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Food Corporation of India Vs. Ghanashyamdas Agarwal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 595 of 1981
Judge
Reported inAIR1985Ori298; 58(1984)CLT472
ActsArbitration Act, 1940 - Sections 8(2)
AppellantFood Corporation of India
RespondentGhanashyamdas Agarwal
Appellant AdvocateY.S.N. Murty, Adv.
Respondent AdvocateP.K. Mishra, Adv.
DispositionRevision allowed
Cases ReferredFood Corporation of India v. Sunil Krishna Samanta
Excerpt:
.....1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - 4. law is fairly well settled that in case of arbitration, by common consent the parties choose their own form and thereby exclude jurisdiction of the regular court. in the present case, a fair reading of arbitration clause quoted above, clearly shows that the parties intended to vest exclusive discretion in the secretary of the ministry of the government of india, administratively dealing with the contract or administrative head of the ministry to nominate arbitrator and not to make a reference to any other arbitrator. i am inclined to agree that the judgment of the delhi high court have laid down the law..........the objection indicated above and submits that since the parties intended not to accept any person as arbitrator other than the one nominated by the secretary or administrative head of ministry, it was not open to the court below to entertain the application filed by the opposite party.4. law is fairly well settled that in case of arbitration, by common consent the parties choose their own form and thereby exclude jurisdiction of the regular court. as such, it is very material to ascertain the intention of the parties when they decided to make a reference to the arbitrator. such intention is to begathered from the terms of the agreement where the parties have entered into a written agreement. in the present case, a fair reading of arbitration clause quoted above, clearly shows.....
Judgment:
ORDER

D.P. Mohapatra, J.

1. The order of the Subordinate Judge, Titlagarh dt. 21-7-1981 in Misc. Case No, 29/80 allowing application of the opposite party under Section 8(2) of the Arbitration Act (called 'the Act' for short) for appointment of an Arbitrator is sought to be impugned in this petition under Section 115, C.P.C. The short question that arises for decision is whether Section 8(2) of the Act applies to the present case in view of the express provision in the Arbitration Clause in the agreement.

2. The opposite party entered into agreements with the petitioner to let out his godowns to the latter. The agreements contained an Arbitration Clause in the following terms :--

All disputes and differences, arising out of or in any way touching or concerning this agreement whatsoever, shall be referred to the sole arbitration of any person nominated by the Secretary of Ministry of the Government of India, administratively dealing with the contract as the administrative head of such Ministry at the time of nomination. It will be no objection to any such appointment that the person appointed is a Government servant, that he had to deal with the matters to which the agreement relates, and that in the course of his duties as such Government servant he has expressed views on all or any of the matters in dispute or difference. The award of such Arbitrator shall be final and binding on the parties to this agreement. It is term of this agreement that in the event of such Arbitrator to whom the matter is originally referred beingtransferred or vacating his office or said at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as Arbitrator in accordance with the terms of this agreement, such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this agreement that no person other than the person nominated by the Secretary or administrative head of the Ministry as aforesaid should act as Arbitrator and, if for any reason that is not possible, matter is not to be referred to arbitration at all.

Subject as aforesaid, the Arbitration Act, 1940 shall apply to the arbitration proceedings under this clause.'

Some disputes having arisen between the parties, the opposite party gave a notice under Section 8 of the Act to the petitioner to appoint an Arbitrator. Getting no response from the petitioner within the stipulated period of 15 days, he filed an application in the court under Section 8(2) for appointment of an Arbitrator.

The petitioner filed objection to the said application stating inter alia that in view of the express term in the Arbitration Clause to the effect that no person other than the person nominated by the Secretary or administrative head of the Ministry should act as Arbitrator, and if for any reason that is not possible, matter is not to be referred to arbitration at all, the court had no jurisdiction to appoint an Arbitrator in the case. The court below overruled the objection and allowed the application for appointment of an Arbitrator.

3. Shri Y. S. N. Murty, the learned counsel for the petitioner reiterates the objection indicated above and submits that since the parties intended not to accept any person as Arbitrator other than the one nominated by the Secretary or administrative head of Ministry, it was not open to the court below to entertain the application filed by the opposite party.

4. Law is fairly well settled that in case of arbitration, by common consent the parties choose their own form and thereby exclude jurisdiction of the regular court. As such, it is very material to ascertain the intention of the parties when they decided to make a reference to the arbitrator. Such intention is to begathered from the terms of the agreement where the parties have entered into a written agreement. In the present case, a fair reading of Arbitration Clause quoted above, clearly shows that the parties intended to vest exclusive discretion in the Secretary of the Ministry of the Government of India, administratively dealing with the contract or administrative head of the Ministry to nominate arbitrator and not to make a reference to any other Arbitrator. This is amply clear by express stipulation in the clause that if for any reason such appointment is not possible, matter is not to be referred to the arbitration at all.

This view finds support from the decision in the case of Union of India v. Lingaraj Dash, (1981) 52 Cut LT 146 : (AIR 1981 NOC 227) where R. N. Misra, C.J, (as then he was) while considering an arbitration clause identical to that in the present case came to hold as follows :--

'This being as agreement between the parties, the arbitration clause is subject to the condition and the view indicated by the two decisions of the Delhi High Court (ILR 1974(2) Delhi 637 and AIR i 979 Delhi 220) (supra) on this score seems to be correctly laying down the law. Parties must be taken to have agreed to the position that the arbitration clause has to be so construed that the Court would have no jurisdiction to appoint an arbitrator. Jurisdiction under Section 8 of the Arbitration Act, in the circumstance, it ruled out. I am inclined to agree that the judgment of the Delhi High Court have laid down the law correctly by interpreting a similar clause like Clause 25 here. The learned Subordinate Judge went wrong in holding that he had jurisdiction to appoint an arbitrator in the face of the provision contained in the arbitration clause.'

Sri P. K. Mishra, the learned counsel for the opposite party has placed reliance on a Bench decision of Calcutta High Court in the case of Food Corporation of India v. Sunil Krishna Samanta, AIR 1979 Cal 193. In that case though there was a pari materia arbitration clause, the question of applicability of Section 8 of the Act in view of the express term in the agreement was not pointedly in issue. Further, the case is distinguishable on facts since the arbitrator whose appointment was in question was in fact appointed with the consent of both the parties.

In view of the decision of this Court with which I am in respectful agreement, the order of the Court below appointing an Arbitrator is unsustainable and has to be vacated.

5. In the result, the revision petition is allowed, the order dated 21-7-1981 of the Subordinate Judge, Titlagarh in M. J. C. No. 29/80 is set aside. There will be no order as to costs of this proceeding.


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