Allahabad High Court
Union Of India (Uoi) vs Om Prakash on 13 December, 1985
Equivalent citations: AIR1987ALL138, AIR 1987 ALLAHABAD 138, (1987) 1 ARBI LR 310 (1986) 12 ALL LR 259, (1986) 12 ALL LR 259
JUDGMENT N.N. Mithal, J.
1. This is a revision under Section 115 of the Civil P.C. filed at the instance of Union of India assailing the order of the Court below appointing a retired Hon'ble Judge of this Court as an Arbitrator in proceedings under Section 8(1)(b) of the Arbitration Act.
2. This is one of those cases which must cause lot of anguish and concern to every right thinking citizen of this country and reflects not very favourably on the attitude adopted by the Government which proposes to be one of the people, by the people and for the people. We must pause here and ponder whether such a long and arduous series of litigation should really have taken place and should have occupied more than 40 years in the arena of Courts and still showing no sign of culmination dispite so many battles that have been fought during the last four decades.
3. The whole thing started when the respondents entered into some contract with the Government way back in the year 1943 which, as usual contained a clause for settlement of dispute through arbitration who was agreed to be the Director of Farms, General Headquarter by designation. In those ancient days there used to be only one Director of Farms for all Military Farms spread over the country with their General Headquarter at Simla, presently in Himachal Pradesh. Due to the advent of second World war and consequent-war time expansion and thereafter independence of the country in 1947, many structural changes in the administrative hierarchy took place. For a while, it is admitted, even the post of Director of Farms, General Headquarter ceased to exist. The respondent repeatedly approached the Court eversince 1949 seeking reference of the dispute to arbitration and/or for the appointment of an Arbitrator. However, for one reason or the other, which need not concern us here, the Arbitrator either could not proceed with arbitration or refused to take it up with the result that the matter kept hanging fire all these years. On the last occasion Col. Hari Singh was appointed as an Arbitrator in Dec., 1981 but according to the respondents he was forced to withdraw from the arbitration work while, the revisionist claims that it was his retirement in Feb., 82 which prevented him from proceeding in the matter. May be as it may, an application was moved at that stage under Section 8(1)(b) of the Arbitration Act for the appointment of an Arbitrator. Objections were filed by the Union of India but no plea was raised therein that the post of Director of , Farms, General Headquarter, Simla or an Officer of equivalent rank has since been restored and was in existence, or that it was possible for the Court to appoint an Arbitrator such as contemplated by Clause 36 of the Contract. It is true that a very vague and general plea was taken that the application was not legally maintainable. By making this plea as the sole basis of his entire submission the learned counsel has tried to urge that now that the post existed reference only to the agreed arbitrator can be made and as such the application under Section 8(1)(b) was not legally maintainable. The relevant portion of Section 8 of the Arbitration Act may be extracted here;
Section : 8 Power of Court to appoint arbitrator/ umpire-
(1) In any of the following cases :
(a).........................
(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 arbitrator, as the case may be, do not supply the vacancy; or
(c) .....................
any party may serve the other parties or the arbitrator, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy (2)....................
Before an application under this provision can be made, therefore, what is necessary is firstly that either the Arbitrator had (i) neglected or refused to act, or (ii) had become incapable of acting, or (iii) had died, secondly that the vacancy was capable of being supplied and lastly that the parties did not supply the vacancy. If these three conditions are fulfilled then the parties to the arbitration agreement can, after serving a notice on the other seeking concurrence in the appointment of the Arbitrator by a written notice, apply to the Court for appointment of the Arbitrator. The contention of the learned counsel for the revisionist is that the first condition of this Sub-section has not been complied with and as such the respondent had no right at all to apply under Section 8(1)(b) of the Act. According to him the Arbitrator had neither neglected nor refused to act nor he had become incapable of acting nor had he died. He further contends that the language of the agreement clearly indicates that the vacancy was not to be supplied and the matter was referable only to the named Arbitrator and to none else.
4. In the objection filed by the revisionist it was nowhere stated that an official with the designation of Director of Farms, G.H.Q. was available for appointment as an Arbitrator. It was also not stated anywhere that same other official having similar powers though with different designation existed. Had a plea of this nature been taken on behalf of the Government it would have been possible for the parties to lead evidence on this question and also for the Court below to find if a person holding that post existed. This was a question of fact which ought to have been raised by the revisionist before the Court below. Having failed to do so it cannot now in revision try to fill up the lacuna by filing evidence.
5. While disposing of a revision the Court is primarily concerned with the material that was on the record when the order under revision was passed. It is not a rigid rule but it is always advisable and proper to confine the parties in revision to that material on record which was there at the time when the question was decided and exceptions can be made to this general rule only in very exceptional circumstances. I do not find that any such exceptional situation existed in the present case particularly keeping in view the fact that the matter has been shuttling between the Arbitration and the Court for almost 40 years. A situation has reached when no further opportunity can justifiably be given to the parties to ding dong with this dispute in the arena of Civil Courts. The matter must be decided once for all. I, therefore, do not feel disposed to permit the learned counsel to lean on any of the facts that have been disclosed for the first time in the affidavits and evidence here in this Court.
