Patna High Court
Ramkhelawan Mistry vs Rabindra Kumar Ghose And Anr. on 17 March, 1960
Equivalent citations: AIR1961PAT128, AIR 1961 PATNA 128
Author: N.L. Untwalia
Bench: N.L. Untwalia
ORDER N.L. Untwalia, J.
1. It seems to me that the arbitration agreement between the parties has got to become abortive because of some lacuna in the Arbitration Act not empowering the Court to appoint an arbitrator in a situation like this. The petitioner as well as the two opposite parties entered into a partnership agreement (exhibit 1) to carry on certain business in partnership. Clause 14 of the agreement provides:
"All differences arises (arising) between partners or their representatives or assignees, or any of them will (with) regard to the interpretation of these presents, or as to the rights of (or) liabilities of the partners or any of them under these presents or with regard to the winding up or any matter of thing relating to the partnership or to the affairs thereof, shall he referred to Arbitration to 3 persons each of the partners nominating one Arbitrator; reference to arbitration shall be a condition precedent to the right of any partner to sue on any of the above counts."
Some disputes and differences seem to have arises between the three partners. The two opposite parties on their part nominated two arbitrators and asked the petitioner to nominate his, but the petitioner did not agree to carry out the terms of the arbitration clause. He did not nominate his arbitrator. Thereupon, the opposite parties went to the Court and asked it to appoint an arbitrator in exercise of its power under Section 8, 9 or 10 of the Arbitration Act.
The Court below has taken the view that Section 8 is not applicable in such a case, but the court can appoint an arbitrator under Section 9, and in pursuance of that view it has directed the petitioner to appoint his arbitrator, failing which the two arbitrators appointed by the opposite parties will constitute the whole board of arbitrators to decide the disputes and differences between the three parties. The petitioner, therefore, has come up to this Court in revision.
2. In my opinion, the view of the court that Section 9 of the Arbitration Act is applicable to this case is wrong. This section reads as follows:
"Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement,--
(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place;
(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent:
Provided that the Court may set aside any appointment as sole arbitrator made under Clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit".
This section, therefore, provides for a contingency where the arbitration agreement provides that the reference shall be to two arbitrators, one to be appointed by each party. It has not provided for the contingency of three arbitrators, one to be appointed by each party. In my opinion, therefore, in terms, the section does not apply and the meaning of Section 9 cannot be extended, on principle, to a contingency which has not been specifically provided therein, especially if the provisions of Clause (b) of that section are kept in view. Mr. Mukharji, appearing on behalf of the opposite parties, tried to bring his case under Section 8(1)(a) of the Act, which provides:
"In any of the following case -- (a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties d'o not, after differences have arisen, concur in the appointment or appointments; ...... any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy. It is abundantly clear that the contingency which has been provided in Section 8 is where the arbitration agreement provides a reference to one or more arbitrators "by 'consent' of the parties' (the underline (here into ' ') is mine). Here, according to Clause 14 of the partnership deed, there was no question of appointment of three arbitrators by the consent of the parties.
Each party had its own right to appoint its own nominee as an arbitrator, irrespective of the consent of the other side, and, therefore, in my opinion, the learned Subordinate Judge has rightly held that Section 8 is not applicable to the facts of the instant case. Section 10 also is not applicable, aa there the contingency provided is that where the arbitration agreement provides that the reference shall be to three arbitrators, one to be appointed by each party and the third by the two appointed arbitrators. There is no such case here. An agreement of the instant kind is uncommon and unusual, where each party has been given a separate right to appoint its own arbitrator, and perhaps that may be the reason why the legislature did not provide for such a contingency.
But, if none of these sections, namely, 8, 9 and 10, has empowered the Court to direct the party which does not carry out the terms of the agreement to appoint its arbitrator and does not empower the court to give its own direction for the failure of the party to appoint one, in my opinion, it has got to be held that the parties which are ready to carry out the terms of the agreement are helpless in tha matter, and they have no other remedy but to go out to a court of law for the redress of their grievances, if any, according to the ordinary mode of instituting a suit or other proceedings, but they cannot get any relief under the arbitration clause, like the one provided in their partnership deed.
3. In that view of the matter, I allow this application in revision, and set aside the order of the learned Subordinate Judge, but would make no order as to costs.