Calcutta High Court
B.S. Jaireth vs Sri S.P. Sinha on 4 May, 1993
Equivalent citations: AIR1994CAL68, AIR 1994 CALCUTTA 68, (1994) 1 CURLJ(CCR) 779 (1994) 1 ARBILR 354, (1994) 1 ARBILR 354
ORDER
1. This application has been made by B.S. Jaireth under Section 8 of the Arbitration Act praying for appointment of an Arbitrator. There was a Memorandum of understanding as between the petitioner and the respondent dated 12th November, 1988 which contained a clause as follows:
"6. Any dispute arising out of above understanding or due to non-implementation of above understanding by either Sri Sinha or Shri Jaireth will be referred for arbitration."
2. Thereafter disputes and differences had arisen between the parties and the petitioner by letter dated 22nd September, 1990 appointed an Arbitrator. The respondent, S.P. Sinha, however, did not send his concurrence to the daid appointment. Thereafter, the said Arbitrator proceeded with the reference (hereinafter referred to as 'the previous reference) and made an Award. The said Award was set aside by an unreported judgment and order passed by Justice Ruma Pal dated 23rd May, 1992, made in matter No. 3432 of 1991 (S.P. Sinha v. B.S. Jaireth). This is to be noted that the said previous reference had arisen in respect of the same disputes between the same parties and was made under the same arbitration agreement as in the instant case before me.
3. By and under the said judgment, this Court, inter alia, held that where the provisions of the first schedule to the Arbitration Act were not excluded, the reference has to be to a sole arbitrator and the appointment of the sole arbitrator has to be by consent of the parties to the agreement. The Ld. Judge relied on a Division Bench Jugment of this Court in case of India Hosiery Works, v. Bharat Woolen Mills Ltd. . In the said case, the Division Bench of this Court held as follows:--
"An arbitration agreement, neither specifying the number of arbitrators, nor specifying the mode of appointment, is perfectly effective and valid and the incidents of such an agreement are that it is to take effect as an agreement for reference to a sole arbitrator, to be appointed by consent of the parties or, where the parties do not concur in making an appointment, to be appointed by the court, except where the operation of Rule 1 of the First Schedule is excluded."
4. The Division Bench, in the aforesaid case also relied on Halsbury's laws of England, because according to the Division Bench, the provisions of the English Act are in all essential respect the same is in India. In the Hailsham Edition of Halsbury's Laws of England in Vol. I, the following passage occurs at page 644-45 :
"The submission itself may name the arbitrator or arbitrators, or it may without naming them direct how they are to be selected or it may simply provide for a reference to arbitration without either naming the arbitration or directing how they are to be selected.
5. In the last-mentioned case, if the submission is contained in a written agreement and does not express a contrary intention the following rules apply:
(1) The reference is to a single arbitrator.
(2) If the parties do not concur in the appointment of the Arbitrator, any party may serve the other parties with a written notice to appoint an arbitrator; and if the appointment is not made within seven clear days after service of the notice, the Court may, on the application of the party who gave such notice, appoint an arbitrator".
6. The present case is exactly "the last-mentioned case" contemplated in the above passage in Halsbury's Laws of England and the respondent followed precisely the same procedure as indicated there. It served a notice on the appellant, requiring it to concur in the appointment of an arbitrator and on the appellant declining to do so, it applied to the Court.
7. The learned Judge also held in aforesaid matter No. 3432 of 1991, that there was no concurrence of the parties in the matter of appointment of the arbitrator on the previous occasion. The Learned Judge also held that the appointment of the Arbitrator was invalid since there was no consent of the respondent. The said award made in the said matter was, therefore, set aside on the ground that the arbitrator did not have any jurisdiction to arbitrate.
8. Thereafter, the petitioner gave another notice dated June, 25, 1992 whereby the petitioner expressed his intention to appoint a named arbitrator and requested the respondent to concur in the appointment of the said arbitrator. The respondent, however, did not concur in the appointment of the arbitrator. As the parties could not concur in the appointment of the arbitrator, the petitioner moved this application before this Court under Section 8 of the Arbitration Act.
