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State of Orissa and anr. Vs. Govinda Choudhury - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 24 of 1969
Judge
Reported inAIR1969Ori274; 35(1969)CLT630
ActsArbitration Act, 1940 - Sections 8(1)
AppellantState of Orissa and anr.
RespondentGovinda Choudhury
Appellant AdvocateGovt. Adv.
Respondent AdvocateR.N. Misra and ;R.C. Patnaik, Advs.
Disposition Revision dismissed
Cases ReferredSurendranath v. Union of India
Excerpt:
.....218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - therefore i seek the court's permission to submit that a retired chief engineer like shri s......who should be appointed as arbitrators. on 6-10-67 the learned subordinate judge, bhubaneswar appointed shri mamtaj ali, additional chief engineer as the arbitrator. obviously shri mamtaj ali must have the status of ,a superintending engineer not connected with the work. at any rate, no objection was raised before the court that shri mamtaj ali was not a person coming within the ambit of the arbitration clause. it appears from the order dated 29-4-68 that shri mamtaj ali wrote a letter on 22-4-68 expressing his inability to act as arbitrator. he wrote thus:'due to pressure of work i have not been able to attend to the said cases, as in the meantime i have been appointed as chief engineer, r & b bhubaneswar. there is hardly any time for me to attend to the case work. therefore i seek.....
Judgment:
ORDER

G.K. Misra, J.

1. Govinda Chowdhury, opposite party, filed an application before the subordinate Judge, Bhubaneswar, making a prayer that the petitioners (State of Orissa and the Executive Engineer, Bhubaneswar Division) should be directed to file the agreement, notice under Section 8 of the Indian Arbitration Act (hereinafter., referred to as the Act) and other papers relating to dispute, and to appoint an arbitrator for giving an award. It is not necessary to give the detailed terms of the agreement. Clause (23) of the agreement, so far as relevant, runs thus:

'Except where otherwise provided in the contract all questions and disputes... ...shall be referred to the sole arbitration of a Superintending Engineer of the-State Public Works Department unconnected with the work at any stage nominated by the concerned Chief Engineer. If there be no such Superintending Engineer it should be referred to the sole arbitration of the Chief Engineer concerned. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to this contract.'

The opposite party took up construction of high level bridge over the river Bhargabi at 3rd mile on the Pipili-Konark Road. He filed a claim and wanted early disposal. The matter is pending from 30-5-62. The opposite party served a notice under Section 8 of the Act and the petitioners received the same on 7-4-66. A counter was filed on behalf of the opposite party wherein the names of 3 Superintending Engineers, Sri M.M. Bhanj, Shri P. Fatnaik and Shri N. Misra were mentioned to be arbitrators. The opposite party filed a subsequent application wherein the names of Sri Mamtaj Ali, Sri B.N. Sahu and Shri A.M. Mohanty were mentioned as persons who should be appointed as arbitrators. On 6-10-67 the learned Subordinate Judge, Bhubaneswar appointed Shri Mamtaj Ali, Additional Chief Engineer as the arbitrator. Obviously Shri Mamtaj Ali must have the status of ,a Superintending Engineer not connected with the work. At any rate, no objection was raised before the court that Shri Mamtaj Ali was not a person coming within the ambit of the arbitration clause. It appears from the order dated 29-4-68 that Shri Mamtaj Ali wrote a letter on 22-4-68 expressing his inability to act as arbitrator. He wrote thus:

'Due to pressure of work I have not been able to attend to the said cases, as in the meantime I have been appointed as Chief Engineer, R & B Bhubaneswar. There is hardly any time for me to attend to the case work. Therefore I seek the Court's permission to submit that a retired Chief Engineer like Shri S.K. Palit may be appointed and on Intimation I shall submit' the records,'

On 4-5-68 the court passed the following order:

'Advocates for both the parties have already given their consent as per endorsement made in the remarks cloumn regarding appointment of Shri S.K. Falit as arbitrator. As the appointed arbitrator is unwilling to act and both the parties have agreed to the appointment of Sri Palit in his place, it is ordered that the appointment of Shri Ali is cancelled and Shri Palit, retired Chief Engineer is appointed as arbitrator.'

On 25-7-68 Shri Mamtaj Ali wrote another letter to the learned Subordinate Judge making a request that the appointment of Shri S.K. Palit as the arbitrator should be cancelled. The letter runs thus:

'I am to say that my willingness given to appoint Shri S.K. Palit, retired Chief Engineer as arbitrator in the above letter may kindly be treated as cancelled as I was not in the know of the fact that the award of Shri S.K. Palit in another case has been challenged by the State and an appeal has been filed in the High Court. . . .'

