Punjab-Haryana High Court
Punjab Housing Development Board vs Jit Singh Jaimal Singh on 5 March, 1999
Equivalent citations: (1999)123PLR51
Author: V.S. Aggarwal
Bench: V.S. Aggarwal
JUDGMENT V.S. Aggarwal, J.
1. By this common judgment, Civil Revisions No. 563 to 572 of 1999 can conveniently be disposed of together. The facts are identical and common question of law is involved, therefore, the facts are being mentioned from Civil Revision No. 564 of 1999.
2. The relevant facts are that an application had been filed under Sections 5, 8, 11 and 12 of the Arbitration Act, 1940 (for short 'the Act') in the court of learned Sub-Judge 1st Class, Chandigarh. It had been asserted that there is an arbitration agreement between the parties. The said arbitration agreement reads as under :
"Clause 25A : If any question, difference or objection whatsoever shall arise in any way connected with or arising out of this instrument or the meaning or operation of any part thereof for the rights, duties or liabilities of either party then save insofar as the decision of any such matter is herein-before provided for and has been so decided, every such matter including whether its decision has been otherwise provided for and/or whether its decision has been finally decided accordingly or whether the contractor (contract ?) should be terminated has been rightly terminated and as regards the rights and obligations of the referred for arbitration to the Superintending Engineer, Punjab Housing Development Board, acting such at the time of reference within 180 days or 6 months from the payment of final bill or written notice issued to the contractor that his bill is ready for payment and his decision shall be final and binding and where the matter involves a claim for or the payment or recovery deduction of money only the amount if any avoided (involved ?) in such arbitration shall be recoverable in respect of the matter so referred. If the matter is not referred to Arbitration within specified period, all the rights and claims under the contractor (contract ?) shall be deemed to have been forfeited and absolutely barred."
3. The learned Sub-Judge 1st Class, Chandigarh, on 21-9-1987 had allowed that application. Shri Manohar Singh, Technical Member Hydel, Punjab State Electricity Board, Patiala, was appointed as an arbitrator to adjudicate the dispute between the parties. Subsequently, another application was filed under the Act in the court of Sub-Judge Ist Class, Chandigarh. The learned trial Court had considered the matter and after hearing the parties' counsel removed the arbitrator in terms of Clause 25A of the Act vide order dated 12-5-1990. Instead, Shri Harnam Singh, Retired Additional District and Sessions Judge was appointed as the new District and Sessions Judge was appointed as the new arbitrator. The arbitrator Punjab Housing Development Board (for short "the Board") felt aggrieved by that order, filed an appeal before the learned District Judge. It was assigned to the learned Additional District Judge. On 1-9-1990, the learned Additional District Judge allowed the appeal and set aside the order passed by the trial Court. The respondent preferred a revision petition in this court.
4. During the course of arguments a question arose as to whether the order passed by the learned trial Court removing the arbitrator was appealable or not. The matter was referred to the Division Bench. On 19-9-1994, a Division Bench of this Court held that the order passed by the trial Court removing the arbitrator was not appealable. When the reference was answered, it went back to the learned Single Judge of this court. The learned Single Judge on 1-8-1987 had passed the following order :
"In view of the question answered by the Division Bench, I have no option but all allow this revision petition and to set aside he order dated 1-9-1990 passed by the learned Additional District Judge. It is so recorded. There shall, however, be no order as to costs. Parties through their counsel are now directed to appear before the Arbitrator on 1-9-1997, appointed by the trial Court and the arbitrator shall proceed with the matter in accordance with law."
5. When the order of the learned Single Judge of this Court was shown to the Arbitrator (Sh. Harnam Singh, Additional District Judge (Retd.)), the said arbitrator had written that he is not in touch with the case nor he is in a position to do justice and regretted his inability to act as an Arbitrator.
6. When Shri Harnam Singh arbitrator showed his inability to conduct the arbitration proceedings, an application was filed with the learned trial Court for appointment of an independent and impartial person as an Arbitrator. At this stage, it is not out of place to mention that an application in this regard was filed in this Court and this Court had directed them to approach the trial Court. The petitioner objected to the appointment of new arbitrator and had referred to the arbitration clause. According to the petitioner, the arbitrator, who was the Superintending Engineer, could not be removed. The learned Civil Judge vide the impugned order held that since arbitrator has refused to act he is removed and it was directed that Shri H. L. Randev, District and Sessions Judge (Retired) shall act as an arbitrator.
