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Food Corporation of India and ors. Vs. Sunil Krishna Samanta - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberC.R. No. 1206 of 1978
Judge
Reported inAIR1979Cal193
ActsArbitration Act, 1940 - Section 8(1)
AppellantFood Corporation of India and ors.
RespondentSunil Krishna Samanta
Appellant AdvocateDhruba Kumar Mukherjee, Adv.
Respondent AdvocateBose, Adv.
Cases Referred(Cal.) Food Corporation of India v. Sunil Krishna Samanta
Excerpt:
- .....f.c.i.) and entered into an agreement with the f.c.i. the agreement contained an arbitration clause. clause 41 of the agreement provides that all disputes and differences arising out of or touching or concerning the agreement shall be referred to the sole arbitration of any person appointed by the managing director of the f.c.i. it is also provided therein that no person other than a person appointed as such should act as arbitrator and if for any reason that is not possible, the matter is not to be referred to arbitration at all. the o.p. filed an application before the learned subordinate judge under section 8(2) of the arbitration act on an allegation that a dispute having arisen between the parties, he had given notice to the managing director for appointment of an arbitrator.....
Judgment:

B.C. Chakrabarti, J.

1. This Rule at the instance of Food Corporation of India and two others is directed against Order No. 97 dated 21-1-1978 passed by the learned Subordinate Judge, 1st Court, Howrah in Misc. Case No. 87 of 1975 dismissing an application of the petitioners under Section 5 of the Arbitration Act, read with Section 151 of the Code of Civil Procedure and raises a short question namely whether in the given facts of the case, application of Section 8(1) of the Arbitration Act is ruled out.

2. Facts relevant for appreciation of the point urged are not in dispute. The opposite party Sunil Krishna Samanta had been carrying on business of storing of food grains belonging to the Food Corporation of India (hereinafter called F.C.I.) and entered into an agreement with the F.C.I. The agreement contained an arbitration clause. Clause 41 of the agreement provides that all disputes and differences arising out of or touching or concerning the agreement shall be referred to the sole arbitration of any person appointed by the Managing Director of the F.C.I. It is also provided therein that no person other than a person appointed as such should act as arbitrator and if for any reason that is not possible, the matter is not to be referred to arbitration at all. The O.P. filed an application before the learned Subordinate Judge under Section 8(2) of the Arbitration Act on an allegation that a dispute having arisen between the parties, he had given notice to the Managing Director for appointment of an arbitrator and that he had failed to do so. It appears that on 25-3-1976, Sri A.K. Nandi was appointed arbitrator on both parties' consent. In the written objection filed by the petitioners to the application under Section 8(2) the F.C.I. took a plea that in view of the terms of the agreement there was no question of the concurrence or consent of the O.P. Sunil Samanta, the selection of arbitrator being left to the sole discretion of the Managing Director alone, his application under Section 8(2) was not maintainable.

3. It further appears that even thereafter the F.C.I. prayed for appointment of Sri N.N. Bhattacharya as arbitrator in place of Sri Nandi and the Court appointed Sri Bhattacharya the sole arbitrator on consent of both parties. Thereafter the F.C.I. came up with an applicationunder Section 5 of the Act for revoking the reference to arbitration on several grounds including the point that in view of Clause 41 of the agreement, the matter lay outside the scope of Section 8(l)(a) of the Act and as such the appointment of an arbitrator by the Court was without jurisdiction and therefore liable to be recalled and revoked.

4. The learned Subordinate Judge by the impugned order, found against the F.C.I. on all the points and dismissed the application. It is not necessary for us now to go into any other points besides the question of applicability of Section 8(l)(a) of the Arbitration Act in the facts and circumstances of the case hereinbefore stated. That was the only point urged before us.

5. Mr. Mukherjee appearing for the petitioners contended that the agreement and more particularly Clause 41 thereof makes no provision for the appointment of an arbitrator by consent of parties, and therefore Section 8(l)(a) of the Act is not attracted. Consequently it was contended that the application of the opposite party under Section 8(2) of the Act was not maintainable.

6. We have set out hereinbefore the relevant provisions of Clause 41 of the agreement. The plain meaning of the clause is that the selection of the arbitrator was left to the choice of the Managing Director. Apparently the opposite party would not be entitled to oppose the selection. In order to attract Section 8(l)(a) it is necessary that the arbitration agreement should provide for reference to one or more arbitrators to be appointed by consent of parties. In our view the consent referred to in the section need not necessarily be an express consent. It is enough if implied consent can be spelt out from the agreement itself. In the instant case the opposite party consented to the provision that the arbitrator is to be selected by the Managing Director. In the case of India Hosiery Works v. Bharat Woollen Mills Ltd., : AIR1953Cal488 , it has been held that Section 8(l)(a) when it speaks of an agreement which 'provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties' should be read as 'provides expressly or by necessary implication'. A similar view has been taken in the case of Union of India v. D.P. Singh, : AIR1961Pat228 . In that case the arbitration clause provided that in case of dispute or difference the matter shall be referred to the sole arbitration of anOfficer who shall be nominated by the General Manager of the particular Rly. Administration. In spite of the absence of express provision providing for consent of both parties, it was held that the consent to the nomination of the arbitraor whoever he may be, is implied in the agreement itself. In the case of Surendranath v. Union of India, : AIR1965Cal183 the Court went a little further and held that even in a case where the contract provided for reference to the arbitration of the Secretary of a particular department to the Govt. of India and if he is unable or unwilling to act as sole arbitrator, some other person appointed by him. Section 8(1)(a) applied because the appointment of another person by the Secretary, as was done in that case, was virtually an appointment made by consent of parties. Applying the same principle it may be said that in the instant case also the clause relating to appointment of an arbitrator by the Managing Director alone was the result of consent of parties themselves. Therefore in our view Clause 41 of the agreement referred to hereinbefore does not take the case out of the scope of Section 8(l)(a). Consent to the appointment of any person as arbitrator at the option of the Managing Director of F.C.I. by necessary implication means that any appointment so made, is by the consent of both parties.

7. Mr. Mukherjee however, argued on the authority of a Bench decision of this Court, in the case of Sunil Mukherjee v. Union of India, : AIR1978Cal37 that Clause 41 of the agreement should not be construed to mean that it provided for appointment of arbitrator by consent of parties. The facts of that case were entirely different and the decision therein our view has no particular bearing. For the reasons aforesaid we find that the application of the Opposite Party under Section 8(2) of the Arbitration Act was maintainable. Consequently we hold that the application under Section 5 of the Act filed by the petitioners was rightly dismissed.

8. These apart, the order of the learned Subordinate Judge, indicates that the arbitrator Sri Bhattacharya was in fact appointed with the consent of both par-ties. After that it is not open to the petitioners to contend that no such appointment could be made.

9. Finally, our attention was drawn to a Bench decision in another case between the same parties and involving a similarquestion, the wording of the agreement being identical in every respect. There also the contention of the F.C.I. was overruled (vide C.R. No. 1143 of 1978 (Cal.) Food Corporation of India v. Sunil Krishna Samanta), The view we have taken finds support from the decision in that case.

10. For the reasons aforesaid the Rule is discharged. There will be no order for costs.

Anil Kumar Sen, J.

11. I agree.


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