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1988 DIGILAW 300 (KER)

KERALA STATE ELECTRICITY BOARD v. G. P. STEPHEN & CO. , ANGAMELY

1988-07-08

K.G.BALAKRISHNAN

body1988
ORDER K. G. Balakrishnan, J. - The revision petitioner, Kerala State Electricity Board, entered into an agreement with the respondent for the construction 66 KV. SC tap line from Alleppey to Shertallai and some other allied works. Dispute arose between the parties and as per a clause in the contract the matter was referred for arbitration. The respondent nominated an advocate of Ernakulam and the petitioner nominated Shri A. M. Mani, retired Chief Engineer of the K.S.E. Board as its nominee. The arbitrators entered on reference and number of sittings were held. However, the arbitrators did not pass an award within the time stipulated by the court. The time for passing the award expired on 5-12-1983. Thereafter Shri A. M. Mani expressed his unwillingness to continue as an arbitrator. The respondent sent a notice under Section 9(b) of the Arbitration Act calling upon the petitioner to nominate another arbitrator in the place of Shri A. M. Mani. The petitioner sent a reply on 18-7-1985 stating that the period of arbitration has already expired on 5-12-1983 and the arbitrators have become functus officio and that no arbitration proceeding was in existence. However, without prejudice to the rights of the K.S.E. Board Shri G. Ganesa Pillai, Chief Engineer (Civil) was nominated as an arbitrator. Meanwhile the respondent filed I.A. 4011(a)/84, 4011(b)/84 and 4011(c)/84 in O.P. Nos. 38/84, 39/84 and 40/84 respectively praying that their nominee may be allowed to continue to act as a sole arbitrator and the period for making the award be extended for a further period of three months. The petitioner resisted the application stating that the period for arbitration has already expired and that the petitioner had nominated Shri Ganesa Pillai as their arbitrator. The court after considering the rival contentions held that the petitioner has not nominated an arbitrator in time as prescribed under Section 9(b) of the Arbitration Act. Therefore, the arbitrator nominated by respondent was, allowed to continue as the sole arbitrator. This order is being challenged in these civil revision petitions. Admittedly the period for arbitration expired on 5-12-1983. It is also not disputed that Shri A. M. Mani expressed his unwillingness to act as an arbitrator after the expiry of the said period. Therefore, the arbitrator nominated by respondent was, allowed to continue as the sole arbitrator. This order is being challenged in these civil revision petitions. Admittedly the period for arbitration expired on 5-12-1983. It is also not disputed that Shri A. M. Mani expressed his unwillingness to act as an arbitrator after the expiry of the said period. Thereafter the respondent sent notice to the petitioner calling upon them to suggest a name of new arbitrator and in the K.S.E. Board's reply dated 18-8-1984 suggested Shri Ganesa Pillai, Chief Engineer, as their nominee. The court below has not understood the factual situation. The court below was of the opinion that no nomination was made by the respondent in time and therefore the other arbitrator was allowed to continue as the sole arbitrator. The order passed by the court below is not sustainable. The agreement between the parties, provided that the reference shall be to two arbitrators one appointed by each party. One of the nominated arbitrators expressed his unwillingness to act as an 'arbitrator'. The contractor sent notice under Section 9 of the Act, calling upon the Board to suggest a new arbitrator. Section 9 of the Arbitration Act reads as follows : "9. One of the nominated arbitrators expressed his unwillingness to act as an 'arbitrator'. The contractor sent notice under Section 9 of the Act, calling upon the Board to suggest a new arbitrator. Section 9 of the Arbitration Act reads as follows : "9. Power to party to appoint new arbitrator, or in certain cases, a sole arbitrator : Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then unless a different intention is expressed in the agreement, - (a) if either of the appointed arbitrators, neglects or refuses to act or is incapable of acting, or dies, the who appointed him may appoint a new arbitration in his place; (b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference and his award shall be binding on both parties as if he had been appointed by consent : Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit." AS per S. 9(b) of the Act, fifteen clear days must expire from the date of service of notice, before the party giving the notice may appoint his arbitrator as sole arbitrator. An appointment of sole arbitrator the before expiry of 15 days is invalid. The condition of S. 9(b) of the Act must be strictly complied with before a party appoints his arbitrators sole arbitrator. In the instant case the petitioner sent reply on 18-8-1984, wherein it was mentioned that Shri Ganesa Pillai would be its nominee. When the petitioner has nominated an arbitrator in time as contemplated under Section 9(b) of the Act, the court could have only appointed him as one of the arbitrators instead of allowing the other arbitrator to continue as sole arbitrator. The order passed by the court below is illegal and hence it is liable to be set aside. When the petitioner has nominated an arbitrator in time as contemplated under Section 9(b) of the Act, the court could have only appointed him as one of the arbitrators instead of allowing the other arbitrator to continue as sole arbitrator. The order passed by the court below is illegal and hence it is liable to be set aside. Another contention urged by the petitioner is that the court should not have allowed extension of time to pass an award. It was argued that the earlier arbitrators failed to pass an award on or before 5-12-1983 and they have become functus officio and the court had no power to enlarge time for making award. This plea is not sustainable. The court has got ample powers under Section 28 of the Arbitration Act to enlarge time for making award. This plea is not sustainable. The court has got ample powers under Section 28 of the Arbitration Act to enlarge time. Section 28 reads : "28. Power to Court only to enlarge time for making award : (1) The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time, the time for making the award. (2) Any provision in arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect." The court is vested with discretionary powers to enlarge time for making the award from time to time, whether time for making the award has expired or not and whether the award has been made or not. This power of the court is not controlled by the arbitration agreement It is also important to note that under Section 5 of the Arbitration Act, the authority of an appointed arbitrator or umpire shall not be revoked except with the leave of the court, unless a contrary intention is expressed in the arbitration agreement. In the present case the court below has not extended the time but directed the sole arbitrator to pass an award. Since the appointment of sole arbitrator itself is found illegal no question of enlargement of time arises in this matter. In the present case the court below has not extended the time but directed the sole arbitrator to pass an award. Since the appointment of sole arbitrator itself is found illegal no question of enlargement of time arises in this matter. Contention of the petitioners that earlier arbitrators have become functus officio and thus the whole arbitration proceedings ended cannot be accepted. The order passed by the court below appointing the respondents' nominee as sole arbitrator is set aside. Learned counsel for the K.S.E. Board submitted that Shri Ganesa Pillai nominated by the Board has already retired from service and he may not be available to act as an arbitrator. The court below shall give an opportunity to the petitioner Board to nominate its arbitrator. The petitioner shall nominate the new arbitrator within 15 days of the receipt of the records by the court below. The court below will pass appropriate order appointing the arbitrators after hearing both sides. The Civil Revision Petitions are disposed of as above. No costs. Issue photo copy of this order to the learned counsel on either side on usual terms.