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Hot Chand Vs. Sadhu Ram, anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 14 of 1971
Judge
Reported inAIR1973Delhi143; 8(1972)DLT419
ActsArbitration Act, 1940 - Sections 8
AppellantHot Chand
RespondentSadhu Ram, anr.
Advocates: Abnash Sehgal and; B.D. Behl, Advs
Cases Referred and Union of India v. S. V. Krishna Rao
Excerpt:
.....of the said notice the, party who gave the notice may apply to the court,and the court in may,after giving the parties an opportunity of being heard appoint an arbitrator who shall have like power to act in the reference and to make an award as if he had been appointed by consent of all parties. accordingly, the court appointed shri gajanand as arbitrator under section 8(2). however, the words, who shall have like power to act in the reference and to make an award' as if he had been appointed by consent of all parties',in section 8(2) show that an arbitrator so appointed under section 8(2) has to be regarded as if he was appointed by the parties themselves......of one shri amar nath nayyar. in accordance with that clause, sadhu ram, respondent no. 1. filed an application under section 20 of the arbitration act for reference of the disputes between the parties, and shri sagar chand jain, subordinate judge 1st class, delhi, passed an order, on 4th august, 1967, referring the disputes -to the arbitration of shri amar nath nayyar. it appears that an appeal was preferred against that order, but the same was dismissed on 23rd october, 1968. meanwhile, shri amar nath nayyar intimated the parties that he was unable to act as an arbitrator. then. on 25th september, 1967, sadhu ram filed an application under section 8(1)(b) of the arbitration act in the court of shri jaspal singh. subordinate judge 1st class, delhi, for the appointment of a new.....
Judgment:

T.V.R. Tatachari, J.

(1) This Civil Revision has been filed by Hot Chand against an order of Shri O. P. Chhabra, Subordinate Judge 1st, Class, Delhi, dated 16th December, 1970, accepting an application filed by respondent I, Sadhu Ram, under section 8(1)(b) of the Arbitration Act on 27th November, 1969. The respondents in this Civil Revision are (1) Sadhu Ram and (2) Tek Chand.

(2) In order to appreciate the points raised in this Civil Revision, it is necessary to state the facts which have given rise to this Revision. Certain disputes arose between, the parties in connection with a partnership .between them. The deed of partnership contained an arbitration clause according to which the parties agreed that all disputes in connection with the partnership would be referred to the arbitration of one Shri Amar Nath Nayyar. In accordance with that clause, Sadhu Ram, respondent No. 1. filed an application under section 20 of the Arbitration Act for reference of the disputes between the parties, and Shri Sagar Chand Jain, Subordinate Judge 1st Class, Delhi, passed an order, on 4th August, 1967, referring the disputes -to the arbitration of Shri Amar Nath Nayyar. It appears that an appeal was preferred against that order, but the same was dismissed on 23rd October, 1968. Meanwhile, Shri Amar Nath Nayyar intimated the parties that he was unable to act as an arbitrator. Then. on 25th September, 1967, Sadhu Ram filed an application under section 8(1)(b) of the Arbitration Act in the Court of Shri Jaspal Singh. Subordinate Judge 1st Class, Delhi, for the appointment of a new arbitrator in the place of Shri. Amar Nath Nayyar. By an.order dated 21st November, 1967, Shri Jaspal Singh, appointed Shri.Gaja Nand, Advocate, as the Sole arbitrator in the place of Shri Aitlar Nath Nayyar. It appears that a Civil Revision was filed against that order, but the same was dismissed in liming. Then,on 27th November, 1967, an application was filed by.Sadhu Ram requesting the. Court that a notice of the appointment may be sent to Shri Gaja Nand so that be could proceed with the arbitration. The said application was,.opposed by the petitioner herein. Hot Chand.on the ground that it was misconceived and a reference to the arbitrator was not legal' when the alleged disputes were not specified or disclosed by the applicant Sadhu Ram. By his order, dated 16th December. 1970, Shri O. P. Chhabra, Subordinate Judge 1st Class, Delhi, accepted the said application and directed that a notice be sent to the arbitrator. If is against the said order that the present civil revision has been filed by Hot Chand.

(3) Shri Abnash Chand Sehgal learned counsel for the petitioner, contended that since the aoplication. dated 25th September, 1967, was filed under section 8(1)(b) of the Arbitration Act. the appointment of Shri Gaja Nand as arbitrator in pursuance of that application has to be considered as being equivalent to an appointment by the parties themselves, that the Court could make a reference to Shri Gaja Nand only on a proper application under section 120(4) of the Act and not on an application like A the one filed by Sadhu Ram on 25th September, 1967, and that the impugned order: of the lower Court, dated 16th December, 1970, referring: the dispute to Shri Gaja Nand was consequently without jurisdiction.

