Patna High Court
Bihar State Housing Board And Ors. vs Kamla Kant Sharan on 5 March, 1997
Equivalent citations: 1997(2)BLJR957
Author: P.K. Deb
Bench: P.K. Deb
JUDGMENT P.K. Deb, J.
1. This Revision petition has been preferred against the order dated 24.8.1996 passed by the Sub Judge, I, Ranchi in Misc. Case No. 29 of 1995 by which the application filed by the Opposite party under Section 5 and 8 (2) of the Arbitration Act has been allowed and by revoking the authority of the appointed Arbitrator, fresh Arbitrator who happens to be the retired Judge of the Hon'ble High Court, Patna has been appointed as an Arbitrator.
2. The facts of the case are almost admitted. The Opposite party, Mr. Kamla Kant Sharan had applied for allotment of one M.I.G. B type house at the Harmu Housing Colony, PS-Argora on 19.4.1975. Originally first application was for L.I.G. type but considering his Income Group, he was allotted MIG-B-type house. As required an earnest money of Rs. 1500/- was deposited alongwith the application with the Board but later on, on enhancement being made by the Board the amount of earnest money to Rs. 5000/- instead of Rs. 1500/-, balance amount of Rs. 3500/- was deposited by the Opposite party.
3. According to the Opposite party, the Board as per Policy was to give interest at the rate of 4% per annum after 12 months of deposit of the earnest money, if the house is not allotted within 12 months till the date of allotment order of the house.
4. In the year 1977 in the month of September, the Opposite party was allotted house No. M IG-B/92 at Harmu Housing Colony, value of the allotted house was determined at Rs. 50,192/-. 25% of the value of the house was directed to be deposited by the Board. Accordingly after deduction of earnest money only Rs. 12,548/- was directed to be deposited whereas other charges as legal and documentation charges were also asked to be deposited and the balance amount of the consideration of the house was to be deposited at 120 monthly instalments at the rate of Rs. 466.80 p. per month.
5. The Opposite party's case is that he reported to the Board that there is no approach road to the house allotted to him and the house is in very bad condition and was not ready for occupation for residential purpose. He claimed interest on the earnest money deposited by him as no allotment order was passed within 12 months of the deposit of the earnest money but the Board did not pay heed to it. Ultimately, an agreement was entered between the Opposite party and the Board which was duly registered on 4.10.1980 and the Board delivered the possession of house to the Opposite Party in the month of November, 1981 and he was asked to deposit the price of the house in instalments from the month of November, 1980. According to the Opposite party, he deposited the price of the house as per instalment granted within time and hence according to him he had already deposited to the tune of Rs. 68,766.70p. with interest. Then there was a request from the side of the Opposite party to the Executive Engineer of the Board for execution and registration of the deed in respect of the allotted house but then the Board informed that he is to pay further interest amounting to Rs. 32,782/- up to 31.12.1991. The grave dispute started at this juncture.
6. According to the Opposite party, he paid the full amount as agreed upon and there was no question of payment of further interest by the Opposite party and the demand of the Board was illegal. Ultimately on coercion the Opposite party had to deposit the amount on protest but he went on filing representations registering his objections. When the Board did not pay any attention on the several objections being raised by him then ultimately the Opposite party sent Advocate's Notice under Section 8 (2) of the Act calling upon the defendants to enter into the Reference for deciding the dispute and difference between him and the Board within 15 days next from the date of receipt of the notice as according to the agreement, Chairman, Bihar State Housing Board, Patna was the appointed Arbitrator for settling the dispute and difference between the customer and the Board, but despite service of notice upon the Board and also upon the Chairman, Bihar State Housing Board failed to enter into the Reference for deciding the dispute and difference and hence a petition was filed by the Opposite Party as plaintiff under Section 5 and 8 (2) of the Arbitration Act, 1940. The said petition was registered as Misc. Case No. 29/95. Notice was issued to the Board and they appeared and filed objection. The main contention in the objection was that the points raised by the Opposite party as plaintiff in the Misc. case had no semblance of dispute or difference but these demands made by the Board were in accordance with the agreement arrived at between the parties in the year 1980 and when there was no dispute or difference then the reference of the dispute to the Arbitrator or the Chairman of the Board to enter into reference of Arbitration did not arise at all.
7. After hearing the learned Counsel for both the parties, learned Subordinate Judge, I, passed the impugned order holding that genuine dispute existed between the parties regarding the further payment of interest on the part of the Board and when after even service of notice as required under Section 8 (1) (b) and 8 (2) of the Arbitration Act, the Board or its Chairman, who was the appointed Arbitrator in the agreement failed to enter into reference of Arbitration, Then the provisions of Section 8 (2) of the Act would automatically come in force giving power and jurisdiction to the court to appoint an independent Arbitrator and hence a retired Judge of the Patna High Court was appointed as an Arbitrator.
