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D.R. Gupta Vs. Steel Authority of India Limited - Court Judgment

LegalCrystal Citation
SubjectArbitration;Civil
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 594 of 1980
Judge
Reported inAIR1985Ori224
ActsCode of Civil Procedure (CPC) , 1908 - Sections 11; Arbitration Act, 1940 - Sections 8
AppellantD.R. Gupta
RespondentSteel Authority of India Limited
Appellant AdvocateM.R. Mohanty, ;N.C. Pattnaik, ;D.K. De and ;A.K. Sahoo, Advs.
Respondent AdvocateAsok Das and ;D.K. Mohapatra, Advs.
DispositionRevision allowed
Cases Referred(Mrs. Sushila Seth v. State of Madhya Pradesh
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....order1. this revision is directed against the order d/- 2-5-80 passed by the learned subordinate judge, rourkela in misc. case no. 33 of 1979 rejecting the petitioner's application under section 8 of the arbitration act, 1940 (hereinafter referred to as 'the act') for appointment of an arbitrator to adjudicate upon the disputes between the petitioner and the opposite party in respect of the petitioner's claim for rs. 21,35,250/-.2. the petitioner's case is that by an indenture of lease dated 3-10-63 the opposite party granted to the petitioner a lease of ac. 12.30 decimals of land together with buildings thereon for a term of ten years from 9-2-63. the lease was for the purpose of running a hotel-cum-restaurant in the demised premises. the lease contains the following arbitration clause.....
Judgment:
ORDER

1. This revision is directed against the order D/- 2-5-80 passed by the learned Subordinate Judge, Rourkela in Misc. Case No. 33 of 1979 rejecting the petitioner's application under Section 8 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') for appointment of an arbitrator to adjudicate upon the disputes between the petitioner and the opposite party in respect of the petitioner's claim for Rs. 21,35,250/-.

2. The petitioner's case is that by an indenture of lease dated 3-10-63 the opposite party granted to the petitioner a lease of Ac. 12.30 decimals of land together with buildings thereon for a term of ten years from 9-2-63. The lease was for the purpose of running a hotel-cum-restaurant in the demised premises. The lease contains the following arbitration clause :

'In the event of any dispute or difference arising between the Lessor and the Lessee during the period of subsistence of the lease relating to the observance of the terms and conditions of the lease and/or interpretation relating to any clause herein, the same shall be referred by both the parties to the sole arbitration of the Chairman, Hindustan Steel Ltd. whose decision and/or award in this behalf will be final, conclusive and binding between the two parties.

The provisions of the Indian Arbitration Act, 1940 and any statutory modification to be made herein will be applicable for resolving the dispute through arbitration.'

Around 1965 disputes and differences arose between the parties and the opposite party instituted Money Suit No. 16 of 1972 valued at Rs. 50,000/-. On an application made by the petitioner under Section 34 of the Act, the learned Subordinate Judge stayed Money SuitNo. 16 of 1972 and the disputes between the parties were referred to the arbitration of Shri H. N. Bhaya, Chairman, Hindustan Steel Ltd. who was the person holding the office designated in the aforesaid arbitration clause. Thereafter the opposite party preferred a claim for Rs. 14,14,320/- against the petitioner and the petitioner preferred a claim for Rs. 35,250/-against the opposite party. The learned arbitrator by his order dated 3-7-73 directed that both the arbitration cases should be heard together. The proceedings continued for a number of years. The learned arbitrator separated the opposite party's arbitration case on 18-8-75 and made the award on 20-8-75. The opposite party was awarded Rs. 9,32,662.37 and interest of Rs. 1,38,289.60 and Rs. 8,5007- as costs. The petitioner challenged the validity of the award and the learned Subordinate Judge by his order dated 12-5-76 set aside the award. The opposite party preferred Misc. Appeal No. 146 of 1976 in this Court, By judgment dated 21-7-80, reported in (1980) 50 Cut LT 305 (Hindustan Steel Ltd. v. D.R. Gupta), the appeal has been allowed in part and a decree has been directed to be passed in favour of the opposite party for a sum of Rs. 9,32,662.37 adjudged under item No. 1 of the award and for a sum of Rs. 8,500/-adjudged as costs awarded under item No. 3 of the award. It has been further directed that the aggregate amount shall bear interest at the rate of 6 per cent per annum from the date of the decree till the date of payment. In the meanwhile, with regard to the petitioner's arbitration case, the Court granted extension of time till 14-3-77. Shri H.N. Bhaya ceased to be Chairman of Hindustan Steel Ltd. on 7-3-77. On 8-3-77 the petitioner wrote to the opposite party that on the vacation of office by Shri H.N. Bhaya, both parties should amicably agree to supply the vacancy for adjudication of the disputes between them. However, the opposite party failed to agree to the appointment of another arbitrator, nor was any other person appointed as the Chairman of Hindustan Steel Ltd. in place of Shri H. N. Bhaya. Thereafter on 1-5-78 with the passing of the Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978 (No. 26 of 1978) the Hindustan Steel Limited went out of existence and was taken over by the Steel Authority of India Limited. Obviously the post of Chairman, Hindusthan Steel Limited, ceased to exist from the aforesaid date. In these circumstances on 3-4-79 the petitioner applied to the Court forappointment of an Arbitrator under Section 8 of the Act to adjudicate upon the disputes between the parties.

