Punjab State Civil Supply Corporation Ltd. v. Aman Rice Mills
2004-04-27
M.M.KUMAR
body2004
DigiLaw.ai
Judgment M.M.Kumar, J. 1. This petition filed under Article 227 of the Constitution of India challenges the order dated 12.1.2004 passed by the Civil Judge (Sr. Division), Chandigarh dismissing the application filed by the petitioner Punjab State Civil Supplies Corporation (PUNSUP). In the application the prayer made was for disposal of the application filed by the respondent miller under Section 11 read with Section 14 of the Arbitration and Conciliation Act, 1996 (for brevity the Act) by passing an order that the afore-mentioned application had become infructuous on account of the fact that Arbitrator stood already appointed. 2. Brief facts of the case are that respondent miller as well as the petitioners are parties to an agreement dated 3.11.2000. The agreement is with regard to the milling of rice and contains the following arbitration clause: "All disputes and difference arising out of or in any manner touching or concerning this agreement whatsoever (except as in any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of the Managing Director, PUNSUP or any person appointed by him in this behalf. There will be no objection to any such appointment that the person appointed is or was an employee of Food and Supplies Department Punjab/PUNSUP or that he had to deal with the matter to which the contract relates and that in the course of his duties such an employee of the Food and Supplies Department Punjab/PUNSUP had expressed views on ail or any of the matter in dispute or difference. The award of such arbitration shall be final and binding on the parties to this contract. It is a term of this contract that in the event of the arbitrator being transferred or vacating his office or being unable to act for any reason, the Managing Director, PUNSUP at the time of such transfer, vacation of office, death or inability shall appoint another person to act an arbitrator. Such a person shall be entitled to proceed with reference from the stage where it was left by his predecessor." 3. On 25.9.2003, the respondent-miller wrote a letter to the petitioner for appointment of the Arbitrator in view of Clause 22 of the agreement dated 3.11.2000. Thereafter on 1.11.2003, a petition was filed under Section 11 read with Section 14 of the Act seeking appointment of the Arbitrator.
On 25.9.2003, the respondent-miller wrote a letter to the petitioner for appointment of the Arbitrator in view of Clause 22 of the agreement dated 3.11.2000. Thereafter on 1.11.2003, a petition was filed under Section 11 read with Section 14 of the Act seeking appointment of the Arbitrator. However, the petitioner appointed Shri J.P.S. Puri as an Arbitrator vide Endst. No. Arb.Cell/2002-RPR 17010 dated 22.5.2002 and due intimation was sent to the respondent-miller about the appointment. The Arbitrator, Shri J.P.S. Puri issued notice to both the parties for their appearance on 7.1.2003 but the respondent-miller preferred not to appear before the Arbitrator. On 31.12.2002 he served a legal notice on the petitioner as well as Arbitrator through his counsel for recalling the reference. The petitioner filed an application before the Civil Judge taking the stand that reference is legal and binding on both the parties, and none of the party is competent to challenge the authority of the Arbitrator or his jurisdiction in any manner. The objections were raised against the application filed by the petitioner for disposal of the application of the respondent miller as infructuous on the ground that the Arbitrator had already been appointed. The Civil Judge relying on a judgment of the Supreme Court in the case of Datar Switchgears Ltd. v. Tata Finance Ltd., and Anr., (2000)8 S.C.C. 151 held that the petitioners have forfeited their right of appointment of Arbitrator. The views of the Civil Judge reads as under: "During arguments the learned counsel for the applicant PUNSUP has argued that since Shri J.P.S. Puri has already been appointed as arbitrator, now the present petition filed by the petitioner Aman Rice Mills for appointment of arbitrator has become infructuous. But on the other hand, the learned counsel for the petitioner M/s Aman Rice Mills has argued that for appointment of arbitrator the petitioner wrote a letter to the respondent but the respondent respondents failed to appoint the arbitrator within a period of 30 days from the date of request made to the respondents. When the respondents failed to appoint the arbitrator, petitioner filed the present petition under Section 11(6) of Arbitration and Conciliation Act, 1996. Once the petitioner has moved the court for appointment of arbitrator now the respondent cannot appoint the arbitrator suo moto and only the Court can appoint the arbitrator.