8. During the course of argument, it appears that arbitrator had already started functioning and the petitioner-Board had also appeared before the Arbitrator seeking time to get the stay order from the High Court in this Revision petition. While hearing the counsel of the petitioners, by order dated 29.11.1996, an interim stay was passed regarding further proceedings before the Arbitrator.
9. Mr.s Indrani Sen Choudhary, appearing on behalf of the Board has attacked the impugned order on three grounds:
(i) That the plaintiff-Opposite party had already raised the point in a writ petition being CWJC No. 2265 of 1994 (R) and the said writ petition is still pending and subjudice and hence no question of dispute to be resorted to, by appointment of Arbitrator arises and hence the petition under Section 5 and Section 8(2) of the Arbitration Act is not maintainable.
(ii) The interest claimed by the Board was as per the Arbitration agreement itself and hence there is no scope of raising a dispute on such demand and when that amount had already been paid by the plaintiff- Opposite, he cannot raise the same as a dispute when he had submitted to the jurisdiction.
(iii) That the Chairman had not been noticed properly nor there was any question of refusal by the Chairman when the alleged dispute raised had no legal founding of a dispute to be referred to the Arbitrator as per Clause-20 of the Arbitration agreement itself.
10. Mr. N.K. Prasad, appearing on behalf of the plaintiff-Opposite party has submitted that the first point as raised by Mrs. Sen Choudhary has got no force. The point reised before this Court under the writ jurisdiction is with regard to the registration fee for the purpose of registration of purchased deed and the said writ petition is completely on separate issue and hence there is no scope to submit that the point in issue in the Arbitration petition was the same as that of the points raised in the writ petition.
11. On perusal of the records of the writ petition, it became clear that the points were different which were raised in issue in the writ petition and hence that submission has got no force.
12. Regarding the dispute, it appears that the Opposite party-plaintiff was raising dispute/objection regarding further payment of interest at every stage and only on coercion he had to pay the interest amount claimed but such payment was always made on protest.
13. That the payment was made on protest had not been challenged in the objection filed by the petitioners before Subordinate Judge and when any payment has been made on protest, the person making payment reserves the right to challenge the same in an appropriate forum and hence the question of submission of jurisdiction by the Opposite party-plaintiff does not arise at all and that the dispute remains has rightly been held by the learned Subordinate Judge. The submission of Mrs. Sen Choudhary that the interest claimed is as per the terms of different clause of the agreement has got no bearing in view of the Arbitration clause in the agreement itself. Clause-20 of the agreement runs as follows:
On matters not specifically stipulated in the agreement or provided for in the relevant Rules and Regulations of the Board or in case any dispute, doubt or question arises between the settlee and the Board then in such event every such case shall be referred for the arbitration to the Chairman of the Board acting as such at that time and his decision in these regards shall be final on both the parties and shall not be liable to be questioned in any court of law.
Thus the Clause itself enumerates that the dispute, doubt or question even if it arises regarding different Clauses of the agreement and its implementation may also be referred before the Arbitrator, hence whether the demand of interest made by the Board to the settlee is within the four corners of the Clauses of the agreement or not is a question/doubt/dispute and hence the same can be referred to the Arbitrator.
14. Thus, it has become settled that the dispute remains which requires to be redressed before the Arbitrator. The Arbitrator was given notice of and also the Board. Neither the Board had referred the matter to the Chairman who happens to be the sole Arbitrator as per the agreement and when the notice has also been served on the Chairman himself he had also not entered into the reference under arbitration, hence the learned court below had held that such silentio from the side of the Board and its Chairman is nothing but refusal/negligence on the part of the Chairman, the sole arbitrator to enter into arbitration and thus the Court has got the jurisdiction to act under Section 8(2) of the Act. Nowhere in the objection/written statement filed by the Board before the Sub Judge, it has been alleged that the notices have not been properly served nor it has been raised that the contents of the notice were not known to the Board, they had only submitted that the Board was justified in asking for further interest from the settlee and the same is with the four corners of the agreement arrived at between the parties.
15. Mrs. Sen Choudhary by referring to a Division Bench judgment of the Calcutta High Court as reported in 1989 Calcutta, 155, M/s National Project Construction Corporation Ltd. v. S.P. Enterprises submits that the petition itself/under Section 8(2) of the Arbitration Act was not maintainable as there was a bye-passing from the side of the petitioner, when Chairman had never given refusal for Arbitration.
