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State of Rajasthan Vs. Sharma and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtRajasthan High Court
Decided On
Case NumberCivil Misc. Appeal No. 95 of 1970
Judge
Reported inAIR1981Raj1; 1980()WLN233
ActsArbitration Act, 1940 - Sections 8(2), 20(4) and 30
AppellantState of Rajasthan
RespondentSharma and Co.
Advocates: D.S. Shishodia, Govt. Adv.
DispositionAppeal allowed
Cases ReferredUnion of India v. Om Prakash
Excerpt:
.....further to make an order referring the dispute? to arbitrator. as the award was made by the arbitrator on reference made by the court, which, it had no jurisdiction, it should be set aside as invalid.;appeal allowed - industrial disputes act, 1947. section 2(s): [m.s. shah, sharad d. dave & k.s. jhaveri,jj] workman part time employees held, part time employees are not excluded from the definition of workman in section 2(s) merely on the ground that they are part time employees. the ex abundante cautela use of the words either whole time or part time by the legislature in the definition of working journalist in the working journalists and other newspaper employees (conditions of service and miscellaneous provisions) act, 1955, does not mean that the definition of workman in the..........the court under section 8(2) of the act was that the person appointed was to be considered as an arbitrator appointed by the parties themselves. it was observed as under:'it was then for the parties to refer their disputes to the arbitrator. reference in such a case must be out of court andmust be by both the parties together. reference out of court cannot be by one party alone. in the present case after the appointment of brig. bhandari only the government approached the arbitrator to take action and the appellant flatly refused to submit to his jurisdiction and even applied to the court for his removal. the order of the court referring the dispute to him was wholly without jurisdiction and had no effect in law. unless an application under section 20 was made to the court, for.....
Judgment:

Lodha, J.

1. This appeal under Section 39 of the Arbitration Act (No. X of 1940) (hereinafter referred to as 'the Act') is directed against the judgment and decree dated June 6, 1970 passed by the District Judge, Sri Ganganagar.

2. The material facts, necessary for the disposal of this appeal, are these:

The respondent (M/s. Sharma & Co.) entered into an agreement with the appellant (the State of Rajasthan) on December 17, 1961 for supply of forty lacs of Pacca bricks to the Irrigation Department of the Government of Rajasthan. According to Clause 21 of the Agreement, all disputes arising between the parties in connection with the contract were required to be referred for arbitration to the Superintending Engineer of the Irrigation as may be nominated by the Government. The respondent (contractor) completed the supply by July 26, 1962 and a final bill was prepared on December 25, 1962. The respondent, inter alia, raised a claim for the payment of costs of 1,12,152 bricks and the concerned Department disputed the same. On April 15, 1967, an application under Section 8 of the Act was submitted by the respondent before the learned Senior Civil Judge, Sri Ganga-nagar. The case was registered as Civil Misc. Application No. 1 of 1967. The learned Senior Civil Judge, by his order dated July 11, 1967 appointed Shri R.L. Malhotra, retired Superintending Engineer as the sole Arbitrator to decide the dispute between both the parties. The relevant portion of the order dated July 11, 1967 is as under:

'14. Thus for the reasons given above, I, therefore, hold that in the instant case the application made by the petitioner is maintainable and he is entitled to the re-relief claimed in the petition viz. for the appointment of an arbitrator for settlement of the difference between the parties.

15. In the result the application is allowed. Shri R.L. Malhotra retiredSuperintending Engineer Irrigation (Raj) c/o 392, Model Town, Jamnagar is appointed as an arbitrator. The non-petitioner shall pay Rs. 100/- as costs of this application to the petitioner.' Feeling aggrieved by the order dated July 11, 1967 appointing Shri R.L. Malhotra as Arbitrator under Section 8 of the Act, the appellant preferred S. B. Civil Revision Petition No. 359 of 1967, which was dismissed by the learned single Judge of this Court on January 9, 1968. The learned Senior Civil Judge, vide letter dated July 22, 1967 informed Shri R.L. Malhotra, retired Superintending Engineer, Irrigation Department, Rajasthan, that he has been appointed as Arbitrator to arbitrate on the disputes between the parties vide order dated July 11, 1967. In pursuance of this Reference, Shri R.L. Malhotra proceeded with the arbitration proceedings and obtained extension of time for making the award under Section 28 of the Act. Ultimately, he made the award on June 19, 1969. The award was sent to the Court of District Judge, Sri Ganganagar by post on June 20, 1969. After the receipt of the award, notices were issued to both the parties. The respondent did not contest the award and prayed that a decree may be passed in terms of the award under Section 17 of the Act. The appellant raised various objections in the application which was filed on August 11, 1969 purporting to be under Section 17 read with Sections 30 and 33 of the Act praying therein that the award may be set aside. The learned District Judge framed the issues and refused to set aside the award by his order dated June 6, 1970 and passed a decree for Rupees 37,255.07 p. in favour of the respondent and against the appellant with a rendition that the same will be executed only after the respondent had submitted a No-dues Certificate from the State Government in the Court. Against the judgment and decree dated June 6, 1970 the appellant has filed this appeal.

