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U.P. Ban Nigam, Almora and anr. Vs. Bishan Nath Goswami, (Deceased by L.Rs.) - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 14 of 1982
Judge
Reported inAIR1985All351
ActsArbitration Act, 1940 - Sections 8, 8(1), 13, 20 and 20(2)
AppellantU.P. Ban Nigam, Almora and anr.
RespondentBishan Nath Goswami, (Deceased by L.Rs.)
Appellant AdvocateSunil Gupta and ;R.G. Padia, Advs.
Respondent AdvocateRajesh Tandon, Adv.
Excerpt:
.....an ex parte award on the basis of the evidence and materials supplied to him by the other party, when he does not make an award even though he could make it, it can be said that he neglected or refused to make it and action could be taken under section 8. in such a case there is also a failure on the part of the arbitrator in respect of the proceeding with the reference although there might not have been failure in entering on the reference and hence he could be removed under section 11. on a proper construction of that section it is clear that a failure in regard to either would be enough and that the legislature could not have meant that the failure must be in respect of both entering on and proceeding with the reference......at almora amounted to clear refusal, so learned judge appointed sri gobardhan upreti, advocate, almora as arbitrator and ordered the reference as given above.6. i have heard learned advocates for parties and perused the record.7. on behalf of revisionist, it was argued that the impugned order was without jurisdiction and the reference to sri upreti, advocate was totally unjustified inasmuch as the proceedings were not under section 20 of the act. in this connection reliance was placed upon om prakash v. union of india reported in air 1963 all 242 which posited :--'(c) arbitration act (1940), section 8 --appointment of arbitrator by court under section 8(2) -- effect is that arbitrator is to be considered as appointed by parties themselves -- reference to arbitration has to be made by.....
Judgment:
ORDER

N.N. Sharma, J.

1. This revision is directed against order dated 7-12-1981 by Sri G. K. Mathur, learned District Judge, Almora who allowed application of respondent (now dead) under Section 8 of Arbitration Act X of 1940 and appointed Sri Gobardhan Upreti, Advocate, Almora as an arbitrator to enter the reference and give award within the prescribed period.

2. There is no dispute on the point that under the agreement dated 20-2-1977 (Annex. 1) filed with the stay application, applicant-contractor was given the contract of cutting the trees in logs and to transport them to Haldwani Forest Depot : Clause 15 of the agreement provides that all the disputes between the Contractor and Chief Logging Officer shall be referable to the General Manager Logging who shall arbitrate on it. On 18-5-1981, applicant-contractor served a notice on opposite party to enter upon and proceed to decide the dispute by arbitration. There was a prayer that the award should be given within four months.

The arbitrator did not respond within one month of the receipt of the aforesaid notice nor gave any information in that regard to the contractor. By another notice, opposite parties were called upon to give consent for the appointment of one of the four persons proposed for the appointment as arbitrator. Opposite parties did not give consent for the appointment of any one within 15 days from the receipt of notice dated 25-6-1981.

3. It was on 6-7-1981, that the contractor received a notice from the General Manager, Forest Corporation, U. P. by which he called upon the parties for arbitration on 27-7-1981 at Lucknow. By letter dated 18-7-1981, the applicant-contractor informed the General Manager, Forest Corporation that the arbitration proceedings could take place at Almora and not at Lucknow because the cause of action had arisen at Almora and the agreement was executed at Almora and the matter was under the territorial jurisdiction of the Court of Almora. By his letter dated 25-7-1981, the General Manager, Logging. Lucknow informed the applicant that he would not arbitrate at Almora and cancelled the date. So the contractor applied under Section 8 of Arbitration Act for appointment of arbitrator out of the four persons proposed by him.

4. The Chief Logging Officer and the General Manager, Forest Corporation, U. P. contested the case on the ground that the contractor did not appear before the arbitrator and so the arbitrator was unable to give award. Opposite parties were not willing to the appointment of any one of the four persons as arbitrator nominated by the contractor.

5. Learned Judge found that the arbitrator neglected to proceed with the reference : he refused to arbitrate; having regard to the convenience of the parties and territorial jurisdiction, his refusal to proceed with the arbitration at Almora amounted to clear refusal, so learned Judge appointed Sri Gobardhan Upreti, Advocate, Almora as Arbitrator and ordered the reference as given above.

6. I have heard learned Advocates for parties and perused the record.

7. On behalf of revisionist, it was argued that the impugned order was without jurisdiction and the reference to Sri Upreti, Advocate was totally unjustified inasmuch as the proceedings were not under Section 20 of the Act. In this connection reliance was placed upon Om Prakash v. Union of India reported in AIR 1963 All 242 which posited :--

'(c) Arbitration Act (1940), Section 8 --Appointment of arbitrator by Court under Section 8(2) -- Effect is that arbitrator is to be considered as appointed by parties themselves -- Reference to arbitration has to be made by both and not one of the parties out of Court Court cannot make reference in absence of written application under Section 20(2).'

