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Union of India Vs. D.K. Gupta of Sudhir Brothers - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 58 of 1970
Judge
Reported in13(1977)DLT334; 1978RLR476
ActsArbitration Act, 1940 - Sections 30
AppellantUnion of India
RespondentD.K. Gupta of Sudhir Brothers
Advocates: J.D. Jain,; S.C. Malik and; Daljit Singh, Advs
Cases ReferredHariram Khiaram v. Gobindram Rattan Chand Air
Excerpt:
arbitration act (1940) - sections 30 & 19--award--setting aside of--misconduct of arbitrators--objections to award--what is misconduct--consequences of supersession of reference--whether supersession justified on the basis of long delay--grounds for supersession--effect of filing of suit subsequent to the setting aside of award on appeal--general conditions of contract, article 64.; in the instant case, on 20th february, 1965, the parties submitted list of witnesses before the arbitrators which they proposed to examine in support of their respective case. the arbitrators were fully aware of the fact that the parties were keen to produces witnesses. the claimant on 19th may, 1965, sought adjournment on the ground that his counsel was going out of delhi. the said request was turned.....prithvi raj, j.(1) this first appal is directed against the order dated 28th april, 1970, passed by a learned single judge setting aside award dated 10th june, 1965, on the ground that the arbitrators had 'failed to control and conclude the proceedings' which were commenced on or about 30th june, 1961, and that the arbitrators were guilty cf having misconducted themselves and the proceedings in that without affording proper opportunity to the claimant taking advantage of his absence, had made and announced the award in question. in that view of the matter, it was not considered feasible to remit the proceedings to the same arbitrators. the learned single judge superseded the reference on the ground that the procedure prescribed by article 64 of the general conditions of contract was 'not.....
Judgment:

Prithvi Raj, J.

(1) This first appal is directed against the order dated 28th April, 1970, passed by a learned Single Judge setting aside award dated 10th June, 1965, on the ground that the arbitrators had 'failed to control and conclude the proceedings' which were commenced on or about 30th June, 1961, and that the arbitrators were guilty cf having misconducted themselves and the proceedings in that without affording proper opportunity to the claimant taking advantage of his absence, had made and announced the award in question. In that view of the matter, it was not considered feasible to remit the proceedings to the same arbitrators. The learned Single Judge superseded the reference on the ground that the procedure prescribed by Article 64 of the General Conditions of Contract was 'not only cumbersome but wholly illusory and was not intended to inspire confidence between the parties'. As a consequence the learned Single Judge held that the arbitration agreement 'will cease to have effect with reference to the difference referred', and that 'the parties will be free to pursue their remedies in a Civil Court according to law, or to take such other steps as they think proper'.

(2) Relevant facts required to be noted for the disposal of this appeal are as under.

(3) Shri D. K. Gupta (hereinafter to be called 'the claimant') was carrying on business under the name and style of M/s. Sudhir Bros. as its sole proprietor. He was awarded contracts for construction of three units of Type Iii, 84 units of Type Ii double-storeyed quarters and 180 units of Type I quarters at Tughlakabad in connection with Tughlakabad Marshalling Yard. Two contracts No. 3-TMY dated 19th September, 1958, and 4-TMY, dated 20th September, 1958, were executed by the claimant in favor of the Union of India, in respect of the above works.

(4) The agreement in question contained an arbitration clause being clause No. 64. The relevant provisions of which are as under :

'ARBITRATION: 64(3) (a) Matters in question, dispute or difference to be arbitrated upon shall be referred for decision to :

(I) A sole arbitrator who shall be the General Manager or a person nominated by him in that behalf in cases where the claim in question is below Rs. 50,000 and in cases where the issues involved are not of a complicated nature. The General Manager, shall be the sole Judge to decide whether or not the issues involved are of a complicated nature.

(II) Two arbitrators, who shall be Gazetted Railway Officers of equal status to be appointed in the manner laid down in clause 3(b) for all claims of Rs. 50,000 and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager, shall be the sole Judge to decide whether the issues are of a complicated nature or not. In the event of the two arbitrators being divided in their opinions the matter under dispute will be referred to an Umpire to be appointed in the manner laid down in clause 3(b) for his decision.

