Sharda Aggarwal, J.

1. The applicant has filed the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the) and has prayed for appointment of a Sole Arbitrator for adjudicating the disputes having arisen between the parties, in view of the arbitration clause contained in the licence agreements executed between the applicant and the respondents.

2. It is contended that in exercise of powers under Sub-section (2) of Section 4 of the Indian Telegraph Act, 1885, the Central Government delegated its powers to Telegraph Authority by GSR 806 Gazette of India Part-II, Section 3(I) dated 24th August, 1985 and on the request of the applicant granted licence to establish, maintain and operate Mobile Radio Trunked Service in eleven areas and executed eleven separate Licence Agreements for each area. All the Licence Agreements are similar. These eleven Licence Agreements were executed pursuant to the Department of Telecommunications proposal to introduce Mobile Radio Trunked Service in the country using 400 and 800 Mhz. Bands. The applicant was granted twelve months time to provide the service in specified areas. It is contended that the frequencies granted to the applicant were prone to inter-modulation problem, but WPC was not inclined to alter the frequencies inspite of applicants sincere efforts. The contention is that due to non-allocation of inter-modulation free frequencies by WPC, and the Department of Telecommunications not agreeing for change of effective date, the applicant was compelled to seek cancellation of the Licence Agreements. The Licence Agreements were accordingly cancelled by the Department of Telecommunications but they forfeited the Advance Licence Fee. The respondents did not respond to the requests of the applicant for release of Advance Licence Fee and the applicants letters to that effect remained unanswered. The applicant vide its letter dated 2nd February, 2000 addressed to the Director General Telecommunications and Director (VAS-III), Ministry of Telecommunications vide their letter dated 22nd February, 2000, in response to the applicants letter invoking the arbitration clause, stated that there was no dispute and the request to refer the disputes to the Sole Arbitrator was declined. The applicant had raised the dispute that the forfeiture of the Advance Licence Fee was illegal and the same was refundable to the applicant with interest at the rate of 24% per annum compounded monthly.

3. Condition 16 of the Licence Agreement incorporates the arbitration clause, which reads as under :

Condition 16. Arbitration of Disputes

(a) In the event of any question, dispute or difference arising under this licence, or in connection thereof, except as to the mater, the decision of which is specifically provided under this licence, the same shall be referred to the sole arbitration of the Director General, Telecommunications, or in case his designation has changed, or his office is abolished, then, in such case, to the sole arbitration of the officer for the time being entrusted, whether in addition to the functions of the Director General, Telecommunications or by whatever designation such officer may be called (hereinafter referred to as the said officer), and if the Director General, Telecommunications or the said officer is unable or unwilling to act as such, to the sole arbitration, then some other person appointed by the Director General, Telecommunications or the said officer.

(b) There will be no objection to any such appointment that the Arbitrator is a Government servant, or he has to deal with the matter to which the licence relates, he has expressed views on all, or any of the matter in disputes or in differences. The award of the Arbitrator shall be final and binding on the parties. It is a term of this licence, that in the event of such Arbitrator, to whom the matter is originally referred to, being transferred or vacating his office, or being unable to act for any reason whatsoever, such Director General, Telecommunications or the said officer shall appoint another person to act as Arbitrator, in accordance with the terms of the licence and the person so appointed shall be entitled to proceed with reference to the stage at which it was left out by his predecessor.

(c) The Arbitrator may, from time-to-time, with the consent of the parties, increase the time for making and publishing the award. Subject to Arbitration Act, 1940, the rules made thereunder and any modification thereof, for the time being in force, shall be deemed to apply to the arbitration proceedings as above.

(d) Upon any and every reference as aforesaid, the assessment of cots and incidental expenses in the proceedings for the award shall be at the discretion of the Arbitrator.

4. The respondents in their reply have not denied the existence of the arbitration clause in the Licence Agreements. They have also not denied that the applicant had invoked the arbitration clause by virtue of their letter dated 2nd February, 2000 to which they had replied vide their letter dated 22nd February, 2000 alleging that there was no dispute which could be referred to an Arbitrator. The respondents contention is that the Advance Licence Fee paid for a period of one year against each of the licence was forfeited, as the same was not refundable. They further contended that the licence fee was payable and recoverable for full one year even though surrender can happen at any time before the expiry of the year.