3. In its counter the opposite party challenges the maintainability of the petition filed by the petitioner. It is stated that as per arbitration clause in the agreement the opposite party's arbitration case and the petitioner's arbitration case were being analogously heard by Mr. H. N. Bhaya, Chairman of Hindusthan Steel Limited. However because of the delaying tactics of the petitioner the Arbitrator split up the two cases, proceeded with the opposite party's arbitration case and delivered his award on 20-8-75. Though the petitioner's last application to the Court for extension of time was belated, the Court granted extension of time till 14-3-77. It is admitted that Mr. H. N. Limited (sic) on 7-3-77 and that Hindusthan Steel Limited was dissolved and taken over by the Steel Authority of India Limited by virtue of Act 16 of 1978. It is pointed out that all throughout the pendency of the arbitration cases, the petitioner was deliberately delaying the hearing of the cases. According to the opposite party, after the departure of Mr. Bhaya, the post of Chairman, Hindusthan Steel Limited was filled up by Mr. Wadhawan, but the petitioner never asked for continuation of the arbitration proceedings before Mr. Wadhawan. In the meanwhile this Court in Civil Revision No. 328 of 1973 and Misc. Appeal No. 166 of 1973 decided that the petitioner's arbitration proceeding was not referable to arbitration since the matter was not within the scope of the arbitration clause in the contract. It is admitted that the opposite party had received the letter dated 8-3-77 from the petitioner requesting for supply of the vacancy in the office of the Arbitrator. The opposite party replied to the said letter saying that even if Mr. Bhaya had ceased to be the Chairman of Hindusthan Steel Limited, he could still arbitrate or alternatively the succeeding Chairman was competent to arbitrate and as such there was no vacancy in the office of the Arbitrator. Finally the opposite party has prayed that the petitioner's application for appointment of an Arbitrator under Section 8 of the Act should be rejected.

4. Upon hearing the parties the learned Subordinate Judge by his order dated 2-5-80 dismissed the petitioner's petition filed under Section 8 of the Act mainly on the ground that by virtue of the arbitration clause in the agreement the petitioner should havecontinued the arbitration proceeding before Mr. Wadhawan or any other successor to the office of the Chairman, Hindusthan Steel Limited. The learned Subordinate Judge has further found that by virtue of Sections 23 and 24 of Act 16 of 1978 the existing contract between the parties and pending proceedings were not affected and that the decision of this Court in Civil Revision No. 328 of 1973 and Misc. Appeal No. 166 of 1973 had no bearing on the proceeding before him. The order of the learned Subordinate Judge dismissing the petitioner's application under Section 8 of the Act is under challenge in this revision.