(B) For the purpose of appointing 'two arbitrators' as referred to in clause a(ii) above, the Railway will send a panel of more than three names of officers of the appropriate status of one or more departments (vide correction slip No. 20, dated 16-10-63) of the Railway to the contractor, who will be asked to suggest a panel of three names out of the list so sent by the Railway. The General Manager will appoint one arbitrator out of this panel as the contractors' nominee, and then appoint a second arbitrator of equal status as the Railway's nominee either from the panel or from outside the panel, ensuring that one of the two arbitrators so nominated is invariably from the accounts department. Before entering into reference, the two arbitrators shall nominate an Umpire to whom the case will be referred in the event of any difference between the two arbitrators.

(C) The arbitrator or arbitrators or the Umpire shall have power to call for such evidence by way of affidavits or otherwise as the arbitrator or arbitrators or Umpire shall think proper, and it shall be the duty of the parties hereto to do or cause to be done all such things as may be necessary to enable the arbitrator or arbitrators or Umpire to make the award without any delay.

(D) It will be no objection that the person appointed as arbitrator, or arbitrators or Umpire are Government servants and that in the course of their duties as Government servants they have expressed views on all or any of the matters in dispute.

(E) Subject as aforesaid, Arbitration Act, 1940, and the Rules there under and any statutory modification thereof shall apply to the arbitration proceedings under this clause.

(5) Disputes arose between the parties pertaining to the above-said contracts and were referred to the decision of Shri G. T. Sampat, Deputy Chief Engineer and Shri M. Y. Ranadey, Deputy Financial Adviser, Northern Railway, New Delhi. The said arbitrators made, signed and delivered their award on 10th June, 1965, whereby a sum of Rs. 10,911 was awarded to the claimant in full and final settlement of all his claims.

(6) Against the award delivered by the arbitrators, the claimant Bed objections which were registered as suit No. 471 of 1967. The said suit was decided by a learned Single Judge by the impugned judgment dated 28th April, 1970, as a result whereof the reference was superseded and the arbitration agreement was concelled. The arbitrattion agreement accordingly ceased to have effect with reference to differences referred.

(7) Feeling aggrieved by the above-said judgment the Union of India have filed the present appeal F.A.O.(OS) No. 58 of 1970.

(8) The grievance of the appellant regarding setting aside of the award and revoking the authority of the arbitrators' is wholly misconceived. There is sufficient material on the record to uphold the findings of the learned Single Judge that the arbitrators had 'misconducted themselves as well as the proceedings.'

(9) Though the proceedings in the dispute had commenced on 30th June, 1961, the arbitrators, however, effectively entered upon the reference on or about 30th March, 1962. The proceedings remained adjourned for sometime and were resumed on 8th March, 1963. The learned Single Judge after referring to the record of the arbitrators Found that the first hearing in the case was held on 24th September, 1964, the second hearing was held on 28th September, 1964, the third hearing was held on 23rd January, 1965 and the fourth hearing was held on 20th February, 1965. On or about 11th February, 1965, the appellants moved an application in the Court under section 28 of the Arbitration Act, 1940 (hereinafter to be called 'the Act') seeking extension of time to enable the arbitrators to make the award, the ground urged in the application was that the arbitrators were busy in another important work. A learned Subordinate Judge who heard the application, extended time till l0th June, 1965.

(10) During the proceedings held on 20th February, 1965, the parties filed list of witnesses whom they wanted to examine. The Railway Administration also produced certain documents. According to the claimant the matter was fixed for hearing for 21st and 22nd May, 1965. A request was made to the arbitrators on 19th May, 1965 that the case may not be heard on the said two dates as the claimants' counsel was going out of Delhi and that it may be fixed for 1st July, 1965. The arbitrators declined the request on the ground that the matter had been delayed for long. The claimant's son on 20th May, 1965, sought to deliver a letter in the office of the arbitrators but the office refused to take the letter. No record of the proceedings on date 21st May, 1965, was made available. However, the record of the proceedings held by the arbitrators on 1st June, 1965, revealed that the claimant was absent. The case was proceeded ex parte against him. The arbitrators heard the counsel for the appellant and passed the following order 'to come up for making the award on 8-6-65 at 15.30 hours.' On the aforesaid date the award could no be made as in the meantime the claimant had moved an application under sections 5 and 11 of the Act for revocation of the authority of the arbitrators. A Subordinate Judge, 1st Class, Delhi (Shri Joginder Nath) on 1st: June, 1965, granted interim stay of the arbitration proceedings. This order was received by the Central office of the Railway Administration as well as its law officers on 1st June, 1965. The arbitrators, however, were informed on 4th June, 1965. The arbitrators in their proceedings held on 8th June, 1965, accordingly stooped further proceedings pending vacation of orders from the Court. On 9th June. 1965, the Subordinate Judge vacated the stay order. The arbitrators were apprised of the same by the counsel for the appellants. The arbitrators accordingly passed the following order on the file on 9th June. 1965, 'R. B. Nanak Chand, Railway Counsel informed us en phone at 15.00 hrs. that the stay order has been vacated by the Cour and the Court has ordered the arbitrators to proceed further with the arbitration subject to orders of the Court on the applications under section 28 and under sections 5 and 11 of the Arbitration Act'. Despite the operative part of the order passed by the Court, the Arbitrators chose to make the award on 10th June, 1965.

