1. The petitioner filed the present petition under S. 8 of the Arbitration Act alleging that he was one of the directors of the company respondent No. 1, that he ceased to be the director of the company from 16th May, 1973, that disputes arose about the payment of gratuity and compensation, for loss of office to him, that Shri S. Watel, Advocate, respondent No. 2 was appointed as an arbitrator, that Shri Watel expressed his inability to act as an arbitrator, that the agreement of reference does not show that the vacancy would not be supplied, that a notice dated 25th Feb. 1974 was served upon the company respondent No. 1 requiring it to concur in the appointment of Shri Inderjit Singh respondent No. 3 as sole arbitrator in the matter. As the respondent No. 1 did not concur in the appointment of the arbitrator, the petitioner filed the present petition for the appointment of respondent No 3 as sole arbitrator or any other person as an arbitrator to settle the two disputes regarding the payment of gratuity and compensation for the loss of office.
2. Respondent No. Y in its written statement has denied that Mr. Watel was appointed as an arbitrator, that in any caw, it was intended that no other Person would be appointed to settle the disputes. It was alleged that Mr. Watel was agreed to be appointed as referee but the petitioner dictated certain terms and conditions subject to which Shri Watel should proceed with the consideration of the matter which conditions were not acceptable to Mr. Watel, and thereforee he did not accept to settle the disputes. The petitioner filed his replication reiterating the allegations contained in his petition. The following issues were framed on 28th Feb. 1975.
'l. Whether this court has territorial jurisdiction to try the petition? OPP.
2. Whether the dispute was referred to Shri S. Watel , for advice only and not as an Arbitrator? Opd
3. In case if the above issue is proved against the defendant, whether the dispute between the parties is liable to be referred to another Arbitrator because of the failure of Shri Watel to proceed in the matter? Opd
4. Whether the dispute between the parties is not referable to arbitration? Opd (Onus objected to)
3. The entire correspondence between the petitioner and the respondent No. 1 regarding the alleged disputes and its settlement by a reference or an arbitrator Was exchanged at Delhi and the respondent No. 1 has its office at Delhi, thereforee, it is clear that this court has jurisdiction to decide the present petition. The issue is decided accordingly in favor of the petitioner.
Issue Nos. 2, 3 and 4.
4. It would be convenient to decide all these issues together. On 16th May 1973, the petitioner as per Resolution Ex. P-6-A ceased to be the director of the company respondent No. 1. The petitioner claimed that he is entitled to payment of gratuity and compensation for loss of office. On 10th Sept. 1973, the company respondent No. 1 wrote a letter (Ex. P. 2) to Shri Watel, Advocate, respondent No. 2 to the following effect and sent a copy to the petitioner.
'As you are aware, S. Amrik Singh Bhandari who was a, Director of this Company has sold the shares held by him and other members of his family and terminated his association with the company on 16th May 1973.
At the time of finalising his accounts with the company, Mr. Bhandari had raised two questions:-
(a) Payment of Gratuity
(b) Compensation for loss of office.
In his opinion, the amount of gratuity offered to be paid by the company was insufficient and compensation for loss of office in accordance with the provisions of Company Law was payable. In the company's opinion, the amount of gratuity payable was fair and no compensation was payable for loss of office.
In order to amicably resolve these issues, it was agreed between Mr. Bhandari and us that a joint reference should be made to you with an agreement that your ruling on these matters would be acceptable to both us.
This is to request you, to please take the matter in hand and fix a suitable date when both Mr. Bhandari and ourselves may be concluded as early as possible.
With kind regards.'.
4-A. This letter Ex. P. 2 is only an offer by the respondent No. 1 to appoint Mr. Watel to settle the disputes. On 6th Nov. 1973 the petitioner wrote a letter Ex. P. 3 to Mr. Watel and sent a copy to the Managing Director or respondent No.1 in reply to the said letter dated 10-9-1973 of respondent No. 1 to Mr. Watel. The relevant portion of this letter concerning the present dispute is as follows: -
'I Will submit my statement of facts and case in writing to you with a copy to the, company on a pre-fixed date when the Company is also expected to place their statement of case on that day also. I will endorse a copy to them and they are expected to endorse a copy to me on the day itself. Thereafter, we will go through the statements and submit a counter statement of facts with evidence that both parties may choose to bring forward to establish their positions and view points. After that a session may be arranged when both the parties can explain further in the case with evidence in writing or in person to be placed before you. Recording of such sessions will be done by you and given to both the parties every day (a procedure followed in a solely arbitration case as followed by us in Trusuli arbitration case) After we have concluded our case then you will announce your judgment based on f acts placed before you in writing.
I hope this is in order. Kindly confirm the same to enable me to move into the matter, It would not be out of place to mention that I will need a minimum of two to three months to prepare my case to be submitted to you from-the date you give your direction, as I have to go through various letters/ records available with me and the company.'
