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G.C. Sharma Vs. University of Delhi - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 5 of 1977
Judge
Reported inAIR1982Delhi227; 21(1982)DLT22
ActsArbitration Act, 1940 - Sections 8
AppellantG.C. Sharma
RespondentUniversity of Delhi
Advocates: D.D. Chawla,; C.L. Choudhry,; S.N. Chopra and;
Cases ReferredDevi Dass Gulzari Lal v. Firm Mitjia Shah Ramditta Mal
Excerpt:
.....of umpire - it was further found that no evidence was adduced regarding the existence of the arbitration agreement between the parties and hence, there was no scope for creating the vacancy - thus, it was held that the said appeal would not be maintainable - - baleshwar prasad mandal and others, air1974pat63 .in that case also the award was set aside under section 33 of the act and the court held that even if the award was set aside on the ground of invalidity of reference under section 33, the same falls under clause (vi) of section 39(1). we have given our careful consideration to the two cases cited by the learned counsel for the appellant but we are of the opinion that none of these can help the appellant because in both these cases the award was set aside and as such the..........the payments of bills for the work executed by the appellant. the appellant invoked the following arbitration agreement by notice dated 5-3-1969 :- 'that in case of any dispute arising out of or in any way touching this agreement, the dispute will be referred to a board of arbitration consisting of one person nominated by the university other than the university engineer and the one person to be nominated by the architect. in case of difference of opinion between the two, the dispute will be referred to the arbitration of the vice chancellor as an umpire, whose decision will be final and binding on both the parties.' (3) the appellant appointed one k.p. sharma as his nominee. the respondent denied the existence of the arbitration agreement but under protest appointed shri k.b rohtagi as.....
Judgment:

D.K. Kapur, J.

(1) This appeal, under section 39 of the Arbitration Act 1940 (hereinafter referred to as 'the Act'), is directed against the order of the learned Single Judge of this Court, whereby the application of the appellant under section 8 of the Act for supplying the vacancy was dismissed. A preliminary objection has been taken to the maintainability of the appeal, on the ground that the impugned order does not fall under any of the clauses of section 39(1) of the Act and as such is not appealable.

(2) The relevant facts for the decision of the preliminary objection are that by resolution No. 202 dated 5th December, 1952 of the Executive Council of University of Delhi, the petitioner was appointed as the Architect on the terms laid down by the Royal Institute of British Architect and waa to be paid 6% of the total value of each work. Later on the said resolution was superseded by resolution No. 255 dated 30-1-1959 whereby the Executive Council of the University of Delhi reduced the rate of fee from 6% to 3% with reduction in the items of services to be performed by the appellant, and it was provided that the engagement of the appellant by the University in future would be for special works on specific terms under separate agreements in each job. Certain disputes arose between the appellant and the respondent about the payments of bills for the work executed by the appellant. The appellant invoked the following arbitration agreement by notice dated 5-3-1969 :-

'That in case of any dispute arising out of or in any way touching this agreement, the dispute will be referred to a Board of Arbitration consisting of one person nominated by the University other than the University Engineer and the one person to be nominated by the Architect. In case of difference of opinion between the two, the dispute will be referred to the arbitration of the Vice Chancellor as an Umpire, whose decision will be final and binding on both the parties.'

(3) The appellant appointed one K.P. Sharma as his nominee. The respondent denied the existence of the arbitration agreement but under protest appointed Shri K.B Rohtagi as its nominee. The two arbitrator entered upon the reference but differed on 10-8-1971. The record of the arbitration proceedings was forwarded to Dr. Sarup Singh, the then Vice Chancellor of the University of Delhi as Umpire. Dr. Sarup Singh entered upon the reference as an Umpire on 5-8-1971. However, on 22-11-1971 he declined to act in the case. The appellant thereafter sent a notice dated 21st December, 1971 calling upon the respondent to concur in the appointment of another Umpire acceptable to both the parties. The respondent declined to concur and in these circumstances, the appellant filed an application under section 8 of the Act, for appointment of an Umpire in place of Dr. Sarup Singh.

(4) In reply to the application, the respondent stated that there was no arbitration agreement and it was never intended that the vacancy caused should be supplied. In rejoinder filed by the appellant, it was stated that the question of existence of arbitration agreement in the proceedings under section 8 were irrelevant.On the pleadings of the parties, the learned Single Judge framed the following issues :

1. Whether it is open to this Court in these proceedings to inquire into the question whether there was an arbitration agreement between the parties

(2) If issue No. 1 is decided in favor of the respondent then was there any arbitration agreement between the parties

(3) If issue No. 2 is found in favor of the petitioner, docs the arbitration agreement not show that it was intended that the vacancy in the office of Umpire should not be supplied

(4) Whether the respondents are estopped from pleading that there was no arbitration agreement between the parties

(5) RELIEF. As far as issue No. 1 is concerned, the counsel for the parties agreed before the learned Single Judge that in order to find whether the agreement to refer, does not show a contrary intention regarding supplying the vacancy, it will be necessary to determine the existence of the arbitration agreement and the scope and effect thereof. In view of this, issue No. 1 was not pressed by the counsel for the appellant and was thereforee decided in favor of the respondent. As regards issue No. 2, the learned Single Judge after going through the entire correspondence between the parties and discussing the entire case law, on the subject, came to the conclusion that there was no arbitration agreement between the parties and as such there was no scope for filling in the vacancy. It is against this order that the present appeal has been filed.