(11) It may bear mention here that one commencement of the Delhi High Court Act, the proceedings pending in the lower Court stood transferred to this Court. The clamant before the learned Single Judge on the transfer of the proceedings pressed both his application under section 5 and 11 of the Act seeking revocation of the authority of the arbitrators of also the objections filed by him under sections 30 and 33 of the Act for setting aside the award. This is how the matter came up before the learned Single Judge.

(12) The facts which we have noted above have been fully set out by the learned Judge in the impugned judgment. There is no dispute between the parties on the facts recorded above. The appellants, however, contend that proper opportunity was given to the claimant to urge his case before the arbitrators and if he chose to desert the proceedings the arbitrators cannot be blamed for making the award in question, more so when the stay granted by the Court had been vacated on 9th June, 1965, with a direction to proceed further with the arbitration.

(13) This contention is devoid of merit and cannot be countenanced on the facts of the case. Arbitration agreement is a contract by which the parades agree to refer their disputes to a domestic forum but the arbitrators in their function which is quasi-judicial must act in a judicial manner. It is true that the arbitration proceedings cannot be allowed to go to the extent of protracting proceedings for years together leaving the dispute between the parties unsettled for an indefinite period but the arbitrators must act in a manner as will sub serve the interest of justice. In the instant case, as already noted earlier, on 20th February, 1965, the parties submitted list of witnesses which they proposed to examine in support of their respective case. The arbitrators were fully aware of the fact that the parties were keen to produce witnesses. The claimant on 19th May, 1965, sought adjournment on the ground that his counsel was going out of Delhi. The said request was turned down. The claimant was told that the hearing already fixed for 21st May, 1965, would not be postponed. There was no formal record of the proceedings in dated 21st May, 1965. However, the counsel for the appellant, as observed by the learned Single Judge, after considerable pains in wading through the records was able to draw the attention of the learned Judge to a note dated 21st May, 1965, found in the correspondence section of the file. The said note has been reproduced in the impugned judgment and reads as under :-

'PRESENT: Shri S. K. Chopra, Executive Engineer (DA) Queen's Road, Delhi, with Railway's counsel, Shri Nanak Chand.

None present for the claimant.

Claimant has been given number of opportunities to produce his evidence. He has been obtaining adjournment on one excuse or the other.

An application by the claimant saying that he has no confidence in Shri G. T. Sampat Co-Arbitrator has been received by Shri M. Y. Ranade Co-Arbitrator. This can be no ground to stop the arbitration proceedings.

The claimant is hereby informed that if he does not appear and produce his evidence on 1st June, 1965, at 15.00 hrs. the case would be proceeded in his absence'.

The above order was communicated to the claimant vide letter dated 21st May, 1965, Brij Mohan the son of the claimant on receipt of this order, wrote to the arbitrators that the copy of the order was received by him on 25th May, 1965, and that his father was out of Delhi and would return to Delhi on 10th June, 1965. He, thereforee, prayed that the proceedings be adjourned after 10th June, 1965. Despite this letter which is on the file of the arbitrators, the claimant was proceeded ex parte and the arbitrators after hearing the counsel of the appellant on 1st June, 1965, as already noted in an earlier part of the judgment, adjourned the matter to 8th June, 1965, for making the award.

