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1991 DIGILAW 126 (DEL)

NATIONAL SMALL INDUSTRIES CORPORATION LIMITED v. BHANOT ENGINEERING WORKS

1991-02-22

M.L.VERMA

body1991
M. L. VARMA, J. (ORAL) ( 1 ) THIS is a petition under Section 8 of the Arbitration Act, 1940 praying: that Umpire be appointed as per agreement dated 12. 1. 1963. ( 2 ) IN this case two arbitrators were appointed by this Court on 17. 11978. According to Clause 16 of the agreement between the parties which is an arbitration Clause; in the event of difference of opinion between the arbitrators the dispute was to be referred and decided by an Umpire to be nominated by the arbitorators before the arbitrators enter upon reference. The Umpire was appointed by the arbitrators on 11. 8 1978. ( 3 ) IT is stated in this petition that the arbitrators initiated arbitration. proceedings and "called upon the parties for 28. 8. 78, 14. 2. 79, 22. 3. 79 and 24. 5. 79". The petitioner entered appearance before the arbitrators, but the respondent herein was not present. It has also been alleged that the arbitrators neglected and refused to act as arbitrators inspite of the petitioner writing various letters to the arbitrators. Consequently, the petitioner wrote a registered A. D. letter on 6. 11 1985 to the Umpire, but admittedly this letter was received back by the petitioner with the postal remark that the addressee, namely the Umpire had already died Consequently, this petition has been filed for appointment of an Umpire. ( 4 ) MR. Saluja has submitted since the arbitrators did not enter upon reference and that they neglected to act as arbitrators in spite of various loiters written to them on behalf of the petitioner, it became necessary tor the petitioner to move this petition. His contention is that the very fact that the arbitrators allowed the time of four months to pass by their inaction itself amounted to disagreement between them for the Umpire to enter upon reference. For this purpose he referred to Rule 4 of the 1st Schedule of the Arbitration Act. In support of his contention be has also relied upon the judgment of ths Supreme Court in the case of K. D. Kapadia v. Indian Engineering Company reported in (1971) 2 SCC Page 706. In this case it has been held, inter alia, that when the arbitrators allowed their tim. In support of his contention be has also relied upon the judgment of ths Supreme Court in the case of K. D. Kapadia v. Indian Engineering Company reported in (1971) 2 SCC Page 706. In this case it has been held, inter alia, that when the arbitrators allowed their tim. ; to expire without making the award the Umpire could enter upon reference in lieu of the arbitrators because disagreement between the arbitrators may lake different shapes and forms. ( 5 ) MR. Chaudhary appearing for the respondent does not dispute this position in lav. . He, however, opposes this petition on the grounds that the petition is barred by time and that even otherwise it is not maintainable. His contention is ihat the petition should have been filed within three years from 22nd April, 1980 when inspite of letters from the petitioner the arbitrators neglected to act. He contends that since this petition was filed on 22nd November, 1985, it is beyond the period of three years and, therefore, barred by limitation under Article 137 of the Limitation Act, 1963 He has relied upon the judgment of the Supreme Court in the case of The Kerala State Electricity Board v T p. Kunhahumm reported in AIR 1977, Supreme Court, Page 282 and the judgment of Orissa High Court in the case of Secretary to Government of Orissa. Irrigation Depit. and Ors. v. Raghunath Mohapatra, reported, in AIR 1983, Orissa, Page 182 as well as ajudgment of this Court in the case of Shah Conitruction Company Ltd. v. Municipal Corporation of Delhi, reported in AIR 1985, Delhi, Page 358 in support of his contention that Article 137 of the Limitat on Act applies to all applications under any Act, ircluding those under ihe Arbitration Act. Mr. Chaudhary has drawn my attention to the explanation to Section 9 of the Arbitration Act according to which if an arbitrator, inspite of request by either party does not enter upon reference or proceed with it within one month from the date of request then such inaction may constitute neglect or refusal to act within the meaning of Section 8 of the Act. ( 6 ) THE other objection of Mr. Chaudbary is that under Section 8, sub-section (1) Clause. (b) it is only the arbitrators who could fill up the vacancy of the Umpire after the death of the one named earlier. ( 6 ) THE other objection of Mr. Chaudbary is that under Section 8, sub-section (1) Clause. (b) it is only the arbitrators who could fill up the vacancy of the Umpire after the death of the one named earlier. Consequently, notice petition is cation in C to the arbitrators on UMPIRE, should have been given by the petitioner to the arbitrators to fill up the vacancy of the Umpire- Admittedly, in this case no such notice was given either to the arbitrators or to the respondent. Mr. Chaudhary, therefore, contends that in view of the provisions of Section 8 sub-section (2) without such notice the petition is not maintainable. His submission is that under Section 8 (2) an appli- in Court would be maintainable only after such a notice had been issued arbitrators on the facts of this case consequent upon the death of the may be a submits ( 7 ) MR. Saluja has fairly stated at the bar that the petitioner m victim of inaction, but the petition is not barred by limitation. He that the period of four months would start running only after the arbitrators have entered upon reference. His argument is that an arbitrator enters upon reference only when he first applies his mind to the disputes between the parties in a judicial manner and this exclude ministerial acts of issuing notices. He has relied upon a judgment of five Judges of the Calcutta High Court in the case of Ramnath Agarwalls v. M/3 Goenka and Co- and Ors. reported in AIR 1973 Calcutta 253, whereunder it has been held that the arbitrators enter upon reference only when they have applied their mind to the disputes. Mr. Saluja has also submitted that apart from the letter written to the arbitrators on 22. 