S. R. Lalwani v. Rajasthan State Industrial Development & Investment Corporation Ltd.
1997-09-08
SHIV KUMAR SHARMA
body1997
DigiLaw.ai
JUDGMENT 1. :- Instant appeal arises from the order dated January 24, 1987 of the learned District Judge Alwar whereby the award of the Arbitrator dated July 13, 1987 was set aside. 2. Relevant facts giving rise to this appeal are that the Arbitrator vide its award dated July 13, 1987 awarded a sum of Rs. 1,70,038.50 p to be paid by the respondent No. 1 (for short the RIICO) to the appellant within three months failing which the award amount shall carry interest @ 12% p.a. from the date of award. The appellant on August 8, 1993 submitted an application before the learned District Judge for making the award as rule of the court and to pass decree accordingly whereas the RIICO filed an application under Section 33 read with section 30 of the Arbitration Act, 1940 (for short the Act) for setting aside the award. 3. The learned District Judge, vide order dated Jan. 24, 1997, allowed the application of RIICO and set aside the award whereas the application moved by the appellant was dismissed. The appellant in the instant appeal has called in question the said order of the learned District judge. 4. Mr. S.R. Lalwani, appellant present in person assailing the impugned order canvassed that the learned court below has not properly appreciated the legal position as well as the facts of the case. The learned District Judge has completely overlooked the provisions contained in Sections 8 and 9 of the Act. The learned District Judge has also ignored the fact that several opportunities were given to the RIICO and the RIICO had knowledge of all the proceedings but no objections were raised in respect of the arbitration proceedings. Under these circumstances the principle of estoppel was fully applicable and the RIICO was estopped from assailing the award of the Arbitrator. Mr. Lalwani, further contended that clause 80 of the arbitration agreement clearly envisages the appointment of a person as the sole arbitrator. The only qualification laid down therein is that the person appointed should have the standing experience. Right from the beginning the arbitrator Mr. M.C. Das accepted to act as sole Arbitrator. He went on issuing directions to both the parties.
The only qualification laid down therein is that the person appointed should have the standing experience. Right from the beginning the arbitrator Mr. M.C. Das accepted to act as sole Arbitrator. He went on issuing directions to both the parties. RIICO did not come forward before the learned District Judge under various provisions of the Act or under any Act praying to stay the proceedings before the arbitrator Shri M.C.Das and to allow them an opportunity to appoint their arbitrator. The case of RIICO is that it had appointed Shri O.P.Mathur as an arbitrator. Shri O.P.Mathur has also requested the appellant to attend his office on Jan. 13, 1983 at 3.00 p.m. regarding appointment of arbitrator. If Shri Mathur was arbitrator then there was no necessity in writing to the appellant to discuss the case with regard to appointment of arbitrator. Mr. Lalwani, learned appellant invited my attention to section 9 of the Act. The learned appellant further contended that there was no error apparent on the face of the record and the award of the arbitrator could not have been set aside. 5. On the other hand Mr. R.R.L. Gupta, supported the impugned order and contended that appointment of arbitrator was illegal and the arbitrator had no jurisdiction to make the award. The contractor and the competent authority had not arrived at an agreement as to the appointment of sole arbitrator and Empire ought to have been appointed but the clause of the arbitration agreement as well as the legal provisions were flouted. The learned court below has categorically dealt with this legal position and rightly set aside the award. 6. I have given my anxious consideration to the rival contentions and carefully perused the impugned order as well as the record of the case. 7. The whole rigmarole is with regard to appointment of sole arbitrator. In this respect section 9 of the Act is very clear. Once the parties abide by the arbitration clause then recourse has to be taken to the Act. If Act says something it has to prevail and section 9 of the Act gives power to any of the party to appoint any arbitrator as the sole arbitrator if the other has failed to appoint its arbitrator.
Once the parties abide by the arbitration clause then recourse has to be taken to the Act. If Act says something it has to prevail and section 9 of the Act gives power to any of the party to appoint any arbitrator as the sole arbitrator if the other has failed to appoint its arbitrator. If the appellant did exercise his statutory right and in case the RIICO was so dissatisfied it had remedy available under section 9 of the Act to come before the District Court for the purpose of getting its arbitrator appointed which they did not choose to do so and through its conduct it allowed Shri M.C.Das to proceed further. Even the Managing Director of the RIICO did appear before the Arbitrator Shri M.C.Das and sought the adjournment indicating that he would be deputing the Resident Engineer to attend the hearing. The basic clause to the arbitration is not in dispute between the parties that there is an arbitration clause which had to be adhered. It is also an admitted fact that the clause of arbitration agreement has to be governed by the provisions of the Act, and any statutory modification or enactment thereof and rules made thereunder for the time being in force shall apply to the arbitration proceedings. Consequent to the disputes the appellant invoked the provision in this case and suggested the respondent to come forward for appointment of a sole arbitrator from the following persons:- 1. Shri M.C. Das, Chief Engineer 2. Shri S.P. Sharma, Deputy. Chief Engineer 3. Shri S.P. Kapil Superintending Engineer. This was replied by the RIICO vide their letter dated December 17,1982 indicating that it had decided to appoint Shri O.P.Mathur, Superintending Engineer as Arbitrator on behalf of the RIICO in terms of the arbitration clause referred in the agreement dated 18.12.1980. It was further stated that if the appellant had any objection to it, the RIICO may apprise and discuss with the appellant immediately. It appears that this was in the nature of the proposal and it cannot be said as an absolute appointment as required under the Act. In fact Shri O.P. Mathur being the Superintending Engineer of the Works directly connected, could not be appointed as an arbitrator. Arbitrator to be appointed was bound to be impartial and not connected with the works at all.
