(2001) 1 J & K LAW
REPORTER
High Court of Jammu and Kashmir
at Jammu
Before
Hon’ble Mr. Justice T.S. Doabia, Judge
Hon’ble Mr. Justice O.P. Sharma, Judge
Deputy Manager Civil Township
Complex
Petitioner
versus
Kirti Kumar and others
Respondents
CIMA No. 48-A/1996, decided on
5.10.2000.
Arbitration Act, section 20 -
Letters Patent Cl.12 - Appeal - Judgement dated 8.3.96 being final judgement, appeal held
maintainable.
So far as maintenance of appeal is concerned, it be seen that the judgment dated 8.3.1996,
is a final judgment, therefore an appeal would be maintainable in terms of clause 12 of
the Letters Patent. Independently of the above, the provisions of Section 39 do not bar
filling of this appeal. A decision of Division Bench reported as M/s Ama Corporation,
Madras V. Food Corporation of India AIR 1981 Madras121 supports this.
Arbitration Act, S.20- Appointment of arbitrator to be made by the person who is vested
with this power- Power could be exercised under clause 25 of the agreement.
Once the appointment of somebody is revoked and a vacume or vacancy exist, then the power
to appoint an arbitrator would have to be exercised in terms of the original agreement. An
arbitrator has to be named by the functionary who is exercising power under clause 25 of
the agreement. If it was General Manager then that power has to be exercised by himself if
that power now vests in Additional Chief Engineer, then that power has necessarily to be
exercised by him.
Advocates who appeared in this
case
Mr. J.P. Singh, Advocate for the petitioner
Mr. Anil Mahajan, Advocate for the respondents
Case referred :
Ama Corporation, Madras v. Food Corporation of India AIR 1981 Madras 121
JUDGMENT AND ORDER
Per T.S. Doabia, Judge
In exercise of powers conferred Under Clause 25 of the agreement entered into between the
parties, an arbitrator was appointed . This was done on 21.11.1978. One Shri A.K.Pal was
so appointed. This arbitrator resigned. Thereafter, the very authority which appointed the
first arbitrator, namely the Genaral Manager appointed another arbitrator. The arbitrator
so appointed namely Shri R.P.Bhat expressed his inability t o pass the award, as the other
party (contractor respondent) was not appearing before him. In this situation, an
application was preferred by respondent Kirti Kumar Kapahi and others. This was preferred
under section 20 of the Arbitration Act. A prayer was made that the order dated 29.04.1987
passed in CMP No. 93/1997 be set aside and arbitration application No. 39 / 1997 be
restored to its original number; or in the alternative, the application be treated as a
fresh application under section 20 of the Arbitration Act and the dispute referred to an
independent arbitrator affresh.
This application was considered by a learned Single Judge of this Court on 8.3.1996. One
Shri K.K.Gupta Chief Engineer, PWD Jammu was appointed as an Arbitrator. It is the
appointment of this arbitrator which is subject matter of challenge in this appeal.
The learned counsel for the
appellant submits that the basic power to appoint an arbitrator vested with the General
Manager (now being exercised by Addl. Chief Engineer) and this power has to be exercised
in terms of clause 25 of the agreement. For facility of reference, this clause is being
reproduced below:-
"Except where otherwise
provided in the contract all questions and disputes relating to the meaning of the
specifications, designs, drawings and instructions herein before mentioned and as to the
quality of workmenship or materials used on the work or as to any other questions, claims
right matter or thing whatsoever, in any way arising out of or relating, contract,
designs, drawings, specifications, estimates instructions or these conditions or otherwise
concerning the works, or the exercution or failure to execute the name whether arising
during the progress of the work or after the compliction or abandonment thereof shall be
referred to the sole Arbitration of the persons appointed by the Additional Chief
Engineer, Central Public Works Department, in charge of the work at the time of dispute or
if there be no Additional Chief Engineer, the administrative head of the said Central
Public Works Department at the time of such appointment. It will be no objection to any
such appointment that the arbitrator so appointed is a Government servant, that he had to
deal with the matters to which the contract related and that in the course of his duties
as Government servant he had expressed views on all or any of the matters in dispute of
difference. The arbitrator to whom the matter is originally referred being transferred or
vacating his office or being unable to act for any reason, such Additional Chief Engineer
or administrative head as aforesaid at the time of such transfer, vacation of office or
inability to act, shall appoint another person to act as arbitrator in accordance with the
terms of the contract. Such person shall be entitled to proceed with the reference from
the stage at which it was left by his predecessor. It is term of this contract that no
person other than a person appointed by such Additional Chief Engineer or administrative
head as aforesaid should act as arbitrator and if for any reason is not possible, the
matter is not to be referred to arbitration at all.
