The National Small Industries ... vs M/S. Bhanot Engineering Works
1991 Latest Caselaw 159 Del

ORDER

1. This is a petition u/ S. 8 of the Arbitration Act, 1940 praying that Umpire be appointed as per agreement dated 12-1-1963.

2. In this case two arbitrators were appointed by this Court on 17-1-1978. According to Cl. 16 of the agreement between the parties; which is an arbitration Clause; in the event of difference of opinion between the arbitrators the dispute was to be referred and decided by an Umpire to be nominated by the arbitrators before the arbitrators enter upon reference. The Umpire was appointed by the arbitrators on 11-8-1978.

3. It is stated in this petition that the arbitrators initiated arbitration proceedings and "called upon the parties for 28-8-78, 14-2-79,22-3-79 and 24-5-79". The petitioner entered appearance before the arbitrators, but the respondent herein was not present. It has also been alleged that the arbitrators neglected and refused to act as arbitrators in spite of the petitioner writing various letters to the arbitrators. Consequently, the petitioner wrote a registered A.D. letter on 6-11-1985 to the Umpire, but admittedly this letter was received back by the petitioner with the postal remark that the addressee, namely the Umpire had already died. Consequently, this petition has been filed for appointment of an Umpire.

4. Mr. Saluja has submitted that since the arbitrators did not enter upon reference and that they neglected to act as arbitrators in spite of various letters written to them on behalf of the petitioner, it became necessary for the petitioner to move this petition. His contention is that the very fact that the arbitrators allowed the time of four months to pass by their inaction itself amounted to disagreement between them for the Umpire to 5 enter upon reference. For this purpose he has 5 referred to Rule 4 of the 1st Schedule of the Arbitration Act. In support of his contention 5 he has also relied upon the judgment of the 7 Supreme Court in the case of K.D. Kapadia v. Indian Engineering Company . In this case it has been held, inter alia, that when the arbitrators allowed their time to expire without making the award the Umpire could enter upon reference in lieu of the arbitrators because disagreement between the arbitrators may take different shapes and forms.

5. Mr. Chaudhary appearing for the respondent does not dispute this position in law. He, however, opposes this petition on the grounds that the petition is barred by time and that even otherwise it is not maintainable. His contention is that the petition should have been filed within three years from 22nd April, 1980 when in spite of letters from the petitioner the arbitrators neglected to act. He contends that since this petition was filed on 22nd November, 1985, it is beyond the period of three years and, therefore, barred by limitation under Art. 137 of the Limitation Act,1963. He has relied upon the judgment of the Supreme Court in the case of The Kerala State Electricity Board v. T. P. Kunhaliumn and the judgment of Orissa High Court in the case of Secretary to Government of Orissa, Irrigation Deptt. v. Raghunath Mohapatr , reported in 'AIR 1985 Orissa page 18 as well as a judgment of this Court in the case of Shah Construction- Company Ltd. v. Municipal Corporation of Delhi, in support of his contention that Art. 137 of the Limitation Act applies to all applications under any Act, including those under the Arbitration Act. Mr. Chaudhary has drawn my attention to the explanation to S. 9 of the Arbitration Act according to which if an arbitrator, in spite of request by either party does not enter upon reference or proceed with it within one month from the date of request then such inaction may constitute neglect or refusal to act within the meaning of S. 8 of the Act.

6. The other objection of Mr. Chaudhary is that under S. 8, sub-sec. (1) Cl. (b) it is only the arbitrators who could fill up the vacancy of the Umpire after the death of the one named earlier. Consequently, notice should have been given by the petitioner to the arbitrators to fill up the vacancy of the Umpire. Admittedly, in this case no such notice was given either to the arbitrators or to the respondent. Mr. Chaudhary, therefore, contends that in view of the provisions of S. 8 sub-sec. (2) without such notice the petition is not maintainable. His submission is that u/ S. 8(2) an application in Court would be maintainable only after such a notice bad been issued to the arbitrators on the facts of this case consequent upon the death of the Umpire.