In fact Shri O.P. Mathur being the Superintending Engineer of the Works directly connected, could not be appointed as an arbitrator. Arbitrator to be appointed was bound to be impartial and not connected with the works at all. It was in reference to this letter that the appellant vide its letter dated December 24, 1992 intimated the RIICO that the appellant had appointed Shri M.C. Das as arbitrator to proceed further in the matter requesting the RIICO to issue further orders failing which Shri M.C.Das shall be called upon to act as a sole arbitrator. It was also intimated to the RIICO that no useful purpose would be served by discussing the matter, nor the appellant was in a position to agree for sole arbitrator of Shri O.P.Mathur, as he was Superintending Engineer of Works. To this no reply was received from the RIICO. Even the statutory period of 15 days had expired. 8. Section 9 B of the Act provides as under: "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." 9. The learned appellant canvassed that the selection of Shri O.P. Mathur by the RHCO had not culminated into final appointment. The facts are also not in dispute between the parties that the appellant did notify to the RIICO that in case it did not appoint its arbitrator within 15 days then Shri M.C. Das would be appointed as sole arbitrator. It was the inaction of the RIICO taking the matters in a causal way and I am of the view that the appellant rightly and legally notified to the RIICO vide letter dated 28.2.1983 that Shri M.C. Das was appointed as the sole arbitrator in view of section 9 of the Act. This letter has been admitted to have been received by the RIICO and no steps were taken by the RIICO under the provisions contained in the Act. On the contrary it allowed the sole Arbitrator Shri M.C.Das to proceed.
This letter has been admitted to have been received by the RIICO and no steps were taken by the RIICO under the provisions contained in the Act. On the contrary it allowed the sole Arbitrator Shri M.C.Das to proceed. The RIICO ought to have taken the steps provided under the Act but on the contrary it sat on the fence to wait and watch the results and did not act in time and by its conduct it appears that the appointment of Shri M.C.Das, as sole arbitrator was accepted by it. 10. Viewing from the another angle, it appears that the appellant appointed the arbitrator by letter dated December 24, 1982. In this letter it was requested that the RIICO should issue orders for its arbitrator failing which the appellant would appoint its arbitrator as sole arbitrator. 11. The RIICO did not do anything at all. It is on 28.2.1983 that the appellant appointed Shri M.C. Das as sole Arbitrator. Thus it is apparent that the RIICO had clear two and half months, i.e. 75 days at its disposal as against dear 15 days. The RIICO should have invoked the provisions of section 9 of the Act but it did not invoke said provisions, and more over the Arbitrator Shri M.C. Das before he started functioning as sole arbitrator was never informed by the RIICO that Shri O.P. Mathur has been appointed as Co-arbitrator on behalf of the RIICO. No correspondence was produced by the RIICO before the learned Judge addressed to Shri O.P. Mathur that he was appointed and he should have accepted to act as arbitrator which is the prerequisite under the Act. It is well settled that once the arbitrator enters and accepts to act as sole arbitrator any intimation there is meaningless unless the District Court is approached as provided under the Act. 12. In view of the discussions made hereinabove I am of the considered view that the learned District Judge has committed illegality in setting aside the award and in allowing the application submitted under section 33 read with Section 30 of the Act. 13. Consequently, I allow this civil miscellaneous appeal and set aside the impugned order. The case is remitted back to the learned District Judge Alwar for passing appropriate orders on the application submitted by the appellant for making the award of the arbitrator as a rule of the court.
13. Consequently, I allow this civil miscellaneous appeal and set aside the impugned order. The case is remitted back to the learned District Judge Alwar for passing appropriate orders on the application submitted by the appellant for making the award of the arbitrator as a rule of the court. The record of the case by sent back forthwith. The parties are directed to appear before the learned District judge on September 30, 1997. The learned District Judge is expected to adjudicated upon the application within three months from the date of receipt of this order. Costs easy.Appeal allowed-case remitted back. *******