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1988 DIGILAW 10 (ALL)

Nagar Palika, Aligarh v. Sukhpal Gupta

1988-01-06

V.K.MEHROTRA

body1988
ORDER V.K. Mehrotra, J. - Nagar Palika, Aligarh executed a lease in favour of Sukhpal Gupta on April 18, 1973 in respect of a plot upon which Gupta wished to construct some shops and a hotel. This lease was substituted by a fresh lease dated July 7, 1973 which contemplated payment of a higher rate of rent. Sukhpal Gupta obtained necessary permission from the Nagar Palika for raising the construction and got a plan in respect thereof sanctioned. According to his case, some shops were constructed and when construction of the hotel was about to start a letter dated October 22, 1974 was received by him from the Nazul In charge of the Nagar Palika informing him that the Commissioner, Agra Division had directed that till further orders of the State Government, no further construction be made on the land let out by the Nagar Palika. Repeated letters and notices to the Nagar Palika on behalf of Sukhpal Gupta, characterising the directions contained in the letter dated October 22, 1974 of the Nagar Palika as illegal and calling for revocation thereof, remained unreplied by the Nagar Palika. Surprisingly through notice dated November 26, 1983 sent by it through Umesh Chand Varshneya, Advocate, Nagar Palika, Aligarh purported to terminate the lease dated July 6, 1973 and call upon Gupta to remove his construction from the land. The-lease was terminated by the Administrator, Nagar Palika, (District Magistrate, Aligarh) in compliance with the order of the State Government (No. 167E/XI- 8-6(7)/73 dated May 4, 1983). 2. On December 17, 1983, an objection was filed by Sukhpal Gupta against the notice of November 26 1983 before the Administrator/District Magistrate, Aligarh, who called for a report within a week. However, when the matter was not attended to beyond it, a reference to arbitration of the dispute was made to the District Magistrate, Aligarh, in terms of the stipulation to that effect in the lease, by registered post on April 3, 1984 by Sukhpal Gupta. This reference was received in the office of the District Magistrate, the Arbitrator, on April 5, 1984. Sukhpal Gupta had mentioned in this reference application the extent of losses which he had suffered by that time. The reference application was sent by the office of the District Magistrate to the Executive Officer, Municipal Board, Aligarh on April 6, 1984. 3. This reference was received in the office of the District Magistrate, the Arbitrator, on April 5, 1984. Sukhpal Gupta had mentioned in this reference application the extent of losses which he had suffered by that time. The reference application was sent by the office of the District Magistrate to the Executive Officer, Municipal Board, Aligarh on April 6, 1984. 3. An application was made by Sukhpal Gupta under section 11 read with section 12 of the Indian Arbitration Act before the Civil Judge, Aligarh with a grievance that the Arbitrator (District Magistrate) had not entered upon the reference within four months of the receipt of the claim made by him which amounted to refusal on his part to act as Arbitrator in accordance with the relevant clause (xi) of the lease deed dated July 6, 1973. It was prayed that the District Magistrate be removed as an Arbitrator and some other person be appointed as Arbitrator in his place to submit his award within the time fixed by the Court. The application was registered as Misc. Case No. 204 of 1984. The Nagar Palika, through the Executive Officer, and the District Magistrate (impleaded as opposite party No. 2) filed objection to application of Sukhpal Gupta. After hearing parties, the learned Civil Judge concluded that the District Magistrate, as Arbitrator, had not entered upon the reference nor made an award within four months and deserved to be removed as an Arbitrator. After directing so, the learned Civil Judge appointed Sri R.R. Agarwal, a retired District Judge living at Aligarh, as the Arbitrator and directed him to give his award within three months. This order was passed on May 17,. 1985. In the present revision, under section 115 C.P.C. Nagar Palika, Aligarh has assailed this order. 4. In his reply filed before the learned Civil Judge, the District Magistrate said that the application for entering upon the reference and deciding the dispute as an Arbitrator made by Sukhpal Gupta had been received in his office on April 5, 1984 and was sent to the Executive Officer, Municipal Board, Aligarh on April 6, 1984. That application was never put up before him nor was the reference brought to his notice. He never refused to act as an Arbitrator. The application of (sic) Sukhpal Gupta is still ready and willing to act as an Arbitrator. 5. That application was never put up before him nor was the reference brought to his notice. He never refused to act as an Arbitrator. The application of (sic) Sukhpal Gupta is still ready and willing to act as an Arbitrator. 