Delhi High Court
M/S. Jones & Wexoes (India) vs Union Of India Etc. on 27 October, 1989
Equivalent citations: AIR 1990 Delhi 245, 40 (1990) DLT 230, 1990 (18) DRJ 188
Bench: M Narain
ORDER
1. By this petition under Secs. 5, 11, 12 and 33 of the Arbitration Act, 1940, the-applicant/ petitioner prays that for the reasons stated in the application leave be granted to revoke the authority of respondent No. 3 Dr. B. N. Mani, as sole arbitrator, and it also be declared that arbitration agreement and Dr. B. N. Mani. The only inference which the reference to the arbitrator have ceased to could be reached is that the contention of the exist and have no effect.
2.The facts alleged in the petition are that a contract for the supply of 10384000 tablets of Sulphasomidine-500mg was entered into between the parties on 14-8-1980. The total amount of the contract was Rs. 882121. There was some modification of the contract according to which the quantity of the tablets to be supplied was raised to 12814000 and the amount to Rupees 1088549.88.
3. Disputes had arisen between the parties, which had been referred to arbitration.
4. There is an agreement between the parties regarding the date of reference of disputes to arbitration. The reference to arbitration was on 29-12-1984. The reference to arbitration was on 29-12-1984. The reference was to the arbitrator Sint. R. Lakshmanan, Addl. Legal Advisor to the Govt. of India, Ministry of Law. Parties are agreed that Smt. R. Lakshmanan entered upon the reference on 30th April 1985. She resigned as arbitrator on 30-4-1985.
5. After the resignation of Smt. R. Lakshmanan, the second arbitrator Dr. B. N. Mani, was appointed on 23rd July, 1986. Dr. B. N. Mani however superannuated on 28th Feb. 1989.
6. It is the case of the petitioner that since the date of reference on 29-12-1984 till the superannuation of Dr. B. N. Mani, on 28-2-1989, more than four years have passed, and the respondents had not even filed their claim before the arbitrator.
7. I had directed the Union of India to file an affidavit to indicate as to what had transpired before the arbitrator since 23rd July, 1986.
8. As noticed in my order dt. 3rd Oct. 1989, the affidavit filed said a lot of things except, whether the claim was filed before the arbitrator Sint. R. Lakshmanan or before petitioner, that no claim has been filed before the arbitrator is correct.
9. The petitioner in support of his case relies upon a judgment delivered by Justice D. R. Khanna in O.M.P. 54 of 1981 (Som Nath Chandha & Co. v. Union of India) on 27-8-1982. In that case also no claim was filed by the respondent before the arbitrator for a considerable time. Mr. Mehra for the respondent says that the time during which no claim was filed before the arbitrator was much longer in that case, than in the instant case.
10. As noted above, for more than 4 years the matter was pending before the arbitrator or the other and yet no claim was filed by the respondent in the instant case.
11. Justice Khanna in the aforesaid case said that for more than two years after the appointment of both the first and second arbitrator, the Union of India chose to sit on the fence and did not care to file the claim for which it had sought a reference, in spite of a number of opportunities having been granted. No circumstance of sufficient cause has been brought out for explaining the inaction for so long, and the contumacious ignoring of direction of the learned arbitrator for enlargement of time for making the award, and that no indulgence, is therefore, called for in favor of such a recalcitrant party. He held that the arbitration agreement shall cease to have effect.
12. The order of Justice Khanna went in appeal before a Division Bench of this Court. By their order in F.A.O (O.S.) 145 of 1982 decided on 31-1-1984, reported as (1984) 25 Delhi LT 226, it was stated by the Division Bench that "the main object of referring a dispute to an arbitrator for adjudication is the speedy end of the strife". This object in our view stands frustrated on account of unreasonable neglect on the part of the appellant/ claimant to promote the conduct of arbitration proceedings.
13. In my view in the instant case the respondents have behaved in the same way as the respondents/ appellants had behaved in the matter before Justice Khanna, and then Division Bench and, for the same reasons the claim of the petitioner in the instant case, ought to succeed.
14. Counsel for the Union of India had referred to AIR 1978 NOC 214 (Delhi) which is also a Division Bench judgment of this Court in which it is stated in the head notes that "delay by itself would not be enough to hold that the arbitration agreement has come to an end or that arbitration agreement on that count has to be cancelled though it may be a relevant factor, nay, an important circumstance, in conjunction with other circumstances to arrive at a conclusion whether the arbitration agreement be cancelled or not."
15. In my opinion actions speak louder than words. In the instant case the action is inaction on the part of the Union of India. It did not even care to file its claim before the arbitrator. It appears that in AIR 1978 NOC 214 (Delhi) that at least a claim had been filed by the Union of India, and some proceedings were held before the arbitrators thereafter. The facts of AIR 1978 NOC 214 (Delhi), are therefore different, and that case is not applicable to the facts of instant case. The two cases are distinguishable.
16. In the case before me there is no claim filed by the Union of India. In this view o the matter I am inclined to follow the judgment of the Division Bench of this Court reported in (1984) 25 Delhi LT 226.
17. In the result I hold that in view of the inaction on the part of the Union of India in not filing any claim before the Arbitrators from 12-9-1984 to 28-2-1989, the instant case is a fit one for granting reliefs claimed by the petitioner that the arbitration agreement has ceased to exist, and is of no effect.
18. Ordered accordingly.
19. Petition allowed.