5. Mr. D. K. De, the learned counsel appearing for the petitioner submitted that a vacancy occurred in the office of the Arbitrator on 7-3-77 when Mr. H. N. Bhaya ceased to be the Chairman of Hindustan Steel Limited and as the said vacancy was not supplied by the opposite party in spite of notice, the petitioner was entitled to ask the Court under Section 8 of the Act to appoint a fresh Arbitrator. Mr. A. Das, learned counsel appearing for the opposite party, has raised two preliminary objections in this case. First, that the petitioner's application under Section 8 of the Act is not maintainable in view of the decision of this Court in Civil Revision No. 328 of 1973 and Misc. Appeal No. 166 of 1973 and second, that on the ground of res judicata no arbitration proceeding can continue before the arbitrator in view of the judgment pronounced by the learned Subordinate Judge in Title Suit No. 8 of 1975 filed by the petitioner against the opposite party which has been dismissed by judgment dated 31-10-81.

6. The arbitration clause in agreement between the parties has already been extracted in para 2. It is not in dispute that Hindustan Steel Limited went out of existence and was taken over by the Steel Authority of India Limited on 1-5-78. However, as pointed out by the learned Subordinate Judge by virtue of the provisions contained in Section 23 of Act 16 of 1978 the agreement between the parties shall remain in full force as if instead of Hindusthan Steel Limited the Steel Authority of India Limited had been a party to the said agreement. Coming to the first preliminary objection raised on behalf of the opposite party, I may refer to the decision of this Court in Civil Revision No. 328 of 1973 and Misc. Appeal No. 166 of 1973 reported in (1974) 2 Cut WR 1081, Dayaram Gupta v. Hindusthan Steel Ltd., Rourkela 1. The aforesaid two casesbefore this Court arose out of an order of the learned Subordinate Judge rejecting the petitioner's application for mandatory injunction. In the judgment it is observed that the matter before this Court related to the dispute between the parties as to whether there was a contract for a fresh lease between the parties and it was found that there was no arbitration agreement between the parties to refer that dispute to arbitration and as such the arbitration proceeding in so far as it related to the contract for a fresh lease was held to be not maintainable. This finding is not in respect of the original lease agreement dated 3-10-63 between the parties which also forms a part of the subject-matter of the petitioner's arbitration case. The learned Subordinate Judge has correctly held in para 15 of the impugned order that the findings of this Court in Civil Revision No. 328 of 1973 and Misc. Appeal No. 166 of 1973 have no bearing on the proceeding pending before him. The first preliminary objection raised on behalf of the opposite party is accordingly rejected. As regards the second preliminary objection, a copy of the judgment of the learned Subordinate Judge in Title Suit No. 8 of 1975 has been filed by the opposite party in this Court. The petitioner is the plaintiff and the opposite party is the defendant. The suit is for specific performance of contract and for extension of the lease dated 3-10-63 and for direction to the opposite party to execute and register a lease deed and give delivery of possession to the petitioner. This suit was dismissed by the judgment dated 31-10-81. It is urged on behalf of the opposite party that principles of res judicata are applicable to arbitration proceedings and a number of decisions including AIR 1953 SC 65 (Mohanlal Goenka v. Benoy Krishna Mukharjee) and AIR 1978 Cal 449 (Talcher Coalfields Ltd. v. Central Coalfields Ltd.) have been cited in support of this proposition. It is not necessary to refer to those decisions as it is well established that principles of res judicata are applicable to arbitration proceedings. However it has been stated on behalf of the petitioner that the said judgment is now pending in this Court in First Appeal No. 77 of 1982. Law is well established that a decision liable to appeal may be 'final' within the meaning of Section 11 of the Civil Procedure Code until an appeal is preferred, but once the appeal is filed the decision loses its character of 'finality' and what was once res judicata again becomes res sub judice that is, matter under judicial enquiry.(See Mulla's Code of Civil Procedure, Volume I, Fourteenth Edition, page 143). In the present case the judgment of the learned Subordinate Judge Title Suit No. 8 of 1975 is pending disposal in this Court in First Appeal No. 77 of 1982 and therefore the said judgment cannot operate as res judicata during the pendency of the First Appeal. The second preliminary objection raised on behalf of the opposite party must accordingly be overruled.