Subject as aforesaid the
provisions of the Arbitration Act,1940, or any statutory modification or re-enactment
thereof and the rules made thereunder and for the time being in force shall apply to the
arbitration proceeding under this clause."
It is also urged that an
arbitrator could not be named by the Court, and this power had necessarily to be exercised
by the authority which was desingnated into the agreement.
The learned counsel appearing for
the respondents submits that the appointment of earlier arbitrator Shri R.P. Bhat was
revoked. This was in terms of section 5 of the Arbitration Act. It is urged that once
appointment of arbitrator stood revoked , then this Court could appoint fresh arbitrator
and it was not necessary for this Court to refer the matter to a functionary who was named
under clause 25 of the agreement. In addition to this it is submitted that the present
appeal is not maintainable. It is also urged that application under section 20 of the
Arbitration Act was for change of arbitrator and not for appointment of new arbitrator and
therefore for this additional reason also an appeal under section 39 of the Arbitration
Act would not be maintainable.
After having heard learned
counsel for the parties, we are of the opinion that when the application preferred by the
respondents is perused, it becomes apparent that a prayer was made for appointment of an
arbitrator in terms of section 20 of the Arbitration Act. If this be the situation, then
the parties were fully aware as to the true intent and scope of the arbitration agreement
and the proceedings which were being taken. When resort is to be taken to section 20 of
the Arbitration Act, then the only direction which could have been given was to appoint an
arbitrator and this had necessarily to be done in terms of the arbitration clause in the
agreement.
This is one aspect of the matter.
The other aspect of the matter is
that if the argument raised by the respondents applicants is accepted even then after the
revocation of appointment of arbitrator i.e. of Shri R.P.Bhat, the situation which would
arise would be the same, as it existed before his appointment. Once the appointment of
somebody is revoked and a vacuum or vacancy exist, then the power to appoint an arbitrator
would have to be exercised in terms of the original agreement. Looking from any point of
law, an arbitrator has to be named by the functionary who is exercising power under clause
25 of the agreement . If it was General Manager then that power has to be exercised by
him; if that power now vests in Additional Chief Engineer, then that power has necessarily
to be exercised by him.
So far as maintenance of appeal
is concerned, it be seen that the judgment dated 8.3.1996, is a final judgment, therefore
an appeal would be maintainable in terms of clause 12 of the Letters Patent. Independently
of above, the provisions of section 39 do not bar filling of this appeal. A Division Bench
reported as M/s Ama Corporation, Madras v. Food Corporation of India AIR 1981
Madras 121 supports this. In the above case it was held :-
"We are inclined to agree
with the contention of the learned counsel for the appellant that the appointment of an
arbitrator, contrary to the terms of the arbitration agreement, is not possible. Section
20 comtemplates any of the parties to an arbitration agreement, coming before the Court,
for filing that agreement . Though in this case the learned trial judge has not
specifically passed an order, directing the filling of the arbitration agreement, the fact
that he has chosen to appoint an arbitrator on the basis of the arbitration agreement,
clearly leads to the inference that the learned judge has taken the arbitration agreement
on file. The order appointing an arbitrator has to naturally follow the filing of an
award. Once an arbitrator is appointed by the trial Court, it will mean that there is a
direction also for the filing of the arbitration agreement. Without filing such an
arbitration agreement, the order appointing an arbitrator by the Court is not legally
possible.
Therefore, we construe the order
of the trial court, as one directing the filing of the arbitration agreement and the
appointment of an arbitrator. It is in this view, we hold this appeal as maintainable as
directed against an order directing the filing of an arbitration agreement, falling under
clause (iv) of section 39 of the Arbitration Act."
In view of the above , this
appeal is allowed. The functionary who is supposed to make appointment of the arbitrator
in terms of arbitration clause 25 of the agreement would now do so within a period of
thirty days from today. The period which is spent in obtaining a certified copy of this
judgment would be excluded from that period. This is, subject to the condition that the
application for obtaining a certified copy is filed today only. |