(14) The arbitrators did not pass any orders on this letter as is borne out from their order dated 1st June, 1965. In fact they do not make a mention of this letter in their above said order in which after recording that the claimant inspire of their office note dated 21st May, 1965, copy of which was endorsed to him, was absent and proceeded ex parte against him. The least that was required of them was to pass a suitable order on the request made by the claimant's son. The arbitrators being aware of the fact that that the claimant had stated that he had no confidence in Shri G. T. Sampat (Arbitrator), should not have proceeded in. a supercilious manner to proceed ex parte in the matter when there was no material belore them to ignore the information apprised to them that the claimant was out of Delhi and would return after 10th June, 1965. Not to talk of this the subsequent conduct of the arbitrators lends weight to the charge that they had misconducted themselves and the proceedings which do not savour of judicial decorum that was expected of them. The arbitrators in their order dated 8th June, 1965, after noting the receipt of the stay order stopped further proceedings pending vacation of the stay order from the Court. Accordingly next date in the matter was not fixed and rightly so as the proceedings had been stayed by the Court. However, on being informed by the counsel for the appellant on 9th June, 1965, that the stay order had been vacated the arbitrators made a record of the said fact in their file mentioning that 'the Court has ordered the arbitrators to proceed further with the arbitration subject to orders of the Court on the applications under section 28 and under sections 5 and 11 of the Arbitration Act'.

(15) It is significant to note that application under section 28 of the Act seeking extension of time had been moved by the appellant and that the Court had fixed 21st July, 1965, for reply by the claimant. The arbitrators had also come to know that an application under sections 5 and 11 of the Act seeking revocation of their authority had already been moved and the same was pending decision. In this background the conduct of the arbitrators in acting with unprecedented haste to make the impugned award on 10th June, 1965, cannot be said to be impeccable. On 9th June, 1965, the arbitrators know that so far as they were concerned no further proceedings were to be conducted by them in the matter and that only an award was to be made. In the circumstances the least that they could do to avoid blemish on their conduct was to seek clarification of the Court's order permitting them to proceed further with the arbitration which permission without doubt appears to have been given under a misapprehension that the time of the arbitrators may not be wasted pending disposal of the two applications under section 28 and under sections 5 and 11 of the Act. The arbitrators in making the award on 10th June, 1965, under the cloak of permission from the Court not only displayed total lack of judicial decorum on their part but rendered infructuous the application moved by the claimant under sections 5 and 11 of the Act and in the process deprived the Court from dealing with the said application by confronting it with fait accompli that the award having already been made there was no occasion to revoke the authority of the arbitrators. The facts and circumstances of the case speak eloquently to the effect that the arbitrators had misconducted themselves as well as the proceedings. The award dated 10th June, 1965, had rightly been set aside and we affirm the said finding of the learned Single Judge.

(16) We now proceed to consider the next question whether there was Justification for superseding the reference and for the direction that the arbitration agreement would cease to have effect with respect to the subject matter of the reference. Before we proceed to consider justification for superseding the reference it would be appropriate to note the relevant provisions of the Act empowering the Court to order that the arbitration agreement shall cease to have effect with respect to the difference referred. Sub-section (2) of section 12 empowers the Court where the authority of an arbitrator or arbitrators or an Umpire has been revoked by leave of the Court or where the Court removes an Umpire who has entered on the reference or a sole arbitrator or all the arbitrators on the application of any party to the arbitration agreement, either-

(A) appoint a person to act as sole arbitrator in the place of the person or persons displaced, or

(B) order that the arbitration agreement shall cease to have effect with respect to the difference referred.

(17) It would, thereforee, be seen that on facts placed before the Court, it has discretion on the application of any party to the arbitration to make either to the two orders envisaged by section 12(2)(a) of (b). It is evident from the aforesaid provisions that on a party to an agreement seeking revocation of the authority of an arbitrator or arbitrators the Court may appoint a person to act as sole arbitrator in the place of the person or persons displaced in which event the arbitration agreement shall remain in force with respect to the difference referred.

(18) Section 19 of the Act, however, envisages that where an award has become void under sub-section (3) of section 16 or has been set aside, the Court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred.

(19) SUB-SECTION (1) of section 16 empowers the Court from time to time to remit the award or any matter referred to arbitration to the arbitrators or Umpire for re-consideration upon such terms as it thinks fit if either of the eventualities contemplated by clause (a) to (c) arc found in an award. According to sub-section (2) where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or Umpire shall submit his decision to the Court : Provided that any time so fixed may be extended by subsequent order of the Court. As per sub-section (3) an award remitted under subsection ( 1 ) shall become void on the failure of the arbitrator or Umpire to reconsider it and submit his decision within the time fixed.

(20) From the 'perusal of section 19 of the Act it is evident that where an award has become void under sub-section (3) of section 16 or where an award has been set aside by the Court, it may by order supersede the reference and once it chooses to supersede the reference the Court shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred. In other words once the Court passes an order superseding the reference, the consequence of such an order is that the arbitration agreement shall cease to have effect with respect to the difference referred. On superseding the reference the Court is obliged to pass an order that the arbitration agreement shall cease to operate in respect to the difference referred.

