Research › Search › Judgment

Punjab High Court · body

2000 DIGILAW 837 (PNJ)

Union of India v. Abbotts and Company

2000-08-02

R.L.ANAND

body2000
JUDGMENT R.L. Anand, J. (Oral) - Union of India has filed the present revision and it has been directed against the judgment dated 15.1.1999 passed by Additional District Judge, Jalandhar, who dismissed the appeal of Union of India by affirming the order dated 24.7.1996 passed by Additional Civil Judge (Senior Division), Jalandhar, who allowed the objections of M/s. Abbotts and Company and set aside the award dated 10.6.1988. 2. Some facts can be noticed in the following manner :- There was an arbitration clause in the agreement entered into between the petitioner and the respondent-Company. The matter was referred to the arbitrator in accordance with the agreed condition of the agreement. The arbitrator gave the award on 10.6.1988 in favour of Union of India. The Company filed the objections that Union of India has illegally and unilaterally made the reference to the arbitrator and in these circumstances the reference is not valid. It was also the objection of the Company that the award has been made after four months of entering upon the reference. 3. Notice of the objection petition was given to the Union of India, who filed the reply stating that it was entitled to recover Rs. 94,335.22 but the contractor failed to deposit the amount. The claim was filed before the arbitrator, who gave the award. From the pleadings of the parties, the following issues were framed by the learned trial Court : 1. Whether the award dated 10.6.1988 is liable to be set aside on the ground mentioned in paragraph No. 5 of the objection petition ? OP Objector 2. Whether the objector is barred by his act and conduct from filing the present objection ? OPR 3. Whether the objection petition has been filed within limitation ? OPO 4. Relief. 4. Both the parties led evidence before the trial Court and vide order dated 24.7.1996 the learned Additional Civil Judge (Senior Division), Jalandhar allowed the objections and set aside the award. The reasons of allowing the objections are contained in para Nos. 6 and 7 of the order which read as under :- "6. As per admitted case of the respondent, the arbitrator entered into reference on 28th October 1986, but give his award on 10.6.1988. The reasons of allowing the objections are contained in para Nos. 6 and 7 of the order which read as under :- "6. As per admitted case of the respondent, the arbitrator entered into reference on 28th October 1986, but give his award on 10.6.1988. The award has, therefore, been admittedly made and signed by the arbitrator after the expiry of the statutory period of four months as required by the first schedule of the Arbitration Act, 1940. In case of the arbitrator could not pronounce and sign the award within a period of four months then he was required to get permission of the court to extend the time for making the award as required under Section 28 of the Arbitration Act, 1940, but this has not been done in the present case. The reference made in the present case is unilateral one i.e. made by the UOI alone. On this issue Shri D.N. Bahri, learned counsel for the objector has argued that where the reference to the arbitrator has been made unilaterally without referring the claim of the objector then the award is liable to be set aside. In this regard the learned counsel for the objector has placed reliance on the ruling reported in AIR 1973 Allahabad page 49, Jagan Nath Kapoor and another v. Premier Credit and Instrument Corporation (P) Ltd., AIR 1972 Punjab and Haryana page 207 titled as UOI v. Hari Krishan Joshi. It has been held in the ruling reported in AIR 1972 Punjab and Haryana page 207 that one sided reference to arbitration is illegal until and unless the other party has refused to join in the reference. When it is desired to take advantage of an arbitration clause it is necessary that the party seeking the reference should first call upon the other party to join in the submission and it is only when the other party has refused to join that a unilateral reference becomes competent. This has also been held in the ruling reported in AIR Allahabad page 49 as under : It is true that the Arbitration Act does not specially provide for a joint reference by the parties to an arbitrator out of court. This has also been held in the ruling reported in AIR Allahabad page 49 as under : It is true that the Arbitration Act does not specially provide for a joint reference by the parties to an arbitrator out of court. Yet in the very nature of arbitration proceedings, where the adjudicator is chosen by common consent of the parties, it is but natural that their dispute, differences, claims should also be jointly referred by them for decision of the arbitrator. The use of the words claim and difference in clause 16(b) of the agreement is significant. It obviously refers to the respective claims of the parties against each other. 7. In the present case the arbitrator has not given the award within the statutory period of four months, and the reference to the arbitrators was made unilaterally by the UOI. The arbitration award, therefore, cannot be said to stand scrutiny of law and is liable to be set aside. This issue is therefore decided in favour of the objector." 