S. Sankarasubban, J.

The above Civil Revision petition is filed against the order passed in O.P. 66/83 on the-file of the Subordinate Judges Court, Kozhikode. The first respondent in the CRP, M/s. Salam Traders, was the petitioner in the O.P. which was filed under S.8 of the Arbitration Act. The petitioners in the C.R.P. are the Food Corporation of India and its Officers. The case of the petitioner in the O.P. is as follows:- The petitioner had entered into an agreement with the Food Corporation of India for the work of Clearing and forwarding-cum-handling and transporting of various food articles at Calicut Port and FCI godown for a period of two years from 11.8.79. It had deposited with the respondents a sum of Rs. 50,000/- by way of security for the due performance of the work. According to petitioner, an amount of Rs. 4,26,707.96 was due to the petitioner for the work done during the period of contract. Disputes and differences arose between the parties regarding the claim of the petitioner. The agreement entered into between the parties contained an Arbitration Clause. As per the Arbitration Clause, the Managing Director of the Food Corporation of India has to appoint an arbitrator to decide the disputes and difference arising out of the agreement. The petitioner on 27.7.82 sent a notice to the Managing Director to appoint an arbitrator to decide the disputes and differences between the parties. Excepting saying that the matter is under consideration, no arbitrator has been appointed by the Managing Director. Hence the petitioner filed a petition under S.8(2) of the Arbitration Act for appointment of arbitrator to settle the disputes between the parties.

2. The respondents in the O.P. filed a counter. They challenged the maintainability of the petition. According to them, there were no disputes or differences between parties it was contended that the petition was "barred by limitation. As per the terms of the contract, no person other than the person appointed by the Managing Director of the Food Corporation of India can be the arbitrator for the disputes. A petition under S.8 is not maintainable in the facts of the case. The Sub-Court considered the questions and found that the petition under S.8 was maintainable and appointed the second respondent as the arbitrator. It is against the above order of the Sub Court, the Food Corporation of India and its officers have come up in revision. When the CRP came up originally for hearing before John Mathew, J. his Lordship, after hearing the parties, was of the view that the matter requires consideration by a Bench of two Judges. Before his Lordship the revision petitioners contended that the revision has to be allowed in view of the decision of this Court in Food Corporation of India v. A. Mohammed Yunus (AIR 1987 Kerala 231). But the respondents submitted that a Full Bench decision of the Delhi High Court in Veil Prakash Mithal v. Union of India & Ors. AIR 1984 Delhi 325 has taken a view which is opposite to the view taken by the Division Bench in AIR 1987 Kerala 231. It was also contended that the decision in M/s. Rai Bhadur Basakha Singh & Sons (Contractors) Pvt. Ltd. v. M/s. Indian Drugs & Pharmaceutical Ltd. AIR 1979 Delhi 220 which was relied on in the Kerala decision has been overruled by the latter Full Bench decision of the Delhi High Court. Before the learned single judge the F.C.I, contended that in any event the petition under S.8 was not maintainable and referred to various decisions in support of that-contention, Because of the importance of the question raised, the learned single judge referred the matter to a Division Bench.

3. The matter came up before the Division Bench consisting of K.T. Thomas & K.S. Radhakrishnan, JJ. The Division Bench referred to the decision in Food Corporation of India v. Mohammed Yunus AIR 1987 Ker. 231 [LQ/KerHC/1987/81] and in Ved Prakash Mithal v. Union of India & Ors. AIR 1984 Delhi 325. It also took into consideration that the petition was filed under S.8 of the Arbitration Act. The Division Bench was of the view that since the decision in AIR 1984 Delhi 325 was not brought to the notice of the Division Bench which had decided AIR 1987 Ker. 231, the matter has to be decided by a Full Bench of this Court. That is how the matter has come up before the Full Bench of this Court.

4. Before we deal with the rival contentions, we shall extract below the Arbitration Clause:

"All disputes and differences arising out of or in any way touching or concerning this agreement whatsoever (except as to any matter the decision of which is expressly provided for in he contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the Food Corporation of India. It will be no objection to any such appointment that; the person appointed is or was an employee of the Corporation, that he had to deal with the matters to which the contract relates and that in the course of his duties as such employee of the Corporation that he had expressed his views on all or any of the matter in dispute or differences.

The award of such Arbitrator shall be final and binding on the parties to this contract. It is a term of this contract that in the event of such Arbitrator to whom the matter is originally referred being transferred or vacating his office or being to act for any reason, the Managing Director of the Food Corporation of India at the time of such transfer, vacation of officer inability to act, shall appoint another person to act as Arbitrator in accordance with the terms of this contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by the Food Corporation of India as aforesaid should act as Arbitrator and if for any reason that is not possible the matter is not to be referred to Arbitrator at all.