7-8. It has been strenuously urged on behalf of the opposite party that the petitioner has been guilty of laches and inordinate delay throughout the pendency of the arbitration proceedings before the Arbitrator and this conduct of the petitioner being mala fide, disentitles him from seeking any relief from the Court under Section 8 of the Act. In support of this contention reliance is placed on a decision of this Court reported in AIR 1971 Orissa 288 (at p. 289) (Hindusthan Steel Ltd. v. Amarnath Sharma) wherein it was held:

'Law is well settled that the Court has got wide discretionary power to extend time. But as the amplitude of the power is wide the discretion must be exercised judiciously with care. In this regard I respectfully agree with the observations of a Division Bench in J. W. Oliver v. Mian Dost Mohammad, AIR 1935 Lah 191 (2). Their Lordships observed thus under the corresponding Section 12 of the Arbitration Act, 1899.

The Arbitration Act prescribes a procedure for the expeditious and speedy settlement of disputes by private tribunals especially those arising in commercial transactions, and the Legislature has in the schedule fixed a period of three months for the delivery of awards in cases where no time is fixed in the reference. The Court has no doubt a discretion to extend time under Section 12, but it will do so only if cogent reasons are forthcoming.' Obviously the discretion cannot be exercised in favour of a party who himself has been negligent and as in the present case, has been guilty of dilatory tactics.

The impugned order comes directly within the mischief of the aforesaid dictum. Though in 1966 parties were called upon to have extension of time, the opposite party filed the application under Section 38(1) of the Act about three years after. Delay and dilatory tactics have not been explained by any cogent reason as the 'opposite party was doing his contract work at Burla in 1968 and could have taken steps for extension of time.'

Further, the delay in the hearing of the arbitration cases leading to the splitting up of the two cases was noticed in the decision of this Court in Miscellaneous Appeal No. 146 of 1976 filed by the opposite party against the petitioner and reported in (1980) 50 Cut LT 305 (Hindusthan Steel Ltd. v. D. R. Gupta) and the observations made in the judgment has been brought to the notice of this Court. However these observations as regards delay are confined to the period prior to the order of the Arbitrator dated 18-8-75 splitting up the two arbitration cases. After the Court finally extended time till 14-3-77, the petitioner does not appear to have delayed the disposal of his arbitration case. It so happened that Mr. H. N. Bhaya, the Arbitrator ceased to hold office with effect from 7-3-77 and Hindusthan Steel Limited merged in the Steel Authority of India Limited with effect from 1-5-78. The delay following these developments cannot be attributed to the petitioner. Hence I am not convinced that the petitioner is disentitled from seeking relief from the Court under Section 8 of the Act for his conduct.

9. The next question which arises for consideration is whether a vacancy had occurred in the office of the Arbitrator and if so, whether the opposite party had failed to supply the vacancy in spite of notice from the petitioner. The arbitration clause in the agreement provides for the Chairman, Hindusthan Steel Limited to be the Arbitrator in case of disputes between the parties. Mr. H. N. Bhaya was the Chairman when disputes between the parties arose and were referred to arbitration. However on 7-3-77 Mr. Bhaya relinquished his office. The petitioner's contention is that as soon as Mr. Bhaya had ceased to be the Chairman of Hindusthan Steel Limited, the office of the Arbitrator fell vacant. The opposite party's contention is that even if Mr. Bhaya was no longer the Chairman of Hindusthan Steel Limited, there was no vacancy in the office of the Arbitrator as Mr. Bhaya could have continued the arbitration or Mr. Wadhawan who had succeeded Mr. Bhaya could have entered upon arbitration. On behalf of the opposite party reliance is placed on two decisions reported in AIR 1951 All 359 (Jai Dayal Pearey Lal v. Chunni Lal Parsotam Dass) and AIR 1954 Cal 606 (Bharat Construction Co. Ltd. v. Union of India), In the former case it was held (at p. 361) :

