Research › Browse › Judgment

Calcutta High Court · body

1997 DIGILAW 405 (CAL)

Rehabilitation Industries Corporation Ltd. v. Madan Mohan Nandy

1997-11-10

Samaresh Banerjea

body1997
JUDGMENT Samaresh Banerjea, J.: The present revisional application is directed against order no. 9 dated the 12th September, 1996 passed by the learned Chief Judge, City Civil Court, Calcutta, in Misc. Case No. 174 of 1995, allowing the application of the opposite party under section 8 of the Arbitration Act, 1940 praying for appointment of an Arbitrator by the court. Admittedly the petitioner which is a Government of India enterprise invited tenders for providing noon meals and afternoon snacks/tea etc. to its employee in the Bonhoogly Industrial Estate wherein the tender submitted by the opposite party was accepted and agreement was duly executed by and between the parties on 9.9.91 for a period upto 31.8.92. Clause (t) of the said agreement provides for reference of disputes and differences between the parties to the Chairman and Managing Director of the petitioner for arbitration. The aforesaid agreement was replaced by another agreement dated 3.9.93 which also contains a similar arbitration clause. Admittedly, differences and disputes arose between the parties for which the opposite party made several representations to the present petitioner. As according to the opposite party the Arbitrator declined to act in spite of raising of dispute, he applied under section 8 of the Act for removal of the said Arbitrator and for appointment of an Arbitrator by the court which has been allowed by the trial court. 2. The learned counsel for the petitioner has assailed the said order on the ground that trial court had no jurisdiction to pass such order allowing the application of the opposite party under section 8 of the Arbitration Act inasmuch as only in case of refusal of the named Arbitrator the provision under the said Act can be invoked but in the instant case admittedly the Arbitrator in the agreement having been named and the opposite party never having raised and dispute before the Arbitrator asking him to enter into reference, the question of refusal of such named Arbitrator to act could not arise. 3. 3. Learned counsel for the opposite party on the other hand has brought to the notice of the court several letters written to the various authorities including the Chairman and Managing Director of the petitioner corporation and submitted that such letters along with the letter ultimately addressed to the Corporation asking for appointment of Arbitrator, if are read together there will be no manner of doubt that the Arbitrator declined to act although dispute was raised before him and under such circumstances no interference is called for with the order of the trial court. 4. It has been, further submitted on behalf of the opposite party that whether there has been refusal on the part of the named Arbitrator to act is a question of fact and the trial court in exercise of its discretion having found on fact that there was such a refusal, this court sitting in revisional jurisdiction may not interfere with such discretion there being no error of jurisdiction. 5. After considering the respective submission of the parties and considering the material on record I am unable to accept the contention of Mr. Basu, learned Senior Advocate appearing for the opposite party that the trial court having exercised its jurisdiction on certain facts and having found there is refusal, this court in exercise of its revisional jurisdiction should interfere in the matter. It is true as pointed out by Mr. Basu that even erroneous decision may not be interfered with under the revision of section 115 of the Code of Civil Procedure and even under Article 227 of the Constitution unless there is error of jurisdiction. 6. It must not be overlooked that while in a case like the present one where the very assumption of jurisdiction by the court under section 8 of the Arbitration Act being dependent on a particular fact viz. whether there was really refusal by the Arbitrator to act, the same really amounts to jurisdictional fact and in the event the court assumed jurisdiction involving its power under section 8 of the Arbitration Act on the basis that there was refusal although in fact there was no such refusal the question of error of jurisdictional fact being involved, the court can certainly interfere. In this connection decision of the Supreme Court in the case of Smt. Shrist Dhawan vs. M/s. Shaw Brothers reported in AIR 1992 SC 1555 para 19 may be referred to. 7. In the instant case it is the specific grievance of the present petitioner is that there has been no refusal at all by the Arbitrator to act as it will be evident from the records of the case. It is not disputed that in the instant case the Arbitrator is a named one inasmuch as the relevant clause in the agreement provides for reference of the dispute and difference between the parties to the Chairman and Managing Director of the petitioner Corporation. It is not stated in the agreement that in the event of dispute or differences the Corporation or the Chairman or the Managing Director will appoint the Arbitrator. The fact that in the instant case the, Arbitrator is named is also not disputed by the opposite party. It appears from the records that admittedly the opposite party never applied before the said named Arbitrator viz. the Chairman-cum-Managing Director of the Corporation specifically referring the dispute and difference between the parties and asking him to enter into reference. The only letter which has been written asking reference of the dispute to the Arbitrator is a letter dated 12.8.94 annexed to the affidavit in opposition. The said letter, however, is not addressed to the Arbitrator at all but to the petitioner Corporation itself. After briefly stating the dispute between the parties in the last but one paragraph of the said letter the petitioner Corporation has been requested to appoint the Chairman-cum-Managing Director as the Arbitrator for settlement of the dispute. The said letter, therefore, clearly is not a letter written to the named Arbitrator himself asking him to enter into reference and referring the dispute to him. Mr. The said letter, therefore, clearly is not a letter written to the named Arbitrator himself asking him to enter into reference