5. Aggrieved by the order of the learned trial Court the Union of India filed the appeal before the Additional District Judge, Jalandhar, who for the following reasons as given in para Nos. 8 to 10 of the impugned judgment dated 15.1.1999, dismissed the appeal : "8. The learned counsel for the appellant has contended that the findings of the trial Court on issues No. 1 and 3 are wrong and are based on conjectures and surmises. He has further contended as per Section 22 of the Indian Arbitration Act, an arbitrator can be appointed in such a manner as may be agreed upon between the parties and in the present case the arbitrator was appointed in terms of condition No. 37-IAFW-1815-Z forming part of the agreement and, therefore, learned Civil Judge committed error in holding that the arbitrator was appointed unilaterally. He has further contended that learned trial Court failed to rely on the agreement that arbitrator who is produce that the arbitrator may enlarge time with the consent of the parties for enlargement of the time in making and publishing the award. In this case application for enlargement of time was given from time to time and, therefore, the award has been wrongly set aside. In this case application for enlargement of time was given from time to time and, therefore, the award has been wrongly set aside. He further contended that copy of the award was sent to the objectors but they did not file the objections within time and as such findings on issue No. 3 are also liable to be set aside. 9. On the other hand, the learned counsel for the respondent objector contended that under the law reference could not be made unilaterally and arbitrator can give award within four months and thereafter time to make the award can be enlarged by the Court only and in this case time was never enlarged and as such the learned Civil Judge has rightly decided the issue. 10. No doubt, there is an arbitration clause in the contract between the parties for referring the dispute to the arbitrator but it is settled law that reference to arbitrator could not be made unilaterally. In case of Jagan Nath Kapoor and another v. Premier Credit and Instrument Corporation (P) Ltd. (supra) it was held that unilateral reference to arbitrator by the plaintiff is wholly illegal and confers no jurisdiction on the arbitrator. Similarly in Union of India v. Hari Krishan Joshi (supra) it was held that unilateral reference to arbitrator is illegal. In these cases there was arbitration clause in the agreement but it was held that unilateral reference was illegal. In the present case also the reference has been made unilaterally and as such arbitrator had no power to give the award. Moreover, the award has not been given within the statutory period of four months. No sanction of the court was obtained for enlargement of the time and as such award is without jurisdiction. The findings of the trial Court on issue No. 1 are, therefore, correct and are affirmed." 6. I have heard Mr. M.S. Guglani, Advocate on behalf of the petitioner, Mr. Sudhir Pruthi, Advocate on behalf of the respondent and with their assistance have gone through the record of the case. 7. It is a revision. The scope of the revision is limited. I have to see whether any patent illegality or material irregularity has been committed by the Courts below and whether any miscarriage of justice has been done to the parties or not. 7. It is a revision. The scope of the revision is limited. I have to see whether any patent illegality or material irregularity has been committed by the Courts below and whether any miscarriage of justice has been done to the parties or not. I have already re-produced above the reasons given by the Courts below why the objections of the objector-Company have been allowed. A reading of the same would show that the objections have been allowed mainly on the ground that the Union of India had made the reference unilaterally. 8. During the course of submissions the learned counsel for the petitioner has brought to my notice that the Company had been appearing before the arbitrator and now it does not lie in its mouth to say that the reference has been made unilaterally by the Union of India. So much so, the Company has filed even the cross-objections before the arbitrator and the proceedings continued before the arbitrator upto 10.6.1988 and the award has been made on the same day. 9. On the contrary, the learned counsel for the respondent submitted that the reference has been made to the arbitrator unilaterally by the Union of India and the respondent-Company never gave consent in writing or otherwise in this regard. 10. I do not subscribe to the argument raised by the learned counsel for the respondent. The Company had been participating before the arbitrator. It had even filed the cross-objections before the arbitrator and now it does not lie in the mouth of the company to say that the reference has been made unilaterally by the Union of India. Admittedly, there was an arbitration clause in the contract and the dispute has arisen with regard to the work and, therefore, the Union of India had the right to refer the matter to the arbitrator. 11. With regard to the extension of time the proceedings continued before the arbitrator upto 10.6.1988. The learned counsel appearing on behalf of the petitioner invited my attention to the letter dated 8.5.1988 issued by the respondent-Company in which it has been stated that the Company agrees and gives its consent for enlargement of time upto and including 30.6.1988 for making and publishing of the award. Meaning thereby that authority was given to the arbitrator to make the award upto 30.6.1988 but the award has been made by the arbitrator much before 30.6.1988. 12. Meaning thereby that authority was given to the arbitrator to make the award upto 30.6.1988 but the award has been made by the arbitrator much before 30.6.1988. 12. Both these aspects have not been noticed in a right perspective by the Courts below. Therefore, I am of the opinion that this revision is bound to succeed. Resultantly, the revision is allowed by setting aside the impugned order dated 15.1.1999. The objections filed by the respondent-Company are dismissed and the award is hereby made the rule of the Court. Revision allowed.