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District Co-operative Federation Ltd. Vs. Khub Chand - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtHimachal Pradesh High Court
Decided On
Case NumberCivil Revn. No. 1 of 1960
Judge
Reported inAIR1961HP35
ActsArbitration Act, 1940 - Sections 8, 14 and 20
AppellantDistrict Co-operative Federation Ltd.
RespondentKhub Chand
Appellant Advocate D.N. Vaidya, Adv. holding brief for Hira Lal, Adv.
Respondent Advocate T.P. Vaidya, Adv.
DispositionRevision allowed
Cases ReferredJaipur v. Harbans Singh
Excerpt:
.....filed under section 20 - section 8 contemplates appointment of arbitrator by court on refusal of arbitrator appointed by parties to arbitrate - unless it is not practicable to apply section 8 to proceeding initiated under section 20, said provision would apply - petitioner failed to show that section 8 cannot apply to instant proceeding - under section 20 (4) court has power to appoint arbitrator on refusal of arbitrator nominated by parties to arbitrate - in view of section 8 subordinate judge had jurisdiction to appoint another arbitrator on refusal of registrar to arbitrate provided that agreement did not indicate that vacancy on refusal of registrar to arbitrate was not intended to be supplied - in appointing arbitrator subordinate judge had assumed jurisdiction which he did not..........could be appointed in place of the registrar, co-operative societies.thereupon the respondent filed an application under section 8 of the act in the court and requested that it may appoint one of the three persons named therein as an arbitrator. this application was also opposed by the petitioner on the same ground on which the previous notice under section 8 was opposed. the objection was repelled by the learned additional subordinate judge and he referred the case to shri kedar ishwar as an arbitrator. the petitioner filed an application in revision to this court against the aforesaid order and also prayed for a stay order.such an order was passed by this court but before it could be communicated to the court below the arbitrator had submitted his award. the petitioner thereat.....
Judgment:
ORDER

C.B. Capoor, J.C.

1. This petition in revision by the District Co-operative Federation Ltd. Mandi is directed against an appellate judgment and decree of the learned District Judge, Mandi and Chamba districts, affirming an order of the learned Additional Subordinate Judge Mandi refusing to set aside an award made by Shri Kedar Ishwar, then Advocate at Mandi.

2. An agreement Ex. P-1 was entered into between the petitioner and the respondent whereby the latter agreed to transport and supply firewood, charcoal etc. One of the terms of the agreement was that if any dispute will arise between the parties with regard to the supply and transport of firewood etc., it will be referred to the Registrar, Co-operative Societies, Himachal Pradesh. vide Clause 11. A dispute did arise between the parties and an application was filed by the respondent for the filing of the agreement of reference in Court.

The application was opposed but ultimately the dispute between the parties was referred to the Registrar, Co-operative Societies, who expressed his unwillingness to arbitrate on account of his being busy otherwise. The respondent thereat served a notice under Section 8 of the Arbitration Act, hereinafter to be referred as 'the Act' on the petitioner to select an arbitrator out of a panel of three names mentioned therein. In reply the petitioner contended that no other arbitrator could be appointed in place of the Registrar, Co-operative Societies.

Thereupon the respondent filed an application under Section 8 of the Act in the Court and requested that it may appoint one of the three persons named therein as an arbitrator. This application was also opposed by the petitioner on the same ground on which the previous notice under Section 8 was opposed. The objection was repelled by the learned Additional Subordinate Judge and he referred the case to Shri Kedar Ishwar as an arbitrator. The petitioner filed an application in revision to this Court against the aforesaid order and also prayed for a stay order.

Such an order was passed by this Court but before it could be communicated to the Court below the arbitrator had submitted his award. The petitioner thereat filed objections to the award and requested this Court to keep the application in revision pending. On the dismissal of the objections the petitioner did not press the application in revision which was accordingly dismissed. The petitioner preferred an appeal against the order of the dismissal of the objections which, as has already been seen, was rejected and the present revision petition was filed.

3. The first question that has been urged, on behalf of the petitioner is that the Registrar, Cooperative Societies, Himachal Pradesh had not refused to arbitrate. A reference to the reply which the Registrar, Co-operatice Societies had sent would make it abundantly clear that he had expressed his unwillingness to arbitrate and had requested the Court to appoint another arbitrator. In reply to the notice under Section 8 of the Act, the petitioner again did not dispute that the Registrar had refused to arbitrate.

