ACE PIPELINE CONTRACTS PRIVATE LIMITED v. BHARAT PETROLEUM CORPORATION LIMITED

Citation: [2007] 4 S.C.R. 777

Court: Supreme Court of India

Bench: A.K. MATHUR, TARUN CHATTERJEE

Case summary

ACE PIPELINE CONTRACTS PRIVATE LIMITED v. BHARAT PETROLEUM CORPORATION LIMITED.pdf

Judgment text

-f· ACE PIPELINE CONTRACTS PRIVA1E LIMIIBD v. BHARAT PETROLEUM CORPORATION LIMIIBD APRIL 4, 2007 [AK MATHURAND TARUN CHATTERJEE, JJ. ] Arbitration and Conciliation Act, 1996: • ss. 11 & 34-Appointment ofArbitrator-Courts can issue mandamus to authorities to appoint arbitrators as per the arbitration clause-But choice can go beyond the designated persons or institutions in exceptional cases for reasons to be recorded or where both parties agree for common name- Once a party has entered into an agreement with eyes wide open it cannot plead that if any person nominated in the arbitration clause is appointed as arbitrator he will not be impartial or objective-However, ifa party feels that the arbitrator has not acted independently or impartially, or he has suffered -t from any bias, it can make application under s. 34 to set aside the arbitra/ ,. award on the ground that arbitrator acted with bias or malice in law or fact. s.

11(6)-Application under-Held: Period of limitation of thirty days cannot be invoked under s. 11(6). Appellant and Respondent-Corporation had entered into a contract which contained an arbitration clause in terms ofwhich disputes between the parties were to be referred to the sole arbitration of an officer of the Respondent- Corporation. Some differences arose between the parties on which Appellant requested Respondent-Corporation to appoint an arbitrator. It is alleged that no one was appointed as arbitrator, pursuant to which Appellant filed application before High Court under Section 11 of the Arbitration and Conciliation Act, 1996 demanding appointment ofsome retired Judge of the Supreme Cpurt as arbitrator on the ground that ifany person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. High Court dismissed the application.

Hence the present appeal Dismissing the appeal, the Court HELD: 1. A person ofany nationality may be appointed as Arbitrator, unless otherwise agreed between the parties. Sub-section (2) of Section 11 .... says that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-section (3) provides that failing any agreement referred to in sub-section (2), one arbitrator can be appointed by each party and the two arbitrators so appointed shall appoint the third arbitrator who shall act as the presiding arbitrator. Sub-section (4) says that in case a party fails to make appointment within thirty days from the date of receipt of the request to do so from the other party, or that the two appointed arbitrators fail to nominate the third arbitrator within thirty days >from the date of their appointment, the appointment shall be made by the Chief • Justice or by any person or institution designated by him.

Sub-section (5) says failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, ifthe parties fail to agree on the arbitrator within thirty days from receipt ofa request by one party from the other party to so agree the appointment shall be made, upon request ofa party, by the Chief Justice or any person or institution designated by him. Therefore, the concept of thirty days is there in sub-sections (4) & (5). This is in the event the parties did not come to appoint arbitrator or the two nominated arbitrators fail to agree within thirty days for appointment ofthird arbitrator, application can be moved under .. , Section 11(5) of the Act to the Chief Justice for appointment ofarbitrator. ....

But in sub-section (6), where, the procedure has already been agreed upon by the parties, as in the present case, and in that event, if a party fails to act as required under that procedure or the parties, or the two appointed arbitrators, fail to reach an agreement expected ofthem under that procedure or a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may in that event, request the Chief Justice or a person or an institution designated by him to make necessary measures, unlessthe agreement on the appointment procedure provides other means for appointment of arbitrator. Therefore, so far as the period of thirty days is concerned, it is not mentioned in Sub-section (6). The period oflimitation is -' only provided under sub-sections (4) & (5) ofSection 11. As such, as per the statute, the period of limitation of thirty days cannot be invoked under subsection (6) of Section 11 of the Act.

