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1994 DIGILAW 739 (ALL)

UNION OF INDIA v. AUDHYOGIC GASES PTD. LTD.

1994-10-21

S.C.MOHAPATRA, V.P.GOEL

body1994
JUDGMENT S. C. Mohapatra, J. - Six disputes were referred to a arbitrator. Arbitrator not having given awards in respect of these disputes referred to him within the time stipulated, six applications were filed in court by the respondent for appointment of an arbitrator to enter into reference and make awards, alleging that arbitrator is guilty of misconduct and has also become functus officio after expiry of the period. Appellant filed six applications for extension of time enable arbitrator to give the awards. 12 applications were heard together and impugned composite order has been passed appointing an arbitrator which has the effect of removal of the arbitrator appointed. This is grievance of the appellant. 2. Against the impugned order in respect of one of the application of respondent F.A.F.O. No. 217 of 1994 was filed by appellant which came up for admission earlier. Finding that in case we direct issue of notice to respondent, the proceeding before arbitrator may be delayed we disposed of the appeal disapproving appointment of arbitrator and directed Trial Court in that case to give opportunity to the parties to file panel of names whereafter to consider the appointment of an arbitrator. We gave liberty to respondents to move this court for recalling of the order in case it feels aggrieved and is prejudiced. 3. When these appeals came up for admission, respondent No. 1 has entered caveat. In such circumstances with the consent of the parties, we have heard the appeals finally. 4. No appeal having been filed against removal of the arbitrator oh ground of misconduct on account of delay in making an award his removal stands confirmed and court gets jurisdiction to appoint an arbitrator. We may, however, state that order of refusal to extend time was vulnerable in as much as court did not keep in mind that it has power to extend time even after award is passed where parties are not prejudiced and took part in the proceeding even after expiry of the period allowed to the arbitrator. In the present case, respondent No. 1 tolerated the expiry of time and even prayed for adjournments even after expiry of the period fixed till it filed application in court for appointment of another arbitrator. Be that as it may, removal of arbitrator has become final. 5. Once arbitrator is removed by court. Power is vested on it to appoint another arbitrator. Be that as it may, removal of arbitrator has become final. 5. Once arbitrator is removed by court. Power is vested on it to appoint another arbitrator. Learned counsel for the appellant has brought to our notice the clause of arbitration agreement, where it is said that for any reason arbitrator does not give the award, the matter is not to be referred to arbitration at all. Relevant portion of clause 2900 of the agreement reads as follows : "2900. ARBITRATION (a) In the event of any questions, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitration of a person appointed to be the arbitrator by the General Manager in the case of contracts entered into by the Zonal Railways and Production Units; by any Member of the Railway Board, in the case of contracts entered into by the Railway Board; and by the Head of the Organisation in respect of contracts entered into by the other organisations under the Ministry of railways. If, however, the arbitrator is a railway servant, he will not be one of those who had an opportunity to deal with the matters to which the contract relates or who in the court of their duties all as railway servants have expressed views on or any of the matters under dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract. (b) In the event of the arbitrator dying neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the court for any reason, it shall be lawful for the authority appointing the arbitrator to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid. (c) It is further a term of this contract that no persons other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all. (d) to ... (r) ............." 6. (c) It is further a term of this contract that no persons other than the person appointed by the authority as aforesaid should act as arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all. (d) to ... (r) ............." 6. Perusal of the extracted portion indicates that in clause (b) authority empowered to appoint an arbitrator, can appoint another arbitrator. In these appeals arbitrator has not not died, refused to act, resigned or is unable to act. His negligence if any has been condoned by respondent No. 1 by taking part in the proceeding till 3.9.1993. In such circumstances, authority has no scope to appoint an arbitrator. Power of Court to appoint arbitrator as envisaged under the Act has not been taken away. Rightly or wrongly. Court has removed the arbitrator and therefore, it has power to appoint another under Clause (c) which is dependent on Clause (b) is not attracted. 7. Trial Court has, however, acted arbitrarily in appointment of an arbitrator. It ought to have kept in view that arbitrator is a judge of the choice of the parties. Therefore, parties should have been given an opportunity to select a person of their choice. This could have been best achieved by calling upon the parties to give panel of names. If any name is common. Trial Court ought to have appointed that persons as arbitrator. Where names are not common. Trial Court ought to have heard objection to the names of persons and thereafter, could have appointed an arbitrator after getting his consent and terms of his appointment determined. Appointment of an arbitrator before he has consented and agreed to the terms of his appointment is arbitrary and cannot be sustained. That part of the order is vacated. 8. In this case, claim statement and other statement have already been filed. Only materials are to be produced before the arbitrator to be appointed who is to consider the same after giving opportunities to parties of being heard and is to make the award. Keeping the nature of work to be performed. Court is to determined the terms of appointment relating to time within which award shall be given and remuneration as well as other expenses payable. Keeping the nature of work to be performed. Court is to determined the terms of appointment relating to time within which award shall be given and remuneration as well as other expenses payable. Learned counsel for both the parties agree that the parties shall render full co-operation for early disposal of the disputes. 9. Both parties shall appear before the court on 21.11.1994 with a copy of this order and on that date submit the penal of names on basis of which Trial Court shall proceed to appoint an arbitrator and shall finalise appointment within thirty days from that date in light of observations made above. 10. In result, appeals are allowed to the extent indicated. There shall be no order as to costs. 11. A copy of order when applied for shall be given to the parties within ten days. Order accordingly.