(5) The contention of the learned counsel for the appellant was that the order in substance, either falls under clause (i) or clause (iv) of section 39(1) of the Act. Section 39 of the Act is :- S. 39(1). An appeal shall lie from the following orders passed under the Act (and from no others) to the Court authorised by law to hear appeals from. original decrees of the Court passing the order :- (i) Superseding an arbitration ; (ii) on an award ttated in the form of a special case ; (iii) modifying or correcting an award ; (iv) filing or refusing to file an arbitration agreement; (v) staying or refusing to stay legal proceedings where there is arbitration agreement ; (vi) setting aside or refusing to set aside an award : Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect to take away any right to appeal to the Supreme Court.'

(6) Clause (i) of Section 39(1) presupposes the existence of an arbitration and the same can be superseded wither under section 19 or section 25 of the Act. Under section 19 if the award has become void under sub-section (3) of section 16 or has been set aside, the Court may by order supersede the reference. Section 25 of the Act falls in Chapter Iv which deals with 'arbitration in suit'. The section enables the Court in any of the circum- stances mentioned in section 8, 10, 11 and 12 to supersede the arbitration instead of filling of the vacancy and proceed with the suit. The learned counsel for the appellant was unable to bring his case in either of these two sections and as such the appeal cannot possibly fall in clause (i) of section 39(1). As regards clause (iv) of section 39(1), the learned counsel for the appellant conceded that the filing or refusing to file an arbitration agreement is covered by section 20 of the Act but he submitted that we have to take the substance of the order and should ignore the section for that purpose. Reliance was placed on a Full Bench decision of Patna High Court in Makeshwar Misra v. Laliteshawar Prnsai Singh and others, : AIR1967Pat407 . In that case, the objector disputed the existence of a valid arbitration. agreement and also challenged the award on the ground that the arbitrators have misconducted themselves. The objection regarding the validity of the agreement was decided in favor of the objector and it was held that the execution of the deed of reference by defendant No. 1 was not acceptable. The consequence of the order was that the award was set aside though the Court did not in terms say so. The Full Bench of the Patna High Court held that while dismissing the case though did not use expression that award was set aside yet the effect of its order was to set aside the award and hence the order was appealable under section 39(1)(vi) of the Act. Reliance was placed on a later decision of the Patna High Court in Sashi Prasad and, others v. Baleshwar Prasad Mandal and others, : AIR1974Pat63 . In that case also the award was set aside under Section 33 of the Act and the Court held that even if the award was set aside on the ground of invalidity of reference under Section 33, the same falls under clause (vi) of Section 39(1). We have given our careful consideration to the two cases cited by the learned counsel for the appellant but we are of the opinion that none of these can help the appellant because in both these cases the award was set aside and as such the order was clearly appealable under clause (vi) of Section 39(1).

(7) In Union of India v. A. S. Dhupia, F.A.O. (OS) No. 14 of 1970, an application under Section 33 of the Arbitration Act was made by the Union of India against A.S. Dhupia for the determination of the effect of the arbitration agreement between the parties. The learned Single Judge of this Court held that the reference of the counter claim of the Union of India lack the concurrence of A.S. Dhupia and was not thereforee reference in the eye of law and the arbitrator rightly declined to consider the same. The Union of India filed an appeal against the said decision of the learned Single Judge. It was contended before the Division Bench that even if the appeal was not maintainable under Section 39(1) of the Act, the same was competent under Section 10(1) of the Delhi High Court Act. This question was referred to a Full Bench and was decided against the appellant. The said case is reported as Union of India V. A.S. Dhupia and another, : AIR1972Delhi108 . After deciding the maintainability of appeal under Section 10(1) of the Delhi High Court Act, the case was sent back to the Division Bench for decision. Before the Division Bench it was contended that the appeal was maintainable under Section 39(1) of the Act. This contention was repelled by the Division Bench and the appeal was dismissed.

(8) It cannot be disputed that in terms no appeal lies against orders passed under Section 8 of the Act. At best the objection of the respondent regarding the existence of the arbitration agreement can be considered to be objection falling under Section 33 of the Act. Even if we consider it as such the same is covered by the aforesaid decision of a Division Bench of this Court and we do not find any reason to differ with the same. In firm Devi Dass Gulzari Lal v. Firm Mitjia Shah Ramditta Mal, A.I.R. 1943 Lah 8, a Division Bench held that an order superseding arbitration on the ground that reference was invalid was not maintainable. The reason for so holding was that the super session had to be under the Act i.e. either under Section 19 or Section 25 of the Act in order to make the order appealable. It is true that an order on the question of existence or non-asistence of an arbitration agreement can have far-reaching effects and the same can be passed under section 33 of the Act but the Legislature in its wisdom has not provided for an appeal against such an order. The appeal being the creation of a statute, the scope of the same cannot be extended even if we are of the opinion that there seems to be lacuna in the Act.

(9) For the reasons recorded above, we have no option to uphold the preliminary objection. The appeal is accordingly dismissed as not maintainable, but we leave the parties to bear their own costs.


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