(Para 6] (784-D-H; 785-A-C] I- Great Eastern Shipping Co. Ltd v. Board of Trustees for the Port of Calcutta, [2005] 1 Arb. LR 389 and J. V. v. Union ofIndia & Ors. , [Full Bench le decision of the Delhi High Court decided on 31. 8. 2006, overruled. ...... Union ofIndia v. Popular Construction Co. , [2001] 8 SCC 470 and The State of Uttar Pradesh & Ors. v. Babu Ram Upadhya, [1961] 2 SCR 679, ACEPIPELINECONTRACTS PRIVATELTD. v. BHARATPETROLEUMCORPORATION •,TD. 779 distinguished. Datar Switchgears Ltd v. Tata Finance Ltd & Anr. , (2000) 8 SCC 151, relied on. Pun} Lloyd Ltd v. Petronet MHB Ltd, (2006) 2 SCC 638; BSNL & Ors. v. Subhash Chandra Kanchan & Anr. , [2006) 8 SCC 279; Shin Satellite Public Co. Ltd. v. Jain Studios Ltd, (2006] 2 SCC 628; Union ofIndia & Anr. v. Ml s. V. S. Engineering (P) Ltd. , [2006) 12 SCALE 144; BSNL & Ors. v. Subhash Chandra Kanchan & Anr. , (2006) 8 SCC 279 and Union ofIndia & Anr v. MP. Gupta, [2004) 10 SCC 504, referred to. 2. 1.

This Court is aware of the Departmental lethargy in making appointment of arbitrators in terms of the arbitration clause. Therefore, Mandamus can be issued by the Courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within the reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms of arbitration clause and appoint the arbitrator/arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name. [Para 13) [789-D-E] 2. 2.

In the present case, the appellant's demand was to get some retired Judge ofthe Supreme Court to be appointed as arbitrator on the ground that ifany person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. Once a party has entered into an agreement with eyes wide open it cannot wriggle out ofthe situation that ifany person ofthe respondent- BPCL is appointed as arbitrator he will not be impartial or objective. However, if the appellant feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the party to make an application under Section 34 ofthe Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact. There is no reason to interfere with the order passed by the High Court in Arbitration Petition. The arbitrator has already been appointed.

He should proceed in the matter and decide the dispute expeditiously. [Paras 14 and 15] (789-F-H; 790-A] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1783 of2007. From the Final Judgment and Order dated 18. 01. 2006 ofthe High Court of Delhi at New Delhi in Arbitration Petition No. 181 of 2005. Soli J. Sorabjee, Manish Bhatt, Mukesh Kumar, Mahima Shroff and Chirag M. Shroff for the Appellant. Sudhir Chandra, Parijat Sinha, R. Rea Sinha, Snehsish Mukherjee and S. C. Ghose for the Respondent. The Judgment of the Court was delivered by A. K. MATHUR, J. 1. Leave granted. 2. This appeal is directed against the order dated 18. 1. 2006 passed by learned Single Judge ofthe High Court ofDelhi in Arbitration Petition No. 181 of2005 whereby learned Single Judge dismissed the application for appointment of Arbitrator. Hence, the present appeal against the aforesaid order. 3.

Brief facts which are necessary for disposal of this appeal are that an application styled under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') was moved by the Ace Pipeline Contracts Private Limited, the appellant herein, for appointing a retired Judge of the Supreme Court of India to adjudicate the claims and disputes between the parties arising out of the contract between the parties dated I0. 06. 2002. The said contract pertained to the laying down of a pipeline and associated facilities for Section-I [Manmad in Maharashtra to M. P. Border near (Shirpur)] for Mumbai-Manmad Pipeline . Extension Project of the respondent- Bharat p· Petroleum Corporation Limited (hereinafter referred to as 'BPCL'). The main issue was with regard to interpretation of Clause 91 of the contract which pertains to appointment ofarbitrator. Clause 91 ofthe contract reads as under: "91.