When the respondents failed to appoint the arbitrator, petitioner filed the present petition under Section 11(6) of Arbitration and Conciliation Act, 1996. Once the petitioner has moved the court for appointment of arbitrator now the respondent cannot appoint the arbitrator suo moto and only the Court can appoint the arbitrator. In support of this contention the learned counsel for the respondent has also relied upon a case law (2000) 8 S.C.C. 151. In this case it has been held that if a party having responsibility of appointing arbitrator does not do so within 30 days of the demand being made by the other party, right to make appointment is not automatically forfeited. The appointment can still be made but before the other party moves the Court under Section 11. Once the party moves the Court the right to make the appointment ceases to exist. In view of this, the learned counsel for the respondent has argued that legal notice was issued to the respondent on 25.9.2002 duly received on 26.9.2002 whereas they appointed the arbitrator on 25.11.2002 i.e. after the present petition was filed by the petitioner on 1.11.2002. In view of these facts when the respondents have failed to appoint the arbitrator within one month from 26.9.2002 i.e. the date when legal notice was received by the respondents and in the meantime the petitioner has knocked the door of the Court, now the respondent has no right to appoint the arbitrator. As such, the application moved by the respondent for dismissal of the present petition for appointment of arbitrator is liable to be dismissed. In this regard I am also of the opinion that when the petitioner has filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 after exhausting his remedy and the respondent has failed to appoint the arbitrator within stipulated period, now the respondent cannot allege that the present petition for appointment of arbitrator is liable to be dismissed. With these observations, the application moved by the respondent dated 11.3.2003/24.4.2003 stands dismissed and for filing written reply by the respondents to the main petition the case is adjourned to 17.2.2004." 4. Ms.
With these observations, the application moved by the respondent dated 11.3.2003/24.4.2003 stands dismissed and for filing written reply by the respondents to the main petition the case is adjourned to 17.2.2004." 4. Ms. J.K. Gurna, learned counsel for the petitioner has argued that the Civil Judge had committed a grave error in law by engrafting the period of 30 days in Section 11(6) of the Act whereas no period of limitation has been provided under that Section. According to the learned counsel, the period of 30 days prescribed under Section 11(4) of the Act cannot be lifted and planted in Section 11(6) of the Act which is independent of Section 11(4) of the Act. She has maintained that in the absence of any agreement of the parties and non prescription of period of limitation by statute no period of limitation of 30 days could be prescribed nor any such principle has been laid down by the Supreme Court in Datar Switchgears Ltd. case (supra) on which reliance has been placed in the impugned order. She has further pointed out that the Arbitrator appointed by the petitioner has already announced the award and the same should be accepted as legal. 5. After hearing the learned counsel. I am of the considered view that this petition is devoid of any merit and the same is liable to be dismissed. It would be appropriate to make a reference to Section 11 of the Act which reads as under: "Appointment of arbitrators.- (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub Section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in Sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in Sub-section (3) applies and - (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment.
(4) If the appointment procedure in Sub-section (3) applies and - (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment. the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in Sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties,- (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person including an institution, fails to perform any function entrusted to him or it under that procedure. a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment." 6. The afore-mentioned Section 11(4), (5) and (6) of the Act came up for consideration before the Supreme Court in Datar Switchgear Ltd. case (supra). The views of their Lordships on the interpretation of Section 11 of the Act read as under: "So far as cases falling under Section 11(6) are concerned-such as the one before us- no time limit has been prescribed under Act. Whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days.
In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. Another words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observations of the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited." 7. It is true that Sub-section 6 of Section 11 of the Act does not prescribe any period of limitation as has been prescribed by Sub-section 4 of Section 11 of the Act but all the same it has been held that if the application filed by the one party fails to evoke any response for a period of 30 days from the party who has to appoint an arbitrator and interdiction by the Court has been invoked by filing the application under Section 11 after 30 days then the Arbitrator cannot be appointed. In the present case, a letter was addressed by the respondent-miller to the petitioner on 20.9.2002 seeking appointment of an arbitrator in pursuance to Clause 22 of the agreement dated 3.11.2000 An application under Section 11(6) read with Section 14 of the Act was filed before the Court on 1.11.2002. The Arbitrator was appointed on 25.11.2002 i.e. much later than the jurisdiction of the Court was invoked. Therefore, the principles laid down in Data Switchgears case (supra) would fully apply to the facts of the present case because after expiry of thirty days the respondent-miller has invoked the jurisdiction of the Civil Judge for the appointment on an arbitrator as the petitioner had failed to do so.
Therefore, the principles laid down in Data Switchgears case (supra) would fully apply to the facts of the present case because after expiry of thirty days the respondent-miller has invoked the jurisdiction of the Civil Judge for the appointment on an arbitrator as the petitioner had failed to do so. I am further of the view that the jurisdiction of this Court under Article 227 of the Constitution in the absence of the agreement of the parties cannot be invoked as the order passed by the Civil Jude is purely administrative in character being the representative of Honble the Chief Justice. This view is supported by a Constitution bench judgment of the Supreme Court in the case of Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Pvt. Ltd., A.I.R. 2002 S.C. 778. Therefore, there is no merit in this petition. For the reasons recorded above, this petition fails and the same is dismissed.