5. From this letter Ex. P-8 it is certain that the petitioner did not accept the offer of respondent No. 1 as contained in letter Ex. P. 2 dated 10th Sept. 1973 but made a counter offer for the acceptance by Mr. Watel. Mr. Watel, however, by his letter dated 12th NovL 1973 (Ex. P. 9) expressed his inability to accept the conditions laid down by the petitioner. Mr Watel, according to this letter has agreed to sit and hear both the parties at informal meetings but the petitioner wanted a complete procedure of entertaining statement of claim, its reply by the company and then regular hearing and then a decision by Mr. Watel. From the contents of these letters dated, l0th Sep4. 1973, (Ex. P. 2), 6th Nov. 1973 (Ex. P-8), and 12th Nov. 1973 (Ex. P. 9), it is apparent that the petitioner never accepted Mr. Watel to decide the disputes except on conditions mentioned by him in his letter dated, 6th Nov; 1973 (Ex. P-8). Mr. Watel, however, did not agree to all those conditions and 'never accepted to sit and settle the alleged disputes between the parties. There was thus no agreement between the parties to refer the alleged two disputes relating to payment of gratuity and compensation for loss of office to Mr. Watel. This conclusion is further fortified by subsequent correspondence between the parties. On 3rd Dec. 1973, (Ex. P-11), the petitioner wrote letter to the Managing Director of respondent No. 1 requiring the company to settle the said two disputes under Art. 34 of the Articles of Association of the company respondent No. 1 which is as under:-
'34. Whenever any difference arises between the Company on the one hand and any of the members, their executors administrators, or assignees on the other hand, touching the true intent or construction or the incidents or consequences of these presents or touching anything then or thereafter done, executed, omitted, or suffered in pursuance of the presents or statutes, or enactments or touching any breach or alleged breach or otherwise relating to these presents, or the statutes or to any of the affairs of the company every such difference shall be referred to the arbitration of two arbitrators one appointed by each party or in the event of disagreement of the arbitrators, to that of an umpire appointed by them (i. e. the arbitrator) before entering on the reference, or to the arbitration of a single arbitrator if the parties to the differences agree to such reference.
5-A. By this letter the petitioner required the respondent No. 1 to nominate an arbitrator. The company respondent No. 1 sent a reply dated 11th Dec. 1973 (Ex. D-5) to the petitioner wherein it was stated that reference to Art. 34 of the Articles of Association of, the company was irrelevant as the said Article applies to differences arising between the company on the one hand and a member on the other hand .The disputes between the director and the company are not referable to arbitrator under Article 34 of the Articles of Association. The petitioner in his letter dated 5th Jan. 1974 in reply to this letter dated 11th Dec. 1973 to the Managing Director of the company respondent No. 1 asked the company to clarify how it wishes to, resolve the outstanding matters. The contents of letters dated 3-12-1973 (Ex. -P-11), 11-12-1973 (Ex. D-5), and 5-1-1974 (Ex. P-12) suggest that the initial offer of the company respondent No. 1 is contained in its letter dated 10-9-1973 (Ex. P-2) came to an end. This correspondence was thus an implied refusal of offer dated 10-9-1973 (Ex . P-2). S. 6 of the Contract Act reads as under :-
'6. A proposal is revoked -
(1) by the communication of notice of revocation by the proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for it acceptance, or, if no time is so prescribed , by the lapse of a reasonable time, without communication of the acceptance ;
(3) by the failure of the acceptor to fulfill conditions precedent to acceptance; or
(4) by the death or insanity of the proposer, if the facts of his death or insanity comes of the knowledge of the acceptor before acceptance.'
5-B. In the present case, the offer dated 10-9-1973 made by the company respondent No. 1 was never accepted either by the petitioner or by Mr. Watel to get the matter settled. The offer thus stood revoked and there was thereforee no agreement of reference. Under these circumstances, the irresistible conclusion is that there was never my arbitration agreement to refer the alleged disputes to Mr. Watel.
6. In the absence of an arbitration agreement it is not possible to grant my relief to the petitioner under S. 8 of the Arbitration Act. From the correspondence on record, it appears that Mr. Watel was approached to settle the alleged two disputes because Mr. Watel was in the knowledge of the entire background of the disputes and the reasons for the petitioner to leave the directorship of the company. it was in the -special circumstances that Mr. Watel was approached to decide the disputes but he never accepted to decide the same on the terms and conditions dictated by the petitioner, as per his letter dated 6-11-1973 (Ex P-8). Even it it be assumed for the sake of arguments that there was an arbitration agreement between the parties to refer the alleged disputes to Mr. Watel for decision, it is clear from the correspondence that the intention of the parties was that nobody else would be approached or appointed to settle the odd disputes. From the correspondence and record it is, thereforee, clear that if Mr. Watel is treated as an arbitrator it was intended that the vacancy would not be supplied. On account of this conclusion of mine after going through the record I am of the opinion that the petitioner is, not entitled to the relief of appointment of an arbitrator under S. 8 of the Arbitration Act. I, thereforee, hold that the disputes were ever referred to Mr. Watel as an arbitrator. In my case a new arbitrator cannot be appointed as the intention of the parties was not to supply the vacancy.
7. As observed above, the alleged disputes are not between the company and a member of the company but between the company and its ex-director and, in these circumstances Art. 34 of the Articles of Association is not applicable and the alleged disputes are not referable to arbitration under Article 34 of the Articles of Association of the respondent No. 1.
Relief:- In view of observations made above, the petitioner's application under S. 8 of the Arbitration Act has no merit. The same is dismissed but without any order as to costs.
8. Application dismissed.