JUDGMENT D. P. Sood, J.—"If any appointed arbitrator as per the arbitration clause neglects or refuses to act, or becomes incapable of acting or dies and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, whether the powers of the appointing authority to appoint another Arbitrator afresh revive" is the basic but an important question which has arisen for the decision of this Court, 2. The petitioner Purshotam Lal was a supplier of water tanks and pipes to the Controller of Stores, Himachal Pradesh pursuant to a contract having been entered into in between them inter se as per the arbitration agreement. No doubt as per the arbitration clause both the parties contemplated reference of disputes to the arbitration to any officer appointed by the State of Himachal Pradesh acting as such at the time of reference and his decision is to be final and binding upon them. Admittedly disputes had arisen in between the parties and as per the clause the Financial Commissioner (Education) to the Government of Himachal Pradesh (Shri Attar Singh) was appointed to arbitrate and finally adjudicate upon the same vide notification dated 8th of May, 1987, later on duly published in the Himachal Pradesh Rajpatra. 3. The respondents moved an application registered as O. M. P. (M) No. 2 of 1990 under section 20 of the Arbitration Act for enlargement of time for making the award. Simultaneously the petitioner also filed an application registered as O. M P. No 217 of 1990 under sections 5, 11 and 12 of the Arbitration Act, 1940 seeking directions of this Court to revoke the authority of the abovesaid appointed arbitrator and to fill up the vacancy so created by appointing another arbitrator.
Simultaneously the petitioner also filed an application registered as O. M P. No 217 of 1990 under sections 5, 11 and 12 of the Arbitration Act, 1940 seeking directions of this Court to revoke the authority of the abovesaid appointed arbitrator and to fill up the vacancy so created by appointing another arbitrator. The allegations made in the application for removal of the Arbitrator (Shri Attar Singh) are that he failed to use all reasonable despatch in entering on and proceeding with the reference and making an award It was alleged that he duly entered the reference on 28th of March, 1^87 and the parties filed their claims and counter claim on 2-12-1987 ; that earlier too, time for making an award was got enlarged by the parties by four months from 2oth July, 1988, onwards ; that after the said extension the Arbitrator fixed as many as seven hearings in between the period commencing from August, 3, 1988 till October 31, 1988 before the issues could be framed by him on 4-11- 1988 ; that all these adjournments except that of 3-8-1988 were allegedly necessitated because of either non-availability of the learned Counsel for the respondent or the administrative work of the Arbitrator ; that though the parties continued to participate in the proceedings despite the expiry of the period, yet no other proceedings in respect of the production of the evidence by the petitioner could be taken up. It is on account of the above said facts that removal of Arbitrator is prayed for due to having failed to use all reasonable despatch in entering upon the proceedings. 4. The respondent admitted the factual position so stated but according to them, petitioner also could not produce any evidence or list of the witnesses required in the said case. It is also admitted that Arbitrator did not make an award till 6-M990 allegedly on account of the negligence of petitioner in not having produced evidence in support of his claim. The factum of vacancy having fallen on April 9, 1990 for the reason stated above, is also admitted. However, the respondent contended that another Arbitrator was appointed vide another Notification duly published Thus, according to the respondent, the power to appoint an Arbitrator afresh lay with the appointing authority as per term of the agreement and not with this Court. 5.
However, the respondent contended that another Arbitrator was appointed vide another Notification duly published Thus, according to the respondent, the power to appoint an Arbitrator afresh lay with the appointing authority as per term of the agreement and not with this Court. 5. Both parties have stated today at the bar that they do not want to produce any evidence as their pleadings have already been supported by the affidavits of the respective persons representing them and factual position as stated above has also been admitted. During the course of arguments today by the consent of parties a photostat copy of the agreement as also cyclostyled copy of the Notification pertaining to the appointment of both the Arbitrators have been placed on record, In view thereof, I have heard the arguments of the learned Counsel appearing on behalf of the respective parties at length At this stage, it may be stated that both the parties have relied upon *he principle laid «down in Union of India v. M/s. Raghunath Singh and Co , AIR 1980 SC 103. Both the parties have further conceded that the intervention of the Court to appoint a new Arbitrator, taking into consideration the circumstances of the instant case, falls in section 8 (1) (b) of the Arbitration Act which reqaires three essential ingredients to be satisfied : (i) Whether the earlier Arbitrator had shown his inability to proceed with the Arbitration proceedings ; (ii) Whether the vacancy was capable of being supplied as per Clause 18 of the Arbitration agreement; and (iii) Whether the parties have not supplied the vacancy. 6. In the instant case, controversy has arisen with respect to the third requirement. 7. The learned Counsel for the petitioner placing reliance on the abovesaid case has urged that the Himachal Pradesh Government appoint ed an Arbitrator by designation, namely, Shri Attar Singh to whom the disputes were referred ; that the appointed Arbitrator accepted the appointment but later on expressed his inability to continue with the proceedings ; that in such circumstances, the power or authority conferred upon Himachal Pradesh Government to appoint an Arbitrator having been once exercised, stood exhausted and, therefore, it is only within the powers of this Court to appoint an arbitrator and not with a stranger.