ARBITRATION All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof under this Contract or the right touching or concerning the works or the execution or the maintenance effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after detennination foreclosure or breach ' t ACE PIPELINE CONTRACTS PRIVATELID. v. BHARATPETROLEUMCORPORATIONLID. [A. K. MATHUR, J. ]78} --;.. of the Contract (other than those in respect of which the decision of any person is by the Contract expressed to be final and binding) shall after written notice by either party to the Contract to the other ofthem and to the Appointing Authority be referred for adjudication, to a sole Arbitrator to be appointed as hereinafter provided. a.

Any dispute or difference of any nature whatsoever any claim, ,.. cross-claim, counter-claim or set off of the Corporation against the ,.. , Vendor or regarding any right, liability, act, omission or account of any ofthe parties hereto arising out ofor in relation to this agreement shall be referred to the Sole Arbitration ofthe Director (Marketing) of the Corporation or of some officer of the Corporation who may be nominated by the Director (Marketing). The Vendor will not be entitled to raise any objection to any such Arbitrator on the ground· that the Arbitrator is an Officer of the Corporation or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any other matters in dispute or difference. In the event of the ?

,, Arbitrator to whom the matter is originally referred being transferred or vaca~ing his office or being unable to act for any reason, the Director (Marketing) as aforesaid at the time ofsuch transfer, vacation of office or inability to act may in the discretion of the Director (Marketing) designate another person to act as Arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings notwithstanding his transfer or vacation of office as an Officer of the Corporation if the Director (Marketing) does not designate another person to act as arbitrator on such transfer, vacation of office or inability of original arbitrator. Such persons shall be entitled to proceed with the reference from the point at which it was left by his predecessor.

It is also a term ofthis contract that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as an Arbitrator hereunder. The award of the Arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provisions of the Conciliation & Arbitration Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause. " Clause 91 provides that any dispute arising between the parties shall be settled through arbitration and the appointing authority i. e.

the Director (Marketing) himself or he may nominate any other person ofthe Corporation to act as an Arbitrator to resolve the disputes and the vendor will not be entitled to raise any objection to such arbitrator on the ground that the Arbitrator is an officer ofthe Corporation or that he has dealt with the matters to which the . contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any other matters in dispute or difference. Since some differences arose between the parties with regard to the claim ofthe appellant, a letter dated 21. 7. 2005 was written to the Director (Marketing) invoking clause 91 ofthe agreement and requesting him to refer the matter to arbitration for resolving the differences.

It was also requested that the Director (Marketing) may accede to the request of the appellant for adjudication of the dispute by a former Judge of the Supreme Court of India so as to remove any justifiable doubts to the independence or impartiality ofthe said Arbitrator. It was further submitted that on receiving the communication, the appellant would suggest the name ofthe retired Judge of the Supreme Court of India for the purpose of appointment as Arbitrator. It was alleged that no one was appointed as Arbitrator, therefore, on 22. 8. 2005 the appellant filed the present application before the High Court for appointment of Arbitrator under Section 11(5) & (6) of the Act. It was also pointed out that after presentation ofthe application on 22. 8. 2005, the appellant received a letter of the Director (Marketing) nominating Shri P. S. Bhargava, Executive Director (Quality Control Cell) of the respondent- BPCL to act as sole arbitrator.

It was contended that the letter appointing Shri P. S. Bhargava as sole Arbitrator was received by the appellant subsequent to the filing of the petition before the High Court on 26. 8. 2005. It was also pointed out that Shri P. S. Bhargava was appointed as Arbitrator on 22. 8. 2005 and the same was communicated and received by the appellant through courier on 26. 8. 2005. Therefore, it was submitted before the High Court that since the appointment of Arbitrator has been made after the filing of the petition by the appellant before the High Court, the Director (Marketing) ceased to have any right to appoint any Arbitrator after expiry of thirty days. Therefore, a request was made that any retired Judge of the Supreme Court may be appointed as Arbitrator. This was contested by the respondent by filing a reply. It was pointed out that the notice dated 21. 7. 2005 was received by the Director (Marketing) on 26. 7.