(21) Reference here may be made to case . Examining the provision of section 19 of the Act, their Lordships observed that the section leaves it to the discretion of the Court when it decides to set asides an award whether to supersede the reference or not. The Court may not supersede the reference at all in which case though the award may be set aside the reference will continue. But if the Court supersedes the reference it has in consequence to order that the arbitration agreement on the basis of which the reference was made would cease to have effect with respect to the difference referred. It was accordingly observed that it was only when the Court orders supersession of the reference that the consequence follows that the arbitration agreement ceases to have effect with respect to the subject-matter of the reference.

(22) It is no doubt true that the learned Single Judge has not indicated the section under which the impugned order superseding the reference was passed but a reading of the order makes it clear that it was passed under section 19. Once a justification can be found for superseding the reference no exception can be taken to the order directing 'that the arbitration agreement will cease to have effect with reference to the differences referred'.

(23) In holding that the arbitrators had misconducted, themselves as well as the proceedings and that the award cannot be allowed to stand, the learned Judge did not consider it feasible to remit the proceedings to the same arbitrators. The learned counsel for the claimant in that view of the matter emphatically urged before the learned Single Judge that if the counsel for the appellant agreed, reference may be made to one Mr. L. C. Lai who had been appointed as the Umpire in the case by the arbitrators failing which the arbitration agreement may be superseded. The learned counsel for the appellant expressed his inability to either accept or reject the suggestion. On this the learned counsel for the claimant urged that the arbitration agreement be superseded as according to him the procedure prescribed by Article 64 of the General Conditions of contract for appointing other arbitrators was not only cumbersome but wholly illusory and was not intended to inspire confidence between the parties. The precise argument was that under the said clause one person was to be nominated by the Railway Administration itself, and the other person who is the nominee of the contractor, is also to be appointed by the General Manager of the Railway out of a panel of four or more persons selected by the General Manager, out of whom the contractor has to agree to three of them and out of the three so proposed by the contractor, the General Manager selects one who is the nominee of the contractor. The learned Single Judge was of the opinion that there was force in the above-said contention. The learned Single Judge in that view of the matter held that the net result of the exercise of the right of the contractor to appoint his nominee as an arbitrator was only to exclude some persons out of a small list offered by the General Manager and that the General Manager was not bound to accept any one nominee of the contractor. It was further observed that the dispute between the parties related to the contract dated January, 1958; that the arbitration proceedings commenced on or about 30th June, 1961; and that from the record of the proceedings made available to the Court 'the end of the dispute is nowhere in sight'. On the basis of the twin reasons noted above, the learned Judge came to the conclusion that it was a fit case where the arbitration agreement should be superseded. Accordingly, he superseded the reference, directing that the arbitration agreement would cease to have effect with reference to the differences referred.

(24) We have given our anxious consideration to the matter and are of the opinion that the twin grounds noted above could not be made the basis for superseding the reference and cancelling the arbitration agreement.

(25) Arbitration agreement is a contract between the parties under which they agree to refer their disputes to a domestic forum of their choice. Under the agreement the parties for better or worse agree lo have their dispute settled through arbitration and make the arbitrators the final Judge in their dispute. Such a contract cannot be allowed to be evaded unless there are substantial grounds to relieve either of the party of the obligations incurred by it under the contract. An arbitration agreement like any other agreement is binding on the parties unless it be shown that it is tainted with fraud, coercion, undue influence or that its terms are unconsionable. It is only on such grounds that an arbitration agreement can be avoided like any other agreement. The parties having entered into the agreement of their free choice and having even acted upon it by having the disputes referred to arbitration in the manner provided under Article 64(3) (b), it is too late in the day for the claimant to contend that the procedure prescribed by Article 64 of the General Conditions of the Contract was cumbersome and wholly illusory which was not intended to inspire confidence between the parties. It is not the case of the claimant that undue influence was brought to bear upon him or that he was coerced to sign the arbitration agreement or that on the face of it the agreement is tainted with fraud. The claimant in the circumstances cannot be permitted to avoid the agreement. The first ground on which the reference was superseded and the arbitration agreement cancelled, in our opinion, on the facts and the circumstances of the case, cannot be sustained.

(26) The other ground on which the claimant was relieved of his obligation under the agreement was that undue delay had occurred in the arbitration proceedings as a result of which the end of the dispute was nowhere is sight. The question accordingly is whether this delay was occasioned because of the arbitrators or whether it was caused by the claimant.