Provided further that any demand for arbitration in respect of any claim (s) of the contractor Under the contract shall be in writing and made within one year of the date of completion (expiry of the period) of the contractor from the date of termination of the contract if it is terminated earlier and where this provision is not complied with claims of the contractor shall be deemed to have been waived and absolutely barred and the Corporation shall be discharged and released of liabilities under this contract."

5. Learned counsel for the petitioner Sri. Karunakaran Nambiar submitted that a petition for appointment of an arbitrator with reference to the above Clause cannot be filed under S.,8 of the Arbitration Act. According to him, the clause enables the Managing Director to appoint a person as Arbitrator. Hence, according to him, this is not a case where an arbitrator has to be appointed with the consent of both the parties. He further submitted that even if it is found that a petition under S.8 was maintainable, the F.C.I, cannot be compelled to appoint an arbitrator because of the following term of the Clause: "It is also a term of this contract that no person other than a person appointed by the F.C.I, as aforesaid should act as Arbitrator and if for any reason that is not possible the matter is not to he referred to Arbitrator at all". It was this Clause that was interpreted in the decision in AIR 1987 Kerala 231, and which held that the court cannot appoint an arbitrator in view of the above clause. Learned counsel submitted mat even though AIR 1984 Delhi 325 has taken a different view from AIR 1987 Ker 231 [LQ/KerHC/1987/81] , the facts in AIR 1987 Kerala 231 will reveal that the petition that was filed there was under S.20 and not under S.8. Hence the counsel submitted that in any view of the matter the order passed by the Court below is against the provisions of law and it has to be set aside.

6. Sri. Rajiv A. George, learned counsel appearing on behalf of the first respondent, contended that the order passed by the Court below was perfectly within its jurisdiction. He contended that S.8 foresees a situation where consent of both parties is necessary for appointment of an arbitrator. According to him, by allowing the Managing Director to nominate a person as arbitrator, the petitioners had consented for an arbitrator to be appointed. But when the Managing Director does not nominate the person, it amounts to a difference of opinion in the appointment of arbitrator and hence can move the court under S.8(2) of the Arbitration Act. He further submitted that the Food Corporation of India had never informed the first respondent as to whether it was going to appoint an arbitrator or not. In these circumstances, the first respondent had no other alternative than to approach the court under S.8 of the Act. Regarding the non-arbitrability clause which is included as a term in the contract, the learned counsel for the first respondent submitted that the view of the Delhi High Court was correct in point of law since according to him any party to the arbitration agreement cannot refuse to appoint an arbitrator without a reason. He further submitted that if one person is allowed to go back on the terms of the contract, the other party to the contract will be put to great difficulty; even he may not be able to approach the civil court. According to him, the Division Bench decision reported in AIR 1987 Kerala 231 is not correctly decided and hence it requires reconsideration.

7. First we shall decide the question whether a petition under S.8 of the Arbitration Act is maintainable in the facts of the case. If we find that such a petition is not maintainable, it is not necessary for us to go into the correctness of the decision in AIR 1987 Kerala 231. Regarding the non-arbitrable clause, S.8 of the Arbitration Act reads as follows:

Power of court to appoint arbitrator or umpire - (1) In any of the following cases -

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) if any appointed arbitrator or umpire neglects or refuses to act, or is in capable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;

any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.

9. In the present case, the petition is filed for invoking S.8(1)(a). For S.8(1)(a) to be applicable, the following conditions are necessary:

(1) The agreement should provide for reference for appointment of an arbitrator or arbitrators by all the parties jointly.

(2) The parties do not concur in the appointment of the arbitrators after the differences have arisen.

(3) A notice should have been sent by one of the parties to the other parties requesting for the appointment of arbitrator.

Now if we examine the Arbitration Clause in the agreement between the parties, the following facts are clear:

(1) The Clause provides for reference to arbitration.

(2) The Clause enables the Managing Director to appoint an arbitrator.