9. It was, inter alia, submitted on behalf of the respondent that there could not be a second reference on the same subject matter since there was already one reference earlier. The said point is, in my opinion, of no substance inasmuch as, so far as the first reference is concerned, it was held by this Court that even appointment of the Arbitrator was invalid and no reference could be held by the said Arbitrator. The said award made by the earlier Arbitrator was set aside on the ground of lack of jurisdiction. The effect, therefore, is that there was no reference at all and the said purported reference was non est and of no legal significance in the eye of law. The Learned counsel for the petitioner relied on the Division Bench Judgment of this Court (Baranagore Jute Factory Co. Ltd. v. M/s. Hulaschand Rupchand. In the said case, the Division Bench held that if there is no order of supersession under Section 19 of the Arbitration Act, the reference and the agreement both survived. The Division Bench also held that the setting aside of the award does not by itself terminate the reference except obviously where the award is set aside on a finding that the reference itself was invalid. It was also held that when the award was set aside and there was no order of supersession, there could be no question of either reference coming to an end or the arbitration agreement having been exhausted by reference already made. In the instant case also there was no order directing that the agreement of arbitration shall cease to have effect. The Division Bench also held that if the agreement is wide enough to cover all disputes that can obviously be successive references under its authority. In the instant case, the appointment of the arbitrator on the earlier occasion was held as invalid and it was also held that the arbitrator had no jurisdiction to arbitrate. Under the circumstances, the disputes remained undecided and since the arbitration agreement survives, the same is enforceable and fresh reference can always be made.
10. The Learned counsel for the petitioner also relied on the judgment of the Supreme Court in the case of Juggilal Kamlapat v. General Fibre Dealers Ltd., . In the said case, the Supreme Court, inter alia, held that the legislature has given discretion to the Court under Section 19 to decide when it sets aside an award what the consequences of its order setting aside the award would be. The Supreme Court in the said case held as follows:--
"The scheme of the Act therefore is whether the arbitration is under Chap. II, Chap. III or Chap. IV, to give discretion to the Court to decide whether to supersede the reference or not. Where it decides to supersede the reference it has to order that the arbitration agreement shall cease to have effect with respect to the difference referred; but where it decides not to supersede the reference and the reference and the arbitration agreement subsist and if there is machinery provided in the arbitration agreement for making a further reference or for continuing the same reference, further arbitration can take place. The contention therefore urged on behalf of the appellant that once the award is set aside the arbitrator becomes functus officio and consequently there can be no further reference with respect to the dispute decided by the award which is set aside, must fail in view of the specific provisions of S. 19 of the Act."
11. The [earned counsel appearing for the respondent relied on the judgment in the case of Union of India v. Prafulla Kumar Sanyal, . That was a case under Section 20 of Arbitration Act and the Supreme Court held as follows :--
"Under Section 20(4) of the Arbitration Act when an agreement is filed, the Court is required to 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. The subsection requires that the Court shall make an order of reference to the arbitrator appointed by the parties whether in the agreement or otherwise. If no such arbitrator had been appointed and when the parties cannot agree upon an arbitrator, the court may proceed to appoint an arbitrator by itself. Thus if an arbitrator had been appointed whether in the agreement or otherwise, the court shall make an order of reference to him".
12. It was submitted that the proper course for the petitioner was to proceed under Section 20 of the Arbitration Act and not under Section 8 of the Arbitration Act. A party to the Arbitration Act has an option either to proceed under Chapter II of the Arbitration Act without intervention of Court or under Chapter III of the Arbitration Act with intervention of Court. According to Mr. Banerjee Section 8(1)(a) has no application to the facts of the case. Sections 8(1) and 8(2) of the Arbitration Act are as follows:--
"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 ail the parties do not, after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable or 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) 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 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 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."
13. In the instant case, schedule 1 to the Arbitration Act applies since the same has not been excluded. Therefore, the reference has to be made to a sole Arbitrator as per the decision of the Division Bench of this Court in (India Hosiery Works v. Bharat Woolen Mills Ltd.). The reference in the instant case can only be to a sole Arbitrator and the said arbitrator can only be appointed by consent of the parties. The petitioner did give notice to the respondent and it is clear that the parties could not concur in the appointment of the Arbitrator. Since the parties could not concur in the appoint-
merit of the Arbitrator, I am of the view that the petitioner is entitled to apply to this Court for appointment of Arbitrator.
14. I, therefore, appoint Sri Pradip Chowdhury, Advocate, as the Arbitrator to arbitrate in the matter. The remuneration of the Arbitrator is fixed at 40 GMS per effective sitting of two hours. The Arbitrator will make his award within a period of four months from the date he enters upon the reference.
15. All parties and the Arbitrator to act on a signed copy of the operative portion of this Judgment and order upon usual undertaking.
16. Application allowed.