This is a Division Bench case.

8. A mere perusal of Section 8 of Arbitration Act, 1940 shall go to show that Court has power to appoint arbitrator or umpire under Section 8 in the cases enumerated in Section 8(1) of the aforesaid Act. Under Section 20 of the said Act, the Court can order reference to the arbitrator. Court had no jurisdiction to refer the dispute to arbitrator having appointed arbitrator under Section 8(2) of the aforesaid Act. Such order of the Court was without jurisdiction as was held in Union of India v. Om Prakash reported in AIR 1976 SC 1745. So the order of reference must fall off.

9. The next contention on behalf of revisionist was that Sri Govardhan Upreti, Advocate, Almora represented the contractor before the learned District Judge, Almora. This averment made by the revisionist in his application dated 6-1-1982 was countered by affidavit of Sri Shanker Nath Goswami dated 26-4-1982 where it was pointed out that the counsel of the contractor were Sri P. B. Goswami, Sri Mohan Singh Kaploti and Sri D. K. Joshi, Advocates. Moreover, the contractor died pending these proceedings. So this contention is devoid of force.

10. The next contention was that the General Manager Logging had his headquarter at Lucknow. He could not be forced to arbitrate at Almora. It was open to the arbitrator to fix the venue of arbitration of his choice. No direct authority on this point could be cited by revisionist.

11. However, reliance was placed on para 590 which occurs at page 306 of Vol. 2; Arbitration. Halsbury's Laws of England, Fourth Edition which reads : --

'In fixing the times and places of meetings it is usual for the arbitrator to consult the convenience of the parties and to comply, so far as possible, with their wishes; but it is within his discretion to fix such times and places as he may think proper.'

These observations were based on Whitwham Trustees etc., and Wrexham, Mold and Connah's Quay Rly. Co. (1885) 39 Sol Jo 692. However, that authority was not available.

12. There is no provision in the Arbitration Act to show that the place of meeting was to be fixed by the arbitrator. Even the said observation shall go to disclose that arbitrator will have regard to the convenience of the parties and so far as possible had to comply with their wishes.

13. It was not open to the arbitrator to fix the venue of his choice regardless of the convenience of parties etc. Under Section 13 of Arbitration Act, which contemplates the powers and duties of arbitrator, he cannot violate the principles of natural justice and has to give fair hearing to the parties. In the instant case, both the parlies resided at Almora and the cause of action also arose at Almora. Local inspection or adduction of evidence at Almora would have been conducive to the convenience of parties and justice in the matter. There was no condition in the arbitration agreement to empower the arbitrator to fix the venue of arbitration as he thought fit. It must be in consonance with the principles of natural justice also.

14. In fixing the venue of the meeting, the arbitrator must take into account all material circumstances, including the residence of the parties and their witnesses, the subject-matter of the reference and the balance of convenience. In the instant case, it is obvious that Almora is farflung from Lucknow and is also ill connected. It could have been inconvenient to the contractor to go to Lucknow for the purpose along with his evidence etc. and so he expressed his inability to go to Lucknow in that connection vide Ext. 6. Under such circumstances, I find that the refusal of arbitrator to proceed with the reference at Almora to give his verdict was unjustified.

15. Learned trial Judge referred to the correspondence of the parties Exts. 3, 6, 7, 8 and 12. It was by letter dated 25-7-1981 (Ext. 8) that the General Manager cancelled the date 27-7-1981 to proceed with the reference.

16. Learned trial Judge rightly based himself on Gopal v. State of Uttar Pradesh reported in AIR 1972 Cal 67 in which the arbitrator named in the arbitration clause in spite of repeated requests by a party to proceed with the arbitration did not respond.

17. In Mangal Prasad v. Lachhman Prasad reported in AIR 1964 All 108 (FB), it was observed (at p. 110) :---

'The arbitrator's jurisdiction to make an award does not at all depend on the cooperation by both the parties. Though a party non-co-operates the arbitrator can have no difficulty in making an ex parte award on the basis of the evidence and materials supplied to him by the other party, when he does not make an award even though he could make it, it can be said that he neglected or refused to make it and action could be taken under Section 8.

In such a case there is also a failure on the part of the arbitrator in respect of the proceeding with the reference although there might not have been failure in entering on the reference and hence he could be removed under Section 11. On a proper construction of that section it is clear that a failure in regard to either would be enough and that the legislature could not have meant that the failure must be in respect of both entering on and proceeding with the reference.'

18. I respectfully follow the aforesaid observations.

19. In the result, the revision is partly allowed. The appointment of Sri Govardhan Upreti, Advocate, Almora as arbitrator is affirmed but the portion 'he shall enter upon and proceed with the reference and give award within the prescribed period' shall fall off. The impugned order is modified accordingly.

20. Under the circumstances of the case, I make no order as to costs. The ad interim stay order dated 7-1-1982 confirmed on 18-7-1982 is vacated.


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