Thus the Clause does not provide to appoint a person as arbitrator by the consent of both the parties. The power to appoint an arbitrator is given to a person as arbitrator by the consent of both the parties. The power to appoint an arbitrator is given to a person mentioned in the Clause. The question is whether when a person is authorised to appoint an arbitrator and when such person does not appoint the arbitrator, the aggrieved party can come to the court under S.8 of the Arbitration Act. To put it more concisely, when a power is given enabling a person or authority to appoint an arbitrator can it be said that the Clause provides for appointment of arbitrator by consent because if the arbitration clause does not provide for the appointment of arbitrator by consent, S.8 is not applicable. Now we shall refer to the decisions which were cited before us by both the parties. We may at once say that only the decisions in Union of India v. D.P. Singh, AIR 1961 Patna 228 and in Food Corporation of India v. Bibhutibhusan Patra & Ors, AIR 1987 Orissa 230, have taken the view that a petition under S.8 is maintainable in circumstances similar to the facts in this case. The other courts have taken a different view. In this context, we also wish to refer to S.4 of the Arbitration Act, which is as follows:

"The parties to an arbitration agreement may agree that any reference there under shall be loan arbitrator or arbitrators to be appointed by a person designated in the agreement either by name or as the holder for the time being of any office or appointment".

First we shall refer to the decision in M/s. Harbans Singh Tuli & Sons Builders (P) Ltd. v. Union of India (1992) 2 SCC 225 [LQ/SC/1992/147] : In that case, the petitioner offered his tender for entering into a contract for supplying provisions of officers mess and single officers quarters. The tender was accepted and the acceptance was communicated. Thereafter a contract was signed. A dispute arose concerning the extra work

which the petitioner was compelled to do. Clause 70 of the Contract enabled the parties to 5 go by way of arbitration. Under this Clause the Engineer-in-Chief Army Headquarters, i was to appoint an arbitrator. The question arose whether on the terms of the Clause, m S.8 can be invoked. The Honourable Supreme Court held as follows:

"Sub-s.(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. 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, S.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 office, certainly, this section will not apply".

But that decision further says that if one of the parties is by agreement given power to make appointment without consulting others, the sub-section would apply. In the present case, we find that the right to nominate is given to the Managing Director and not to any parties. The agreement is between the petitioner and the Food Corporation of India. In Union of India v. Prafulla Kumar AIR 1979 SC 1457, a

Clause similar to the Clause in question came up for considered on before the Supreme Court. In that J case the Union of India called for tenders for the construction of a bridge on Imphal River in the State of Manipur. The respondent submitted his tender and the tender was accepted by the Union of India. An agreement was entered into in writing. The deed of agreement contained an arbitration clause, which provided that except where otherwise provided in the contract all questions and disputes arising out of or relating to the contract shall be referred to the sole arbitration of the person appointed by the President of India with such designation only as he may specify for Manipur Territory and if he is unwilling to act to the sole arbitration of some other person appointed by the arbitrator. A dispute arose between the parties and the respondent filed a suit against the Union of India in the High Court of Calcutta under the Arbitration Act and prayed that the arbitration agreement be filed and a reference be made to the arbitrator under the terms of the said agreement. It was contended on behalf of the Union of India that as per Clause 29 of the agreement, any matter of dispute shall be referred to the sole arbitration of the person appointed by the President of India or if he is unwilling to act to the sole arbitration of some other person appointed by the arbitrator. The question arose whether an arbitrator can be appointed by the Court. In dealing with this contention the Honourable Supreme Court held as follows:

"Under S.20(4) of the Arbitration Act when an agreement is filed, the court is required to make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or where the parties cannot agree upon a arbitrator, to an arbitrator appointed by the court. The sub-section requires that the Court shall make an order of reference to the arbitrator appointed by the parties whether in the agreement or otherwise, If no such arbitrator had been appointed and when the parties cannot agree upon an arbitrator, the Court may proceed to appoint an arbitrator by itself."

In that case, the Court further held as follows:

" An arbitrator has not been appointed by the parties and as the parties are not agreed upon an arbitrator the court may proceed to appoint an arbitrator, but in so doing it is desirable that the court should consider the feasibility of appointing an arbitrator according to the terms of the contract. In this case, the respondent in the petition has prayed for an appointment of an arbitrator under the terms of the agreement. Before us bath the parties expressed a desire that the President should be asked to appoint an arbitrator according to Clause 29 of the agreement. We feel that there could be no objection to this suggestion and we accordingly ask the President to appoint an arbitrator as contemplated under Clause 29".

