Calcutta High Court (Appellete Side)
Smt. Jharna Sarkar vs Sri Nitish Mohan Sanyal on 20 June, 2012
IN THE HIGH COURT AT CALCUTTA
CIVIL REVISIONAL JURISDICTION
APPELLATE SIDE
C.O. No. 1132 OF 2010
Smt. Jharna Sarkar
Vs.
Sri Nitish Mohan Sanyal
PRESENT :
THE HON'BLE JUSTICE MRINAL KANTI SINHA
Mr. Pran Gopal Das ..... for the petitioner.
Mr. Bikash Ranjan Bhattacharya,
Mr. Dibyendu Chatterjee ...for the opposite party.
Heard On : 26.7.2011, 27.7.2011, 28.7.2011, 19.8.2011,
13.6.2012.
Judgment On: 20.06.2012.
Mrinal Kanti Sinha, J :
1. This application under Article 227 of the Constitution of India has been directed against the order No.25 dated 12th January, 2010 passed by the learned Civil Judge (Senior Division), Jalpaiguri in O.C. Suit No.153 of 2007 by which the learned Civil Judge (Senior Division), Jalpaiguri allowed the petition of Sri S.K. Roy Moulik, a partner of M/s. A. Rudra and Company, on contest and appointed Shri S.K. Roy Moulik, partner of M/s. A Rudra and Company as arbitrator modifying order dated 25.3.2008.
2. It is the case of the petitioner that the opposite party as plaintiff instituted a suit for accounts of a dissolved partnership firm against the petitioner in the Court of learned Civil Judge (Senior Division), Jalpaiguri, bearing O. C. Suit No. 153 of 2007 praying for an order of appointing accounts commissioner to prepare the account of the dues of the plaintiff and defendant, injunction and other reliefs. The petitioner appeared in the said suit as defendant and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 praying for referring the matter to arbitration as provided by Clause 16 of the alleged agreement and also to direct the parties to submit the names of arbitrator. The opposite party contested the said application under Section 8 of the Arbitration and Conciliation Act, 1996 by filing a written objection denying all material averments made therein.
3. After hearing the parties the learned Court below allowed the said application under Section 8 of the Arbitration and Conciliation Act, 1996, on 2nd February, 2008, and referred the dispute between the parties to arbitration and directed the parties to suggest the names of arbitrators by the next date fixed. On 25th March, 2008, the learned Court below was pleased to appoint an arbitrator namely M/s. A. Rudra and Company, as suggested by both the parties, to resolve the dispute by and between the parties in terms of the deed of partnership and to make a time frame for publishing the award within four months from the date.
4. On 23rd March, 2009, the petitioner filed an application under Section 2 (I) (d) read with Section 16 of the Arbitration and Conciliation Act, 1996, and challenged the jurisdiction of the Arbitral Tribunal to resolve the dispute between the parties, but the said application is still pending before the learned Arbitrator. During pendency of the said application under Section 2 (I) (d) read with Section 16 of the Arbitration and Conciliation Act, 1996, Sri S.K. Roy Moulik of the Arbitrator firm filed an application before the learned Civil Judge (Senior Division), Jalpaiguri, praying for an order of modification of the earlier order by appointing Shri S.K. Roy Moulik as Arbitrator in his individual capacity instead of the said Firm to proceed with the work of arbitral tribunal in such capacity afresh.
5. After hearing the parties the learned Civil Judge (Senior Division), Jalpaiguri allowed the application filed by Sri S.K. Roy Moulik of the Arbitrator Firm and modified the order dated 25th March, 2008 by the impugned order No.25 dated 12th January, 2010, whereby Shri S.K. Roy Moulik, partner of M/s. A. Rudra and Company, was appointed as an arbitrator to arbitrate the dispute between the parties in place of the firm M/s. A. Rudra and Company.
6. Being aggrieved by and dissatisfied with the said order passed by the learned Civil Judge (Senior Division), Jalpaiguri, the Petitioner has moved the present application praying for issuance of relief calling upon the opposite party/Plaintiff to show cause why the order complained of should not be set aside, and also praying for an interim order of stay of further proceeding of said O.C. suit No.153 of 2007 on the ground that the learned Trial Judge acted illegally and with material irregularity by entertaining that application filed by Sri S.K. Roy Moulik, a partner of M/s. A. Rudra and Company and by appointing Shri S.K. Roy Moulik as the sole arbitrator on the basis of his application, who is not a party to the suit, in spite of raising objection by the petitioner, and the said suit was not filed on the basis of the Arbitration and Conciliation Act, 1996.