(27) A perusal of the arbitrators' file shows that the delay was primarily occasioned by the claimant in not filing his claim and documents within the time allowed by the arbitrators as also by obtaining adjournments on the convenient plea that the dates fixed for considering the matter did not suit them and that they would not be available, being out of station. On 1st July, 1961, the arbitrators called upon the claimant to file his claim. The claim was filed on 23rd August, 1961. The Railway filed its counter in September, 1961. The Arbitrators fixed 11th October, 1961, as a date for hearing in the matter. Shri T. Narasimham expressing his inability to act as an arbitrator, was replaced by Shri B. Madhwan. The arbitrators then fixed the matter for hearing on 15th and 16th February, 1962. The claimant on 10th February, 1962, wrote to the arbitrators requesting that the Executive Engineer be asked to furnish him the details of the final bills of work and the valuation of the material he had prepared. The Executive Engineer was also required to furnish the details of the works done by him departmentally, and the expenditure incurred by him for the execution of the said work. The said information, the claimant averred, was required urgently by him for submitting replication to the counter statement filed by the department. The department in its letter dated 12th February, 1962, informed the arbitrators that the final bills of the applicant were under check and that the copies of the same will be supplied on completion of the checking. This narturally took some time. The arbitrators are not to be blamed for this delay. The delay was occasioned because of the information sought by the claimant.

(28) The arbitrators finally on 11th February 1963, gave the parties time till 8th March, 1963, for filing further papers and documents in support of their respective claim.

(29) The Railway Administration, however, sought extension in time for filing its papers. After the parties had filed the papers the matter was then taken up on 14th of August, 1963. Parties were given time to check up and certify the correctness of the papers filed by the opposite party for which purpose the matter was fixed for 7th September, 1963. The parties were required to complete the inspection of the measurement books and other records and documents by 7th September, 1963. The claimant, however, by his letter dated 7th September, 1963, expressing inability for the reasons set out in the application for completing checking of the documents by 7th September, 1963, sought further time by three weeks. Time was allowed by the arbitrators and the matter was fixed for 11th October, 1963. The claimant by letter dated 9th October, 1963, sought adjournment staling that his counsel would be out of Delhi and prayed that the matter be fixed for 15th November, 1963. The arbitrators fixed the matter for 25th November, 1963, and asked the parties to furnish certificates of having checked the correctness of the documents filed by each party. 25th November, 1963, was declared a holiday. The matter was accordingly adjourned to 2nd December, 1963. The aforesaid direction was not complied with by the claimant despite having attended some meetings held for the said purpose. The arbitrators accordingly on 6th February, 1964, wrote to.the claimant pointing out that he had been given sufficient time for filing the documents but it appeared that somehow or the other the claimant was delaying the matter. The arbitrators, however, gave one more opportunity to the claimant to complete and file documents by 24th February, 1964. The claimant controverter the said allegations and contended that the delay was occasioned because of the apathetic attitude of the Railway Administration that (i) copies of the final bills were not supplied to him (ii) that amounts of security deposit could not be corrected by the Railway and (iii) that the Railway had failed to vouchsafe for the correctness of the documents filed by it and also that variation in quantity in final bills had not been tendered till then.

(30) The matter, however, could not be taken up for sometime because of the change in the forum of arbitrators in that on the transfer of Shri Madhwan, his vacancy was filled by Shri M. Y. Ranade. The matter was, thereafter, fixed for 24th September, 1964 as the earlier date that was sought to be fixed was not suitable to the claimant who in his letter dated 7th August, 1964, apprised the arbitrators that he would be out of Delhi from 13th to 16th August, 1964. On 23rd September, 1964, Shri G. S. Bedi counsel for the claimant by a letter of the said date sought adjournment on the ground that he would not be in Delhi on 24th September, 1964. On the request of Shri Bedi, the matter was adjourned to 23rd January, 1965, and the claimant was informed of this date by the arbitrators by their letter dated 6th January, 1965. Neither the claimant nor his counsel appeared on 23rd January, 1965. Shri B. M. Gupta son of the claimant however, sought adjournment on the ground that both the claimant and his counsel were out of Delhi. On this request the matter was adjourned to 20th and 21st of February, 1965. The arbitrators held the proceedings on 20th February, 1965. Since the matter could not be completed the same was adjourned to 8th March, 1965.