3. We have heard Mr. D.S. Shishodia, learned Government Advocate. Nobody appeared for the respondent despite service.

4. It was strenuously contended by the learned Government Advocate that the award which was made by the Arbitrator. Shri R.L. Malhotra on a reference made by the Court is a nullity and it should be set aside, for the Court had no jurisdiction after appointing the arbitrator under Section 8(2) of the Act to proceedfurther to make the order referring the disputes to the arbitrator. In support of his contention, he relied on Union of India v. Om Prakash AIR 1976 SC 1745 We have bestowed our most anxious and thoughtful consideration to this point as it goes to the root of the matter and vitally affects the jurisdiction of the arbitrator to adjudicate upon the dispute between the parties.

5. A perusal of the order (letter) dated July 22, 1967 shows that reference was made to Shri R.L. Malhotra by the Senior Civil Judge, Sri Ganganagar in pursuance of the order dated July 11, 1967, by which, he was appointed to arbitrate on the disputes between the parties. In the award dated June 19, 1969, the Arbitrator has mentioned that a request was made to him to act as an Arbitrator in the matter by the Senior Civil Judge, Sri Ganganagar under his order dated July 11, 1967, conveyed to him vide letter dated July 22, 1967. As the Arbitrator could not make the award within a period of four months, he applied for extension of time limit on October 19, 1968 and the extension of four months for making the award was granted to him by the District Judge, Sri Ganganagar vide order dated February 24, 1969. It is, therefore, clear that after the appointment of the Arbitrator under Section 8(2) of the Act, reference was not made to the Arbitrator by the parties.

6. Sub-section (2) of Section 8 of the Act reads as under:

'8. (2). If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by the consent of all parties.'

7. In Om Prakash v. Union of India AIR 1963 All 242, an Arbitrator was appointed under Section 8(2) of the Act. It was held that the effect of appointment of Arbitrator by the Court under Section 8(2) of the Act was that the person appointed was to be considered as an Arbitrator appointed by the parties themselves. It was observed as under:

'It was then for the parties to refer their disputes to the arbitrator. Reference in such a case must be out of Court andmust be by both the parties together. Reference out of Court cannot be by one party alone. In the present case after the appointment of Brig. Bhandari only the Government approached the arbitrator to take action and the appellant flatly refused to submit to his jurisdiction and even applied to the Court for his removal. The order of the Court referring the dispute to him was wholly without jurisdiction and had no effect in law. Unless an application under Section 20 was made to the Court, for referring the matter to arbitration, the Court could not pass any orders making the reference through Court. An application under Section 20 has to be made in writing as provided for in Section 20(2) of the Indian Arbitration Act. No such application having been made the direction of the Court was without authority.'

The decision given in Om Prakash v. Union of India (AIR 1963 All 2421 was affirmed in Union of India v. Om Prakash {AIR 1976 SC 1745). After referring to Section 20 of the Act, their Lordships of the Supreme Court in Union of India's case (1) observed as under:

'This section confers power on the court to order the agreement to be filed and, further, to make an order of reference to the arbitrator appointed by the parties, or, where the parties cannot agree upon an appointment, to an arbitrator appointed by the Court. Sub-section (1) of Section 20 makes it plain that the provisions of the section can be availed of only if no proceeding under chapter II has been initiated. Section 8 does not contain any provision empowering the court to make an order of reference to the arbitrator as one finds in Sub-section (4) of Section 20. Thus it seems clear that the court in the instant case had no iurisdiction after appointing an arbitrator under Section 8(2) to pro-ceed further to make an order referring the disputes to the abitrator.' Then the question that arose in Union of India's case (1) was whether the award could be set aside as invalid because the reference was incompetent. After taking into consideration the provisions of Section 30 of the Act, their Lordships of the Supreme Court further observed as follows : 'The words 'or is otherwise invalid' in Clause (c) of Section 30 are wide enough to cover all forms of invalidity including invalidity of the reference. We do not find anv reason why the general and unqualified language of Clause (c) should not include an award on an invalid referencewhich is a nullity. The cases cited at the Bar show that all the High Courts with only one or two exceptions have taken this view. We hold, therefore, that the awards challenged in these appeals are nullities and have been rightly set aside by the High Court.'

In this case, after the appointment of the Arbitrator under Section 8(2) of the Act, Reference was not made by the parties but it was made by the Court, which, it was not competent to make as it had no jurisdiction after appointing an Arbitrator under Section 8 (2) of the Act to proceed further to make an order referring the disputes to the Arbitrator. As the award was made by the Arbitrator on reference made by the Court, which, it had no jurisdiction, it should be set aside as invalid. In view of this conclusion, to which, we have arrived at, it is not necessary to consider the other contentions raised by the learned Government Advocate.

8. The result is that the appeal is allowed and the judgment and decree of the learned District Judge, Sri Ganganagar dated June 6, 1970 are set aside and the award dated June 19, 1969 made by the Arbitrator, Shri R.L. Malhotra, being a nullity is also set aside. As the respondent has not appeared to oppose the appeal, there will be he order as to costs.


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