7. Mr. Saluja has fairly stated at the bar that the petitioner may be a victim of inaction, but the petition is not barred by limitation. He submits that the period of four months would start running only after the arbitrators have entered upon reference. His argument is that an arbitrator enters upon reference only when he first applies his mind to the disputes between the parties in a judicial manner and this excludes ministerial acts of issuing notices. He has relied upon a judgment of five Judges of the Calcutta High Court in the case of Ranianath Agarwalls v. M/s. Goenka & Co., , whereunder it has been held that the arbitrators enter upon reference only when they have applied their mind to the disputes. Mr. Saluj has also submitted that apart from the letter written to the arbitrators on 22-4-80, the petitioner had written to them to proceed with the arbitration on 2-7-80, 23-4-82, 15-12-82 and 11-7-85. He, therefore, submits that under Art. 137 of the Limitation Act the period of three years begins to run when the right to apply accrues. According to him the right to apply accrued on 11-7-1985 as well as on 6-11-85 when the petitioner wrote to the Umpire and, therefore, the petition is within time.

8. It appears to me that the neglect or refusal by the arbitrators to act is different from the question of entering upon reference. If the period of four months for making of the award is to be counted from the date of entering upon reference then that period has not elapsed because according to Mr. Saluja the arbitrators never applied their mind to the disputes between the parties in view of their inaction. If that is so, then there is no disagreement as contemplated in Rule 4 of the 1st Schedule to the Arbitration Act as well as Clause 16 of the agreement between the parties for the Umpire to enter upon reference as a result of disagreement amongst the arbitrators; which difference of opinion is also inferred in the event on the arbitrators allowing the period of four months for making the award to lapse. Since the period of four months for making of the award has to run from the date the arbitrators enter upon reference and since according to Mr. Saluja, they did not enter upon reference in this case, therefore, there is no question of the arbitrators allowing the period of four months for making of the award to lapse. Consequently it cannot be said that there has, been any disagreement between the arbitrators for the Umpire to enter upon reference.

9. To my mind explanation to S. 9 makes it clear that within one month of the request to enter upon reference if the arbitrator does not do so, then there is a neglect or refusal to act. The right to apply under S. 8 of the Act would, therefore, accrue on that date and the period of limitation would start running from then. The fact that the petitioner wrote letters repeatedly to the arbitrators cannot extend the period of limitation of three years and in this case, therefore, it appears to me that the petition is barred by limitation.

10. Apart from the fact that the petition is barred by limitation, provisions of Rule 4 of the First Schedule of the Arbitration Act are also not attracted on the fact of this case. In any event the notice for filling up the vacancy on the death of the Umpire had to be given by the petitioner to the arbitrators and if the arbitrators failed to appoint the Umpire only then could the petitioner come to the Court under S. 8(2). In this case, admittedly, no such notice was given. The contention of Mr. Saluja is that since the arbitrators were not acting at all there was no question of any notice being given to the arbitrators because it would have been of no avail. Be that as it may, it appears to me that the contention with regard to the non-maintainability of this petition raised by Mr. Chaudhary has merit and, therefore, I also hold that the petition is not maintainable. In this case the notice given to the Umpire was at a time when he had already died and, therefore, in the eye of law there was no notice to the Umpire either.

11. Lastly, Mr. Saluja has urged that if the petition is not maintainable under S. 8 of the Act then the same may be treated as one under S. 20 of the Act. In this case two arbitrators had already been appointed by this Court under S. 20 of the Act. The provisions of S. 20 are not at all applicable to the instant case. Besides the relief claimed in this petition is that an Umpire be appointed. However, there is no provision for appointment of an Umpire under S. 20 of the Act. The question with regard to the pecuniary jurisdiction of this Court had also been raised in view of the fact that the value for the purposes of jurisdiction is stated to be Rs. 61,513.47 only. However, there is no serious dispute in this regard because initially the arbitrators were appointed by this Court. Therefore, this Court is seized of the matter for all further proceedings. Mr. Saluja has relied upon a judgment of this Court in the case of Dr. D.R. Malhotra v. Indian Aluminium Cables, reported in 1978, RLR 43 in support of his contention that this Court has the jurisdiction to entertain the petition. Since Mr. Chaudhary does not dispute the jurisdiction of this Court to entertain the petition, it is, not necessary to deal with this point any further.

12. In view of the foregoing, this petition is dismissed. There will be no order as to costs.

13. Petition dismissed.