(31) We had already noted in detail in an earlier part of this judgment as to what transpired in the subsequent proceedings which may not be recapitulated again. The perusal of the record makes it abundantly clear that the delay was occasioned on the part of the claimant. The arbitrators were no doubt indulgent in accommodating the claimant requests for adjournment but they cannot be accused of having delayed the proceedings of their own to cause harm to the claimant who in the circumstances cannot be permitted to take advantage of his own wrong and put up a face of injured innocent to contend that arbitrators are guilty of having adopted dilatory tactics in protracting the proceedings.

(32) Besides delay by itself would not be enough to hold that the arbitration agreement has come to an end or that the arbitration agreement on that count has to be cancelled though it may be a relevant factor, nay an important circumstance, in conjunction with other circumstances to arrive at a conclusion whether the arbitration agreement be cancelled or not.

(33) In Rallis India Ltd. v. B. V. Manickarn Chette and Co Madras and another : AIR1962Mad351 , a Division Bench of the Court setting aside the order of the lower Court superseding the reference to arbitration Oh the ground that the matter had been pending long time and that no useful purpose would be served by referring the matter to another arbitrator, observed that the order savours more of an anxiety on the part of the lower Court to put an end to the disputes between the parties rather than a desire to adjudicate upon their rights. It was further observed that the act of the Court was hardly reconcilable with judicial responsibility.

(34) In Sonelal v. Latta Parsad, Air 1955 M. B. 91 a Division of the Court held that an arbitration agreement stands on the same footing as any other agreement. It is binding upon the parties unless it is tainted with fraud, coercion, undue influence etc. in which event it can be avoided like any other agreement. It was also held that once there was a valid reference to arbitration the parties cannot resile from it merely because the arbitrators have allowed their time to expire without making the award or that they have neglected or refused to act. Further, that it was only when there was something in the arbitration agreement itself giving to the parties not only the right to revoke the authority of an appointed arbitrator in the event of his failure to make an award within the specified time but also the right to revoke the arbitration agreement for that reason, that the revocation of the authority of the arbitrator would make arbitration agreement infructuous.

(35) In Messers Ishar Dass Sahni and Brothers v. Union of India and others 1956 P.L.R. Del 325 Grover J., noticing the decision of a Division Bench in Hariram Khiaram v. Gobindram Rattan Chand Air 1949 Sind 24 in which the Bench treated the reference as having lapsed because one of the arbitrators in that case had refused to act in respect of a dispute that was referred to arbitration in pursuance of the arbitration agreement and the failure of the parties to have the vacancy filled through the assistance of the Court as provided by section 8 of the Act, on a parity of reasoning in view of the pendency of the dispute between the parties for the last ten years held that it should be legitimate to say that no further effect could be given to the arbitration agreement and that to all indents and purposes it should be treated as if it had become altogether ineffective.

(36) The facts of the instant case are distinguishable from the facts of the case dealt with by Grover J. That being so, the ratio of the said case is not applicable to the case before us.

(37) Reference may also be made to case . During the pendency of the suit the parties jointly agreed for mutual settlement of the dispute by an award of the arbitrators. The dispute in suit was accordingly referred to two arbitrators. The arbitrators wrote to the Court that they were not in a position to proceed with the arbitration and make the award. The trial Court superseded the arbitration and directed the suit to proceed further. Before the High Court it was urged by the defendant in the suit that the arbitration ought not to have been superseded but that the vacancies ought to have been supplied. The plaintiff resisting the submission urged that there were cogent circumatanses which warranted the supersession of arbitration. The plaintiff's contention was that the partnership was dissolved long time back and that on account of one reason or another nine years had elapsed since then and yet no accounts of partnership business had been settled between the parties. It was also contended that the suit was filed eight years ago prior to the matter being heard by the High Court and that still there was no decision of the dispute between the parties, and before the parties agreed by a joint application to refer the matter to arbitration the suit had proceeded to hearing; and that a part of the plaintiff's evidence had been recorded. The above circumstances were held to be cogent and well founded for superseding the arbitration agreement.

(38) The above case was decided on its awn facts and does not lay down any rule universally applicable to every case,

(39) No hard and fast rule can be laid down to suggest in what circumstances reference has to be superseded, consequent to which the arbitration agreement shall ceases to have effect. The approach in an application for superseding the reference should be whether the refusal to grant leave would result in miscarriage of justice.

