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Union of India (Uoi) Vs. Janki Prasad Agarwal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. No. 551 of 1978
Judge
Reported inAIR1986All15
ActsArbitration Act, 1940 - Sections 2
AppellantUnion of India (Uoi)
RespondentJanki Prasad Agarwal
Advocates:P.N. Katju, Adv.
DispositionAppeal dismissed
Excerpt:
.....- section 2 (a) of arbitration act, 1940 - name of arbitrator not necessary to mention in arbitration agreement - mere agreement to holding of arbitration proceedings enough. - - the appellant instead of abiding by such a settlement, vide their letter dated 12-11-1976 cancelled such a settlement by which it was resolved and agreed upon to give the coal ash to the respondent, 8. the respondent in view of the non-performance of the terms and conditions of the agreement as well as the decision arrived at for settling their disputes and differences arrived at on 28-7-1976, called upon the appellant to appoint an arbitrator within 15 days to arbitrate into the disputes and differences which had arisen between the parties by means of a notice. 16. however, for a better appreciation..........i.e. 12 months. 5. the agreement which was executed in writing between the parties provided ah arbitration clause reproduced hereunder :-- 'in the event of any question of difference or dispute whatsoever at any time arising under these conditions of contract or in any other manner whatsoever under this contract or in any way relating thereto or as to the true meaning or interpretation of any of the provisions thereof (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to for decision to a sole arbitrator who shall be the -- or a person appointed by him in that behalf and the decision of the arbitrator shall be final and binding on both the parties. it will be the sole discretion of the -- as to who should be the.....
Judgment:

A.N. Dikshita, J.

1. The instantappeal under S, 39 of the Arbitration Act, 1940 (hereinafter referred to as the Act) has been preferred against the judgment and order dated 20-7-1978 passed by Sri S. B. Misra, Civil Judge, Jhansi decreeing the plaintiff-respondent's suit No, 41 of 1977 titled as Janki Prasad Agarwal v. Union of India.

2. Tenders for the sale of coal ash on running contract basis by 'Stock measurement' and on 'lump sum' for the Jhansi 'traffic area' for the period of one year were invited in the month of Jan. 1975 by the Divisional Engineer, Central Railway Jhansi (South). This period of one year was to be reckoned from the date of execution of the agreement The tenderers to the offer were required to deposit Rs. 2500/- as security money along with the tenders which were to be opened on 29-1-1975.

3. Sri Janki Prasad Agarwal plaintiff respondent (hereinafter referred to as the respondent) submitted his tender and his offer was accepted by Divisional Superintendent (W) on behalf of President of India vide his letter dated 13-3-1975 and he was required to execute an agreement.

4. Parties entered into a contract and an agreement in writing was executed on 25-4-1975. The contract for the sale of the coal ash was to commence with effect from 1-5-1975 and was to end on 30-4-1976. It was agreedbetween the parties that the cost of the coal ash was payable at the rate of Rs. 7000/- per month by depositing the same with the railway authorities. The entire coal ash of the 'traffic area' was to be delivered to the respondent during the period of contract i.e. 12 months.

5. The agreement which was executed in writing between the parties provided ah arbitration clause reproduced hereunder :--

'In the event of any question of difference or dispute whatsoever at any time arising under these conditions of contract or in any other manner whatsoever under this contract or in any way relating thereto or as to the true meaning or interpretation of any of the provisions thereof (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to for decision to a Sole Arbitrator who shall be the -- or a person appointed by him in that behalf and the decision of the arbitrator shall be final and binding on both the parties. It will be the sole discretion of the -- as to who should be the arbitrator. It will be no objection that the arbitrator is a Government servant and that he had to deal with the matters to which the contract relates or that in the course of his duties as a Government servant he has expressed views on all or any of the matters in question, dispute or difference.

In the event of the arbitrator appointed by the -- dying, neglecting or refusing to act or resigning or being incapable or unable to act for any reason whatsoever, it shall be lawful for the -- to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid. Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrator. Work under the contract shall, if reasonably possible, continue during the arbitration proceedings, and no payment due to or payable by the Railway Administration shall be withheld on account of such proceedings. The arbitrator may from time to time with the consent of the parties to the contract enlarge the time for making the award. Subject as aforesaid the Arbitration Act, 1940 and the Rules thereunder and any statutory modification thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.'