5. What is urged on behalf of the Nagar Palika, Aligarh by Sri H. S. Nigam, its counsel in this Court, is that no reference was made to the Arbitrator in accordance with law so that he could not enter upon the reference at all. There was, thus, no starting point for the period of four months during which he was required to make an award. The Arbitrator (District Magistrate), according to the -objection filed by him before the learned Civil Judge, was ready to enter upon the reference and decide the dispute between the parties. The learned Civil Judge, according to the submission, committed a manifest error of jurisdiction, in these circumstances, in appointing another person to act as an Arbitrator in the matter. His order under challenge in this revision deserves to be set aside. 6. Sri K.N. Tripathi, who has appeared in this Court on behalf of Sukhpal Gupta has made a copy of the claim application which Sukhpal Gupta made to the Ziladhikari, Aligarh require him to decide the dispute between him and the Nagar Palika available for the perusal of this court after giving a copy of that application to Sri H. S. Nigam. In paragraph 8 of this application clause (xi) of the lease deed has been quoted in these words : "Clause (xi) If any dispute or question arises between parties to the agreement on the points arising out from the aforesaid deed or in respect thereof or with regard to any subject involved therein, the Zila Adhikari, Aligarh, or Arbitrator, will decide such dispute or question and will give his award." 7. This clause, according to the learned counsel for both the parties, is the only arbitration agreement between the parties within the meaning of section 2(a) of the Arbitration Act which defines an arbitration agreement to mean a written agreement to submit present or future differences to arbitration whether an arbitrator is named therein or not. 8. This clause, according to the learned counsel for both the parties, is the only arbitration agreement between the parties within the meaning of section 2(a) of the Arbitration Act which defines an arbitration agreement to mean a written agreement to submit present or future differences to arbitration whether an arbitrator is named therein or not. 8. How and when does an arbitrator enter upon the reference, which is defined in section 2(e) of the Arbitration Act as "a reference to arbitration", was the subject of serious debate between the learned counsel before this Court. The reference to arbitration could only be made by both the parties calling upon Arbitrator to go into the dispute between them and not by one of the parties to the arbitration agreement doing so unilaterally was the contention of the counsel for the Nagar Palika. A reference to the Arbitrator could be made unilaterally if, as in the present case, there was an agreement to that effect, albeit impliedly, was the stand taken by the counsel for Sukhpal Gupta. 9. An analysis of the relevant provisions of the Arbitration Act reveals that the legislature has provided for four different stages in regard to an Arbitrator, firstly, an Arbitrator may be called upon to act, secondly, he enters on a reference, thirdly, he proceeds with the reference, and, fourthly, he makes an award, Ram Nath Agarwalla v. M/s. Goenka and Co., AIR 1973 Cal 253 (FB). An Arbitrator is said to enter upon a reference when he applies his mind to the dispute or controversy before him and does some act in furtherance of the arbitration. M. George v. Raju M. Mathew, AIR 1978 Ker 17 (DB). Normally, notice by one of the parties to the arbitration agreement calling upon the Arbitrator to take steps in connection with the arbitration proceedings does not amount to request to the Arbitrator to enter upon the reference. The reference requires the assent of 'both sides'. In the absence of either agreement by both sides about the terms of the reference, or an order of the court under section 20(4) compelling a reference, the Arbitrator is not vested with the necessary jurisdiction. Thawardas Pherumal v. Union of India, AIR 1955 SC 468 . The reference requires the assent of 'both sides'. In the absence of either agreement by both sides about the terms of the reference, or an order of the court under section 20(4) compelling a reference, the Arbitrator is not vested with the necessary jurisdiction. Thawardas Pherumal v. Union of India, AIR 1955 SC 468 . A unilateral reference to which consent is not given by the other side, is not competent without recourse to the provisions of section 20(4) of the Arbitration Act and does not confer upon the Arbitrator jurisdiction to proceed with the arbitration. Madhubala Private Ltd. v. M/s. Naaz Cinema, AIR 1972 Delhi 263 (DB). It is true that the Arbitration Act does not specifically provide for a joint reference by the parties and in the very nature of the arbitration proceedings where the adjudicator is chosen by common consent of the parties, it is but natural that their dispute, difference or claims should also be jointly referred by them for decision of the arbitrator. Jagannath Kapoor v. Premier Credit and Instalment Co. (P) Ltd., AIR 1973 All 49 . 