(40) In the instant case, as earlier noted by us, the delay was occasioned by the claimant. In the circumstances it is not open to him to contend that proceeding with the arbitration would have the effect of lingering the litigation and that recourse to civil suit would in any manner enable the parties to procure expeditious settlement of their dispute.

(41) The learned counsel for the claimant, however, contended that the claimant after the reference was superseded could not sit over the matter with his fingers crossed, allowing the limitation for filing a suit to lapse by the time the present Letters Patent Appeal was decided Now that he has already filed the suit, goes the argument, setting aside the impugned order would result in imposing double expenses on the claimant apart from prolonging the dispute. We do not agree. The parties having chosen domestic forum for the settlement of their dispute, cannot be allowed to resile from their solemn undertaking. The Letters Patent Appeal was admitted on 8th September, 1970. The appellants by C.M.P. No. 1068 of 1970 sought stay of the impugned order. This application came up for hearing on 30th September, 1970, before a Division Bench of this Court. Counsel for the claimant stated before the Bench that Ho civil suit had been filed till then. The application was accordingly not pressed and was withdrawn reserving liberty to make a suitable application, if so required, at a later stage. The claimant by filing a civil suit subsequently incurred double expenses of his own volition. He cannot set up his act of filing the suit as a defense to the prayer of the appellant to enforce the agreement. The dispute having already been referred to arbitration in revoking the powers of the arbitrators the claim made by the claimant would not attract the bar of limitation, on supplying the vacancies.

(42) The argument that enforcing of the agreement at this late stage would cause inconvenience and hardship to the claimant cannot be countenanced on the facts and circumstances of the case.

(43) Lastly, it was strenuously contended that the agreement in question was not of a comprehensive nature and does not contemplate continuation of the reference relating to the same dispute or successive references relating to different disputes covered by it on the revocation of the arbitrators' powers/authority. It was urged that a bare perusal of clause 64 shows that the agreement to refer stood exhausted by the reference already made and the award following thereupon. The arbitration agreement, it was submitted, does not provide for machinery to have further arbitration on the same dispute.

(44) Support for this submission was sought from case. Juggilal Kamlapat (supra). The ratio of this case on the basis of which the argument, noted above, was sought to be canvassed is not applicable to the instant case. From a reading of clause 64, it cannot be spelled out that the agreement contemplates only one reference, and the same having already been made the agreement stood exhausted by the reference and the award following thereupon.

(45) In determining whether on the setting aside of the award, a second reference on the basis of the agreement is competent or not what is required to be considered is not the intention of the parties to supply the vacancy but their intention not to supply it. The agreement is silent on the question whether vacancies should be supplied or not. Had the parties intended not to supply the vacancies they would have specifically stated so in the agreement.

(46) It would be advantageous here to note the decision of their Lordships of the Supreme Court in . The parties in that case agreed that disputes arising between them shall be referred for arbitration to the Judicial Commissioner, Himachal Pradesh. On disputes having arisen, the same were referred to the Judicial Commissioner who declined to act. The Court was accordingly moved to appoint some other person as arbitrator in place of the Judicial Commissioner. The respondents opposed that prayer on the ground that the arbitration clause did not provide for such an appointment. Rejecting the contention their Lordships held that the terms of the agreement did not in the least show that the parties intended not to supply the vacancy. Further, merely because the arbitrator was designated with reference to the office held by him was not enough to infer that the parties intended not to supply the vacancies.

(47) It is evident from the above noted case that in interpreting an arbitration agreement what is required to be considered is whether the terms of the agreement unmistakably show that the parties intended not to supply the vacancy. In other words the agreement in terms should indicate that the parties desired only one reference and in the event of vacancy occurring they intended not to supply it. If the arbitration agreement is silent about supplying a vacancy caused on the refusal of the arbitrator to act or on revocation of his authority there can be no impediment to supply the vacancy unless prohibition to supply could be spelled out from the agreement. So read, the agreement in question in the instant case does not bar supplying the vacancies. In this view of the matter, it is not possible to hold that the power of the General Manager (Railway) stood exhausted after he had exercised his power/authority under the agreement by appointing the arbitrators envisaged in clause 64(3) (b) of the agreement and that he is precluded from appointing new arbitrators on revocation of the authority of the arbitrators earlier appointed.

(48) In view of our discussion on the various points, noted above, the impugned order superseding the reference and further directing that the arbitration agreement will cease to have effect with reference to the differences referred is set aside. The order relating to the setting aside of the award and revoking the authority of the arbitrators is maintained. In the circumstances of the case the parties are left to bear their respective costs in the appeal.


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