India Supplies & Exports Co. Pvt. ... vs Union Of India
1990 Latest Caselaw 467 Del

JUDGMENT

D.P. Wadhwa, J.

(1) This is a petition under Sections 8 and 20 of the Arbitration Act, 1940 (for short the 'Act').

(2) Under a contract, the petitioner was to supply certain quantity of tents to the respondent. The contract was governed by the General Conditions of Contract. Clause 16 thereof provided as under : "IN the even of any question, dispute or difference arising under these conditions oi any special conditions of contract, or in connection with this contract, (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitration of the Secretary, Ministry of defense, Department of defense Supplies or of some other person appointed by him. It will be no objection that the arbitrator is a Government servant, that he had to deal with the matters to which contract relates or that in course of his duties as government servant, he has expressed views on all or any of the matters in dispute or difference. The award of the arbitrator shall be final and binding on the parties of this contract.................."

This constituted arbitration agreement between, the parties.

(3) Disputes and differences having arisen, the petitioner sent a notice dated 22-11-1988 calling upon the Secretary, Ministry of defense, to enter upon the reference as a person named in the arbitration agreement or appoint some other person within a period of 15 days from the date of receipt of the notice. The respondent failed to do so. This led to the filing of the present petition on 20-1-1988.

(4) On notice being issued, the respondent filed its reply. Apart from controverting the claims of the petitioner, it stated that after the receipt of the notice dated 22-11-1988 from the petitioner immediate steps were taken to appoint an Arbitrator and by letter dated 29-3-1989 Brig. R. K. Mehra was appointed arbitrator and this fact was duly communicated to the petitioner. it appear, the Arbitrator was appointed after receipt of the notice of these proceeding upon the respondent, as on 30-3-1989 counsel for the respondent appeared in court and stated that an Arbitrator had already been appointed in the case. This did not satisfy the petitioner and it asserted that after the expiry of a period of 15 days, the respondent could not appoint the Arbitrator and that jurisdiction to appoint an Arbitrator now lay with the court. Section 8 of the Act is as under : "8. (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 all the parties do not, after differences have arisen, concur in the appointment or appoints; or (b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of 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 arbitrators, 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 he. who shall have award as if he or they had been appointed by consent of all parties."

(5) As noted above, the present petition is both under Sections 8 and 20 of the Act. Such a petition, to my mind, is not maintainable under both these sections as a petition under Section 20 can be filed by a person who does not choose to proceed under Chapter Ii of the Act. Section 8 falls under Chapter Ii of the Act.

(6) Mr. Wali, learned counsel for the petitioner submitted that the appointment of the Arbitrator by the respondent was not legal, In support of his sub-mission, he referred to two decisions of the Punjab and Haryana High Court : (i) in Banarsi Dass Mittal vs. Housing Board, Haryana and 2 others, Alr 1988(1) 171; (1) and (ii) Union of India and another vs. M/s. Amarnath Aggarwal Construction Pvt. Ltd., Alr 1988 (2) 337. (2) These two cases would appear to support the contention raised by the petitioner that since the respondent did nut appoint the Arbitrator within the period of 15 days after receipt of the notice, it had forgone its right to do so, and that now it was for the court to exercise its jurisdiction under Section 8(2) of the Act. In? these two judgments there is reference to a decision of the Orissa High Court in Niranjan Swain vs. State of Orissa and others, . In that case, no Arbitrator was appointed within the statutory period of 15 days after service of notice and after the expiry of this period an intimation was sent stating that an Arbitrator had been appointed. It was contended that as no Arbitrator had been appointed within the statutory period, it was for the court to exercise jurisdiction under Section 3(2) of the Act. and to appoint an Arbitrator. The court. held that if the appointment was not made within the time indicated by law, the petitioner was well within his rights to ask the court to make the appointment of an Arbitrator and that the Chief Engineer would have no jurisdiction to make an appointment and take away the jurisdiction of the court under Section 8(2) of the Act'.

(7) The present case would fall under clause (b) of sub-section (1) of Section 8 of the Act, though it would appear from the wording of this clause that it might be applicable during the reference. In Keshvasinh Dwarkadas Kapadia etc. vs. M/s Indian Engineering Co.. . it was held that declining the office will be refusal to Act. If the appointed Arbitrator refuses to Act, it may mean that there is vacancy and then any patty may serve on the other party a written notice to supply the vacancy. If within 15 clear days after the service of such notice, appointment is not mace the court may on the application of the party giving notice and after giving other party an opportunity of being beard, appoint an Arbitrator. The court in that case will have to see (1) whether there is a valid arbitration agreement between the parties; (2) whether differences have arisen between the parties faring under the arbitration agreement; (3) whether there is refusal or neglect on the part of the appointed Authority; (4) whether on. that account vacancy has occurred; (5) whether under the arbitration agreement parties intended to supply the vacancy; and hastly, (6) if the vacancy was not filled in within the period prescribed after service of notice, Even if all these conditions are fulfillled, the power of the court to appoint an Arbitrator under sub-section (2) of section 8 is discretionary and the court is not obliged to make an appointment. The court can still give opportunity to the party concerned to make the appointment or supply the vacancy as the case may be.

(8) I am unable to agree with the view that after expiry of 1.5 days of the service of notice the party who is to appoint is divested of that power altogether. If appointment is not made during the period of 15 days, if certainly gives cause of action to the party giving the notice to approach the court for the purpose. The party has three years period to approach the court (see Article 137 of the Limitation Act. 1963). It is, however, expected of the party who failed to appoint the Arbitrator within the period prescribed to stay its hands once the court is seized of the matter and not to come to the court with fait accompli. In that case court is not bound to accept the appointment so made.

IN the present case, I find that there is no refusal on the part of the respondent to make the appointment, and the petitioner, thus, appears to have come to the court with undue haste. An Arbitrator has since been appointed by the Secretary, Ministry of defense, Government of India. New Delhi, as per the arbitration agreement. I see no reason to interfere in that appointment. The present petition is, therefore, dismissed. There will be, however, no order as to costs.