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Union of India (Uoi) Vs. M.S. Grewal and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 280 of 1966
Judge
Reported inAIR1968Cal333
ActsArbitration Act, 1940 - Section 39(1)
AppellantUnion of India (Uoi)
RespondentM.S. Grewal and Co.
Appellant AdvocateA. Ajit Sarkar, Adv.
Respondent AdvocateD.K. De and ;J.P. Ghosh, Adv.
DispositionAppeal allowed
Cases ReferredUnion of India v. Himco
Excerpt:
- .....after reference has been filed the ministerial part of the order is that the reference is to the appointed arbitrators. this is on the footing that the arbitrators are appointed in the agreement. the supreme court further pointed out that where the parties did not have any appointed arbitrators the court might be required to make a decision as to who should be selected as an arbitrator and such function might be judicial or procedural or ministerial. it would be judicial if the court was called upon to appoint arbitrator where no arbitrator was appointed under the agreement or the authority of the appointed arbitrator was impeached and the court was specifically invited to appoint an arbitrator. it would be procedural where the parties wanted to invoke the provisions of the arbitration.....
Judgment:

Ray, J.

1. This appeal is from an order of Datta, J.

2. The respondent made an application for an order that Agreement No. 694/ Con/SER/62 be filed and for an order for payment of costs

3. The respondent in the petition alleged that the said agreement 694/CON/ SER/62 dated 10 July. 1962 was entered into by the plaintiff and the defendant. Relevant portions of the agreement are set out at pages 4 and 5 of the paper book. The respondent alleged in the petition that disputes and differences arose and the respondent claimed under the said agreement large sums of money which the appellant disputed or refused to pay. The further al-legations of the respondent were that by a letter dated 3-1 October, 1964 the respondent called upon the General Manager to invoke Clause 63 of the general condition and to appoint arbitrators. Clause 63 is for the sake of brevity described as an arbitration agreement. The respondent alleged that the authorities did not appoint any arbitrator. The respondent alleged that the disputes were within the arbitration clause. On these allegations the respondent prayed for an order for filing of the arbitration agreement.

4. The appellant filed an affidavit-in-opposition. In that affidavit the appellant contended, inter alia, that the respondent was not entitled to claim any sum of money. The deponent in the affidavit further alleged that the General Manager sent a panel of four arbitrators for selection in accordance with the terms in the arbitration clause.

5. The respondent filed an affidavit-in-reply. In that affidavit it was contended that three Chief Engineers decided not to make payments except for work below ground level or thereabout and therefore the names of the arbitrators that the respondent sent were not the names of persons who could be called independent panel of arbitrators.

6. The respondent was given liberty to file a further affidavit and in that further affidavit it was alleged that a fresh list of four persons was sent and the allegations made in the affidavit-in-reply were denied.

7. The learned Judge made an order that the arbitration agreement should be filed. Thereafter the learned Judge made an order that J. C. Mehta, Deputy General Manager, Eastern Railway was appointed the arbitrator. The reasoning of the learned Judge was that there was no specific prayer for making an order of reference to the arbitrator and that the Court had to make an order of reference after it had directed the agreement and it was not dependent on any prayer in the petition. The other reason which the learned Judge gave was that that the words 'appointed by the parties' appearing in Sub-section (4) of Section 20 of the Arbitration Act indicate that the Court has to carry out the duty of making the reference to the arbitrator before the Court directs reference.

8. The appeal is directed, inter alia, against the order passed whereby the arbitration agreement that was filed is not the arbitration agreement having the arbitrators appointed by the parties but a different arbitration agreement having a different arbitrator appointed by the Court

9. Counsel for the respondent contended that the appeal was not maintainable because under Section 39 of the Arbitration Act an appeal was competent only against an order filing or refusing to file an arbitration agreement and no appeal lay against an order appointing an arbitrator. In aid of that contention reliance was placed on the decision of the Supreme Court in Dhanrajmal Gobindram v. Shamii Kalidas & Co., : [1961]3SCR1029 .

The provisions contained in Section 20 of the Arbitration Act are divided into five subsections. Sub-section (4) indicates that where no sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court. It is said that Sub-section (4) of Section 20 consists of two parts, namely, the first part directing the filing of the order of reference and, secondly, the ministerial part of sending the reference to arbitrator. Therefore counsel for the respondent contends that the appeal is not maintainable. The Supreme Court in the case of Dhanrajmal : [1961]3SCR1029 to which reference has already been made said that the judicial power and duty of the Court would be to consider whether the arbitration agreement should be filed in Court or not. This duty may involve dealing with objections to the existence and validity of the agreement itself. The Supreme Court said that once that is done and the Court has decided that the agreement must be filed, the first part of its powers and duties is over. Counsel for the respondent laid emphasis on this observation of the Supreme Court. 'It is significant that an appeal under Section 39 lies only against the decision on this part of Sub-section (4). In essence the contention was that the appeal could lie only against the order filing or refusing to file an arbitration agreement. The observation of the Supreme Court about the ministerial act of reference to arbitrator or arbitrators appointed by the parties was not really appreciated by counsel for the respondent What the Supreme Court said was that the ministerial act of reference to arbitrator or arbitrators appointed by the parties would arise where the dispute was only whether the agreement should be filed or not and there was no dispute as to appointment of arbitrators. Once the Court reaches the conclusion that the agreement has to be filed and the agreement provides the arbitrators who are to act as arbitrators, the Court does not deal with appointment of arbitrators and that is why after reference has been filed the ministerial part of the order is that the reference is to the appointed arbitrators. This is on the footing that the arbitrators are appointed in the agreement. The Supreme Court further pointed out that where the parties did not have any appointed arbitrators the Court might be required to make a decision as to who should be selected as an arbitrator and such function might be judicial or procedural or ministerial. It would be judicial if the Court was called upon to appoint arbitrator where no arbitrator was appointed under the agreement or the authority of the appointed arbitrator was impeached and the Court was specifically invited to appoint an arbitrator. It would be procedural where the parties wanted to invoke the provisions of the Arbitration Act in regard to appointment of arbitrators. It would be ministerial if after the Court had come to the conclusion that an agreement should be filed both the parties consented or agreed upon the names of arbitrators. Then it would not be within the judicial duty of the Court to mention the names of arbitrators and it would be a purely ministerial act as far as the order of the Court was concerned.

