JUDGMENT : S.C. Mohapatra, J. - State of Orissa is the petitioner No. 1 in this Civil Revision challenging the order dated 10. 8, 1982 passed by the learned Subordinate Judge, Bhubaneswar, appointing opposite party No. 2 as Arbitrator in exercise of the power u/s 8 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'). 2. Opposite party No. 1 is a works contractor. He entered into an agreement with the State of Orissa for execution of a work and the agreement was executed between the parties which was signed by the Executive Engineer on behalf of the State of Orissa as required under Article 299 of the Constitution of India. The claim of the opposite party No. 1 not having been settled the opposite party Nr 1 requested the concerned Chief Engineer for appointment of an Arbitrator, as provided under Clause 23 of the agreement. As the Chief Engineer did not appoint an Arbitrator within the period stipulated under the Act, the opposite party No. 1 filed an application under Section, 8 of the Act in Court. By order dated 3. 8. 1982, the Court was satisfied that the conditions for appointment of an Arbitrator were satisfied and accordingly he directed the parties to furnish panel of names by 10. 8. 1982. On 10. 8. 1982 the parties filed their respective panel of names. The Arbitration Tribunal was suggested to be appointed as the Arbitrator by the petitioner No. 1 Opposite party No. 1 suggested four names in the list. Thay were (1) Shri I. C. Misra, retired District Judge, (2) Shri D. C. Padhi, Addl. Chief Engineer (Retired), (3) Shri M. J, Rao, retired District Judge and (4) Shri K. M. Acharya, Superintendent Engineer. Without accepting any of the suggestions by either party and specifically rejecting the scope for appointing the Arbitration Tribunal as the Arbitrator, the learned Subordinate Judge appointed opposite party No. 2 to be the Arbitrator. Opposite party No. 1 has filed the claim statement before the Arbitrator and the Arbitrator issued notice to the petitioners to file the objection to the claim. While the proceeding is pending before the Arbitrator, petitioners have approached this Court challenging the appointment of opposite party No. 2 as the Arbitrator and obtained an interim order of stay of the proceeding before the Arbitrator. 3.
While the proceeding is pending before the Arbitrator, petitioners have approached this Court challenging the appointment of opposite party No. 2 as the Arbitrator and obtained an interim order of stay of the proceeding before the Arbitrator. 3. The scope for interference in the appointment of an Arbitrator u/s 8 of the Act is very limited since the Court has jurisdiction u/s 8(2) of the Act to appoint an Arbitrator other than the one chosen by the parties and the Court exercised the jurisdiction. The only scope for interference is material irregularity in exercise of the jurisdiction by the Court. 4. It is to be remembered that an Arbitrator is a Judge of the choice of the parties. Accordingly, Court should try to confine to the choice given by the parties where the parties do not agree to a particular person to be the Arbitrator. Court should, therefore, give an opportunity to the parties to give their views relating to the names suggested. Thereafter, Court should appoint a person as an Arbitrator. When the Court does not accept any of the names in the panels given and appoints another person of its choice not in the list, reason for the same should be indicated so that the order becomes a speaking order and there is no scope for the order becoming vulnerable on account of arbitrariness. In that short view of the matter, the impugned order is liable to be set aside on account of material irregularity in exercise of the jurisdiction. 5. Mr. Jairaj Behera, the learned Additional Standing Counsel has brought to my notice the recent amendments to the Act. Section 41A has been inserted by Orissa Act 3 of 1983 which came into force on 26.3.1983. By Orissa Act 17 of 1984, Section 41-A of the Act has been amended.
5. Mr. Jairaj Behera, the learned Additional Standing Counsel has brought to my notice the recent amendments to the Act. Section 41A has been inserted by Orissa Act 3 of 1983 which came into force on 26.3.1983. By Orissa Act 17 of 1984, Section 41-A of the Act has been amended. Section 41-A as in force now reads as follows: "41-A. Not withstanding anything contained in this Act or in any contract or any other instrument, but without prejudice to the provisions contained in Section 41 in all cases where the State Government, a local or other authority controlled by the State Government Company is a party to the dispute, all references to arbitration shall be made to the Arbitration Tribunal: Provided that reference to arbitration of the disputes specified in Sub- Section (1) involving Claims of rupees one crore or above may be made by- the State Government to a Special Arbitration Tribunal comprising of one or more retired High Court Judges, as may be constituted by the State Government from time to time. (2) The State Government shall constitute an Arbitration Tribunal consisting of the following members, namely : (a) one member chosen from among the officers belonging to the Orissa Superior judicial Service (Senior Branch); (b) one member chosen from among the officers of the Public Works Department of the State Government not below the rank of a Superintending Engineer; (c) one member chosen from among the officers belonging to the Orissa Finance Service not below the Superior Administrative Cadre in Class-I. (3) The member chosen from the Superior Judicial Service (Senior Branch) shall be the Chairman of the Tribunal. (4) The terms and conditions of appointment of the members of the Tribunal and the headquarters thereof shall be, as may be determined by the State Government, from time to time. (5) The business of the Arbitration Tribunal or Special Arbitration Tribunal shall be conducted in such manner as the Tribunal may determine and awards made and signed shall be supported by reasons. (6) The Arbitration Tribunal constituted by the State Government under the Arbitration Tribunal Rules, 1979 with its members holding office immediately prior to the commencement of the Arbitration (Orissa Amendment) Act, 1982 shall be deemed to be the Arbitration Tribunal constituted under this Act and shall continue to hold office till the Tribunal is re-constituted by the State Government.
