S.K. Mukherjea, J.
1. This Rule involves a question of a construction of Section 19 (1) (a) of the Defence of India Act, 1939. It also raises incidentally the question of validity and efficacy of an arbitration agreement entered into by and between the parties.
2. On April 25, 1942 certain lands in village Basput in the district of 24 Parganas were requisitioned by the Government of India under Rule 75-A of the Defence of India Rules, 1939. The lands belonged to the opposite party No. 1. On the 29th March, 1947 they were derequisitioned.
3. It appears that on the 9th June, 1947 the opposite party filed a claim petition for terminal compensation, that is to say, compensation payable on the expiry of the period of requisition. Compensation was duly assessed by the Collector. The opposite party was not agreeable to accept the proposed compensation and by a petition dated July 30, 1951 expressed its desire to refer the claim to an Arbitrator to be appointed under Section 19 (1) (b) of the Defence of India Act, 1939. On the same date an Agreement was entered into in writing by and between the petitioner and the opposite party whereby it was agreed that eighty per cent of the terminal compensation assessed by the Collector would be paid to the opposite party and the opposite party would accept the same pending an agreement between the parties as to the amount of compensation payable on final determination of such amount under the law. The clauses of the Agreement material for the purpose of this application may be set out in extenso.
'Clause (1). The Government shall pay and the owner shall accept and receive a payment of 80% of Collector's award for the said property pending agreement as to or determination of the amount payable as compensation to the owner.'
'Clause (4). Should any dispute or difference arise, out of or concerning the subject-matter of these presents or any covenant clause or things herein contained or arising out of the acquisition including the amount payable for compensation in respect of such acquisition, the same shall be referred to an arbitrator to be appointed by the Government and the decision of such arbitrator shall be conclusive and binding on the parties hereto.'
Thereafter, the opposite party accepted payment of eighty per cent of the sum assessed as terminal compensation by the Collector and on the 15th December, 1951 made an application to the Land Acquisition Collector, 24-Parganas, Alipore, for appointment of an Arbitrator for determination of compensation.
4. By an order dated September 17, 1971 the Government of West Bengal referred the claim for compensation preferred by the opposite party to arbitration in exercise of the powers conferred by Clause (b) of subsection (1) of Section 19 of the Defence of India Act 1939 read with Sub-section (4) of Section 1 of the said Act and Section 6 of the General Clauses Act, 1897 and the Government of India, Defence Department, notification No. 1365-OR-42 dated the 19th September, 1942. By that notification Mr. S.S. Ganguly of the West Bengal Higher Judicial Service was appointed Arbitrator for determination of compensation payable in respect of requisition of the said lands.
5. It was contended by the petitioner Union of India before the Arbitrator that he had no jurisdiction to enter into the said reference in view of the agreement dated July 30, 1951 under which it was agreed by and between the parties that if any dispute arose concerning the subject-matter of the said reference including the amount payable for compensation in respect of acquisition of the said lands the said dispute should be referred to an Arbitrator to be appointed by the Government of India and the decision of such Arbitrator should be conclusive and binding on the parties. The Arbitrator appointed under Section 19 (1) (b) of the Defence of India Act, it was claimed, was not an arbitrator appointed under the agreement.
6. The Arbitrator, on an anxious consideration of the argument addressed before him, pronounced by an order dated May 10, 1973 that he had full jurisdiction to decide the question involved in the dispute referred to him for arbitration and the arbitration agreement dated the 30th July, 1951 is not a valid agreement. The Arbitrator further held that, in the alternative, the said agreement must be deemed to fee an agreement under Section 24(2)(b) of Requisition and Acquisition of Immovable Property Act, 1951 and as his appointment was proper and valid, he had and has ample jurisdiction to hear and determine the reference.
7. The learned Arbitrator has described the Agreement of July 30, 1951 as an agreement to enter into an agreement. On a careful consideration of the agreement it will appear that nothing was agreed upon except that the Government would pay eighty per cent of the amount of compensation held to be payable by the Collector pending an agreement between the parties as to the amount of compensation payable or the final determination of such amount under the law. It is quite clear from the text of the agreement that there is not even a stipulation that the parties agree to enter into an agreement. The agreement might or might not come off. In that view of the matter, it is not possible to hold that it is an agreement to enter into the agreement as the learned Arbitrator appears to have thought.