2005 and a request was made to the appellant to supply copy of the arbitration agreement and other corresponding documents as he was not aware ofthe procedure for appointment ofthe Arbitrator. The Director (Marketing) received reply to the communication dated 12. 8. 2005 on 16. 8. 2005 ACE PIPELINE CONTRACTSPRIVATELm. v. BHARATPETROLEUM CORPORATION Lm. [A. K. MATHUR, J. J 783 which was received in the Office on 17. 8. 2005. After receiving the communication and all the materials on 17. 8. 2005, the appointing authority appointed Shri P. S. Bhargava as Arbitrator on 22. 8. 2005 and a communication was sent to the appellant through courier which was received by him on 26. 8. 2005. It was also pointed out after receipt ofthe reply to the communication dated 12. 8. 2005 on 16. 8. 2005, 19th, 20th & 21st August, 2005 Office remained 13 closed on account of Rakshya Bandhan and weekly holidays. The Director (Marketing) sent reply on 22. 8. 2005 appointing Shri P. S. Bhargava as Arbitrator.

It was also pointed out that the whole action was done with urgency and ... there was no delay on the part of the Administration. 4. Learned Single Judge after examining the matter came to the conclusion that it cannot be said that the appointing authority did not act with due dispatch. Learned Single Judge also held that as per the terms ofthe agreement in question with re~ard to independence and objectivity of the arbitrator can be examined in view of the agreement and it was observed that this question can be raised before the arbitrator and even if they fail, it can be agitated under Section 34 of the Act. However, learned Single Judge concluded that the situation had not arisen to invoke the provisions of Section 11(6) of the Act at present and consequently, dismissed the petition. Aggrieved against the impugned order dated 18. 1. 2006, the present appeal was filed. 5. We have heard Shri Soli J.

Sorabjee, learned Senior counsel for the appellant, and Shri Sudhir Chandra, learned senior counsel for the respondent, and perused the records. Though the application moved by the appellant under Section 11 of the Act was of course very confusing as it also mentioned Section 11(5) as well as Section 11(6) ofthe Act, in fact the application under Section 11(5) ofthe Act was not maintainable. Be that as it may, learned Single Judge proceeded on the basis of treating this application under Section 11(6) of the Act. This may be bona fide error. Mr. Sorabjee, learned Senior Counsel for the appellant, strenuously urged that after expiry of period of thirty days, the respondent has lost the right to appoint Arbitrator under Clause 9l of the agreement and in support thereof, invited our· attention to the following decisions of this Court. (i) [200018 sec 151 [Datar Switchgears Ltd. v. Tata Finance Ltd & Anr. ,] (iI) [2006] 2 sec 638 [Punj Lloyd Ltd. v. Petronet MHB Ltd. ,] : ,.

\-- (tit) [20061 ssec 219 [BSNL & Ors. v. Subash Chandra Kanchari & Anr. ,] (iv) [2006] 2 sec 628 [Shin Satellite Public Co. Ltd v. Jain Studios Ltd. ,] (v) (2006] 12 SCALE 144 [Union ofIndia & Anr. v. Mis. V. S. Engineering (P) Ltd. ,] -"'-. .... Our attention was also invited to a Full Bench decision of the Delhi High Court in J. V. v. Union ofIndia & Ors. , decided on 31. 8. 2006 and a decision of the Calcutta High Court in Great Eastern Shipping Co. Ltd v. Board of Trustees/or the Port ofCalcutta, (2005) 1 Arb. LR 389. 6. Before we deal with each case cited above, it may be relevant to deal with scope of Section 11 of the Act. A person of any JJ. ationality may be appointed as Arbitrator, unless otherwise agreed between the parties. Subsection (2) of Section 11 says that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub- ...