6. The respondent started performing the contract but with the passage of time disputes and differences arose between the parties with regard to the performance of the contract. Respondent protested that in spite of the deposit of the amount as per the terms and conditions of the agreement he was not allowed to lift the permissible quantity of the 'coal ash'. Instead of examining the merits of the protests lodged by the respondent, the Senior Divisional Engineer, Central Railways, Jhansi rescinded the contract It was alleged by the respondent that there was no such right, much less a legal right to cancel the contract and as such this act on the part of the appellant amounted to the breach of the terms and conditions of the agreement for which he was entitled to damages. Various other disputes and differences arose between the parties and consequently to settle such disputes and differences a meeting of the respondent and the appellant was held for arriving at a settlement The consequence thereof was that a settlement was arrived at and it was agreed upon and decided that certain quantity of coal ash would be given to the respondent and also that the amount of sales tax paid by him would be refunded. The minutes of this meeting wherein the settlement was arrived at were drawn up and signed by the parties.

7. It was alleged by the respondent that in spite of such a settlement having been arrived at between the parties for settling the disputes and differences which had arisen, coal ash was again not given nor the other terms and conditions as embodied in the settlement arrived at between the parties in the meeting, were complied with. The appellant instead of abiding by such a settlement, vide their letter dated 12-11-1976 cancelled such a settlement by which it was resolved and agreed upon to give the coal ash to the respondent,

8. The respondent in view of the non-performance of the terms and conditions of the agreement as well as the decision arrived at for settling their disputes and differences arrived at on 28-7-1976, called upon the appellant to appoint an Arbitrator within 15 days to arbitrate into the disputes and differences which had arisen between the parties by means of a notice. Such a notice seat on behalf of the respondent was received by the appellant on 6-1-1977. The respondent also lodged a claim for Rs. 1,78,071-38.

9. The appellant instead of appointing an Arbitrator as per the terms of the agreement, sent to the respondent another agreement vide their letter dated 2-8-1977. This later agreement provided that in case of disputes and differences arising between the parties the General Manager, Central Railways, would be the sole arbitrator. It further contained other terms and conditions which were at variance with the original agreement. Such an agreement which was sent vide letter dated 2-8-1977 by the appellant was not acceptable to the respondent.

10. The respondent alleged that the appellants do not propose to comply with the requirements of the notice and have no intention to appoint any arbitrator as per the terms and conditions of the agreement arrived at between the parties at the time of awarding the contract.

11. The respondent thereupon filed an application under Section 8 of the Act for the appointment of an Arbitrator to arbitrate into the disputes and differences which had arisen between him and the appellant in respect of the 'coal ash' in the Court of the Civil Judge, Jhansi which was registered as original suit No. 41 of 1977 titled as Janki Pd. Agarwal v. Union of India and others.

12. After hearing the parties the learned Civil Judge, Jhansi by his judgment and order dated 27-7-78 decreed the plaintiff's suit and appointed the General Manager, Central Railway as the sole Arbitrator for deciding the disputes and differences existing between the parties and in case of his non-availability to act as the sole Arbitrator the Chief Engineer, Central Railway was appointed to act as the sole Arbitrator. The learned Civil Judge granted two months' time to the sole Arbitrator to submit his award to the Court.

13. Aggrieved by the judgment and order dated 27-7-1978 passed by the Civil Judge, Jhansi, decreeing the suit of the respondent, the instant appeal has been preferred by the appellant.

14. Learned counsel appearing for the appellant has laid stress that in the arbitration clause of the agreement initially arrived at between the parties the name of the Arbitrator has not been mentioned inasmuch as the blankspace in the said clause has not been filled. It has thus been contended by the learned counsel for the appellant that in view of the non-mentioning of the name of the Arbitrator in the clause it would be deemed in law that there was no arbitration agreement constituted between the parties. It has been strenuously urged by the learned counsel for the appellant that the clause in the contract providing for reference of disputes to arbitration calls for a strict construction as it purports to exclude the jurisdiction of the ordinary courts and unless the intention to refer the disputes and differences to arbitration is expressed beyond doubt the courts should not enforce it. It has, further, been contended on behalf of the appellant that in such an eventuality the application for appointment of an Arbitrator as per the provisions of Section 8 of the Act was not maintainable and hence the judgment and the order passed by the Civil Judge, Jhansi decreeing the plaintiffs suit and appointing an Arbitrator is illegal and the judgment and order decreeing the suit is thus liable to be set aside.