4. The second contention that has been urged on behalf of the petitioner is that after the agreement Ex. P-1 was filed the Court became functus officio and it was not within its province to entertain the award made by Shri Kedar Ishwan This objection again is barren of substance. Since it was the Court which had referred the matter in dispute to the arbitrator the award also was to be filed in the Court.

5. The next contention that has been advanced on behalf of the petitioner is that after the refusal of the Registrar, Co-operative Societies to arbitrate the Court had no jurisdiction to appoint another arbitrator and the provisions of Section 8 of the Act were not applicable to an application filed under Section 20. In support of the aforesaid contention reliance was placed upon the ruling reported in Firm Salig Ram-Bhagat Ram v. Firm Kishen Singh-Sant Ram, AIR 1938 Lah 859.

The decision of the aforesaid case turned upon the interpretation inter alia of paragraph 17 of Schedule II to the Civil Procedure Code. Theaforesaid Schedule was repealed by the Arbitration Act of 1940 and Section 20 of that Act which, in the main, corresponded to the aforesaid paragraph 17, as will presently appear, is much wider in scope. That paragraph was and Section 20 is worded as below:-

'P-17. (1) Where any persons agree in writing that any difference between them shall be referred to arbitration, the parties to the agreement, or any of them, may apply to any Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs, and the others or other of them as defendants or defendant, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.

(3) On such application being made, the Court shall direct notice thereof to be given to all the parties to the agreement, other than the applicants, requiring such parties to show cause, within the time specified in the notice, why the agreement should not be filed.

(4) 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 in accordance with the provisions of the agreement or, if there is no such provision and the parties cannot agree, the Court may appoint an arbitrator.'

'Section 20 (1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or if otherwise, between the applicant as plaintiff and the other parties as defendants.

(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.

(4) 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.

(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.''

It will have been noticed that there was no provision in paragraph 17 corresponding to subsection (5) of Section 20 whereby the other provisions of the Act have been made applicable to the arbitration proceeding initiated under Section 20. There is also Section 47 of the Act which makes the provisions of the Act applicable to all arbitrations and to all proceedings thereunder. Section 8 of the Act inter alia provides that if any appointed arbitrator or umpire neglects or refuses to act .................................. and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy, any party may serve the other parties .............. with a written notice to concur in the appointment or appointments or in supplying the vacancy and 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 ....................who shall have like power to act in the reference and to make an award as if he..................had been appointed by consent of all parties. The aforesaid provision clearly contemplates the appointment of an arbitrator by the Court on the refusal of the arbitrator appointed by the parties to arbitrate.

6. It would thus appear that unless it is not practicable to apply Section 8 to a Proceeding initiated under Section 20 that provision would apply to such a proceeding. It has not been shown on behalf of the petitioner that the aforesaid provision cannot inherently apply to a proceeding like the instant.

7. It will further have been noticed that the scope of Sub-section (4) of Section 20 is much wider than the scope of sub-paragraph (4) of paragraph 17. In the said sub-paragraph the words used were

'appointed in accordance with the provisions of the agreement or, if there is no such provision and the parties Cannot agree' the words used in the aforesaid sub-section are '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'.

8. It has been held in Karam Chand v. Sant Ram Tara Chand, AIR 1958 Punj 418, following a ruling of the Lahore High Court reported in Yar Muhammad v. Ghulam Sarwar, AIR 1950 Lah 145 that the powers of the Court under Section 20 of the Act were larger than the powers which it possessed under para 17 and further that after the Court had ordered the filing of the agreement the other provisions of the Act could be made applicable by virtue of Sub-section (5) of Section 20 and Section 47 of the Act

9. Thus, while it might be held that under paragraph 17 there was no provision for the appointment of another arbitrator on the refusal of the arbitrator appointed by, the parties to act as such under Sub-section (4) of Section 20 the Court has the power to appoint an arbitrator on the refusal of the arbitrator nominated by the parties to arbitrate. The AIR 1938 Lah 859 ruling supra has,therefore, no application to cases arising under the Act.

10. In view of the provisions of Section 8 of the Act, the learned Additional Subordinate Judge had the jurisdiction to appoint another arbitrator on the refusal of the Registrar, Co-operative Societies, to arbitrate provided that the agreement of reference did not indicate that the vacancy on the refusal of the Registrar to arbitrate was not in tended to be supplied.