(6) The Arbitration Tribunal constituted by the State Government under the Arbitration Tribunal Rules, 1979 with its members holding office immediately prior to the commencement of the Arbitration (Orissa Amendment) Act, 1982 shall be deemed to be the Arbitration Tribunal constituted under this Act and shall continue to hold office till the Tribunal is re-constituted by the State Government. (7) All arbitration proceedings relating to a dispute of the nature specified in Sub- Section (1) which are pending before any arbitrator on the date of commencement of the Arbitration (Orissa Amendment) Act, 1982 and in which no award has been made by the said date, shall stand transferred to and disposed of by the Arbitration Tribunal: Provided that the State Government may, by order in writing direct that the arbitration proceedings relating to disputes and claims involving rupees one crore or above, pending before any Arbitrator or Board of Arbitrators on the date of the commencement of the Arbitration (Orissa Amendment) Act, 1982 (Orissa Act 3 of 1983) shall be transferred to any Special Arbitration Tribunal constituted under the proviso to Sub- Section (1) for disposal in accordance with law." 6. A bare perusal of the aforesaid provision shows that there is no scope for an Arbitrator other than the Arbitration Tribunal u/s 41-A(1) or a Special Arbitration Tribunal u/s 41-A(1) proviso to decide the dispute where the State Government is a party to the dispute. There is no scope for a Court in Orissa to appoint an Arbitrator other than the Arbitration Tribunal or the Special Arbitration Tribunal, as the case may be, in view of the mandatory language of Section 41-A. This finds support from a dicision of this Court reported in State of Orissa Vs. Rama Chandra Sahu and Another. The proviso to Sub- Section (1) authorises the State Government to appoint a Special Arbitration Tribunal where the claim involves rupees one crore or above. Sub- Section (7) provides for transfer of claims pending before the Arbitrators. Where the claim is for rupees one crore or above, the State Government in writing can direct such arbitration proceeding to be transferred to any Special Arbitration Tribunal constituted under the proviso to Sub- Section (1). 7. In State of Orissa Vs. Rama Chandra Sahu and Another the provisos added to Sub-sec (1) and Sub- Section (7) of Section 41-A of the Act were not the subject-matter of consideration.
7. In State of Orissa Vs. Rama Chandra Sahu and Another the provisos added to Sub-sec (1) and Sub- Section (7) of Section 41-A of the Act were not the subject-matter of consideration. No provision has been made in Section 41-A relating to the applications pending bafore the Court either u/s 8 or u/s 20 or under other provisions relating to removal of the Arbitrator. Therefore, the Court is to decide the application pending before it and cannot reject the same in limine. When the proceeding before the Arbitrator had bean stayed by this Court it could not have been transferred to the Arbitration Tribunal. Now, in view of my finding that the order appointing opposite party No. 2 as the Arbitrator cannot be sustained, the application u/s 8 remains pending and there is no proceeding pending before the Arbitrator to be transferred to the Arbitration Tribunal, as provided under Sub- Section (7). 8. An application u/s 8 of the Act which relates to disputes regarding claim for money does not require to indicate the amount of claim involved, though u/s 20, it is necessary for indicating the amount of claim in such cases. u/s 8 of the Act, the Court is only to appoint an Arbitrator before whom the claim is to be filed whereas u/s 20 references of the disputes are to be made. Quantum of the claim in such cases is also a question of dispute. This is a peculiar case for which Section 41-A does not make a provision in respect of the pending applications before the Court and the State Government has not exercised the power under the proviso u/s 41-A(1) for the claim case within that scope. 9. In the result the Civil Revision is allowed, the impugned order appointing opposite party No. 2 as the Arbitrator is set aside and the learned Subordinate Judge, Bhubaneswar, is directed to dispose of the application u/s 8 of the Act in accordance with law. There shall be no order as to costs. Final Result : Allowed