In M/s. Dhanrajamal Gobindram v. M/s. Shamji Kalidas & Co. AIR 1961 SC 1285 [LQ/SC/1961/86] , the parties by their agreement had placed the power of selecting an arbitrator in the hands of the Chairman of the Board of Directors of the East India Cotton Association Ltd. The clauses were similar as the clauses in the present case. Interpreting the clause, the Honourable Supreme Court held that the court can certainly perform the ministerial act of sending the agreement to the Chairman of the Board of Directors of the East India Cotton Association Ltd. to be dealt with by him. The Court further observed that once the agreement filed in Court is sent to the Chairman, the bye-laws lay down the procedure for the Chairman and the appointed arbitrator to follow, and that procedure, if inconsistent with the Arbitration Act prevails. Further in its opinion there was no impediment for action being taken under S.20(4) of the Arbitration Act. Of course 8(1)(a) did not arise for consideration; but the court invoked the power under S.20. M/s, Prabhat General Agencies v. Union of India, AIR 1971 SC 2298 [LQ/SC/1970/407] is another case where the construction of 8(1)(b) came into consideration before the Supreme Court. In paragraph 4 of the judgment, the Supreme Court held as follows:

"S.20 is merely a machinery provision. The substantive rights of the parties are found in S.8(1)(b). Before S.8(1)(b)can come in to operation it must be shown that (1) there is an agreement between the parties to refer the dispute to arbitration. (2) they must have appointed an arbitrator or umpire to resolve their dispute (3) anyone or more of those arbitrators or umpire must have neglected or refused to act (4) the arbitration agreement must not show that i t was intended that the vacancy should not be filled (5) the parties or the arbitrator had not supplied the vacancy."

9. A similar question arose in M/s. Boriah Basavish and Sons v. Indian Telephone Industries Ltd. AIR 1973 Mysore 309. There the arbitration clauses directed the arbitrator to be appointed by the President of the Institute of Engineers. On the question raised in that case whether an application under S.8(2) was maintainable, the Court held that both parties have already agreed upon the arbitrator and it was not a case where the Court has got to exercise its jurisdiction under S.8 of the Act as the parties have not agreed upon the appointment of the arbitrators and there is no vacancy created on account of the arbitrator already appointed not being available to decide the dispute. It held that in cases where the arbitrator has already been agreed upon between the parties, what remains to be done after the dispute arises is only a reference to the named arbitrator. In such a case, a party who wishes to have the dispute decided by the named arbitrator has to resort to the provisions of S.20 of the Act. Sub-s.(4) of S.20 provides that where no sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties.

10. In AIR 1984 Delhi 325, the clause which came up for interpretation before the Full Bench was similar to the clause in the present case. There the arbitrator had to be appointed by the Chief Engineer, Public Works Department. Chief Engineer did not appoint the arbitrator. Then one of the parties approached the Court under Ss.8 and 20 of the Arbitration Act. Then the Court had to decide whether the application will lie under S.8, or 20. The court held that S.8 does not apply to the facts of the case. It held as follows:

"In our respectful opinion, the learned judges were absolutely right that neither S.8(1)(a) nor S.8(1)(b) applied to the clause such as we have in this case.

xxx xxx xxx xxx

To a case where the authority to nominate the arbitrator is vested in the Chief Engineer, as in this case S.8 on its own terms have no application. The clause provides for an appointment by a named person-Chief Engineer in this case. He is a persona designata. This method must be invoked. This method does not fit in the scheme and structure of S.B."

11. AIR 1990 Bombay 45 (Union of India v. M/ s. Ajit Mehta & associates) is another case where this question came up for consideration. After considering elaborately the decisions of various High Courts, the Court held as follows:

"The conspectus of the decision cited above, therefore, lays down a proposition that if under a clause of arbitration such as ours where the arbitrator is to be appointed by a named authority and not by consent of the parties, the provisions of S.8 cannot be invoked for appointment of an arbitrator. It is only the provision of S.20(4) that can be availed of such circumstances, and even in that case, the only direction that the Court can be given in the first instance, is to the appointing authority to name the arbitrator. The second proposition which emerges from this decision is that when there is an express term in the contract that the dispute will be arbitrated only by an arbitrator appointed by the named authority and when an arbitrator is appointed under S.8 to arbitrate such a dispute, the very appointment of the arbitrator is void being without jurisdiction, the arbitrator so appointed lacks jurisdiction inherently and hence the award made by such arbitrator is non-est.. The third proposition is that when the award suffers from such inherent defect it can be set aside or ignored at any stage of the proceedings".