'The second point is whether Charan Dascould act as sole arbitrator. As a result of the compromise arrived at between the parties in the proceedings under Section 33, Arbitration Act, each party was entitled to appoint an arbitrator and the case was to be decided by both the arbitrators collectively. The applicant appointed Man Singh and the opposite party appointed Charan Das. The applicant maintained throughout that Man Singh should be a party to the decision of the case, but the Secretary of the Association thought otherwise. He was of the view that as Man Singh had ceased to be a representative of a member of the Association he had no authority to act as an arbitrator. This view has found favour with both the Courts below. I am clearly of opinion that the conclusion at which the Courts below reached was not correct. Bye-law 60 framed by the Kanpur Sugar Merchants' Association provides that if there is anything inconsistent between the bye-laws and the provisions of the Arbitration Act, the latter shall prevail. I must, therefore, look to the Arbitration Act to decide whether the contention that Man Singh ceased to have authority to act as an arbitrator is correct or not. Section 5, Arbitration Act provides that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. No arbitration agreement was drawn up in the present case. The arbitration proceedings started by virture of the parties being members of the Association which provided that the dispute among the members shall be decided by arbitration. The bye-laws do not provide in express terms that an arbitrator shall cease to have authority as such by ceasing to be the representative of a member of the Association. Then Section 9 of the Act provides that another person can be appointed in place of a duly appointed arbitrator only in certain specified circumstances, namely, neglect or refusal by the arbitrator to act, his incapacity of acting or his death. There is nothing on the record to show that Man Singh ever neglected or refused to act as an arbitrator that he became incapable of acting. Needless to say that he is alive. None of the contingencies contemplated by Section 9, Arbitration Act, exist in the present case. Man Singh was eligible to be appointed as an arbitrator on the date on which the applicant appointed him as such. His subsequent disqualification has not the effect of taking away from him the authority of an arbitratorbecause the Arbitration Act makes no such provision. He was a persona designata and there was nothing in his appointment to show that he was to act as an arbitrator only so long as he was a representative of a member of the Association.'

In the Calcutta case it was held (at p. 611) :

'I do not find any indication in the agreement in the present case of any intention that a vacancy arising in the office of the arbitrator should be supplied by the appointment of another person. It should be remembered, however, that under the provisions of the agreement, no vacancy would arise, simply because the particular Major General who was holding the office at the time of the contract ceased to hold that office, if he was succeeded by a successor who was also a Major General. So long as the Major General was succeeded by a Major General in the particular office and so long as the course of such succession was not broken by the introduction of an officer holding a different rank, no vacancy in the office of the arbitrator would arise at all. A vacancy would arise only when the officer in charge of the Administration, Eastern Command, was no longer a person, holding the rank of a Major General.

Does the agreement contain any indication that even in such an event, the agreement: would continue to subsist and that the office of arbitrator could be filled by the appointment of either the successor of the Major General or any other Officer I can find no such indication. Originally, when an arbitrator is chosen by name and some reference is made to his office, it is usual to find a provision to the effect that in the event of the particular arbitrator dying or ceasing to hold the particular office, another arbitrator would be appointed. If the arbitration agreement in the present case contained a provision to the effect that in the event of the office ceasing to be held by a Major General, the parties would choose another arbitrator, it might be said that there was an intention that a vacancy occurring in the office would be supplied. As the agreement stands, however, there is only a single provision of an absolute character with no indication or suggestion of any alternative, either express or implied. I am, therefore, of opinion that the present agreement is one which does show that it was intended that the vacancy, if any occurred, should not be supplied.'

In the present case it may be noted that nomination of the Arbitrator in the arbitration clause is not by name, but by virtue of his office. On the transfer or retirement of the Chairman, Hindusthan Steel Limited, according to the arbitration clause, his successor is to take his place as the Arbitrator. The Allahabad decision cited above is clearly distinguishable as in that case there was no arbitration agreement between the parties. Such is not the case here. As already pointed out in this case the Arbitrator has been nominated by the parties by virtue of his office. In the Calcutta case the Court was of opinion that the agreement showed that the vacancy should not be supplied. That opinion must be held to be confined to the facts of that case.

In AIR 1971 SC 2298 (Prabhat General Agencies v. Union of India) it was held (Paras4, 5 and 7) :

'Section 20 is merely a machinery provision. The substantive right of the parties are found in Section 8(1)(b). Before Section 8(1)(b) can come into operation it must be shown that (1) there is an agreement between the parties to refer the dispute to arbitration; (2) that they must have appointed an arbitrator or arbitrators or umpire to resolve their dispute; (3) anyone or more of those arbitrators or umpire must have neglected or refused to act or is incapable of acting or has died; (4) the arbitration agreement must not show that it was intended that the vacancy should not be filled and (5) the parties or the arbitrators as the case may be had not supplied the vacancy.