11. In view of the language in which Clause (b) of Section 8 is couched it is clear that the mere fact that the parties have agreed to refer a dispute arising between them to a particular arbitrator will not necessarily lead to the inference that the intention was not to supply the vacancy and that the presumption is that unless the agreement of reference indicates otherwise the vacancy is to be filled up.

12. The relevant clause in the instant case is that if during the progress of the works any dispute arises it will be referred to the Registrar Co-operative Societies Himachal Pradesh for arbitration whose award shall be binding. It is significant that the parties had agreed to appoint an arbitrator with reference to his official designation and not by name. An arbitrator is appointed by name usually because of his personal qualities and character but where he is appointed by reference to his office it is the traits peculiar to the office which weigh with the parties and it may reasonably be assumed that where an arbitrator is appointed by the parties with reference to the office the intention is that the arbitration should be conducted by the holder of that office and by was else.

13. On behalf of the petitioner reliance has been placed upon a ruling of Rajasthan High Court reported in Chief Engineer Buildings and Roads, Jaipur v. Harbans Singh, AIR 1955 Raj 30 that as the arbitrator was appointed by office the intention of the parties was that no other arbitrator could be appointed on his refusal to arbitrate.

14. The facts of the aforesaid case were that an agreement was entered into between Chief Engineer of the former State of Bikaner and one Harbans Singh inter alia providing as follows:

'Chief Engineer shall be the sole arbitrate and judge in case of dispute between me and the Executive Engineer with reference to the quality or measurements of work executed or rate of progress .................... and his decision shall be conclusive and binding.'

15. A dispute arose and it was referred to the Chief Engineer for arbitration. During the course of the arbitration proceedings, Harbans Singh made an application under Section 8 of the Act alleging that the arbitrator had neglected to work and another' arbitrator should be appointed in his place. A question, therefore, arose as to whether another arbitrator could be appointed in place of the Chief Engineer. It was held that the intention of the parties was that the disputes between them should be arbitrated by the Chief Engineer alone and by none else and that another arbitrator could not be appointed in his place.

16. The learned counsel for the respondent sought to distinguish the aforesaid case on the grounds that therein the Chief Engineer was to be the sole arbitrator and judge and that as the Chief Engineer was himself a party to the agreement and had appointed himself as an arbitrator no occasion could have arisen for his refusal to arbitrate.

17. It does appear that the Hon'ble Judges in the aforesaid Rajasthan case reached a conclusion ia favour of the applicants on the basis of the three circumstances, namely that the arbitrator had been appointed by office and not by name, that he was described as the sole judge and arbitrator and that he was himself a party to the agreement. Keeping in view the language in which they hsid expressed their conclusion one is led to think that the circumstance which dominantly weighed with them was the description of the arbitrator with reference to his office and not by his name. While they had used the word 'significance' only with reference to the circumstance of the Chief Engineer being a party, they had stated that the fact that the arbitrator is mentioned by office pointed to an intention not to replace him by some other person,

18. With regard to the use of the words 'sole' and 'judge', I, with great respect to the Hon'ble Judges, venture to say that those words merely emphasized the fact that the reference will be made to a single arbitrator who will decide the matter in difference. Even without the use of those words, the reference would have been to one arbitrator only and his function would have been to judge the cause. Those words, therefore, do not serve any purpose other than that of laying stress and emphasis. Although it is very difficult to guess as to what would have been the result of the case if the words 'sole' and 'judge' had not found place in and the Chief Engineer had not been a party to the agreement, I am prone to think that the conclusion would have been the same on the basis of the nomination of the arbitrator by his office.

19. The fact, however, remains that while the aforesaid Rajasthan case does, at least to a certain extent, lend support to the petitioner's Case, the respondent has not been able to cite any case wherein an intention to supply the vacancy may have been inferred even though the arbitrator had been appointed by the parties with reference to his office.

20. I am, therefore, unable to endorse the conclusion reached by the, Courts below on the question under consideration.

21. It was also urged on behalf of the respondent that the concurrent finding of fact recorded by the Courts below should not be interfered With in the exercise of revisional powers. In appointing another arbitrator the learned Additional Subordinate Judge had assumed jurisdiction which he did not have and as such the revisional powers of this Court can be invoked. It may incidentally be mentioned that even in the aforesaid Rajasthan case it was in the exercise of revisional powers that the order of the Court below appointing another arbitrator was set aside on the ground of lack of jurisdiction.

22. In conclusion, the petition in revision is accepted with costs and in supersession of the orders of the Courts below the award made by Shri Kedar Ishwar is set aside.


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