~ section (3) provides that failing any agreement referred to in sub-section (2), one arbitrator can be appointed by each party and the two arbitrators so appointed shall appoint the third arbitrator who shall act as the presiding arbitrator. Sub-section (4) says that in case a party fails to make appointment .. within thirty days from the date of receipt of the request to do so from the other party, or that the two appointed arbitrators fail to nominate the third arbitrator within thirty days from the date oftheir appointment, the appointment shall be made by the Chief Justice or by any person or institution designated by him. Sub-section (5) says failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the ~ other party to so agree the appointment shall be.

made, upon request of a party, by the Chief Justice or any person or institution designated by him. Therefore, the concept of thirty days is there in Sub-sections (4) & (5). This is in the event of the parties did not come to appoint arbitrator or the two nominated arbitrators fail to agree within thirty days for appointment ofthird arbitrator, application can be moved under Section 11(5) of the Act to the Chief Justice for appointment of arbitrator. But in sub-section (6), where, the procedure has already been agreed upon by the parties, as in the present ~ case, and in that event, ifa party fails to act as required under that procedure or the parties, or the tWo appointed arbitrators, fail to reach an agreement ACE PIPELINECONTRACTS PRIVATELID. v. BHARATPETROLEUMCORPORATIONLID. [A. K. MATHUR, J. )785 ""? ' -+.

expected of them under that procedure or a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a ; party may in that event, request the Chief Justice or a person or an institution designated by him to make necessary measures, unless the agreement on the appointment procedure provides other means for appointment of arbitrator. Therefore, so far as the period of thirty days is concerned, it is not mentioned in Sub-section (6). The period of limitation is only provided under sub- ~ _,,. sections (4) & (5) of Section 11. As such, as per the statute, the period of limitation of thirty days cannot be invoked under sub-section (6) of Section •· 1I of the Act. In this context, their Lordships in Datar Switchgears Ltd (supra) did not permit to count 30 days as such in sub-section (6). We cannot do any better than to reproduce paragraphs I9, 20 & 21 of the judgment in that case. "19.

So far as cases falling under Section I1(6) are concerned- such as the one before us no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section I1(5) of the Act. In our view, therefore, so far as Section I I(6) is concerned, ifone party demands the opposite party to appoint i ... an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the frrst party has moved the court under Section 11, that would be sufficient.

In other words, in cases arising under Section 11(6), ifthe opposite party has not made an appointment within 30 days ofdemand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited. 20. In the present case the respondent made the appointment before the appellant filed the application under Section 11(6) though it was beyond 30 days from the date ofdemand. In our view, the appointment of the arbitrator by the respondent is valid and it cannot be said that the right was forfeited after expiry of30 days from the date ofdemand. 21.

We need not decide whether for purposes of sub-sections (4) and ' +- (5) of Section, which expressly prescribe 30 days, the period of 30 days is mandatory or not. " 7. The observations made by their Lordships are very clear and Their Lordships negatived the contention that 30 days should not be read in subsection (6) of Section 11 of the Act if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues. Their Lordships in paragraph 20 have also very --". categorically held that in the present case the respondent made the ~ appointment before the appellant filed the app 1lication under section 11(6), "' though it was beyond 30 days from the date of demand, the appointment of the arbitrator by the respondent was valid and it cannot be said that the right was forfeited after expiry of30 days from the date ofdemand.

Their Lordships were also very clear in their mind in paragraph 21 and observed, "we need not decide whether for purpose of sub-sections (4) and (5) of Section 11, which expressly prescribe 30 days, the period of 30 days is mandatory or not. " We are only concerned with reading of 30 days within sub-section (6) of Section 11. So far as the period of 30 days with regard to Section 11(6) is concerned, there is no manner of doubt that their Lordships had not invoked -i- . . I. 30 days as mandatory period under Section 11(6) and beyond that it cannot be invoked by the appointing authority. Therefore, it is totally misnomer to read 30 days in Section 11(6) ofthe Act, though Shri Sorabjee, learned senior counsel appearing for the appellant tried to emphasize that the decision in Datar has been affirmed by a three Judge Bench and therefore, 30 days should be read in Section 11(6) of the Act is also not correct. 8. In the case of Punj Lloyd Ltd.