7. It has also been alleged that the learned Civil Judge was illegal and irregular in holding that the petitioner has given consent for appointment of the earlier arbitrator M/s. A. Rudra and Company, and here only the Hon'ble Chief Justice of the High Court at Calcutta has power to appoint arbitrator in arbitration proceedings in view of Section 11 (6) of the Arbitration and Conciliation Act, 1996, and the learned Court below had no jurisdiction to entertain the application filed by Sri S.K. Roy Moulik of M/s. A. Rudra and Company, and if the said illegal order complained of is allowed to stand then that would occasion a failure of justice and cause irreparable loss and injury to the petitioner.
8. It appears that during pendency of the said O.C. Suit No. 153 of 2007 the petitioner/defendant filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, for reference of the matter to arbitration on the ground that the plaintiff has filed the suit for winding up of a dissolved firm for accounts, and it is crystal clear that there is dispute between the parties in that regard and the defendant entered appearance in the above suit without submitting any written statement, and the opposite party/plaintiff entered into a partnership agreement with the petitioner/defendant on 1st day of July 2003, whereby the parties to the said suit agreed to refer the matter to arbitration vide Clause 16 of the said agreement, in case any dispute arises between the parties. It was also provided thereby that the arbitrators will be appointed, and if any difference arises between the arbitrators, then the matter would be referred to an umpire appointed by the Arbitrators, but the opposite party/plaintiff instead of referring the matter to arbitration filed the said suit without reference of the dispute to arbitration which was provided by Clause 16 of the alleged agreement and for that purpose the parties were directed to submit the names of Arbitrators.
9. An objection to that application under Section 8 of the Arbitration and Conciliation Act, 1996 was filed by the opposite party/plaintiff denying most of the material averments of the application contending therein that the application was not maintainable inasmuch as in case of an unregistered partnership firm arbitration cannot be invoked and the partnership firm being an unregistered one the plaintiff as per his choice can always file civil suit without reference to arbitration and when the matter is already pending before the Civil Court, then the application of the petitioner/defendant was liable to be dismissed.
10. Hearing both the parties the learned Civil Judge (Senior Division), Jalpaiguri, allowed the said petition under Section 8 of the Arbitration and Conciliation Act, 1996 on contest vide his order dated 2.2.2008 passed in the said suit and directed that the dispute be referred to arbitration and the parties were directed to suggest the names of the arbitrators by the next date fixed.
11. It appears from the order passed by the learned Civil Judge (Senior Division), Jalpaiguri in O.C. No.153 of 2007 on 25th March, 2008 that in pursuance of the aforesaid order of the learned Civil Judge the opposite party/plaintiff suggested names of four Arbitrators while the petitioner/defendant suggested the names of three Arbitrators, and as both sides named M/s. A. Rudra and Company in common, so the learned Trial Judge appointed the said company as Arbitrator to arbitrate the dispute between the parties and fixed date for filing of the award.
12. The petitioner/defendant filed an application on 23rd March, 2009 under Section 2 ( I) (d) read with Section 16 of the Arbitration and Conciliation Act, 1996, contending therein that the composition of Arbitral Tribunal was in violation of statutory provision as M/s. A. Rudra and Company was neither party to the agreement nor a sole Arbitrator nor a panel of Arbitrators.
13. On 24th March, 2009 a petition was filed by Sri S.K. Roy Moulik, a partner of the M/s. A. Rudra and Company, Arbitrator appointed in the said suit, praying for passing an order of modification of the earlier order by appointing Shri S.K. Roy Moulik, partner of the said company, as Arbitrator in his sole individual capacity and to proceed with the work of Arbitral Tribunal in such capacity afresh on the ground that Arbitral Tribunal means a sole Arbitrator or a panel of Arbitrators and if the firm is appointed as Arbitrator then out of this technical defect may arise and in that case the whole arbitration proceedings as well as award is liable to be set aside and so instead of M/s. A. Rudra and Company, Mr. Sujit Kumar Roy Moulik, ECA, should be appointed as sole Arbitrator in his individual capacity as the arbitration was being conducted by him on behalf of the firm M/s. A. Rudra and Company.