and referring the dispute to him. Mr. Basu appearing for the opposite party however, has drawn the attention of the court to some other letters annexed to the said affidavit-in-opposition and submitted that if all the letters are read together there can be no doubt that even the named Arbitrator was aware of the 'dispute and yet did not enter into reference and therefore, the last letter was written to the Corporation so that the Arbitrator enters into reference and the failure to do so certainly would amount to refusal to act attracting the provision of section 8 of the Arbitration Act. 8. I am, however unable to accept the aforesaid contention of Mr. Basu. It is true that letters dated 10.5.94, 2.6.94 and 3.7.94 annexed to the affidavit-in-opposition were addressed to the Chairman and Managing Director of petitioner Corporation who admittedly is the named Arbitrator. A perusal of the said letters will however indicate that none of the said letters was really addressed to the said Chairman-cum-Managing Director in his capacity as Arbitrator asking him to enter into reference after referring the dispute to him. On the contrary it appears that all such letters were really written to the said Chairman-cum-Managing Director, as the head of the Corporation by way of representation against the alleged illegality committed by the Corporation. In letter dated 10.5.94 after drawing the attention of the Chairman that certain amount is still outstanding and not being paid the petitioner asked for immediate payment of the same, obviously the same was written to him as head of the Corporation. Similarly the letter dated 2.6.94 is really a reminder of the first letter demanding immediate payment of the outstanding dues. 9. From the 3rd letter dated 3.7.94 it will appear that after the aforesaid two letters were written in reply to Corporation's stand of non-supply of meals by the said letter the petitioner demanded immediate payment failing which threatened legal action. None of the said letters, therefore, can be said to be a prayer before the named arbitrator to immediately enter into reference of the dispute or even clearly raising the dispute before the Arbitrator giving particulars thereof. None of the said letters, therefore, can be said to be a prayer before the named arbitrator to immediately enter into reference of the dispute or even clearly raising the dispute before the Arbitrator giving particulars thereof. In such view of the matter it cannot be said a combined meaning of all the letters will show that there has been refusal on the part of the Arbitrator. 10. It is true as pointed out by Mr. Basu that such refusal may implied, but as pointed out hereinbefore such implied refusal will come in only when a prayer for entering into reference is clearly made after referring the dispute to the named Arbitrator, which has not been done in the instant case. 11. In this connection reference may be made to the judgment of our High Court as also of the Supreme Court. In the case of Ranjit K. Gupta vs. Union of India, P.C. Mullick J, in the said particular case held that there was no failure on the part of the Arbitrator since the letter sent to the Arbitrator was addressed to the Development Commissioner who was not the proper person to be approached. The fact that copy of the said letter was sent to the Secretary of the appropriate Ministry was also held not to amount calling upon the Secretary to nominate the Arbitrator. 12. In the case of Harbans Singh Tuli and Sons Builders Put. Ltd. vs. Union of India reported in AIR 1992 SC 1124 it was held by the Supreme Court that unless the conditions under section 8 of the Arbitration Act, 1940 are fulfilled or satisfied, the appointment of the Arbitrator by the Court will be illegal. 13. By the impugned order the learned Judge acted illegally and with material irregularity in the exercise of his jurisdiction in overlooking that in the instant case the Arbitrator is a named one and therefore, the question of calling upon him to appoint an Arbitrator was wholly unwarranted and not governed by the agreement between the parties, the Arbitrator being a named one, it was for any of the parties to refer the dispute and difference to the Arbitrator by calling upon the named Arbitrator himself to enter into reference and raising the dispute before him, which, admittedly, has not been done in the instant case. The distinction which has been sought to be made by the learned Judge because of the fact that the Arbitrator has been named by designation and not by name is wholly irrelevant. The fact that the Managing Director and Chairman of the Corporation has been agreed by the parties to be the Arbitrator indicates he certainly was a named Arbitrator. 14. Mr. Basu relied on the decision of the Supreme Court in the case of State of W.B. vs. National Builders reported in AIR 1994 SC 200 . The aforesaid decision of the Supreme Court however, does not appear to this Court to be of any help to the opposite party. On the contrary the said decision of the Supreme Court in no uncertain terms has reiterated the position in law that only on the refusal of the named Arbitrator the court can assume jurisdiction under section 8(1)(b) of the Act and not otherwise. Relying on the observation of the Supreme Court in paragraph 4 of the said judgment it has been submitted that refusal to act may be inferred as well but as pointed out hereinabove a combined reading of the letters do not indicate that the named Arbitrator was ever called upon to enter into reference or there has been any reference at all of the dispute for arbitration before the named Arbitrator, and therefore the question of failure to discharge the obligation of the Arbitrator which alone can attract the provision of section 8 of the Arbitration Act does not arise in the instant case. As pointed out hereinbefore there has been no reference at all of the dispute before the arbitrator and he was never called upon to enter into a reference. 15. For the reasons stated above the impugned order passed by the learned Judge cannot be sustained and the same is hereby set aside. 16. Since the impugned order by which the court has appointed an arbitrator has been set aside, action, if any, taken in the meantime pursuant to the impugned order, shall also stand quashed. 17. There will be no order as to costs. Application allowed.