15. However, in the instant appeal before us no objection whatsoever has been raised against the agreement arrived at between the parties. It is thus singularly clear that the existence of agreement providing for the reference of disputes and differences between the parties to an Arbitrator is admitted. Further it has also not been canvassed on behalf of the appellant that no disputes or differences have arisen between the parties. Manifestly respondent was fully justified in seeking recourse in a civil Court for the appointment of an arbitrator to resolve the disputes and differences which had arisen between the parties and the assertion on behalf of the appellant that a strict construction of the clause is to be considered stands repelled. An arbitration rests on the mutual and voluntary agreement of the parties to submit their matters of disputes or differences to a person whose determination is to be accepted. The object of the final determination of such disputes or differences between the parties is comparatively quicker, less expensive and perhaps less formal than is available in ordinary Court proceedings.

16. However, for a better appreciation of this contention on behalf of the defendantappellant it is necessary for a perusal of Section 2(a) of the Act which reads as under

'2(a) Arbitration Agreement means a written agreement to submit present or future difference to arbitration whether an arbitrator is named therein or not.'

17. The bare perusal of Section 2(a) reproduced above clearly provides that even if the Arbitrator is not named in the arbitration agreement it would not in any way affect the existence of such an agreement The only essentials of the agreement providing for arbitration are that there must be an agreement between the parties and the parties must be ad idem, such an agreement should be in writing and that there is intention of the parties to have their disputes or differences referred and derided through arbitration. In the instant case we find all the three ingredients having been salutarily fulfilled. The naming of the Arbitrator in the arbitration agreement is not necessary and in any case it would not make it non-existent The contention of the learned counsel for the appellant that the non-mentioning of the name of the Arbitrator in the agreement invalidates the arbitration agreement is thus not merited. Such a submission for resolving disputes or differences between the parties to a person chosen by them to act as Arbitrator and acceptable to them is a substitute for the process of the Court as it is comparatively quicker, most acceptable, more expeditious and less formal than proceedings in a Court of law It is not required that such an agreement to arbitrate be set in a particular form or words and in any case the usage of formal or technical words is not at all necessary An agreement providing for an arbitration would be deemed to be valid if it contains any clause collateral to the mam performance of the agreement.

18. Mere absence of the name of the Arbitrator cannot necessarily have the effect of taking an agreement out of the category of an arbitration agreement if otherwise the intention of the parties to agree to arbitrate is clear. There may not be any particular form having been laid down as universal in the framing of an agreement. The words used for the purpose must be words of choice and determination to come to an arbitration and not problematic words of mere possibility. There is nothing peculiar or extraordinaryabout an arbitration agreement and the same rules of construction and interpretation apply to such agreements as apply to agreements generally We have thus to seek to give effect to the intention of the parties as evidenced by the agreement itself without being overly technical in its interpretation. In endeavouring to collect the intention of the parties the whole context has to be considered. The agreement in the instant case clearly and in unequivocal terms reveals the existence of an arbitration agreement It has been emphasised by the learned counsel for the appellant that the clause providing for the reference of dispute to arbitration does not mention the name of the Arbitrator and as such the Court below erred in decreeing the suit. The mere absence of the name or the designation of the Arbitrator in the case in question may not nullify the existence of the arbitration agreement. It would be travelling too far to infer that by the mere non-mention of the name of the Arbitrator or his designation there was no intention to refer the disputes to arbitration. In fact it appears to be too hyper-technical a view which in any case is unjustified and unsupportable and in any case beyond the provisions of Section 2(a) of the Act. We consider it imperatively necessary to frustrate this obdurate resistance on the part of the respondent to succumb to arbitration.

19. Learned counsel for the appellant has laid stress on the submission that the clause before us should be stnctly construed and unless the language succinctly makes out an agreement of arbitration, this Court should not hold it to be so. The submission, to our opinion, is somewhat misconceived. We have carefully perused the clause of the agreement providing arbitration (reproduced above) as well as Section 2(a) of the Arbitration Act and it manifestly emerges that the clause in the agreement between the parties provides the existence of an arbitration agreement, The construction of the clause for the purpose of discovering such an intention is apparently revealed for (from) the reference of disputes or differences to arbitration and there is no question of placing any other meaning thereto. Such a clause has to be considered rationally in the context and there can be no doubt that parties in the instant case intended to submit to arbitration in case of disputes and differences arising out of the agreement arrived at betweenthem. Further as dealt with above the mere non-mentioning of the name of the Arbitrator in the clause providing for arbitration the entire clause would not become bad and ineffective. We are thus clearly of the view that the mere non-mentioning of the name of the Arbitrator in the space provided for in the clause providing for arbitration would not make the agreement invalid or inoperative. The appeal which has been preferred much in derogation to Clause 2(a) of the Arbitration Act thus deserves to be dismissed.

20. We accordingly find no merit in this appeal which is dismissed. We, however, make no order as to costs.


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