14. After hearing both the sides the learned Civil Judge (Senior Division), Jalpaiguri, modified the order dated 25.3.2008 passed in O.C. No.153 of 2007 by the impugned order dated 12th January, 2010 allowing the petition filed by Sri S.K. Roy Moulik of M/s. A Rudra and Company on contest and appointed Sri S.K. Roy Moulik, partner M/s. A. Rudra and Company as an Arbitrator to arbitrate the dispute between the parties in accordance with the order dated 25.3.2008 in place of the firm M/s. A. Rudra and Company fixing date for filing the award.
15. Being aggrieved and dissatisfied with the aforesaid order the present petitioner/defendant has filed this application under Article 227 of the Constitution of India praying for setting aside of the aforesaid order complained of.
16. It is be considered as to whether the learned Civil Judge (Senior Division), Jalpaiguri , was legally justified in passing the impugned order or not.
17. Mr. Pran Gopal Das, learned Counsel for the petitioner/defendant has submitted that as per the provisions of Section 7 of the Arbitration and Conciliation Act, 1996 "arbitration agreement" means an agreement by the parties to submit to arbitration certain dispute which has arisen or which may arise between them in respect of decision of legal relationship, and as per the provisions of Section 2 ( I) (h) of the said Act "party" means a party to an arbitration agreement, but in this case the applicant Sri S.K. Roy Moulik of M/s. A. Rudra and Company is not at all a party to the arbitration agreement between the parties, and he who is not a party to arbitration agreement can not come to the Court for any relief under the provisions of the Arbitration and Conciliation Act, 1996.
18. Learned Counsel for the petitioner has further contended that Section 11 of the Arbitration and Conciliation Act, 1996 replaces Section 8 of the Arbitration and Conciliation Act, 1940, and the power of the parties to constitute an arbitral tribunal and by the Court to do so has been stated in the said Section, and as per the provisions of Section 11 (6) of the Arbitration and Conciliation Act, 1996 as well as the Provisions of Sections 11(5) and 11(7) of the Arbitration and Conciliation Act, 1996 the Chief Justice or any person or institution designated by him only can appoint an arbitrator, whose decision is final, and as per the provisions of Section 11 (6) of the said Act such authority could be delegated by the Chief Justice of the High Court only to another Judge of that High Court and by the Chief Justice of India to another Judge of the Supreme Court only, and Section 5 of the said Act of 1996 is a bar in this regard, and Section 8 no more authorises a Court other than the Chief Justice or a Judge of the Supreme Court or High Court designated by the Chief Justice to appoint an arbitrator, and in case any such appoint order is made by any other Court, then that order will be wholly illegal and without jurisdiction, and no jurisdiction can be given even by consent of the parties, and observation of the learned Court below in this regard was made without application of judicial mind. With reference to the decision reported in (2000) 4 SCC 539 ( P. Anand Ganapathi Raju and others Vs. PVG Raju (Dead) and others ) Mr. Das has submitted that if an application under Section 8 of the said Act is allowed then the matter is referred to arbitration and nothing remains pending thereafter which requires to be adjudicated by the Civil Court.
19. Mr. Das has also submitted that M/s. A. Rudra and Company being a juristic person cannot be appointed as an arbitrator inasmuch as M/s. A. Rudra and Company is not a party to the arbitration agreement between the partners of the dissolved partnership firm and there was no question of suggesting its name as arbitrator and no such petitioner who is not a party to the agreement can pray for any relief in such case.
20. Mr. Das has also submitted that none other except the Chief Justice of the concerned High Court has any more authority to appoint arbitrator under Section 11 (6), but by the impugned order a Court not appointed by the Chief Justice or His designated Judge of the concerned High Court, has made the order of appointment of arbitrator by the impugned order which is wholly illegal and without jurisdiction, and there is no provision under the Statue of 1996 for filing the award, and a civil Court cannot be used as a forum for providing machinery for arbitration and even any consent cannot give any jurisdiction in that regard.
21. On the other hand, Mr. Bhattacharya, learned Counsel appearing for the opposite party has argued that the petitioner herself prayed in writing for regularisation of the matter of arbitration as per Clause 16 of the agreement and prayed for directing the parties to submit the names of the arbitrators and her prayer was allowed in toto or in its entirety and order in that regard was passed as per prayer of the petitioner on 2.2.2008, but none of the parties assailed the said order dated 2.2.2008, rather that was accepted by both the parties and now any party cannot assail that. The said order dated 2.2.2008 ought to have been challenged by 1.5.2008 in case of any grievance of anyone else, but that was not challenged rather both the parties acted upon that and suggested some names of arbitrators one of which namely M/s. A. Rudra and Company was common to both the parties.