4. 80, the petitioner bad written to them to proceed with the arbitration on 2. 7. 80, 23. 4. 82, 15. 12. 82 and 11. 7. 85. He, therefore, submits that under Article 137 of the Limitation Act the period of three years begins to run when the right to apply accrues. According to him the right to apply accrued on 11. 7. 1984 as well as on 6. 11. 7. 80, 23. 4. 82, 15. 12. 82 and 11. 7. 85. He, therefore, submits that under Article 137 of the Limitation Act the period of three years begins to run when the right to apply accrues. According to him the right to apply accrued on 11. 7. 1984 as well as on 6. 11. 85 when the petitioner wrote to the Umpire and, therefore, the petition is within ( 8 ) IT appears to me that the neglect or refusal by the arbitrators to act is different from the question of entering upon reference. If the period of four months for making of the award is to be counted from the date of entering upon reference then that period has not elapsed because according to Mr. Saluja the arbitrators never applied their mind to the disputes between the parties in view of their inaction. It that is so, then there is no disagreement as contemplated in Rule 4 of the 1st Schedule to the Arbitration Act as well as Clause 16 of the agreement between the parlies for the Umpire to enter upon reference as a result of disagreement amongst the arbitrators; which difference of opinion is also inferred in the opinion of the arbitrators allowing the period of four months for making the award to lapse. Since the period of four months for making of the award hag to run from the date the arbitrators enter upon reference and since according to Mr. Saluja, they did not enter upon reference in this case, therefore, there is no question of the arbitrators allowing the period of four months for making of the award to lapse. Consequently, it cannot be said that there has been any disagreement between the arbitrators for the Umpire to enter upon reference. ( 9 ) TO my mind explanation to Section 9 makes it clear that within one month of the request to enter upon reference if the arbitrator does not do so, then there is a neglect or refusal to act. The right to apply under Section 8 of the Act would, therefore, accrue on that date and the period of limitation would start running from then. The fact that the petitioner wrote letters repeutedly to the arbitrators cannot extend the period of limitation of three years and in this case, therefore, it appears to me that the petition is barred by limitation. The fact that the petitioner wrote letters repeutedly to the arbitrators cannot extend the period of limitation of three years and in this case, therefore, it appears to me that the petition is barred by limitation. ( 10 ) APART from the fact that the petition is barred by limitation, provisions of Rule 4 of>be First Schedule of the Arbitration Act are also not attracted on the fact of this case. In any event the notice for filling up the vacancy on the death of the Umpire had to be given by the petitioner to the arbitrators and if the arbitrators failed to appoint the Umpire only then could the petition come to the Court under Section 8 (2 ). In this case, admittedly, no such notice was given. The contention of Mr. Saluja is that since the arbitrators were not acting at all there was no question of any notice being given to the arbitiatcrs because it vould have been of no avail. Be that as it may, it appears to me that the contention with regard to the non-maintainability of this petition raised by Mr. Chaudhary has merit and, therefore, I also hold that the petition is not maintainable. In this ca?e the notice given to the Umpite was a time when be had already died and, therefore, in the eyes of law theie was no notice to the Umpire either. ( 11 ) LASTLY, Mr. Saluja has urged that if the petition is not maintainable under Section 8 of the Act then the same may be treated as one under Section 20 of the Act. In this case two arbitrators had already been appointed by this Court under Section 20 of the Act. The provisions of Section 20 are not at all applicable to the instant caie. Besides the relief claimed in this petition is bat an Umpire be appointed However, there is no provision for appointment of an Umpire under Section 20 of the Act. The question with regard to the pecuniary jurisdiction of this Court had also been raised in view of the fact that the value for the purposes of jurisdiction is stated to be Rs. 61,513. 47 only. However, there is no serious dispute in this regard because initially the arbitrators were appointed by this Court. Therefore, this Court is seized of the matter for all further proceedings. Mr. 61,513. 47 only. However, there is no serious dispute in this regard because initially the arbitrators were appointed by this Court. Therefore, this Court is seized of the matter for all further proceedings. Mr. Saluja has relied upon a judgment of this Court in the case of Dr. D. R. Malhotra v. Indian Aluminium Cables, reported in 1978 RLR Page 43 in support of his contention that this Court has the jurisdiction to entertain the petition. Since Mr. Chaudhary does not dispute the jurisdiction of this Court to entertain the petition, it is not necessary to deal with this point any further. ( 12 ) IN view of the foregoing, this petition is dismissed. There will be no order as to costs.