Alternatively, it has been urged that the appointed Arbitrator (Shri Attar Singh) having failed to use all reasonable despatch in entering upon the reference for making an award on account of the circumstances shown and admitted by the opposite party, was otherwise liable to be removed and thereby the vacancy had been created under sections 5 and 11 read with section 12 of the Act. As such it is only within the powers of the Court to appoint an Arbitrator afresh. Reliance has also been placed on the observations made in Dr. A. K. Roy v. J. C. Roy Choudhary and another, AIR 1982 Cal 8. 8. On the contrary Sh. M. S. Chandel, Assistant Advocate General has adopted the principles laid down w the case of Surendranath Paul v. Union of India, AIR 1965 Cal 183 and Union of India v. M/s. Raghunath Singh and Co. (supra) According to him both sections 8 and 12 of the Arbitration Act are of directory in nature and thus give a discretionary power to the Court to exercise the power of appointment of Arbitrator afresh itself or to allow the parties to fill up the vacancy so created. He has emphasised on the expression "Court may" in order to support his argument. 9. Before the rival contentions are considered, it would be appropriate to quote section 8 of the Act. It is to the following effect: (a) …….
He has emphasised on the expression "Court may" in order to support his argument. 9. Before the rival contentions are considered, it would be appropriate to quote section 8 of the Act. It is to the following effect: (a) ……. (b) If any appointed arbitrator or umpire neglects or refused to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy ; or (c) where the parties or the arbitrators, are required to appoint an umpire and do not appoint him; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy, (2) If the appointment is not made within fifteen clear days after the service of the said notice, the "Court may" on the » application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties" Admittedly, Clause 18 of the agreement provides: "If any question, difference or objection whatsoever shall arise in any way connected with or arising out of this instrument or the meaning, or operation or any part thereof or the rights, duties or liabilities of either party then save in so far as the decision of any such matter is hereinbefore provided for and has been so decided Every such matter including whether its decision has been otherwise provided for any/or whether it has finally decided accordingly or whether the contract should be terminated or has been rightly terminated in whole or part and as regards the rights and obligations of the parties as the result of such termination shall be referred for arbitration to any officer appointed by Himachal Pradesh Government acting as such at the time of reference and his decision shall be final and binding and whether the matter involves a claim the amount, if any awarded in such arbitration shall be recoverable in respect of the matter so referred. 10.
10. It does not provide for a situation, when the arbitrator appointed by a third party under the agreement has declined and/or refused and/or expressed his unwillingness to act as such. There is no evidence to show that initially the parties intended that, in such a case, the authority of the appointment of an arbitrator had specifically but intended not to empower the authorities to appoint the arbitrator afresh The object under the arbitration proceedings is to provide speedy remedy to the aggrieved party by a person of their choice. Simultaneously the object of the legislation is to promote arbitration and provision in section 8 (1) (b) is intended to advance this legislative object i. e. to say that this provision empowers the Court to appoint arbitrator afresh on being satisfied, among other things that the arbitration agreement does not show that it was intended that the vacancy should not be supplied. Close perusal of this provision shows that the provision is drafted with great care and in such circumstances, normally if the parties intended that the vacancy should not be supplied, it is for them to say specifically in the agreement. 11. In the absence of such expression in the agreement, Court has to presume that the parties did not intend that the vacancy should not be supplied. Further the petitioners claim is basically based on the terms of the agreement entered into between the parties inter se which also includes the arbitration clause In other words, the arbitration clause does not become non est in case the arbitrator declined to proceed with the proceedings. Thus, in case section 8 (1) (b) is viewed in that perspective, it is the discretion of the Court to either appoint the arbitrator afresh itself or to leave the parties for allowing to fill up the vacancy so created In the instant case, the parties by the terms of the agreement had empowered the Himachal Pradesh Government to appoint an officer acting as such at the time of the reference as an arbitrator to adjudicate upon all the disputes. In other words, by consent in writing, the parties had given authority to a third party to perform the function entrusted to him, as It is the duty casts upon him pursuant to the consent of the parties.