22. Mr. Bhattacharya, learned Counsel for the opposite party has also submitted that the order passed by the learned Civil Judge (Senior Division), Jalpaiguri in O.C. suit No.153 of 2007 specifies that all the names therein are Chartered Accountants and none of the parties challenged the order then, but the Court rectified its own mistake by the impugned order by allowing the petition of the opposite party filed on 23.3.2009 as no juristic person can be appointed as arbitrator and only a living person is required to be appointed for that purpose, and as per the provision of Section 4 of the Arbitration and Conciliation Act, 1996, there is waiver of right to object, and as no objection has been raised within time, so any such right to object has been given a go by by the petitioner by appearing before the Civil Court in the suit filed in that regard, and as per the provision of Section 8 of the Arbitration and Conciliation Act, 1996, arbitration proceedings include appointment of arbitrators, and as per the provision of Section 10 of the Arbitration and Conciliation Act, 1996, the parties are free to choose or determine number of arbitrators.
23. Mr. Bhattacharya, learned Counsel has also submitted with reference to the decision reported in (2000) 6 SCC 224 in the case of Lily Thomas and others Vs. Union of India that as per the provision of Section 11 (2), 11(4) of Arbitration and Conciliation Act, 1996, when the parties fail to agree between themselves, then the Chief Justice or any person or institution designated by him has the jurisdiction to appoint arbitrator, and it cannot be denied that justice is a virtue which transcends all barriers and the rules or procedures or technicalities of law can not stand in the way of administration of justice and Law has to bend before justice and in this case the learned Civil Judge (Senior Division), Jalpaiguri, has been authorised or designated to exercise the jurisdiction to appoint arbitrator as per the said provision, and when the Court has corrected its inherent mistake and Court has power to do that, then said order should not be interfered with, as the ultimate object of the Court is to dispense with justice so that miscarriage of justice is not caused, and the Court's intervention in this regard should be minimum and the learned Counsel for the opposite party has relied upon the decisions reported in (2000) 4 SCC 539, (2002)4 SCC 388 and (2010) 8 SCC 329 in this regard and has submitted that when original suit was never proceeded with, then it should be kept in mind that a final judgment or order of the Supreme Court also cannot not be considered further after dismissal of review petition as per Article 32 of the Constitution of India or under Article 227 of the Constitution of India.
24. It is not disputed rather admitted that on the application of a party to the agreement the matter was referred to arbitration by the judicial authority or the Court concerned, and the learned Civil Judge (Senior Division), Jalpaiguri, appointed a firm named M/s. A. Rudra and Company as arbitrator as suggested by both the parties, but it is the case of the opposite party that a firm being a juristic person cannot be appointed as arbitrator instead of some living individual person, and a living individual person was required to be appointed as arbitrator, and so a partner of the said firm namely Sri S. K. Roy Moulik filed the application for appointment of himself as a living individual person of the said firm as arbitrator instead of the said firm. The said prayer has been allowed by the learned Court below by the impugned order on 12th January, 2010, modifying the order dated 25th March, 2008. The question as to whether an unregistered firm can be an arbitrator or not require no further consideration when it appears that a firm named M/s. A. Rudra and Company was allegedly appointed as arbitrator as per suggestion of both the parties whether that appointment was legal or not is a different issue which may be dealt with lateron.
25. Assailing the said order the present application under Article 227 of the Constitution of India has been filed on the ground that no such order can be passed by the said Court under Section 8 of the Arbitration and Conciliation Act, 1996 which has been replaced by Section 11(6) of the Arbitration and Conciliation Act, 1996, according to which only the Chief Justice or his designated Judge of the concerned High Court or the Supreme Court can appoint an arbitrator.
26. For proper appreciation of the matter the relevant provisions of Section 8 and 11 including Section 11 (6) of the Arbitration and Conciliation Act, 1996, may be reproduced here :
Section 8 of the Arbitration and Conciliation Act, 1996, runs thus :-
"S. 8 Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration".
27. While Section 11 of the Arbitration and Conciliation Act, 1996 runs thus :-
"S.11. Appointment of arbitrators. - (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and -
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party ; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties, -
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure ; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.