6. In view of the above, the inevitable result is that no Arbitrator, as had been agreed upon or corresponding to the designation of the post as contained in Clause 36 of the agreement, existed and it must be held that the Arbitrator had become incapable of acting or had died. It is true that the word 'died' is normally associated with a living person. But in this case if the post with reference to which an Arbitrator was to be appointed had ceased to exist it must be deemed that either the Arbitrator had become incapable of acting or had died.
7. The learned counsel has, however, urged that even in such a situation it cannot be said that the vacancy was capable of being supplied in view of the mandatory nature of the provisions of the Arbitration clause. He rests his argument heavily on a decision of the Rajasthan High Court in Chief Engineer, Buildings and Roads v. Harbansh Singh, AIR 1955 Raj 30 where a Division Bench of that Court was of the view that where an Arbitrator is appointed by the office he could neither die nor could become incapable of acting. However, that case was decided on the peculiar language of the arbitration clause and in para 7 of the report the learned Judges have themselves mentioned that the wording of the Arbitration clause was quite different from the usual language employed in an Arbitration agreement. It was pointed out that usually the words used are to the effect that the parties will refer the dispute to arbitration followed by the name or designation of the Arbitrator agreed upon. It was further pointed out that the Chief Engineer was not only to be the sole arbitrator but he was also made the sole Judge. The use of the word 'sole Judge' went a long way in prevailing upon the learned Judge in taking that view.
8. Another case to which reference has been made is Prabhat General Agencies v. Union of India, AIR 1971 SC 2298 where also Section 8(1)(b) came up for interpretation. In that case the Judicial Commissioner was appointed Arbitrator by his designation. It was held by the Supreme Court that this fact itself did not afford any indication that the parties to the agreement intended not to supply the vacancy if the Judicial Commissioner refused to act or was incapable of acting. The basis for taking the view was that the provisions of the section was that "the parties did not intend to supply the vacancy" and, therefore, if the agreement was silent as regards supplying the vacancy the law presumes that the parties intended to supply the vacancy. Stress was laid on the intention of parties not to supply the vacancy rather than to look for their intention to supply it. Their Lordships of the Supreme Court also considered AIR 1955 Raj 30 (supra) and it was held that the Rajasthan decision turned mainly on the facts of that case. A reference was also made with approval to a Division Bench decision of this Court in Fertiliser Corporation of India Ltd. v. Domestic Engineering Installation, AIR 1970 All 31 where it was laid down that the intention to supply the vacancy must be presumed to be inherent in the agreement unless the parties intend not to supply the vacancy. In other words, if the agreement be silent about supplying the vacancy the law will presume that the parties did intend that the vacancy be supplied and in that event it would be open to the Court to appoint an Arbitrator under Section 8.
9. Having given careful consideration to the facts of the case I am clearly of the view that the arbitration clause does not lay down that the parties had agreed that vacancy was not to be supplied and, therefore, one has to presume that the intention of the parties was to supply the vacancy. I have already held above that the Arbitrator as designated in the agreement had ceased to exist and must be deemed to have become incapable of acting or having died and in the circumstances the application under Section 8(1)(b) was clearly maintainable.
10. The last leg of the argument of the learned counsel for the revision was that the Court below has wrongly mentioned that the counsel for the Union of India had agreed to the appointment of Arbitrator and that it had no objection to his appointment. From the order under revision it is clear and it is not denied here also that the parties did in fact provide a list of names which according to them should be appointed as Arbitrator to resolve the dispute. The names of three retired Hon'ble Judges of this Court were contained in the list provided by the respondent along with three other names. On behalf of the Union of India also a list of names was given but the two lists did not contain any common name. The Court below has mentioned that the counsel for the Union of India agreed that any one of the retired Judges of Hon'ble High Court may be appointed as an Arbitrator and it was on the basis of this that the name of Hon'ble Mahabir Singh, J. (Retd.) was selected for the appointment as an Arbitrator. In the Court below the plea raised was that only the Director of Farms Headquarter could be appointed as an Arbitrator and no other person could have been appointed as Arbitrator by the Court. When the revision came up for admission before this Court a statement was made by the counsel for the Union of India before Hon'ble Mr. Justice V.K. Mehrotra, J. that according to the instruction received from the District Govt. Counsel (Civil), Meerut no consent to the appointment of any person other than the authority mentioned in clause 36 of the arbitration agreement as sole Arbitrator was ever given. It was on the strength of this statement that this revision was admitted. To support this an affidavit has been filed but not one by either the D.G.C. (Civil), Meerut who had argued the matter or indeed by any departmental representative who may have been present at that time. The person who has sworn the affidavit it only swears an information and that too without disclosing the source of his information, that no such admission was made. Should the Court in these circumstances rely on what the Court below has said or disbelieved it merely on the basis of a statement made in the affidavit sworn on information and unauthenticated by the counsel who argued the matter and who would have been the best person to say whether or not such a statement had been made? I have absolutely no reason for not relying upon what the Court below had said. When both the parties had given the list on their behalf for appointment of an Arbitrator and the Court was only to choose the best person out of it for the job it is very difficult for this Court to believe that there would have been any serious objection on behalf of the Govt. counsel to the name of any of the retired Judges of this Court in preference to the departmental officials. I must, therefore, hold that the appointment of Hon'ble Mr. Justice Mahabir Singh (Retd.) was on the basis of agreement of the parties.
11. In the light of what I have said above, the revision has no force and is accordingly dismissed with costs.