In the cases before us it is admitted that there is an agreement to refer the dispute to arbitration. It is also admitted that the parties had designated the Judicial Commissioner of Himachal Pradesh as the arbitrator for resolving any dispute that may arise between them in respect of the agreement. The Judicial Commissioner had refused to act as the arbitrator. The parties have not supplied that vacancy. Therefore the only question is whether the agreement read as a whole shows either explicitly or implicitly that the parties intended that the vacancy should not be supplied. It may be noted that the language of the provision is not 'that the parties intended to supply the vacancy' but on the other hand it is that 'the parties did not intend to supply the vacancy'. In other words if the agreement is silent as regards supplying the vacancy, the law presumes that the parties intended to supply the vacancy. To take the case out ofSection 8(1)(b) what is required is not the intention of the parties to supply the vacancy but their intention not to supply the vacancy. We have now to see whether the agreements before us indicate such an intention.

XXXXX The Judicial Commissioner as well as the learned subordinate judge erred in thinking that merely because the arbitrator was designated with reference to the office held by him, it should be inferred that the parties intended not to supply that vacancy. Evidently the parties did not mention the name of any particular Judicial Commissioner as arbitrator because there may be a change in the personnel. The appointment of Judicial Commissioner as arbitrator by itself does not afford any indication that the parties to the agreement intended not to supply the vacancy if the Judicial Commissioner refused to act or is incapable of acting.'

In AIR 1980 SC 103 (Union of India v. Raghunath Singh & Co.) it was held : --

'The Arbitration clause in the contract between the parties ran as follows :

'All disputes or differences arising between the parties or their representative and the Controller of Rationing Delhi at any time hereafter and of whatever nature arising out of or in respect of the contract shall be referred for arbitration to the Chief Commissioner/ Director of Storage, Ministry of Food, Government of India, and his decision shall be final and binding.' The post of Director of Storage, Ministry of Food, Government of India was abolished and no person holding that post was available for arbitration for the purpose of the arbitration clause aforesaid. The Chief Commissioner, however, was available but he refused to act. That led the respondent company to apply to the Court under Section 8 of the Act for appointment of another Arbitrator. The argument put forward on behalf of the appellant is that when there was a named Arbitrator even though he was named by office, it was not open to the Court to supply the vacancy in his place under Section 8(1)(b) of the Act. We did not find any substance in this argument. The Court had no power to supply the vacancy under Section 8(1)(b) only if the arbitration agreement did show that the parties did not intend to supply the vacancy. If nosuch intention could be culled out from the arbitration clause, the Court could supply the vacancy. There is a direct decision of this Court in Prabhat General Agencies v. Union of India, (1971) 2 SCR 564 : (AIR 1971 SC 2298).'

In AIR 1983 Guj 233 (Sindhy Resettlement Corporation Ltd. v. Ambavi Raghu), it was held:

'The contention of the learned Advocate for the appellant-Corporation is not well founded for the obvious reason that in absence of negative intention specifically expressed in a given arbitration agreement that the parties did not intend to fill in the vacancy, the Court is under an obligation to refer the matter to arbitration since the parties are deemed to have intended in absence of such a negative agreement to resolve their dispute or differences arising between them by reference to arbitration. In Prabhat General Agencies v. Union of India, AIR 1971 SC 2298, the Supreme Court held that the language of the provision in Section 8 is not that the parties intended to supply the vacancy but on the other hand it is that 'the parties did not intend to supply the vacancy'. The Supreme Court made it clear that if the agreement is silent as regards supplying the vacancy, the law presumes that the parties intended to supply the vacancy. This principle of the Supreme Court has been reiterated by the Supreme Court in its latter decision in Union of India v. Raghunath Singh & Co., AIR 1980 SC 103. In the present agreement there is absence of negative intention as required by Section 8 to hold that the arbitration agreement failed and Judge was, therefore, perfectly justified in rejectingthe objection of the appellant-Corporation......'

