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2006 DIGILAW 1177 (PAT)

Union Of India v. Harpal Das Madhyani

2006-12-04

SYED MD.MAHFOOZ ALAM

body2006
Judgment Syed Md.Mahfooz Alam, J. 1. This, miscellaneous appeal has been preferred by the dafendants-Union of India through General Manager (Administration), N.F. Railway, Maligaon, Gauhati and others against the order dated 26.7.1996 passed by the Subordinate Judge IV, Katihar in Title Suit No. 54 of 1994 whereby he has been pleased to allow the application of the plaintiff for review of the order dated 24.5.1996 passed by him referring the suit to the Arbitrator. 2. The brief facts of the case are that plaintiff-respondent no. 1, M/s Harpal Das Madhyani, a Railway Contractor, filed Title Suit No. 54 of 1994 in the Court of Sub-Judge, Katihar for declaration that Memorandum No. W/362/88/OMLF/APD/Ballast/W-3 dated 17.9.1991 and other memorandums and notice issued by the railway authorities (defendants) are illegal, invalid and inoperative and the same are biased and violative of legal and fundamental rights and also for issuing permanent injunction restraining the defendants from giving effect to its order contained in the abovesaid memorandums and notices. 3. The defendants-appellants appeared in the suit and contested the claim of the plaintiff and on 1.8.1995 the defendants-appellants filed a petition under Sec.34 of ihe Arbitration Act mentioning therein that there was an agreement in between the parties to refer the dispute to the arbitration and so, the matter be referred to arbitration and further proceeding in the suit be stayed. 4. It appears that on that petition the court passed order on 24.5.1996 and by the said order the learned Subordinate Judge referred the suit for arbitration with observation that Arbitrator shall submit report within six months from the date of the said order. It appears that after passing of the said order the plaintiff preferred an application for review of the order dated 24.5.1996 and then the learned Subordinate Judge heard both the parties on the prayer of the plaintiff and by order dated 26.7.1996 the learned Subordinate Judge passed the impugned order whereby he reviewed the matter and recalled his order dated 24.5.1996 by which order he has referred the suit for arbitration. Against the said order, this miscellaneous appeal has-been preferred. 5. Firstly, it has been argued by the learned Advocate of the appellants that the case is based on agreement between the plaintiff and the defendants and under the agreement the plaintiff was appointed as Contractor to supply ballast stone. Against the said order, this miscellaneous appeal has-been preferred. 5. Firstly, it has been argued by the learned Advocate of the appellants that the case is based on agreement between the plaintiff and the defendants and under the agreement the plaintiff was appointed as Contractor to supply ballast stone. He submitted that there is specific provision in the agreement that in case of any dispute between the parties, the matter will be referred to the Arbitrator. He submitted that the order of the learned Subordinate Judge whereby he had recalled his previous order of referring the suit to the Arbitrator is illegal as the same is against the express provision contained under Clause 63(3)(b) of the Agreement and so, the same should be set aside. In support of his argument, the learned Advocate of the appellants has placed reliance upon the decision given in the case of Union of India and Another, appllants vs. M.P. Gupta, respondent reported in (2004)10 Supreme Court Cases 504. His further contention is that the impugned order is also barred by limitation as the application for review of the order dated 24.5.1996 filed by the plaintiff was barred by law of limitation as provided under Article 124 of the Limitation Act, 1963 . 6. As against the said argument of the learned Advocate of the appellants, the contention of the learned Advocate of the respondent is that the order dated 26.7.1996 passed by the Subordinate Judge is legal in view of the fact that as per the terms and conditions of the arbitration clause, an officer of the Railway Administration shall be the sole Arbitrator but the approach of the Railway Administration was very much biased which is evident from the fact that during the pendency of the suit, the way Administration has blacklisted the plaintiff and debarred him from taking any contract work of railway for a period of five years. The learned Advocate submitted that under such circumstance, it is not expected from the railway authorities that any fair and impartial order will be passed in arbitration proceeding. The learned Advocate submitted that under such circumstance, it is not expected from the railway authorities that any fair and impartial order will be passed in arbitration proceeding. The learned Advocate submitted that the petition dated 1.8.1995 filed by the appellants for sending the suit for arbitration was also not in accordance with law and the same was violative of Sec.34 of the Arbitration Act as the appellants have not specifically stated in the petition that they were ready and willing to have dispute settled through Arbitrator and so, the order whereby the learned Subordinate Judge has referred the matter to the arbitration was itself illegal. In support of his argument, the learned Advocate has placed reliance upon the decision given in the case of State of U.P., appellant vs. Harsh Singh Kanyal, respondent reported in AIR 1986 Allahabad 169. 