5. I have heard the learned Counsel for the parties and have perused the record. The execution of the Licence Agreements and their cancellation at the request of the applicant is not disputed. The fact that the Licence Agreements contained an arbitration clause is also not disputed. Learned Counsel for the applicant contends that since the respondents failed to refund the Advance Licence Fee, dispute had arisen in terms of the arbitration clause and the same became referable to the sole arbitration of the Director General, Telecommunications and if the Director General, Telecommunications is unable or unwilling to act as such, then to the sole arbitration of some other person appointed by the Director General, Telecommunications. According to the respondents, there was no dispute which could be referred for arbitration. The further contention of the learned Counsel for the applicant is that while exercising powers under Sub-section (6) of Section 11 of the Act, the Court is required to pass an order of administrative nature and the objection on the point as to whether a dispute had arisen or not could be examined only by the Arbitrator. Reference in this regard has been made to the decision of the Supreme Court in the case of Konkan Railway Corporation Ltd. & Ors. v. Mehul Construction Company, reported in VI (2000) SLT 321=(2000) 7 SCC 201 [LQ/SC/2000/1250] , wherein it was held :

When the matter is placed before the Chief Justice or his nominee under Section 11 of theit is imperative for the said Chief Justice or his nominee to bear in mind the legislative intent that the arbitral process should be set in motion without any delay whatsoever and all contentious issues are left to be raised before the Arbitral Tribunal itself. At that stage, it would not be appropriate for the Chief Justice or his nominee to entertain any contentious issue between the parties and decide the same. A bare reading of Sections 13 and 16 of themakes it crystal clear that questions with regard to the qualifications, independence and impartiality of the Arbitrator, and in respect of the jurisdiction of the Arbitrator could be raised before the Arbitrator who would decide the same. . . . . . . . . . . . . . . . . . . . .

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Section 16 empowers the Arbitral Tribunal to rule on its own as well as on objections with respect to the existence or validity of the arbitration agreement. Conferment of such power on the Arbitrator under the 1996 Act indicates the intention of the Legislature and its anxiety to see that the arbitral process is set in motion. This being the legislative intent, it would be proper for the Chief Justice or his nominee just to appoint an Arbitrator without wasting any time or without entertaining any contentious issues at that stage, by a party objecting to the appointment of an Arbitrator. If this approach is adhered to, then there would be no grievance of any party and in the arbitral proceeding, it would be open to raise any objection, as provided under the.

6. Learned Counsel for the applicant has further placed reliance on the decision of this Court in the case of Bakshi Steels Ltd. v. Govt. of India & Ors., reported in 89 (2001) DLT 63=2001 (I) AD (Delhi) page 527, where relying on the case of Konkan Railway Corporation Ltd. (supra), directions were issued for appointment of an Arbitrator in terms of the agreement.

7. Learned Counsel for the applicant has further relied upon the decision of Supreme Court in the case of Nimet Resources Inc. & Anr. v. Essar Steels Ltd., reported in VII (2000) SLT 166=IV (2000) CLT 262 (SC)=(2000) 7 SCC 497 [LQ/SC/2000/1449] . In this case the existence of the arbitration agreement itself was challenged. There were some transactions between the parties with regard to sale and supply of goods. Whether the said transactions fructified into a contract with an arbitration clause was the moot point to be decided. It was held by the Supreme Court that under the circumstances proper course for the parties would be to thrash out such question under Section 16 of theand not under Section 11 of the.

8. In the case in hand, the dispute having arisen between the parties is as to whether the respondents were entitled to forfeit the Advance Licence Fee or not In fact according to the respondents, they were entitled to forfeit the Advance Licence Fee as per the terms of the Advance Licence Agreements and as such according to them there was no dispute whatsoever which could be referred to an Arbitrator.

9. The pleadings show that there is no dispute that Licence Agreements were executed in favour of the applicant which were later on cancelled. There is also no dispute about the existence of an arbitration clause in the said agreements. The plea of the respondents that they were entitled to forfeit the licence fee and no dispute referable to an Arbitrator arose is not tenable at this stage. In view of the findings in the case of Konkan Railway Corporation Ltd. (supra), this issue can be decided only by the Arbitrator under Section 16 of the. A dispute arises when there is a claim by one party and denied or repudiated by the other. This clearly is the situation in the present case. While exercising jurisdiction under Section 11(6) of the Act, the Court has not to go into the question as to whether the claim of the applicant for refund of licence fee was valid or not. The validity of such a claim and the existence of a dispute has to be decided by the Arbitrator.

10. In view of my above discussion, the application is allowed. The respondents are directed to appoint an Arbitrator and refer the disputes in terms of the arbitration clause incorporated in the Licence Agreement within one month. The parties are, however, left to bear their own costs.