again, Puran·
jit Singh took charge on 1.9.90 issued a direction to the Union of India to
submit its defence on or before 20.9.90 The hearing date was fixed between
4th and 7th of October, 1990, at Chandigarh. A request was made through C
a telegram from the Chief Engineer not to proceed with the arbitration.
However, the arbitrator not finding the statement of defence forthcoming
before 20th September, directed the same be filed before 1st of October.
Even then no statement was filed. The Union of India had not entered
appearance. An ex-parte award was made on 8.10.1990 for a huge sum of
Rs. 90.67 lakhs. While the petitioner c.ould not give detail of the four claims D
before the arbitrator earlier appointed, he would file as many as 29 claims
before this arbitrator and they were accepted. The arbitrator had given
335% as escalation with regard to claims No. 1 to 24. Apart from the haste
with which the arbitrator had proceeded, the matter has not been con-
sidered in its proper perspective through a process of reasoning. Therefore, E
we conclude that the High Court is right in its conclusion. The learned
Additional Solicitor General's submission that the appointment of Puranjit
Singh had caused prejudice to the Union of India is fully justified. There-
fore, without going into the other legal aspects, we dismiss the Special
Leave Petition.
F
ORDER

In view of our concurring judgments dated 11th February, 1992, the
Special Leave Petition is dismissed.

G.N. Petition dismissed.