10. The previous consent of the parties to a reference of a dispute binds them throughout and no fresh consent is necessary after the disputes have arisen.....A truly unilateral reference would arise when the agreement between the parties is restricted to the simple fact that the disputes between the parties would be decided by arbitration but the agreement does not include the reference of disputes to arbitration. To decide, therefore, whether the reference in a particular case is based on the previous consent of the parties or whether it is a unilateral reference by one of the parties, the agreement between the parties would have to be construed" P.C. Agarwal v. K.N. Khosla, AIR 1975 Delhi 54. 11. In this decision the arbitration clause said that "in the event of any claim (whether admitted or not) difference or disputes arising between you and me/us out of these transactions the matter shall be referred to arbitration in Delhi as provided in the rules, bye laws and Regulations of Delhi Stock Exchange Association Ltd., Delhi". A reference was made by following the procedure laid down in bye laws Nos. 247 to 249 and regulation 15 together with Appendix A containing the prescribed forms. A reference was made by following the procedure laid down in bye laws Nos. 247 to 249 and regulation 15 together with Appendix A containing the prescribed forms. The Division Bench of the Delhi High Court, speaking through Deshpande, J. upheld the reference to arbitration as valid. 12. Where under an arbitration agreement power has been expressly given to one of the parties to make a reference unilaterally and an arbitrator is also named by the parties, a party can refer the dispute to arbitrator, unilaterally. M/s. Jupiter Chit Fund P. Ltd. v. Som Nath Handa, 1983 All LJ 704. 13. Clause 11, which is the arbitration clause in the present case, has been extracted earlier. It does not contain any express term permitting unilateral reference of any dispute to the arbitrator by one of the parties. This was not disputed by Sri K.N. Tripathi, what was, however, argued was that consent to such unilateral submission of the dispute to the arbitrator should be implied from the fact of the agreement between the parties to refer the dispute to arbitration. Though attractive, the submission cannot be accepted on the language in which cl. 11 is worded. There is an agreement, under this clause, to refer any dispute or question arising between the parties to the agreement for decision to a named arbitrator, namely, Zila Adhikari, Aligarh. It is a simple agreement to refer the dispute between the parties to arbitration and nothing more. No modality for invoking the jurisdiction of the arbitrator is envisaged in this clause. The condition that the parties had given their consent for a reference of the dispute between them to the arbitrator unilaterally by any one of them cannot be implied from the words used in this clause. It is difficult to read the implied consent of the parties for an unilateral submission of the dispute to the arbitrator by reading something in the clause which is not even hinted at by the words used therein. Reading an implied consent in this clause would virtually amount to adding something to the clause which is non-existent. Such a course is not warranted by law. It is not consistent with the concept of decision of a dispute by recourse to arbitration proceedings which presupposes mutual consent of the parties. 14. Reading an implied consent in this clause would virtually amount to adding something to the clause which is non-existent. Such a course is not warranted by law. It is not consistent with the concept of decision of a dispute by recourse to arbitration proceedings which presupposes mutual consent of the parties. 14. Since as found by me, no unilateral reference of the dispute could be made by Sukhpal Gupta to the arbitrator, the letter of April 3, 1984 sent by him to the Zila Adhikari, Aligarh by itself could not be said to have resulted in a reference of the dispute to the named arbitrator for decision. Nor could the arbitrator be treated to have. entered upon the reference on the basis thereof and to have failed in giving an award within a period of four months statutorily available to him for the purpose. The vie taken by the learned Civil Judge to the contrary cannot be sustained. The order under challenge is, therefore, manifestly erroneous and the appointment by the learned Civil Judge of Sri R.R. Agarwal as the Arbitrator is totally without jurisdiction. The order deserves to be set aside. 15. In the view that l have taken, it is not necessary to express any opinion on the other submission of Sri Nigam that mere receipt of the letter of April 3, 1984 of Sukhpal Gupta in the office of Zila Adhikari, Aligarh would not amount to a notice to him, particularly, when according to the version of the Zila Adhikari in the proceedings before the learned Civil Judge, the letter was never brought to his notice nor did he ever refuse to proceed with the arbitration. 16. In sum, the revision succeeds and is allowed. The order of the learned Civil Judge dated May 17, 1985 is set aside. The parties are, however, left to bear their own costs of this court.