7. Admittedly, the plaintiff was appointed as Contractor to do certain work under the Railway and as per the agreement there was an arbitration clause that in case of any dispute the matter will be referred to the sole Arbitrator who must be an officer of the Railway. There cannot be any two opinion that where there is specific provision for referring the dispute to the Arbitrator, ordinarily the dispute should be referred to the Arbitrator and in this regard reliance can be placed upon the decision referred above i.e. (2004)10 Supreme Court Cases 504 (Union of India and Another vs. M.P. Gupta). Therefore, the question iswhether in view of the arbitration clause, the court has committed error for recalling its previous order of sending the matter to the Arbitrator. In my view, the answer is in negative because of the fact that the materials on record show that there is absolutely no chance that the Arbitrator will act in fairness and in impartial way as during the pendency of the suit, the railway authorities blacklisted the plaintiff and delisted him from the category of the railway contractor. The railway authorities also debarred him from doing any contract work under the Railway. Under such circumstance, it cannot be expected from the Arbitrator who will be an officer of the Railway to act impartially and without any bias against the plaintiff. The railway authorities also debarred him from doing any contract work under the Railway. Under such circumstance, it cannot be expected from the Arbitrator who will be an officer of the Railway to act impartially and without any bias against the plaintiff. Under the circumstances mentioned above, I am of the view that under such situation it was not just and proper to send the matter to the Arbitrator and therefore, the learned Subordinate Judge was justified in reviewing his order whereby he had referred the matter to Arbitrator. 8. As regards the contention that the very application of the appellants was not in accordance with Sec.34 of the Arbitration Act, I have to say that from perusal of the application dated 1.8.1995 it appears that there is no averment in the said application to the effect that the appellants were ready and willing to get the matter adjudicated through the arbitration. As per the decision cited in AIR 1986 Allahabad 169, in absence of such assertion, the application is liable to be rejected. The relevant lines from the decision are quoted below: "An application under Sec.34 must contain a specific and unequivocal averment to the effect that the defendant is ready and willing to get the matter adjudicated through arbitration.. In the absence of such assertion, it must be assumed that the requirement of Sec.34 has not been fulfilled by the defendant and the application is liable to be rejected." 9. Since the application does not con* tain averment that the appellants were ready and willing to get the matter adjudicated through arbitration, I am of the view that the application dated 1.8.1995 was not in accordance with Sec.34 of the Arbitration Act and therefore, the order dated 24.5.96 whereby the suit was referred for arbitration was not according to law. 10. With regard to the argument of the -learned Advocate of the appellants that the review petition itself was time barred and, therefore, the entire order whereby the learned Subordinate Judge has reviewed his earlier order is illegal, I have to say that it is not correct to say that Article 124 of the Limitation Act, 1963 will apply in this case rather Article 137 of the Limitation Act will apply in this regard according to which limitation will begin after a lapse of three years from the date of the order. In this case the review application was filed just after expiry of period of one month and so, in my view, the review application was filed within time. 11. On the basis of the above discussion, I have come to the conclusion that there is no merit in this miscellaneous appeal and hence, the same is hereby dismissed and the order dated 26.7.1996 passed by the learned Subordinate Judge IV, Katihar in Title Suit No. 54 of 1994 is hereby upheld. However, in the circumstances there will be no order for cost.