28. So it appears that in case of an application under Section 8 of the said Act the judicial authority has the power to "refer the parties to arbitration"
only, but has no power to direct or make any observation regarding the appointment of arbitrator or the constitution of the arbitral tribunal and such power of appointment is to be exercised only as per the agreement of the parties, and in case of an impasse, by the appropriate Chief Justice or his designate on an application under Section 11 (6) of the said Act. In this case it appears that the parties were referred to arbitration on the basis of arbitration clause in their agreement and they failed to agree between themselves regarding appointment of arbitrator.
29. In this case it has been observed by the Learned Civil Judge (Senior Division) Jalpaiguri in the impugned order no.25 dated 12th January, 2010 that :-
"....... It appears from the said record that the firm M/s A. Rudra and company was appointed as an arbitrator on consent of the parties and there was no objection by any of the parties against the said appointment at that time. Now the question arises that a firm cannot be appointed as arbitrator to arbitrate or to act as an arbitral tribunal. In my view, a firm cannot be appointed as an arbitrator and it is not permissible. Therefore, the said appointment should be modified. It is not denied by any of the parties that a firm should be made as arbitrator or the firm should continue to act as arbitrator in this case. The only objection has been raised regarding the appointment and it has been stated that only Hon'ble Chief Justice can make such appointment but in my view this is not a suit under the Arbitration and Conciliation Act, 1996 but this is the suit for accounts of a dissolved firm under the Civil Procedure Code. Furthermore, at the time of earlier appointment of the firm as an arbitrator none of the parties has made any objection about the said appointment. Therefore, objection in this regard at this stage cannot be accepted by this Court. In my view the order of this Court dated 25th March, 2008 regarding the appointment of the firm M/s A. Rudra and Company should be modified on further proceedings of this case.
**************************************** Accordingly, the order dated 25th March, 2008 is modified and Sri S.K. Roy Moulik, the partner of M/s A. Rudra and Company is hereby appointed as an arbitrator to arbitrate the disputes in between the parties in accordance with the order dated 25th March, 2008 in place of the firm M/s A. Rudra and Company ........"
30. But as per the provisions of Section 8 of the Arbitration and Conciliation Act, 1996, a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration only, but the said judicial authority has not been given any further jurisdiction by law to direct the parties to suggest names, or to appoint anyone as arbitrator modifying any earlier order in that regard. Apparently, the impugned order dated 2nd February, 2008 contains 2 parts and by one part the matter was referred to arbitration and by another part parties were directed to suggest names of arbitrators, and by the impugned order dated 12th January, 2010, an arbitrator was appointed modifying the earlier order, which is not only illegal but is without jurisdiction in view of the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996, wherein the provisions regarding the appointment of an arbitrator has specifically been provided and whereby only the Chief Justice of the High court concerned or the chief Justice of India has been empowered to appoint an arbitrator in case the parties to the arbitration agreement failed to appoint an arbitrator in terms of the agreement and there has been a failure in respect of appointment of arbitrator as per agreed terms. As per the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 appointment of arbitrator in such case can only be made by the Hon'ble Chief Justice of the concerned High Court or the Chief Justice of India or his designated Judge of the High Court or supreme Court as the case may be, but the learned Civil Judge (Senior Division), Jalpaiguri, is neither such designated Judge nor he has any more jurisdiction or authority under Section 11 of the said Act to appoint an arbitrator . Consequently, Section 8 of the said Act does not empower the learned Civil Judge (Senior Division), Jalpaiguri, concerned to direct the parties to suggest the names of the arbitrator or to appoint anyone as arbitrator modifying his earlier order. From that point of view directing the parties to suggest names of arbitrator or appointing anyone as arbitrator modifying his earlier order by the learned Civil Judge (Senior Division) Jalpaiguri was without jurisdiction and illegal and violative of the statutory provisions. It appears that the learned Civil Judge appointed a firm as arbitrator even knowing that a firm cannot be appointed as an arbitrator and it is not permissible, and only Hon'able Chief Justice can make such appointment and thereafter passed the order modifying the said appointment.
31. Moreover, it may be that the suit of the parties was not under the Arbitration and Conciliation Act, 1996, but the fact remains that the matter of arbitration and appointment of arbitrator is involved in this case on the basis of an arbitration clause in the alleged agreement, and so the provisions of the present Arbitration and Conciliation Act of 1996 would be applicable in this case. It appears that in spite of that the learned Civil Judge (Senior Division), Jalpaiguri has passed the impugned orders regarding appointment of arbitrator and modification of earlier order of appointment of arbitrator by the queer reasoning of his own without realising or appreciating the proper provisions of law in this regard, which was absolutely illegal and without jurisdiction in view of the present law, and an illegality always remains an illegality.