7. Aggrieved by the said order, the present revision petitioner has been filed.
8. Learned counsel for the petitioner urged that in accordance with the arbitration clause, which has already been reproduced above, the matter had to be referred to the Superintending Engineer, Punjab Housing Development Board, and no other person could be appointed as an arbitrator. According to him, the present Superintending Engineer could be appointed as an arbitrator. This contention has vehemently been opposed by the learned respondent's counsel.
9. Section 8 of the Arbitration Act, 1940 deals with the power of the Court to appoint arbitrator or umpire. It reads as under :
"8. Power of Court to appoint arbitrator or umpire :
(1) In any of the following cases -
(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 do not, after difference have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, 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; or
(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;
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.
(2) If the appointment is not made within fifteen clear days after 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 or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."
10. In the present case, it will be Section 8(1)(b) of the Arbitration Act which will come into play because herein it was the court which had earlier removed the arbitrator and had appointed another arbitrator. It permits the court to appoint another person to be arbitrator. Section 8(2) of the Act makes the position clear.
11. Learned Counsel for the petitioner referred to the decision of the Supreme Court in the case of The Secretary to the Government, Transport Department, Madras v. Munuswamy Mudaliar and another (AIR 1988 SC 2232 = 1989(1) Arb. LR 50). In the cited case, there was an arbitration agreement. The Superintending Engineer was named to be the arbitrator. The parties had submitted to the jurisdiction of the said arbitrator. An application was filed for removal of the successor of the said arbitrator on the ground that he was subordinate to Chief Engineer and would be biased. The Supreme Court repelled this argument. But as is apparent from the peculiar facts already mentioned above, this is not the question in controversy herein. The question in controversy is as to whether when Shri Harnam Singh, District and Sessions Judge (Retd.) refused to act as an arbitrator, the Court has the jurisdiction to appoint another arbitrator or not ? Therefore, the cited decision of the Supreme Court is of little help to the petitioner.
12. In that even, reliance was strongly placed on the decision of the Supreme Court in the case of M/s. Harbans Singh Tuli & Sons Builders Pvt. Ltd. v. Union of India (AIR 1992 SC 1124 = 1992(2) Arb. LR 93). In the cited case, the arbitrator was to be appointed by the Engineer-in-chief. If that arbitrator resigns, the vacancy was to be filled up by appointing another arbitrator. The Supreme Court held that the clause in contract provided that the arbitrator is to be appointed by the Engineer-in-Chief. If he refuses to act, then another arbitrator could be appointed. The vacancy was to be supplied by the Engineer-in-Chief. In the peculiar facts, it was that the court was not justified in appointing another arbitrator.
13. The position herein is different. A resume of the facts given above clearly indicates that the order passed by the trial Court appointing another arbitrator (Shri Harnam Singh, retired District and Sessions Judge) had been restored. It was directed that he should act as an arbitrator. Once that is the position, the ratio decidendi of the above decision have little application.
14. The matter as such as concluded by the decision of the Supreme Court in the case of State of West Bengal v. National Builders (1994(1) Recent Revenue Reports 299 = 1994(1) Arb. LR 5). Herein the Supreme Court held that where the arbitration clause provides for appointment of a sole arbitrator and he refuses to act, then the agreement clause stands exhausted. If it is provided in the agreement that if the arbitrator appointed refuses to act then the dispute shall be resolve by another arbitrator, but if the agreement does not show this then the next arbitrator can be appointed by the Court only.
15. This is what exactly had been done by the Trial Court. When Shri Harnam Singh, retired District & Sessions Judge, refused to act, the Court only could appoint the next arbitrator. The contention of the petitioner's counsel, therefore, must fail.
16. Otherwise also, a perusal of the arbitration agreement clearly shows that intention was to supply the vacancy. It becomes unnecessary to ponder further in this regard but to refer to the decision of the Supreme Court in the case of M/s. Prabhat General Agencies etc. v. Union of India and another etc. (1971(1) SCC 79). In the cited case, the Supreme Court held that it the agreement is silent regarding supplying the vacancy, it will be presumed that he intended to supply the vacancy.
17. As a result of the above, there is no ground to interfere. The trial Court has rightly supplied the vacancy and appointed another arbitrator in exercise of its powers under Section 8(1)(b) read with Section 8(2) of the Arbitration Act, 1940. The revision petitions must fail and are accordingly dismissed.
18. Revisions dismissed.