Allahabad High Court
Sharda Prasad And Ors. vs Khaderan Ram And Ors. on 7 October, 1988
Equivalent citations: AIR1989ALL41, AIR 1989 ALLAHABAD 41, (1989) 1 ARBI LR 355, (1989) 1 ARBI LR 162, (1989) 15 ALL LR 178, (1988) ALL WC 1534, (1988) 2 CURCC 910
ORDER N.N. Mithal, J.
1. Defendants revisionists are assailing the order of the court below on the ground that the order passed by it was incomplete and improper.
2. A preliminary objection was raised on behalf of the plaintiffs opposite parties questioning the maintainability of the revision. It is contended that the order is appealable and no revision lies. This objection is without any merit. Under the Arbitration Act, an appeal is provided under Section 39 thereof amongst others against an order passed under Section 20 making or refusing to make a reference. In a Division Bench decision of this Court in State of U.P. v. Hindustan Construction Company Ltd. Bombay 1978 All LJ 1178 it was observed that before making an order under Sub-section (4) of Section 20 of the Act, the Court must necessarily find out if the arbitrators have been named in the agreement and if not it will have to ask the parties to nominate the arbitrator in accordance with the agreement and it is only after this has been done that an order under Section 20(4) of the Act referring, the dispute to the arbitrator can be made. An order merely deciding that a dispute is to be referred to arbitrator does not amount to an order making a reference as contemplated by Section 20(4).
3. It was further observed in the said decision that before making an order referring a dispute to the arbitrators appointed by the parties or to one nominated by the Court, the Court has to first resolve the controversy between the parties on the question as to whether the dispute can or cannot be referred to arbitration.
4. The order challenged in the revision is as follows : --
"Dava bahaq Vadigan Virudh Prativadigan Pakshkaron dwara manoneet panchon dwara vivad nirnay hetu sandarbhit kiye jane hetu agyapt kiya jata hai. Ubhai Paksh vad vyaya swayan vahan karen."
5. It is admitted that the parties had not agreed to refer the dispute to a named arbitrator either in the agreement or even at a later stage. In view of this, the order obviously cannot be said to be one passed under Section 20(4) of the Act and must be deemed to be an interim order not finally disposing of the application under Section 20 of the Act. In this view of the matter, the preliminary objection raised is overruled.
6. On an application being made under Section 20 of the Arbitration Act, the court is required to record a finding on the following questions : --
(1) That there exists an agreement between the parties to refer a dispute to arbitration;
(2) That there is a dispute between the parties; and (3) That the dispute is covered by the terms of the agreement for referring the dispute to arbitration.
7. After having recorded a clear finding on the above three questions, the Court has to make an order of reference setting out the points in dispute referring the same to the arbitrator/arbitrators who are either named in the agreement or have been consented to by the parties and, ifnot, to one appointed by the Court. In the present case, although the court has recorded a finding that there is a dispute between the parties which is referable to arbitration, yet the court has not made a reference of specific disputes to any arbitrator.
8. Learned counsel for the revisionists vehemently urged that the language in which the operative portion of the order of the court below is couched shows that it has finally disposed of the application under Section 20 purporting to refer the dispute to the arbitrators nominated by the parties. Learned counsel appears to be justified though only partially in his submissions and the use of the word "agyapt' in the order does indicate that what the court purported to do was to finally dispose of the matter. Obviously it could not do so without making a specified reference to arbitrators named by it in the order itself.
9. It was urged by the learned counsel for the opposite-parties that even though the order may be couched in a faulty language, the court never intended to finally dispose of the matter and has in fact taken proceedings for appointment of an arbitrator which are still pending be that as it may, the fact remains that the order challenged in the revision is certainly of an ambiguous nature and need to be clarified.
10. Since admittedly there was no named arbitrator in the agreement nor the parties have consented to the appointment of any agreed arbitrator, it is obvious that the court intended to convey that the dispute was referable to the named arbitrators but apparently the court has used the word 'decree' in a somewhat loose sense. It appears that the court was intending to pass merely an interim order as would be obvious from the use of the words 'sandarbhit kiye jane hetu." These words clearly indicate that the order was only for the purpose of referring the dispute to arbitration.
11. In the result, although the revision fails, it is clarified that the order under revision is only an interim order and not a final order making a reference to the arbitrator. The court below will be free to take steps to formulate the points for being referred to arbitrator and to refer the same to an arbitrator to be appointed either with the consent of the parties in accordance with the provisions of the Act or to an arbitrator appointed by it. With these observations, the revision is disposed of as dismissed.