(Supra), Their Lordships only quoted paragraph 19 in part and not in full. Full paragraph 19 of the judgment in Datar (supra) has been reproduced above. In fact subsequent observation of their Lordships, "We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited", this portion of order was not reproduced. Therefore, it is not a case that the decision given by two Judge Bench in Datar (supra) has been reaffirmed and this is binding on us. We regret to say this is not correct. In the case of Punj Llyod Ltd Their Lordships only set aside the order and remitted the matter back to the High Court for appointment ofarbitrator by the Chief Justice. But the ratio laid down in Datar (supra) holds good and it is not negatived, the ~ period of 30 days cannot be read in Section 11(6) of the Act.

The relevant portion of Punj Lloyd's case (supra) reads as under:- ACEPIPELINECONTRACTS PRl". ATELTD. v. BHARAT PETROLEUMCORPORATION LTD. [A. K. MATHUR, J. J787 ~· "Having heard the learned counsel for the parties, we are satisfied that the appeal deserves to be allowed. The learned counsel for the appellant has placed reliance on the law laid down by this Court in the case of Datar Switchgears Ltd v. Tata Finance Ltd. (SCC p. 158, para 19) wherein this Court has held as under : "So far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to ... , appointment does not get automatically forfeited after expiry of 30 days. Ifthe opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient.

In other words, in cases arising under Section 11(6), ifthe opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. " 9. The aforesaid quotation would clearly reveal that the crucial words in paragraph 5 were not quoted in the aforesaid case which has been reproduced above. 10. Our attention was also invited to a decision ofthis Court in the case of Union ofIndia v. Popular Construction Co. , [2001) 8 SCC 470, This was in relation to Section 34(3) of the Act. This is with regard to the period of limitation for moving the Court under Section 34 of the Act for setting aside the award i. e. the period of limitation was prescribed in Section 34 itself. Therefore, Section 5 of the Limitation Act was not made applicable.

This is not the case before us in the present controversy. t 11. Our attention was also invited to a decision ofthis Court in the case of The State ofUttar Pradesh & Ors. v. Babu Ram Upadhya, [f961] 2 SCR 679, In that case, their Lordships have dealt with the interpretation of the statute and they have referred to "Statute Law" by Craies and "The Interpretation ofStatutes" by Maxwell. Their Lordships have quoted a passage from Maxwell which reads as under: "On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or ·'rinjustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or, in other words, as directory only.

The neglect of them ·may be penal, indeed, but it does not affect the validity of the act done in disregard of them. " --" This observation, so far as this case is concerned, has no relevance as we have already mentioned above that the period of 30 days cannot be read in "" Sub-secti have to be appointed as arbitrators. However, it was observed that failure on . >. the part of the Department to take a decision for appointment of arbitrators would not defeat the right of the party to approach the High Court for appointment of arbitrator. Direction was given to the Department for appointment of arbitrators within 30 days. ". ' 13. It may also not be out of place to mention that we are aware of the Departmental lethargy in making appointment of arbitrators in terms of the · arbitration clause.

Therefore, mandamus can be issued by the Courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within the 'f ,. J reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms ofarbitration clause & appoint the arbitratonarbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name. 14.

In the present case, in fact the appellant's demand was to get some retired Judge of the Supreme Court to be appointed as arbitrator on the ground that if any person nominated in the arbitration clause is appointed, then it may suffer from bias or the arbitrator may not be impartial or independent in taking decision. Once a party has entered into an agreement with eyes wide open it cannot wriggle out ofthe situation that ifany person ofthe respondent- BPCL is appointed as arbitrator he will not be impartial or objective. However, if the appellant feels that the arbitrator has not acted independently or impartially, or he has suffered from any bias, it will always be open to the /r party to make an application under Section 34 of the Act to set aside the award on the ground that arbitrator acted with bias or malice in law or fact. [2007] 4 S. C. R. A 15. In view ofour above discussion, we find no reason to interfere with .........

the order passed by the learned Single Judge of the High Court of'Delhi in Arbitration Petition No. 181 of2005. The arbitrator has already been appointed. He should proceed in the matter and decide the dispute expeditiously. Consequently, the appeal is dismissed with no order as to costs. -I B B. B. B. Appeal dismissed.