32. It has also been held by the decision reported in AIR 2006 Supreme Court 450 at page 473 in para 40 as well as (2005) 8 SCC 618 at page 661 in Para 41 in the case of M/s. S.B.P. and Company Vs. M/s. Patel Engineering Limited that :-
"Then the question is whether the Chief Justice of the High Court can designate a district judge to perform the functions under Section 11(6) of the Act. We have seen the definition of 'Court' in the Act. We have reasoned that the intention of the legislature was not to entrust the duty of appointing an arbitrator to the District Court. Since the intention of the statue was to entrust the power to the highest judicial authorities in the State and in the country, we have no hesitation in holding that the Chief Justice cannot designate a district judge to perform the functions under Section 11(6) of the Act. This restriction on the power of the Chief Justice on designating a district judge or a non-judicial authority flows from the scheme of the Act."
33. It has also been decided in para 46 of the decision reported in AIR 2006 Supreme Court 450 at page 474 in the case of S.B.P. and Company Vs M/s Patel Engineering Limited that :
"..........II. The power under Section 11(6) of the Act, in its entirety, could be delegated by the Chief Justice of High Court only to another judge of that court and by the chief Justice of India to another judge of the Supreme Court.
V. Designation of the district Judge as the authority under Section 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the act.
XI. Where District Judges had been designated by the Chief Justice of the High court under Section 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date (October 26, 2005 as per that decision) will stand transferred, to be dealt with by the Chief Justice of the concerned High Court or a Judge of that court designated by the Chief Justice."
34. It has also been held in para 124 at Page 492 of the decision reported in AIR 2006 Supreme Court 450 that :
"As has been held in earlier decisions as also in the majority judgment, the paramount consideration of Parliament in selecting the Chief Justice and in conferring upon him the power to appoint an arbitrator is to ensure complete independence, total impartiality and highest degree of credibility in arbitral process. The Chief Justice of India and Chief Justices of High Courts have been specially chosen considering their constitutional status as Judges of superior courts and their rich experience in dealing with such matters. The office occupied by them would infuse greater confidence in the procedure in appointing an arbitrator and in ensuring fairness, integrity and impartiality."
35.. It has also been held by the decision reported in AIR 2006 Kerala 373 in the case of M. Vijaya Naraianan Vs. M. Prabhakaran that---
"Construing Section 8 along with Section 11 of the 1996 Act, we hold that appointment of arbitrator or arbitrators is fully covered by provisions of Section 11 of 1996 Act. A judicial authority, under Section 8 of the 1996 Act, cannot exercise the power provided under Section 11 and appoint an arbitrator. An arbitrator can be appointed only in strict conformity with the provisions of Section 11.... Section 8 of the 1996 Act does not contemplate appointment of an arbitrator by the court and a reference to that arbitrator".
36. Under the Arbitration and Conciliation Act, 1940, application under Sections 8, 20, 33 could have been made to the district courts and in case of first two Sections appointment of arbitrator was also possible, but as per the present law of Arbitration and Conciliation Act, 1996, wherever parties need the intervention of the Court for nomination of arbitrator, they have to approach the Chief Justice of the High court of the State concerned. The old law has been changed and power to nominate an arbitrator has been centralised in every State. Moreover under the old Act the Court always used to nominate the arbitrator, but under the new provision of Arbitration and Conciliation Act, 1996, there is a possibility of designation for the purpose of nomination by the Chief Justice, but the power of the Chief Justice is either to nominate arbitrator himself or to designate another Judge of the Hon'ble Supreme Court or the Hon'ble High Court concerned, who will make the nomination, and either for nomination or for designation the Chief Justice will have to be satisfied about the preliminaries and will have the final say.
