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Allahabad High Court · body

2001 DIGILAW 147 (ALL)

RAKESH KUMAR CONTRACTOR v. SUPERINTENDING ENGINEER, IRRIGATION WORKS

2001-02-15

V.M.SAHAI

body2001
V. M. SAHAI, J. ( 1 ) THE petitioner is a contractor. He executed some work in pursuance of a contract entered into between the petitioner and respondents No. 2 to 4. A dispute arose between the parties. The petitioner on 10. 3. 1992 invoked the arbitration Clause 34 of the agreement. Sri Kuldeep Singh sohan. Chief Engineer (Ganga), Irrigation Department, Sichai Bhawan, Vistoria Park, Meerut appointed himself as Sole Arbitrator on 17. 7. 1997. Notices were issued and proceedings were started by the Arbitrator. The petitioner filed Misc. Case No. 218 of 1998 impleading Sri kuldeep Singh Sohan, the sole arbitrator and respondent Nos. 2 to 4 as parties. The application was allowed by the Additional District Judge vide order dated 18. 5. 1998. He removed Sri kuldeep Singh Sohan and appointed in his place Sri K. K. Sahanan as the new arbitrator. This order dated 18. 5. 1998 was challenged by Sri Kuldeep Singh Sohan before this Court by means of civil Revision No. 284 of 1998 which was dismissed summarily on 9. 9. 1998. The respondents no. 2 to 4 did not challenge the order dated 18. 5. 1998. The order became final. The new arbitrator Sri K. K. Sahanan informed the respondents on 19. 9. 1998 about his appointment. The respondents sent a letter on 23. 8. 1998 to him to stay the proceedings for a period of one month. The respondent Nos. 2 to 4 filed Original Suit No. 610 of 1998 before the Civil Judge (Senior division), Muzaffarnagar for a declaration that the judgment and decree passed in Misc. Case no. 218 of 1998 dated 18. 5. 1998 be declared null and void. Along with the suit, an application for interim injunction was also filed by the plaintiff. The trial Court issued notice to the defendants. Since no injunction was granted on the injunction application the respondents filed civil revision. The Revision Court granted injunction on 24. 10. 1998. This order was challenged by the petitioner/ defendant before this Court by means of Civil Misc. Writ Petition No. 35881 of 1998. This Court disposed of the writ petition on 6. 11. 1998 with a direction to the District Judge, muzazffarnagar to decide the revision application either on 19. 11. 1998 or during the month. In pursuance of the direction of this Court, the revision was decided by 1st Additional District judge. Muzaffarnagar on 25. Writ Petition No. 35881 of 1998. This Court disposed of the writ petition on 6. 11. 1998 with a direction to the District Judge, muzazffarnagar to decide the revision application either on 19. 11. 1998 or during the month. In pursuance of the direction of this Court, the revision was decided by 1st Additional District judge. Muzaffarnagar on 25. 11. 1998 with the direction to Civil Judge (Senior Division), muzaffarnagar to dispose of the injunction application after hearing the parties within 15 days. However, the interim order by which Sri K. K. Sahanan, the new arbitrator was earlier restrained, was permitted to work but he was restrained from delivering the award till the disposal of the injunction application 6-C and any proceedings drawn by the arbitrator were to be subject to the decision of the injunction application. The injunction application was heard by the civil Judge (Senior Division), Muzaffarnagar and he allowed the injunction application by order dated 5th December, 1998 and restrained the arbitrator Sri K. K. Sahanan from functioning as arbitrator in pursuance of the order passed in Misc. Case No. 218 of 1998 decided on 18. 5. 1998. The petitioner preferred an appeal, which has been dismissed by the respondent No. 5 on 21. 1. 1999. The petitioner has challenged the orders passed by the respondent Nos. 5 and 6 dated 21. 1. 1999 and 5. 12. 1998 by means of this writ petition. ( 2 ) I have heard Sri Ravi Kant the learned Senior Counsel assisted by Sri A. K. Sharma the learned Counsel for the petitioner and Sri Abhinav Upadhyaya the learned Standing Counsel for the respondent Nos. 2 to 6. Respondent No. 1 had been deleted from the array of respondents by the petitioner. ( 3 ) SRI Ravi Kant the learned Counsel for the petitioner has urged that the order passed in Misc. Case No. 218 of 1998 dated 18. 5. 1998 became final and binding upon the respondent Nos. 2 to 4 and they could not challenge the order by way of a separate suit. The suit was nothing but an abuse of the process of the Court. Case No. 218 of 1998 dated 18. 5. 1998 became final and binding upon the respondent Nos. 2 to 4 and they could not challenge the order by way of a separate suit. The suit was nothing but an abuse of the process of the Court. The learned Counsel further urged that since the arbitration clause was invoked as per the agreement between the parties in the year 1992, therefore, the arbitration proceedings would be governed by the Arbitration Act, 1940 and not by the arbitration and Conciliation Act, 1996. The view taken by the Courts below that since the sole arbitrator was appointed in 1997, therefore, the Arbitration and Conciliation Act, 1996 would apply is incorrect. The learned Counsel placed reliance on a decision of Apex Court in Shetty s construction Co. Pvt. Ltd. v. Konkan Railway Construction and Anr. , (1998) 5 Supreme Court cases 599. On the other hand Sri Abhinav Updhyaya, learned Standing Counsel has urged that the order dated 18. 5. 1998 passed in Misc. Case No. 218 of 1998 would not be binding upon the respondent Nos. 2 to 4 and the suit could be filed by them for declaring the order dated 18. 5. 