8. As regards the arbitration agreement which is to be found in Clause (4) of the document all that is said is that if any dispute or difference arose out of the acquisition including the amount payable for compensation in respect of such acquisition the same should be referred to an Arbitrator appointed by the Government. It is clear and indeed it has not been disputed that the arbitrator to be appointed under the agreement will not be an arbitrator contemplated in Section 19 (1) (b) of the Defence of India Act, It was contended on behalf of the petitioner before the learned Arbitrator, as it was contended before us, that the case falls under Clause (a) and not under Clause (b) of Section 19 (1) of the Defence of India Act, 1939, Clauses (a) and (b) of Section 19 (1) of the said Act read as follows :
'Compensation to be paid in accordance with certain principles for compulsory acquisition of immovable property, etc. (1) Where by or under any rule made under this Act any action is taken of the nature described in Sub-section (2) of Section 299 of the Government of India Act, 1935, there shall be paid compensation, the amount of which shall be determined in the manner, and in accordance with the principles, hereinafter set out, that is to say :--
(a) Where the amount of compensation can be fixed by agreement, it shall be paid in accordance with such agreement.
(b) Where no such agreement can be reached the Central Government shall appoint as arbitrator a person qualified under Sub-section (3) of Section 220 of the above-mentioned Act for appointment as a Judge of a High Court......'
It is not in dispute that the parties have not been able to agree as to the quantum of compensation payable for the requisition or as to any principle by the application of which the quantum of compensation may be calculated. What is being said is that although the parties have not arrived at any agreed figure or formula on the basis of which compensation will be paid, the parties have agreed under the agreement dated July 30, 1951 as to the machinery or the procedure by which the amount of compensation is to be determined and thereby the parties have, by the agreement, so to say, fixed the amount of compensation in the sense of Clause (a) of Section 19 (1). In our opinion, one does not have to be astute to see that the contention if, based on a misconception of the true import of Clause (a). Clause (a) is not concerned with the machinery or the procedure by which the quantum of compensation is to be determined but with the quantum of compensation itself. It aims at determination of compensation by agreement and not at any agreed procedure by which the determination is to be made.
9. The fact that the opposite party asked for the appointment of an Arbitrator under Clause (b) of Section 19 (1) indicates that the quantum of compensation could not be fixed by agreement and recourse had therefore to be had to arbitration. The Government of West Bengal, obviously acting on behalf of the Central Government, appointed the Arbitrator under Clause (b) of Section 19 (1) to determine the amount of compensation which again indicates that the Government also, on its part, was of the view that the compensation had not been fixed by agreement. It is not a little strange that the Government which has itself appointed a statutory Arbitrator in exercise of the power conferred by Section 19 (1) (b) should challenge his appointment on the ground that such appointment does not lie under the statute in the facts and circumstances of the case. An agreement to refer a dispute for determination of compensation to an Arbitrator is a far try from an agreement on the quantum of compensation payable. That by itself is enough to dispose of this Rule. However, since the point has been raised as to the validity of the arbitration agreement we might deal with that aspect of the matter as well. It has been held more than once, one recent instance being a decision reported in : AIR1969Bom151 , Dinshaw v. G.B. Badkas that the provisions of Section 19 and the Rules made thereunder are a complete code for determination of compensation and no other law is to affect the provisions of that code.
10. The provisions for determination of compensation by an Arbitrator is to be found in Clauses (b), (c), (d) and (e) of Section 19 (1) itself. Clause (g) of Section 19 provides:--
'Save as provided in this section and in any rules made thereunder, nothing in any law for the time being in force shall apply to arbitrations under this section.'
The arbitration agreement in the present case, if enforceable at all, is enforceable in accordance with the Arbitration Act. The effect of the arbitration Clause in the present case, if it is held to be valid will be to permit the parties to contract out of Section 19 and in particular of Clause (b) of Section 19 of the Defence of India Act. Even if we had held that the parties have fixed the quantum of compensation by arbitration under the agreement of 3rd July, 1951 the arbitration agreement or the award made by the arbitrator could not have been enforced under the Arbitration Act having regard to Clause (g) of Section 19 (1). We are, therefore, in agreement with the Arbitrator that the private arbitration agreement is invalid and in any event it does not affect the jurisdiction of the Arbitrator appointed under the statute to entertain and determine the reference.
11. In the view we have taken, the application for revision fails and the Rule is discharged.
12. There will be no order as to costs.
13. All interim orders are hereby dissolved. Needless to add, that the Arbitrator will be free to proceed with the hearing of the reference. We direct that the records do go down with utmost expedition.