G. RAMACHANDRA REDDY AND CO. versus CHIEF ENGINEER, MADRAS ZONE, MILITARY ENGINEERING SERVICE

Citation: [1994] 3 S.C.R. 808 · Decided: 29-04-1994 · Supreme Court of India · Bench: K. RAMASWAMY, N. VENKATACHALA

Judgment (excerpt)

A 
B 
G. RAMACHANDRA REDDY AND CO. 
v. 
CHIEF ENGINEER, MADRAS ZONE, MILITARY 
ENGINEERING SERVICE 
APRIL 29, 1994 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.J 
Arbitration Act, 1940: Sections 8(a) and 20. 
C 
Power of Court to appoint Arbitrato,-.Contract-Dispute-Notice to 
appoint Arbitrator in terms of contrac1'-Failure of party to appoint Ar-
bitrato,-He/d Court can appoint Arbitrator. 
The appellant Company's contract was terminated by the respon-
dent. Exercising the option under clause 17 of the General Conditions of 
D Contract the appellant issued notice to the respondent to appoint ar-
bitrator in terms of the contract for adjudicating the dispute which had 
arisen between them. On respondents' failure to do so the appellants filed 
a suit uuder Section 20 of the Arbitration Act, 1940 and a single Judge of 
the High Court appointed an arbitrator. On appeal a Division Bench of 
E the High Court agreed with the Single Judge that despite appellant's notice 
to appoint an Arbitrator no action was taken by the respondent. Though 
High Court's suggestion that the respondent could agree for appointment 
of anyone of the five Arbitrators named in the list given by the appellant 
did not find favour with the respondent, yet the Division Bench directed 
the respondent to appoint an Arbitrator within 15 days from that date 
F 
and declared that in case the respondent failed to do so, the Arbitrator 
appointed by the single Judge would be deemed to have been appointed 
under Section 20. 
In appeal to this court it was contended on behalf of the appellant 
G that (i) failure on the part of the respondent to appoint Arbitrator gave 
right to the appellant to invoke the jurisdiction of the Civil Court under 
Section 20(4) and the Court got jurisdiction to appoint the Arbitrator of 
its choice and (ii) the Division Bench committed a manifest error of law 
in interfering with appointment of Arbitrator under section 20(4). 
H 
Allowing the appeal and setting aside the judgment of the Division 
808 
• 
G. RAMACHANDRAREDDY & CO. v. MILITARY ENGG. SERVICE 809 
Bench, this Cot•"' 
HELD : 1. The single Judge rightly exercised the power under Section 
20( 4) of the Arbitration Act, 1940 and appointed the Arbitrator. When the 
notice was given to the opposite contracting party to appoint an arbitrator 
in terms of the contract and if no action had been taken, it must be deemed 
that he neglected to act upon the contract. When no agreement was 
reached, even in the court between the parties, the court got jurisdiction 
and power to appoint an Arbitrator. [812-H, 813-A-C] 
2. Even if Section 8(a) per se does not apply, notice was an intima-
A 
B 
tion to the opposite contracting party to act upon the terms of the contract C 
and its non-availment entails the forfeiture of the power to appoint an 
arbitrator in terms of the contract and gives right to the other party to 
invoke the court's jurisdiction under section 20. [813-B] 
3. The Division Bench was not right in holding that the respondent 
has by giving option to the appellant to agree for appointment of an ar-
D 
bitrator out of the five named persons had left it to the appellant to appoint 
an Arbitrator and allowed the appellant to appoint Arbitrator. [813-C] 
4. The appointment of Arbitrator made by the single Judge must be 
deemed to have been approved by this Court. [813-D] 
5. In the absence of any named arbitrator it would be open to the 
contracting parties to agree for an appointment of an Arbitrator by 
agreement even after the proceedings were laid in the Court under section 
20. In the absence of any such agreement, the Court gets jurisdiction and 
E 
power to appoint an Arbitrator. [811-H, 812-A] 
F 
Union of India v. Prafu/la Kumar Sangal, [1979] 3 S.C.C. 831, ex-
plained and held inapplicable. 
Nandyal Co-op. Spinning Mill Ltd. v. K.V. Mohan Rao, [1993] 2 
S.C.C. 654, referred to. 
G 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4378 of 
1994. 
From the Judgment and Order dated 5.1.93 of the Madras High 
Court in 0.S.A. No. 281 of 1992. 
H 
810 
SUPREME COURT REPORTS 
[1994] 3 S.C.R. 
A 
K. Parasaran, R. Murari and V. Balachandran for the Appellant. 
B 
A.S. Nambiar, T.V. Ratnam and Ms. A. Subhashini for the Respon-
dents. 
The following Order of the Court was delivered : 
Leave granted. 
This appeal arises from the judgment of the division bench of Madras 
High Court in O.S.A. No. 281/92 dated January 5, 1993. 
C 
The appellants contract was terminated by the res

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