12. In this context, we also wish to state that AIR 1987 Ker. 231 [LQ/KerHC/1987/81] is a case where the petition was filed under S.20 of the Arbitration Act and not under S. 8 of the Arbitration Act. The learned counsel for the respondents relied on the decision of the Supreme Court in Nandyal Co-operative Spinning -Mills Ltd. v. K. V. Mohan Rao (1993) 2 SCC 654 [LQ/SC/1993/210] . In that case, the respondent concluded a contract with the appellant on February, 1986 to construct a building at a cost of Rs. 1,00 crores. During its execution, certain difference arose between the parties. The respondent requested the administrative Head of the appellant to appoint an arbitrator within 15 days of its receipt. Since no arbitrator was appointed, he filed O.P. 167/88 in the Court of subordinate Judge, Nandyal to appoint an arbitrator. The notice was issued to the appellant. By letter dated July 27,1988 the respondent was informed about the appointment of Yethiraj, Superintending Engineer, B.H.E.L Hyderabad as sole arbitrator. After giving opportunity to both sides, by order dated March 2,1991, the Civil Court appointed Sri. Justice C. Sriramulu, a retired judge of the High Court, as arbitrator. His order was challenged before the High Court; but it was dismissed. From the facts, it appears that the appointment of Yethiraj was not endorsed by the court on the ground of bias. This is discussed in paragraph 4 of the judgment. The Supreme Court upheld the objection of the respondent to the nomination of Yethiraj and held that the nomination of Yethiraj does not bind the other parties. It found that Sri. Yethiraj was biased. The finding on the question of bias was itself enough for a decision in that case. But it is seen that the appellant raised a contention that S.8(1) (a) of the Arbitration Act does not apply since the arbitrator is to be appointed by the administrative Head of the appellant. The Honourable Supreme Court referred to the decision in AIR 1979 SC 1457. That was a case where S.20(4) of the Arbitration Act came up for consideration. In the facts of the case, the Supreme Court held that an application under S.8(1)(a) was maintainable. But we do not think, the observations in that case can be taken as conclusively deciding the question; especially because in the earlier decisions of the Supreme Court in (1992) 2 SCC 225 [LQ/SC/1992/147] and AIR 1961 SC 1285 [LQ/SC/1961/86] were not considered. Further it was also seen that the decisions in Union of India v. M/s. Ajit Mehta & Associates, Pune & Ors. AIR 1990 Bombay 45, V.K. Construction Works (P) Ltd v, M/s. Food Corporation of India, AIR 1987 Punjab & Haryana 97, were brought to .the notice of the Supreme Court. But the Supreme Court held that the facts of those cases were different from the facts of the case which was being decided by the Supreme Court. So far as our case in hand is concerned, the facts are similar to the facts in AIR 1990 Bombay 45 and AIR 1987 Punjab & Haryana 97.

13. The counsel for the petitioners also referred to the decision in Union of India v. D.P. Singh AIR 1961 Patna 228. In that case, the Patna High Court takes the view that it is inherent in the arbitration agreement itself that the nomination of the arbitrator by the party who is given the sole power to appoint him shall be deemed to have been made by the consent of both the parties. There may be an express provision, it must be taken to be necessarily implied. According to Court, it has got absolute discretion in the matter of appointment of the arbitrator. We cannot agree with the observations in the above judgment, particularly in view of the subsequent Supreme Court decisions.

14. Another decision that was cited by the learned counsel was in Bharat Petroleum Corporation Ltd. v. Anuradha Ajit Malgaonkar and Others, 1997 (1) Arb. LIZ 550, There the facts are different. As per the Arbitration Clause, the disputes are to be referred to the sole arbitrator. The respondent issued notice to the Director (Marketing), when a dispute arose, to act as an arbitrator. He issued notice to the Director (Marketing) either appoint himself or nominate any other officer as arbitrator within 15 days. But the Director did not appoint any arbitrator within 15 days. After the expiry of 15 days, respondent No. 2 was appointed as Arbitrator. The contention in the case was that the Director had no power to appoint an arbitrator after 15 days and only the Civil Court has got the power under S.8(2) of the Arbitration Act. The Court took the view that the Director (Marketing) was an arbitrator and in his vacancy none was appointed. It shows that the facts are different from the facts of this case and hence it cannot be applied.

15. (1977) 2 SCC 715 [LQ/SC/1977/99] (Chander Bhan Harbhajan Lal v. State of Punjab) is also a case under S.8(1)(b) of the Act and hence the decision in that case cannot be applied to the facts of this case.

16. Thus, on the wording of S.8(1)(a) and in view of the above decisions, we are of the view that S.8(1)(a) is nost applicable to the facts of this case since the power to appoint or nominate the arbitrator is given to a designated person under the Arbitration Clause. Hence we are of the view that the petition filed by the respondents under S.8 of the Act before the Lower Court was not maintainable.

17. Since we have taken the view that the petition itself not maintainable, it is not necessary for us to consider the correctness of the decision rendered by the Division Bench in AIR 1987 Kerala 231. In that decision, the Court did not consider S.B. The Court considered whether an arbitrator can be appointed even under S.20(4) in the light of the terms of the clause.

The Civil Revision Petition is allowed and the order of the Court below is set aside.