In other words, by consent in writing, the parties had given authority to a third party to perform the function entrusted to him, as It is the duty casts upon him pursuant to the consent of the parties. In that view of the matter and in my considered opinion, the powers of the appointing authority under the agreement cannot be deemed to have been exhausted. This can be only the harmonious interpretation which can be given to the arbitration clause. 12. In the case of Smt. Shila Banerjee v. State of West Bengal AIR 1982 Cal 9, it is to be noted that the learned Single Judge did not consider the observations though obiter, made by the Division Bench of the same Court in the case of Surinderanath’s (supra) No doubt in the latter case the primary question before the Division Bench was that in case the powers of the appointing authority to make an appointment had exhausted, whether the Court under sections (1) (b), appoint an arbitrator and make the arbitration effective. In paras 17 and 18 thereof, it had been observed :— “17. It is well settled that if the agreement does not indicate that the vacancy occurring in the office of the Arbitrator should not be supplied, the arbitration does not become infructuous, inasmuch as the Court has power under section 8 (1) (b) to supply the vacancy and made the arbitration effective. 18. It was argued that section 8 (1) (b) contemplates "appointed Arbitrator" chosen by consent of the parties and as in the present case the appointment was made by a person designated in the arbitration agreement, there is no "appointed arbitrator" within the meaning of section 8(1) (b) of the Act. But as pointed out already the person designated in the agreement derives his power to appoint an arbitrator from the arbitration agreement which is entered into by consent of parties. So the appointment by the person designated in the agreement is the appointed (arbitrator) by consent of parties." 13. The abovesaid conclusion so arrived at by me can be considered from another angle.
So the appointment by the person designated in the agreement is the appointed (arbitrator) by consent of parties." 13. The abovesaid conclusion so arrived at by me can be considered from another angle. Had the parties intended not to entrust the duty for the appointment of the arbitrator to the appointing authority they would have specifically mentioned that fact in the arbitration clause In the absence of any such clause Court has to presume that no such restriction was placed upon the powers of the appointing authority to appoint an arbitrator afresh in case of the earlier arbitrator having shown his inability on account of the certain exigency. Same analogy as in the case of the filling up of the vacancy by the court or by the parties, would apply in this respect. In other words, the powers of the appointing authority do not come to an end unless expressly restricted by the consent of the parties. 14. The reasoning given by the learned Single Judge in the case of Shilas case (supra), does not in my respectful view appear to be sound Thus, my conclusion is that under section 8(1) (b) the vacancy in the peculiar circumstances of the instant case can be filled up by the Himachal Pradesh Government. 15. Now sections 5 to 12 in Chapter II of the Act provide remedies of the filling up of the vacancy in case of arbitrator appointed with or without the intervention of the Court. Also both sections 8 and 12 give the foundation whereunder an arbitrator can be removed. As I have observed above, the powers with the Court to appoint an arbitrator afresh are discretionary which can either be left to the parties or the Court itself. The grievance of the petitioner against the earlier arbitrator namely Shri Attar Singh was that he failed to use all reasonable despatch in entering on and proceeding with the reference and making an award. He himself had declined to proceed and thereby no such grievance of the petitioner remains against the said officer who now does not remain to be an arbitrator. The new arbitrator who has been appointed as such by the appointing authority i. e. the Government of Himachal Pradesh, is legal and valid.
He himself had declined to proceed and thereby no such grievance of the petitioner remains against the said officer who now does not remain to be an arbitrator. The new arbitrator who has been appointed as such by the appointing authority i. e. the Government of Himachal Pradesh, is legal and valid. In case the said arbitrator misconducts himself or gives basis for his removal as envisaged under sections 5, 8 and II of the Act, the parties are at liberty to move this Court for his removal. At this stage, it may also be made clear that powers of the appointing authority are also to be considered by the Court for exercising the jurisdiction to appoint an arbitrator as to whether such appointing authority is performing his duties bonafide or not In case, the Court also comes to the conclusion that such powers are being misused for one reason or the other, the appointing authority can also be deprived of his function to appoint an arbitrator afresh. 16. In the case of East India Construction Company (Ltd.) it was observed that in case the powers of the appointing authority are not deemed to have been exhausted, a difficult situation might arise ; for instance that if the appointing authority i e., the Government of Himachal Pradesh in the instant case, is not satisfied with the conduct of the appointed arbitrator, they may transfer the arbitrator and thereby secure the appointment of another arbitrator of their choice on the plea of the arbitrators inability to continue as such. This reasoning appears to be a far fetched one as the Government in legal parlance has to be treated as an ordinary litigant before the Court. No such presumption of the appointing authority under the agreement acting mala fide can be drawn without any basis and thus in that view of the matter, the conclusion arrived at by me above, is supported by the reasonings as discussed above. In vie vv of the above, the application stands disposed of. No order as to costs. Order accordingly.