1998 to be null and void. He further urged that since the Arbitrator was appointed in 1997. Therefore Arbitration any Conciliation Act, 1996 would apply and under the new Act, there is no provision for removal of an Arbitrator which was in the earlier Arbitration Act, 1940. Therefore, the order dated 18. 5. 1998 was of nullity. ( 4 ) FROM the facts of the case, it is clear that the respondent Nos. 2 to 4 were parties to Misc. Case no. 218 of 1998. They were heard before the order dated 18. 5. 1998 was passed removing Sri kuldeep Singh Sohan, Chief Engineer as Arbitrator and appointing Sri K. K. Sahanan as the new arbitrator. Respondent Nos. 2 to 4 could have challenge the order dated 18. 5. 1998 by way of revision but it appears that they did not challenge it because Sri Kuldeep Singh Sohan, Chief engineer (Ganga), Irrigation Department had challenged the order dated 18. 5. 1998 before the court by Civil Revision No. 284 of 1998, which was dismissed summarily on 9. 9. 1998. The order passed on 18. 5. 1998 became final and binding so far as Sri Kuldeep Singh Sohan was concerned. 5. 1998 before the court by Civil Revision No. 284 of 1998, which was dismissed summarily on 9. 9. 1998. The order passed on 18. 5. 1998 became final and binding so far as Sri Kuldeep Singh Sohan was concerned. The order dated 18. 5. 1998 became final and binding against respondent Nos. 2 to 4 as they did not challenge the order dated 18. 5. 1998 by way of revision. Therefore the order dated 18. 5. 1998 was final and was binding on the respondent Nos. 2 to 4 as well. ( 5 ) THE respondent Nos. 2 to 4 filed Original Suit No. 610 of 1998 for declaring the order dated 18. 5. 1998 as null and void. In the suit an injunction application was filed. The trial Court, as well as, the Appellate Court had granted injunction and restrained the new Arbitrator Sri K. K. Sahanan from functioning as sole Arbitrator on the ground that arbitration proceedings would be governed by Arbitration and Conciliation Act, 1996 and not by Arbitration Act, 1940. It is not disputed between the parties that the petitioner invoked Arbitration Clause in 1992. In paragraph 5 of the plaint filed by respondent Nos. 2 to 4 in original suit No. 610 of 1998 the respondent nos. 2 to 4 have clearly mentioned that on 10. 3. 1992 the petitioner contractor has invoked arbitration Clause No. 34 of the agreement dated 8. 9. 1980 which provided for reconciliation of the disputes between the parties by arbitration. In paragraph 6 of the plaint, it has been further been stated that on 23. 1. 1992 and thereafter the petitioner continued his pressure for appointment of an Arbitrator. Therefore, the Arbitrator Clause was invoked by the petitioner in 1992. The question as to whether where an Arbitration Clause invoked in 1992, prior to the enforcement of arbitration and Conciliation Act, 1996, the proceedings will be governed by new Act of 1996 or under the old Act 1940 is no more res integra. The Apex Court in Shettys Construction Co. Pvt. Ltd. (supra) has answered this question and has held that where arbitration clause has been invoked or request has been made for referring the dispute to arbitration prior to 26. 1. 1996, them the proceedings will be governed by Arbitration Act, 1940. The observations of the Apex Court are extracted below: "4. The Apex Court in Shettys Construction Co. Pvt. Ltd. (supra) has answered this question and has held that where arbitration clause has been invoked or request has been made for referring the dispute to arbitration prior to 26. 1. 1996, them the proceedings will be governed by Arbitration Act, 1940. The observations of the Apex Court are extracted below: "4. A mere look at Sub-section (2) (a) of Section 85 shows that despite the repeal of Arbitration act, 1940, the provisions of the said enactment shall be applicable in relation to arbitration proceedings which have commenced prior to the coming into force of the new Act. The new Act into force on 26. 1. 1996. The question therefore, arises whether on the date the arbitration proceedings in the present four suits had commenced or not. For resolving this controversy we may true to Section 21 of the new Act which lays down that unless otherwise agreed to between the parties, the arbitration suit in respect of arbitration dispute commenced on the date on which the request for referring the dispute for arbitration is received by the respondents. Therefore, it must be found out whether the requests by the petitioner for referring the disputes for arbitration were moved for consideration of the respondents on and after 26. 1. 1996 or prior thereto. If such requests were made prior to that date, then on a conjoint reading of such requests were made prior to that date then on a conjoint reading of Section 21 and Section 85 (2) (a) of the new Act, it must be held that these proceedings will be governed by the old Act. " ( 6 ) THE law is, thus, clear that if a request has been made prior to 26. 1. 1996 when new arbitration Act came into force, the proceedings would be governed by the old Arbitration Act, 1940. Under the old Act there was a provision for removal of an Arbitrator and for appointment of a new Arbitrator. The view taken by both the Courts below that the arbitration proceedings would be governed by the new Act 1996 and not by Arbitration Act, 1940 is erroneous and cannot be upheld. ( 7 ) IN the result, the writ petition succeeds and is allowed. The order dated 21. 1. The view taken by both the Courts below that the arbitration proceedings would be governed by the new Act 1996 and not by Arbitration Act, 1940 is erroneous and cannot be upheld. ( 7 ) IN the result, the writ petition succeeds and is allowed. The order dated 21. 1. 1999 passed by the respondent No. 5 Annexure - 14 to the writ petition and order dated 5. 12. 1998 passed by the respondent No. 6, Annexure -12 to the writ petition, are quashed. ( 8 ) PARTIES shall bear their own costs. .