That reported case has different facts. In that case the Chairman of the Project Corporation was the appointed Arbitrator as per agreement but without approaching the Chairman, a petition was filed with alternative prayers both under Section 8(2) and under Section 20(4) of the Arbitration Act. It was rightly held by the Division Bench of the Calcutta High Court that such petition both under Section 8 and Section 20 of the Arbitration Act are not maintainable as the Sections have got different jurisdiction indifferent fields and there are different procedures also having different reliefs to be yielded. In that case, when as per agreement the Chairman was appointed Arbitrator, without approaching Chairman the petitions was filed under Section 20(4) of the Act and the petition under Section 8(2) of the the Act and the petition was held to be not maintainable. That judgment has got no bearing in the present case.
16. Here the appointed Arbitrator was the Chairman and he was approached by the Opposite party as per Section 8(2) of the Act giving time limit to enter into arbitration, but the chairman kept silent even after receipt of the notice which deems refusal as per Section 8(2) of the Act and when there is refusal then the court can act under Section 8(2) of the Act for appointing of an Arbitrator independently.
17. In the present case, the Opposite party's grievance is under Section 8(1) (b) of the Act wherein there is power of the court to appoint an Arbitrator or an Umpire.
Section 8(1) (b) gives the power of the court when the appointed Arbitrator or Umpire neglects or refuses to act or his in-capable of acting or biased and when the agreement does not show that it was intended that the vacancy should be supplied and the purpose of the arbitration, as the case may be, do not supply the vacancy.
18. As already mentioned, Clause-20 of the agreement nowhere gives any option or alternative when the sole Arbitrator i.e. the Chairman of the Board refuses or neglects to arbitrate. If the Clause would have given any other alternative scope for supplying then without submitting to such alternative the plaintiff might not have the authority to come to the court or the court cannot have the jurisdiction to Act under Section 8 (2) of the Act. Here the notice was given to the Chairman and he refused to act by his conduct. Now, the Chairman cannot say that the is ready to act, although in the written statement filed by the Board has never stated that the Chairman is still aggreable to act as an Arbitrator. Hence, on this score also, there is no force in the submission of Mrs. Sen Choudhary.
19. Mrs. Sen Choudhary has also referred to another Calcutta High Court Division Bench Judgment as reported in 1954 Calcutta, page-606 Bharat Construction Company Ltd. v. Union of India, wherein the legality and test regarding applicability of Section 8(1) (b) was elaborately discussed and observed. The test practically is laid down in the Section that if the arbitration agreement does not reveal that the vacancy should be supplied rather if the appointed arbitrator refuses or neglects then if the vacancy is not suggested by the agreement itself to be filled up by another set of Arbitrator/Arbitrators, then the Court can act on simple refusal/negligence of the appointed Arbitrator under Section 8(2) of the Act for appointing of a Court Arbitrator. Although, Section 8 gives a discretionary power of the court and it may not have the inherent power to act but then also such discretion must be applied judiciously in the circumstances and situation of each and every individual and particular case.
In the present case, the Chairman was given notice too alongwith Board for referring the matter to Arbitrator and also for entering into reference of Arbitration, but both the Board and the Chairman kept tight over the matter then definitely there remains no other alternative for the plaintiff-Opposite party to move the Court under Section 8 (2) of the Act r/w Section 5 and the Court has got definitely power to appoint an arbitrator, if all the test as required under Section 8(1) of the Act are fulfilled.
20. Mr. Sen Choudhary's submission regarding legal aspect of the matter has got no force as per the discussions made above.
21. Mr. N.K. Prasad, appearing for the Opposite Party-plaintiff refers to a Division Bench judgment of this Court as M/s Manohar Singh Sahay v. Jogendra Singh Kalra wherein it was held that the court can appoint a new Arbitrator in place of a named Arbitrator in the Arbitration Clause, if Arbitrator neglects to act for long time.
This long time may be construed as the time limit as per Section 8(2) and the time limit given in the notice itself.
22. Similar is the observation made by a learned Single Judge of this Court as reported in 1978 BLJR, page-392 Union of India v. Harpal Das Madhani and also 1994 (1) PLJR, 532 Central Coalfields Ltd. v. Bhardwaj Construction. In that case, Managing Director of the appellant company was to nominate an Arbitrator when there was dispute or difference and when the Managing Director failed to act even if notice is not give directly to M.D. then he being a party to the agreement between the Company and the private party, notice to the Company it binding on the Managing Director also and if no nomination is made by the Managing Director even on receipt of the notice by the Company then the same non action can be considered as a refusal or failure on the part of M.D. and the court can act under Section 8(2) of the Arbitration Act.
23. In the present case, not only the Housing Board by the Chairman himself were also being noticed by the plaintiff-Opposite party giving a time limit for entering into Arbitration but they kept mum and hence there remains ono other alternative of the court to appoint a new Arbitrator when the action on the part of the Chairman of Board a Mounts of refusal/negligence to act as per the arbitration/agreement.
24. Thus on factual and legal aspect, I do not find any force in this Civil Revision petition and hence the same is rejected. Stay order passed earlier, as mentioned above, is hereby withdrawn.