This letter was followed by a petition to the same effect. The matter came up for consideration on 7-10-68. The learned Subordinate Judge rejected the prayer of Shri Mamtaj Ali. The substantial grounds in support of the order are to be found in paragraph 2. Against this order of the learned Subordinate Judge refusing to cancel the appointment of Shri S.K. Palit as the arbitrator, this Civil Revision has been filed.

2. The learned Government Advocate in support of the application urges that Section 8 of the Act has no application to this case, and as appointment of Shri S.K. Palit was in violation of the terms of the arbitration clause the appointment is without jurisdiction, is a nullity and is to be ignored, and there is no question of reviewing the earlier order.

3. There can be hardly any doubt that the appointment of Shri S.K. Palit is in direct contravention of the arbitration clause which prescribes that a Superintending Engineer of a State Public Works Department unconnected with the work as nominated by the concerned Chief Engineer can be appointed as arbitrator. Shri S.K. Palit is not a Superintending Engineer. He has already retired from service. He does not therefore satisfy the first test. He does not also satisfy the second test where-under the arbitration would be to the Chief Engineer concerned. If this were the only matter to be decided in the case, the order of the learned Subordinate Judge cannot stand.

4. The question for consideration, however, is whether the court has got power to appoint an arbitrator in case no arbitrator is appointed in accordance with the arbitration clause. This necessitates an examination of the scope and ambit of Section 8(1)(a) of the Act which runs thus:

'8(1). In any of the following cases--(a) Where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties and all the parties do not, after difference have arisen, concur in the appointment or appointments, ...... any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.'

According to the contention of the learned Government Advocate, the arbitration clause does hot provide that one or more arbitrators shall be appointed by consent of parties. The arbitration clause is one-sided and vests the entire discretion for choice in the concerned Chief Engineer. He accordingly contends that Section 8(1)(a) of the Act has no application to Clause (23) of the agreement,

5. This question directly came up for consideration in (1965) 31 Cut LT 1026, Union of India v. Banka Behari Das, where the arbitration clause was completely different. But there this Court examined a contention that consent of both the parties can be implied in certain circumstances in the arbitration agreement. Though in that particular case it was held that the terms of the agreement did not mean implied consent from the very beginning, yet the correctness of the decisions reported in AIR 1961 Pat 228, Union Of India v. D.P. Sing and AIR 1965 Cal 183, Surendranath v. Union of India, was accepted. The essential distinction was brought out in para 6 of the judgment it was observed therein:

'The crucial test as to whether consent can be implied in the agreement itself is to find out if any discretion is left to one of the parties to the agreement to object to the actual selection of arbitrator when the option is exercised.'

As in that particular case no absolute and uncanalised discretion had been vested in the selection of the second arbitrator, it was held therein that consent of the parties could not be implied from the very start.

6. Applying the aforesaid test to the present case it would be clear that there was an implied consent amongst both the parties that the concerned Chief Engineer would make the selection out of the two groups referred to in the arbitration clause. The agreement accordingly comes within the ambit of Section 8(1)(a) of the Act.

7. As has already been stated, the opposite party served notice under Section 8(2) of the Act that an arbitrator should be appointed in accordance with the arbitration clause and that the dispute should be settled. When no arbitrator was appointed in terms thereof, the court got jurisdiction to appoint an arbitrator to settle the dispute. It is on this reasoning that the appointment of Shri S.K. Palit as arbitrator can be supported. Once he was appointed as an arbitrator by the court whether by consent of parties or not, the question of reviewing that order does not arise, and at any rate the petitioners have no locus standi to question it with reference to the terms of the arbitration clause.

Even if a case had been made out for reviewing on facts, such a discretion could not have been exercised in favour of the petitioners in the facts and circumstances of this case. Sri S.K. Palit heard the parties on about 10 dates beginning from 26-7-68 to 15-3-69. He also made local investigation in presence of both the parties. If at an earlier stage a request would have been made by the petitioners for changing the arbitrator, the court might, in certain circumstances, have acceded to the request.

But once the progress has been made very far, there is no justification why the appointment should be cancelled. This is not on the ground of acquiescence, but on the broader principle that where the appointment was initially justified in law, court should not interfere in changing the arbitrator after a large part of the work had been done by him.

8. The order of the learned Subordinate Judge does not discuss the law on the point and merely rejects the application on the ground that once an arbitrator had been appointed with consent of parties, the application for review should not be allowed. That is only a slender thread and might not stand. But the more formidable obstacle in the path of the petitioners is that the court had jurisdiction to appoint an arbitrator in the facts and circumstances of this case, and once an arbitrator had been appointed it was again a question of discretion on the part of the court whether the prayer to change him should be accepted or not. As has already been said by me there has been substantial progress in the case.

9. In the result, the civil revision Sails and is dismissed. But in the circumstances there will be no order as to costs.


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