In the present case the agreement between the parties has been filed in this Court. The only relevant provision in the agreement is the provision relating to arbitration which has been extracted in para 2. The other provisions in the agreement do not throw any light as regards the intention of the parties. On the question of supplying a vacancy in the office of the Arbitrator, the agreement between the parties is silent and therefore as pointed out by the Supreme Court in AIR 1971 SC 2298 the law presumes that the parties intended to supply the vacancy. As already pointed outthe opposite party's contention is that even if Mr. Bhaya had ceased to hold office Mr. Wadhwan, the next seniormost person, could have entered upon arbitration. In this context learned counsel appearing for the opposite party has cited a decision of the Delhi High Court reported in AIR 1980 Delhi 244 (Mrs. Sushila Seth v. State of Madhya Pradesh) wherein on interpretation of the arbitration clause of the relevant contract was held that in the absence of the Chief Engineer who was nominated as the Arbitrator the Deputy Chief Engineer placed in charge of the work of the Chief Engineer was equally qualified to decide the dispute between the parties. This decision was based on the peculiar facts of that case. According to the terms of the contract the Chief Engineer was chosen as the Arbitrator because of his technical qualification and familiarity with the intricacies of the civil engineering work which was required to be done by the contractor and it was found that these considerations would also hold good in respect of the Deputy Chief Engineer who was placed in charge of the work of the Chief Engineer. In the present case neither the agreement reveals nor have any materials been placed before the Court to show that Mr. Wadhawan was the successor of Mr. Bhaya or that Mr. Bhaya was nominated as the Arbitrator by the parties because of his expertise in relation to the terms and conditions contained in the lease deed dated 3-10-63 or in the hotel-cum-restaurant business for which the said lease was granted. The decision of the Delhi High Court can have no application to the facts of this case. The petitioner's contention in this case is that Mr. Wadhawan was never appointed as the regular Chairman of Hindusthan Steel Limited. In this Court on behalf of the opposite party some resolutions of the Board of Directors of Hindusthan Steel Limited have been filed. Resolution No. 1 dated 2-4-77 is extracted hereunder :

'The Board was informed that consequent upon the acceptance of the resignation of Shri H. Bhaya from the Chairmanship of the Board of HSL by the Chairman, SAIL, with effect from the forenoon of 7th March, 1977 the post of Chairman, HSL is lying vacant Shri M. P. Wadhawan was unanimously elected to chair the meeting.

(Proposed by Shri S. R. Jain)

(Seconded by Shri P. K. Paul).'

There is a clear statement in the aforesaid resolution that with the acceptance of theresignation of Mr. H. N. Bhaya the post of Chairman of Hindusthan Steel Limited was lying vacant. With the vacancy in the post of Chairman it must follow that the post of the Arbitrator also fell vacant. The resolution further states that Mr. Wadhawan was unanimously elected to chair the meeting of the Board of Directors. This part of the resolution does not lead to the conclusion that Mr. Wadhawan succeeded Mr. Bhaya as the Chairman of Hindusthan Steel Limited. Similarly resolution No. 2 dated 11-8-77 to the effect that Mr. Wadhawan was elected 'to function as Chairman at all the Board meetings of the Company until otherwise resolved', does not lead to the conclusion that Mr. Wadhawan was the succeeding Chairman of Hindusthan Steel Limited. In the absence of any other materials or documents, I must hold that after the resignation of Mr. Bhaya, Chairman of Hindusthan Steel Limited, was accepted, the vacancy in the office of the Chairman continued until the post of Chairman, Hindusthan Steel Limited was abolished with the coming into force of Act 16 of 1978. There is no dispute that the petitioner had written to the opposite party on 8-3-77 to supply the vacancy on account of relinquishment of office by Mr. Bhaya. The opposite party no doubt replied to the said letter, but failed to supply the vacancy. In these premises it must be further held that on relinquishing his office as Chairman of Hindusthan Steel Limited Mr. Bhaya became incapable of acting as the Arbitrator between the parties and the opposite party having failed to supply the vacancy in spite of written notice, the petitioner is entitled to call upon the Court to appoint an Arbitrator under Section 8 of the Act.

10. In the result, this revision is allowed and the impugned order of the learned Subordinate Judge dated 2-5-80 is set aside. On receipt of the records the learned Subordinate Judge shall proceed to appoint an Arbitrator under Section 8 of the Act after hearing both parties. As this is an old matter, priority should be given for its early disposal. There shall be no order as to costs. The lower Court records be sent back immediately.


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