(4) The facts narrated above show that initially Shri Amar Nath Nayyar was appointed as arbitrator on an application under section 20 of the Arbitration Act and the disputes between the parties were referred to tile said arbitrator under section 20(4) of the Act. He, however, intimated the parties that he was unable to act as an arbitrator. Chapter Ii of the Arbitration Act containing sections 3 to 19 deals with 'Arbitration without intervention of a Court', while Chapter Iii consisting of section 20 deals with 'Arbitration with intervention of a Court where there is no suit pending'. In a case where there is no suit pending it is open to the parties to proceed under Chapter Ii or under Chapter IIIl. When a party proceeds under Chapter Iii, i.e., section 20, and the Court appoints an arbitrator and makes a reference to him under sub section (4) of section 20, sub-section (5) of the said section provides that there after the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as-they can be made applicable. Where an arbitrator to whom reference has been made under section 20(4) refuses to act as arbitrator the only provision in the Act which deals .With such a situation is section 8(1)(b)-which occurs in Chapter H Section 8(l) provides inter alia, that if any appointed arbitrator refuses to act, and the arbitration agreement does not show that-it Was intended that the vacancy should not be supplied, and the parties do not supply the vacancy, any party may serve the other parties with a written notice to concur in supplying-the vacancy. Section 8(2) then provides that-if-the appointment is not made within fifteen days after the service of the said notice the, party who gave the notice may apply to the Court,and the Court in may,after giving the parties an opportunity of being heard appoint an arbitrator who shall have like power to act in the reference and to make an award as if he had been appointed by consent of all parties. That was apparently the reason why Sadhu Ram filed' an application under section 8(1)(b) on 25th, September 1967 for the appointment of a new arbitrator in the-place of Shri Amar Nath Nayyar, when the latter refused to act as an arbitrator. Accordingly, the Court appointed Shri Gajanand as arbitrator under section 8(2). However, the words, 'who shall have like power to act in the reference and to make an award' as if he had been appointed by consent of all parties', in section 8(2) show that an arbitrator so appointed under section 8(2) has to be regarded as if he was appointed by the parties themselves. Further, section 8(2) merely empowers the Court to appoint, but does not contain any provision empowering the Court to make also a reference of the dispute between the parties to the arbitrator so appointed. thereforee the Court which appoints an arbitrator under section 8(2) cannot also make under that provision a reference of the dispute between the parties to that arbitrator. The power conferred on the Court by section 8(2) being restricted just to the appointment of an arbitrator, the function of the Court under section 8(2) comes to an end once it has appointed an arbitrator under that provision. Thereafter, it is open to the parties to agree to make a reference by themselves outside the Court to the arbitrator who was appointed by the Court under section 8(2). In case of disagreement, either of the parties may apply to the court for such reference under section 200 of the Act as that is the only provision in the Act for reference to an arbitrator by a Court. A similar view was taken in Om Prakash v. Union of India : AIR1963All242 , Union of India v. Gorakh Mohan Das and another : AIR1964All477 , and Union of India v. S. V. Krishna Rao : AIR1970MP49 .

(5) Thus, after the Court appointed Shri Gajanand as arbitrator under section 8(2), an application for reference of the dispute between the parties by the Court to Shri Gajanand could be made only under section 20(4) and not under section 8(2).

(6) Shri B. D. Behal, learned counsel for the respondent referred to the decision in Karam Chand v.M/s Sant Ram Tara Chand and another . The said decision dealt with the question whether an arbitration agreement between the parties in that case would income inoperative on account of the incapacity of the arbitrator to act, or whether the Court could keep the agreement alive under the Arbitration Act. The decision has thus no bearing on the question in the present case. The learned counsel next referred to the decision in Yar Muhammad and another v. Ghulam Sarwar and others, A. I. R. 1950 Lahore 145. That decision dealt with the questions whether a mere refusal to act on the part of an arbitrator named by the parties in the arbitration agreement would make the agreement wholly ineffectual, and whether the agreement can be kept alive by the parties agreeing to another person as an -arbitrator, and failing that, by the Court itself. This decision also has no bearing on the point in the present case.

(7) As pointed out earlier, an application for reference of the dispute between the parties by the Court to Shri Gaja Nand could be made only under section 20(4) and not under section 8(2). However, in the present case, the prayer in the application filed on 27th November, 1969, under section 80 (b) was that notice of appointment as arbitrator may be sent to Shri Gaja Nand so that he could proceed with the arbitration. The learned Subordinate Judge observed in his order, dated 16th December, 1970, that the issuance of a notice to the arbitrator, as prayed for, was only a sequel to the order of the Court directing the appointment of Shri Gaja Nand and no fresh or new proceedings were involved. Accordingly, the learned Subordinate Judge directed that notice be sent to the arbitrator. In other words, the order of the learned Subordinate Judge was only to the effect that Shri Gaja Nand be informed that he was appointed as an arbitrator in the place of Shri Amar Nath Nayyar, and the order did not purport to make a reference of the dispute between the parties to Shri Gaja Nand. As such, the order of the lower Court sought to be revised cannot be regarded as illegal or without jurisdiction.

(8) The Civil Revision, thereforee, fails and is dismissed with costs.


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