10. In the present case the respondent wanted to enforce the agreement. The respondent came with the case that there was an arbitration agreement. The respondent wanted an order that the agreement should be filed. The respondent did not come with the case that there was no arbitrator appointed by the agreement The respondent did not come with the case that the persons who were appointed arbitrators were unfit to be arbitrators. The respondent did not make the case that as far as the agreement mentioned the names of arbitrators that part of the agreement was not being enforced. The respondent, on the other hand, came to enforce performance of the entire agreement as it was.

11. In that background the contention of counsel for the appellant is correct that if the order is for filing the arbitration agreement but appointing a person as the arbitrator who was not the person mentioned in the arbitration agreement as the arbitrator it amounts to an order refusing to file the arbitration agreement. That is the view expressed by Bachawat, J. in the Bench decision in Union of India v. Himco (India) Private Ltd., : AIR1965Cal404 . In that case the question was whether the parties entered into an arbitration agreement in Form No. W. S. B. 133 or the parties entered into an arbitration agreement in a modified form. The dispute arose because the contractor in that case sent a letter containing a sentence as follows: 'We feel there should be an unattached arbitrator.' That was submitted along with the tender. When the tender was accepted by the Union of India the acceptance stated that the condition of the contract should be as contained in Form W.S.B. 133 as amended upto-date. That form contained an arbitration clause providing for reference to the sole arbitration of the Director General of Supplies and Disposals. Disputes arose between the parties. The question before the Court was whether there was a valid arbitration agreement. The trial court came to the conclusion that there was a modified arbitration agreement. The Appellate Court did not accept the conclusion of the Court that the parties entered into a modified arbitration agreement. The Appellate Court came to the conclusion that the parties were bound by Form No. W.S.B. 133. Dealing with the question as to whether an appeal could He or not as was contended in the case of : AIR1965Cal404 because in that case the learned Judge appointed a member of the Bar as arbitrator the Appellate Court said, 'Dr. Das contended that no appeal lies from the impugned order. We are unable to accept this contention. An appeal lies under Section 39(iv) of the Indian Arbitration Act from an order under Section 20 of the Act filing or refusing to file the arbitration agreement. The Union of India is entitled to an order direct-ting the filing of the arbitration agreement set out in the petition. In so far as the learned Judge refused to direct the filing of that arbitration agreement and in so far as he directed the filing of a different agreement the Union of India is entitled to prefer this appeal under Section 39(iv) of the Indian Arbitration Act. It is true that no appeal lies from the order of the learned Judge in so far as he directed reference of the disputes to an arbitrator appointed by him. But this order of reference to the arbitrator appointed by him is dependent upon the order refusing to file the arbitration agreement set out in the petition and directing the filing of a different arbitration agreement. As soon as the latter order is set aside the order of reference to the arbitrator appointed by the Court must fall to the ground and must be declared to be inoperative.' These observations are, in my opinion, conclusive on the question raised by counsel for the respondent that the appeal is incompetent. The appeal is directed against the order of the learned Judge, which is an order filing the arbitration agreement with the further order that J. C. Mehta is appointed arbitrator. The arbitration agreement does not provide for reference to J.C. Mehta. The order of the learned Judge amounts to an order refusing to file the agreement including an arbitration agreement that was being enforced by the respondent and that was also being enforced by the appellant.

12. The contention on behalf of the respondent that there should be independent arbitrators does not have any merit for the obvious reason that the respondent wanted to enforce the arbitration agreement as it was. The respondent cannot approbate and reprobate. The respondent cannot up-hold part of the agreement and impeach the other part. The respondent claimed to have performance of the agreement. If the respondent had grievance with regard to arbitrators it was not within the scope of the application as it was constituted.

13. For all these reasons I am of opinion that the order of the learned Judge appointing J. C. Mehta as the arbitrator cannot be upheld and should be set aside The appeal is allowed. The order of the learned Judge is modified as follows: That the arbitration agreement No. 694/CON/SER/62 be filed and the costs of the trial Court be costs in the arbitration proceedings. The rest of the order is set aside. As far as costs of the appeal are concerned it will be costs in the Arbitration proceedings.

S.K. Mukherjea, J.

14. I agree.


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