37. As per the present law an application or a prayer cannot be made to the Court under Section 8 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator as that function has been shifted by the Act of 1996 to the Chief Justice or any Judge designated by him. Subsequent to the decision of S.B.P. and Company Vs. Patel Engineering Limited reported in (2005) 8 SCC 618 /AIR 2006 Supreme Court 450 the power under Section 11(6) of the Act in its entirety can be delegated by the Chief Justice of the concerned High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Hon'ble Supreme Court. Now even when an application is moved under Section 8 of the Arbitration and Conciliation Act, 1996, before the judicial authority or District Judge, then also he cannot appoint an arbitrator and the Civil Court cannot be treated as a forum for providing machinery for arbitration. Subsequent to the decision of S.B.P. and Company Vs. Patel Engineering Limited (Supra) the concerned Chief Justice is even not bound by the decision on preliminary issues of any other authority, but on the other hand the other authorities are bound by the decision of the Chief Justice. Now other judicial authority can only 'refer a matter to arbitration' if all the legal requirements in that regard are satisfied, but cannot act beyond referring the matter to arbitration, and it practically becomes functus officio having no further jurisdiction to deal with the matter, far to speak of appointment of arbitrator or modifying or correcting the name of the arbitrator after referring the matter to arbitration. As per the decision reported in (2000) 4 SCC 539 (P. Anand Ganapathi Raju and others Vs. PVG Raju (Dead) and others also after reference "all the rights, abligations and remedies of the parties would now be governed by the new Act including the right to challenge the award".
38. In the instant case, the judicial authority concerned or the learned Civil Judge (Senior Division), Jalpaiguri, has acted beyond his jurisdiction by entertaining the application for appointment of arbitrator and in fact appointing a juristic person as arbitrator as allegedly suggested by the parties and subsequently modifying the order in that regard by appointing a living person as arbitrator on his application, who was not at all a party to the agreement, and thereby acted illegally and without jurisdiction, and there was no question of waiver or relinquishment of his known right by the petitioner in that regard, rather there has been miscarriage of justice by the impugned order as the learned Civil Judge has acted without jurisdiction or beyond his jurisdiction in passing the said order.
39. As per his order dated 25th March, 2008, the learned Civil Judge (Senior Division) Jalpaiguri has appointed arbitrator from the suggested names allegedly "on consent of the parties", but according to law no such authority or jurisdiction can be given by 'consent of the parties', and the said order was passed due to misconception of the present law and as such the said order is without jurisdiction . Though learned Counsel for the opposite party/plaintiff has submitted with reference to the decision reported in (2000) 6 SCC 224 Para 52 that the Court can correct its apparent mistake of appointment of a firm instead of a Chartered Accountant by exercising its inherent power, yet it appears that it has been held by the aforesaid decision reported in (2000) 6 SCC 224 (Lily Thomas and Others Vs Union of India and Others) in Para 52 that power of review is not an inherent power and review is the creation of a statute and it is not an appeal in disguise and it must be conferred by law either specifically or by necessary implication. But as there was no conferment of any such power of review by law in this case, so any such power of review cannot be exercised in this case as an inherent power to rectify any such mistake. The learned Civil Judge concerned has also no authority to modify and pass further order of appointment of arbitrator, which is de hors the statutory provision, and the learned Judge concerned has exercised the jurisdiction not vested on him by law and acted with material irregularity and illegality. Such unauthorised exercise of jurisdiction should be regularised by invoking the jurisdiction of this Court under Article 227 of the Constitution of India which is a power of Superintendence over of all subordinate Courts by the High Court.
40. Having regard to the submission of the learned Counsel for the parties, materials on record and other circumstances it appears that the learned Civil Judge (Senior Division), Jalpaiguri, was not legally justified in passing the impugned order and he acted without jurisdiction or beyond jurisdiction by passing the impugned orders appointing M/s. A. Rudra and Company as arbitrator first after referring the matter for arbitration and then modifying his earlier order appointing Sri S.K. Roy Moulik, a partner of the said company, as arbitrator. Learned Civil Judge concerned ought not to have proceeded further just after referring the parties to arbitration, but he has done the illegality by proceeding further in that regard. As such the impugned order dated 12th January, 2010, passed by the learned Civil Judge (Senior Division), Jalpaiguri, cannot sustain, and is required to be interfered with.
41. Accordingly the revisional application bearing C.O. No. 1132 of 2010 is allowed.
The impugned order dated 12th January, 2010 passed by the learned Civil Judge (Senior Division) Jalpaiguri, in O.C. Suit No.153 of 2007 is hereby set aside.
Interim order stands vacated. No order as to cost.
The Revisional application bearing no.C.O.1132 of 2010 is thus disposed of.
42. Urgent photostat certified copy of this judgment be given to the learned Advocates for the parties, if applied for, upon compliance of all usual formalities.
(MRINAL KANTI SINHA, J.)