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1989 DIGILAW 403 (DEL)

JONES AND WEXOES INDIA v. UNION OF INDIA

1989-10-27

MAHINDER NARAIN

body1989
Mahinder Narain, J. ( 1 ) BY this petition under Sections 5, 11, 12 and 33 of the Arbitration Act, 1940, the applicant/petitioner prays that for the reasons stated in the application leave be granted to revoke the authority of respondent No. 3 Dr. B. N. Mani, as sole arbitrator, and it also be declared, that arbitration agreement and the reference to the arbitrator have ceased to exist and have no effect. ( 2 ) THE facts alleged in the petition are that a contract for the supply of 10384000 tablets of Sulphasomidine-500 mg. was entered into between the parties on 14-8-1980. The total amount of the contract was Rs. 882121. 00. Them was some modification of the contract according yo which the quantity of the tablets to be supplied was- raised to 12814000 and the amount to, Rs. 1088549. 88. ( 3 ) DISPUTES bad arisen between the parties, which had been referred, to arbitration. ( 4 ) THERE is an agreement between the parties regarding the date of the reference of dispates to arbitration. The reference to arbitration was on 29-12-1984. The reference was to. the arbitrator Smt. R. Laksbrnannan, Add ). Legal Advisor to the Govt. of India, Ministry of Law. Parties are agreed that Smt. R. Lakihmannan entered upon the reference on 30th April,, 1985. She resigned as arbitrator on 30-4-1985. ( 5 ) AFTER the resignation of Smt. R. Lakshmannan, the second Arbitrator Dr. B. N. Mani, was appointed on 23rd July, 1986. Dr. B. N. Mani however superannuated on 28th Feb. 1989. ( 6 ) IT is the case of the petitioner that since the date of reference on 29. 12. 1984 till the superannuation of Dr. B. N. Mani, on 28-2-1989, more than four years have passed, the respondents bad not even filed their claim before the Arbitrator. ( 7 ) I bad directed the Union of India to file an affidavit to indicate as to what bad transpired before the Arbitrator since 23rd July, 1986. ( 8 ) AS noticed in my order dated 3rd October, 1989, the affidavit filed said a lot of things except, whether the claim was filed before the Arbitrator Smt. R. Lakshmannan or before Dr. B. N. Mani. The only inference which could be reached is, that the contention of the petitioner, that no claim has been filed before the Arbitrator is correct. B. N. Mani. The only inference which could be reached is, that the contention of the petitioner, that no claim has been filed before the Arbitrator is correct. ( 9 ) THE petitioner in support, of his case relies upon a judgment delivered by justice D. R. Khanna in O. M. P. 54 of 1981 (Som Nath Chandha and Co. v. Union of India and others ) on 27-8-1982. In that case also no claim was filed by the respondent before the Arbitrator for a considerable time. Mr. Mehra for the respondent says that the time during which no claim was filed before the. Arbitrator was much longer in that case, that in the instant case. ( 10 ) AS noted above for more than 4 years the matter was pending before one Arbitrator or the other and yet no claim was filed by the respondent in the instant case. ( 11 ) JUSTICE Khanna in the aforesaid case said that for more than two years after the appointment of both the first and second arbitrator, the Union of India chose to sit on the fence and did not care to file the claim for which it had sought a reference, inspite of a number of opportunities having been granted. No circumstance of sufficient cause had been brought out for explaining the inaction for. so long. and the contuntious ignoring of direction of the learned arbitrator for enlargement of time for making the award, and that no indulgence, is therefore, called for in favour of such a recalcitrant party. He held that the arbitration agreement shall cease to have effect. ( 12 ) THE order of Justice Khanna went in appeal before a division bench of this Court. By their order in F. A. O. (OS) 145 of 1982 decided on 31-1-1984, reported as 25 (1984) DLT-226, it was stated by the division bench that the main object of referring a dispute to an arbitrator for adjudication is the speedy end of the strife. This object in our view, stands frustrated on account of unreasonable neglect on the part of the appellant/claimant to promote the conduct of arbitration proceedings. This object in our view, stands frustrated on account of unreasonable neglect on the part of the appellant/claimant to promote the conduct of arbitration proceedings. ( 13 ) IN my view in the instant case the respondents have behaved in the same way as the respondents/appellants bad behaved in the matter before Justice Khanna, and then Division Bench and, the for same reasons the claim of the petitioner in the instant case, ought to succeed. ( 14 ) COUNSEL for the Union of India has referred to AIR-1978 NOC- Delhi 214 which is also a Division Bench judgment of this court in which it is stated in the head notices that "delay by itself would not be enough to hold that the arbitration agreement has come to an end on that arbitration agreement on that count has to be cancelled though it may be a relevant factor, may, an important circumstance, in conjunction with other circumstances to arrive to a conclusion whether the arbitration agreement be cancelled or not. " ( 15 ) IN my opinion actions speak louder than words. In the instant case the action is inaction on the part of the Union of India. It did not even care to file its claim before the arbitrator. It appears that in AIR-1978 NOC Delhi-214 that at least a claim had been filed by the Union of India, and some proceedings were held before the arbitrators thereafter. The facts of 1978 NOC Delhi 214, are therefore different, and that case is not applicable to the facts of instant case. The two cases are distinguishable. ( 16 ) IN the case before me there is no claim filed by the Union of India. In this view of the matter I am inclined to follow the judgment of the Division Bench of this Court reported in 25 (1984) DLT 226. ( 17 ) IN the result I hold that in view of the inaction on the part of the Union of India in not filling any claim before the Arbitrator from 12-9-1984 to 28-2-1984, the instant case is as fit one for granting reliefs claimed by the petitioner that the arbitration agreement has ceased to exist, and is of on effect. ( 18 ) ORDERED accordingly.