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(2) The Court by its order dated August 1, 1989 directed the Managing Director of the petitioner to enter upon reference and in case he was unwilling to act, liberty was granted to him to appoint an arbitrator. Pursuant to this direction the Managing Director, by his letter dated 25th/26th September, 1989, appointed Mr. Justice Vyas Dev Mishra, retired Chief Justice of the High Court of Himachal Pradesh, as the sole arbitrator. Thereupon, Mr. Justice Mishra entered upon reference and proceeded with the matter. But, unfortunately, he expired on June 20, 1990. This necessitated the appointment of a new arbitrator. For this purpose the petitioner moved an application under Section 28 of the Indian Arbitration Act, 1940. The respondent did not file any reply to the application nor appeared in the matter despite service. On December 17, 1991, this Court appointed Mr. Justice S.S. Chadha, a retired Judge of this Court, as the new arbitrator to fill the vacancy caused by the demise of Mr. Justice Mishra. Pursuant to his appointment as Arbitrator, Mr. Justice Chadha made and published his award on September 5, 1992.

(5) The Managing Director, pursuant to the above said order, appointed Mr. Justice Vyas Dev Mishra, a retired Chief Justice of the High Court of Himachal Pradesh, as an arbitrator for the adjudication of disputes between the parties. As Mr. Justice Vyas Dev Mishra died on June 20, 1990, an application was moved by the petitioner under Section 28 of the Indian Arbitration Act, 1940 for appointment of another arbitrator in his, place. Neither any one appeared on behalf of the respondent nor any reply was filed on its behalf. The matter came up before the Court on December 17, 1991 on which date Mr. Justice S.S. Chadha was appointed as an arbitrator. The submission of learned counsel for the respondent is that at no point of time the nomenclature of the post of Chairman of the petitioner company was changed to that of the Managing Director. The actual fact was that the post of Chairman of the company always existed and still exists but when the Managing Director was directed to enter upon reference or to appoint any other person as an arbitrator, the post of Chairman was vacant as no incumbent had been appointed against it since 1982. In view of this position, the learned counsel submitted that the Court had no authority to authorise the Managing Director to appoint an arbitrator in violation of the arbitration clause, which vested the power to appoint an arbitrator with the Chairman of the petitioner company. Learned counsel further submitted that since the initial appointment of the arbitrator was illegal and void ab-initio the subsequent appointment of Mr. Justice S.S. Chadha by the Court in place of Mr. Justice Vyas Dev Mishra suffered from the same malady.

(14) The reliance placed on the above decisions by the learned counsel for the petitioner do not apply to a situation where the jurisdiction of the arbitrator is challenged on the ground that the arbitration agreement is void ab initio. Such a situation is covered by the decision of the Supreme Court in the case of Waiverly Jute Mills Co. Ltd , wherein it was held that an arbitration agreement being the very foundation on which the jurisdiction of the arbitrator to act rests the proceedings must be held to be without jurisdiction where the arbitration agreement is not in existence at the time when the arbitrator enters upon reference, and the defect is not cured by the appearance of the parties in the proceedings before the arbitrator even if that is without protest.