MANJARI DEVELOPERS SOCIETY, VARANASI v. SATYA NARAIN RAI
2014-05-26
PANKAJ MITHAL
body2014
DigiLaw.ai
JUDGMENT Hon’ble Pankaj Mithal, J.—Heard Sri Naveen Sinha, Senior Advocate assisted by Sri Vikash Srivastava learned counsel for the petitioner and Sri Ajay Kumar Singh, learned counsel for the respondents. 2. Petitioner is seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (herein after referred to as an Act) as the parties have failed to refer the dispute to the arbitral tribunal pursuant to the development agreement dated 10th August 2004 between them. The said agreement in clause 19.4 contains an arbitration agreement which provides that any dispute arising between the parties in connection with the said agreement shall be referred to an arbitrator to be appointed by the parties and the decision of the arbitrator shall be final and binding upon them. 3. In the counter-affidavit, the respondents have not disputed the existence of the arbitration agreement between the parties. They have apart from alleging the facts on merits of the dispute stated that the petition under Section 11 of the Act is not maintainable and is barred by time. 4. The petition is said to be not maintainable as it is not duly verified as provided under Rule 2 of Chapter 31 of the Allahabad High Court Rules, 1952. 5. The said Rule provides that all applications/petitions under the Act shall be presented to the Court in the same manner as plaint or other applications and that if necessary, be supported by an affidavit. 6. The Rules contained in Chapter 31 of the Rules have been framed in exercise of powers under Section 44 of the Arbitration Act, 1940. Section 85 of the Act repeals the Arbitration Act, 1940 which results in repealing of the Rules framed thereunder except to the extent they are not repugnant to the present Act. 7. The Act for the purposes of applications under Section 11 of the Act authorizes the Chief Justice to make a scheme for dealing with applications under Section 11 (4), (5) and 6 of the Act. In exercise of the said power the Chief Justice has framed a scheme known as “Scheme for Appointment of Arbitrators by the Chief Justice of Allahabad High Court, 1996. The said scheme is a statutory scheme framed under Section 11 (10) of the Act and is enforceable in law.
In exercise of the said power the Chief Justice has framed a scheme known as “Scheme for Appointment of Arbitrators by the Chief Justice of Allahabad High Court, 1996. The said scheme is a statutory scheme framed under Section 11 (10) of the Act and is enforceable in law. It inter alia provides that an application to the Chief Justice for request to appoint an arbitrator shall be in writing and accompanied by an affidavit supported by relevant documents. The said scheme does not provide for the verification of the application like a plaint. Therefore, it is not mandatory to have the application filed under Section 11 of the Act verified in the same manner as a plaint. The Rule to this effect under the Arbitration Act, 1940 is in conflict with Scheme of 1996 framed by the Chief Justice under Section 11 (10) of the Act and does not stand saved under Section 85 of the Act. 8. Moreover, the said Rule 2 of Chapter 31 of the Rules applies for presentation of the petitions and applications before the “Court”. The Court in Section 2 (e) means a Civil Court of original jurisdiction in a district having jurisdiction to decide the question forming subject-matter of arbitration if the same has been subject-matter of the suit and includes the High Court in exercise of its original civil jurisdiction. The High Court of Allahabad is not a Court exercising powers of original civil jurisdiction in relation to the dispute which is the subject-matter of arbitration and as such is not a Court within the meaning of Section 2(e) of the Act. Even otherwise, the petition under Section 11 of the Act lies before the Chief Justice or his designate and not before the Court as defined under Section 2 (e) of the Act. 9. In view of the above, Rule 2 of Chapter 31 of the Rules of the Court is not applicable to the petition filed under Section 11 of the Act and the petition cannot be held to be bad as it is not verified in the manner provided for verification of the plaint. 10. The next submission of Sri Singh, learned counsel for the respondents is that as the petition filed by the petitioner is not maintainable as it is not accompanied by the original arbitration agreement or a duly certified copy thereof.
10. The next submission of Sri Singh, learned counsel for the respondents is that as the petition filed by the petitioner is not maintainable as it is not accompanied by the original arbitration agreement or a duly certified copy thereof. In support he has placed reliance upon Section 8 (2) of the Act and Rule 2 (1) of the Scheme for Appointment of Arbitrators by the Chief Justice of the Allahabad High Court, 1996. 11. Section 8 of the Act pertains to the power of the judicial authority/Court to refer the parties to arbitration where in a matter brought before it one of the parties contend that there is an arbitration agreement.It is for the purposes of referring the parties to arbitration in proceedings before the Civil Court, in view of the arbitration agreement that a provision has been made for filing of the original arbitration agreement. The purpose is to ensure the existence of the arbitration agreement. The provisions of Section 8 (2) of the Act are not applicable to proceedings under Section 11 of the Act before the Chief Justice or his designate which are quite distinct and separate. 12. In view of the above, the two decisions Atul Singh and others v. Sunil Kumar Singh and others, AIR 2008 SC 1016 and N. Radhakrishnan v. Maestro Engineers and others, 2010 (1) SCC 72 , which concerns Section 8 of the Act mandating the filing of the original arbitration agreement or duly certified copy thereof is not applicable to an application filed before the Chief Justice or his designate for the appointment of an arbitrator. 13. Rule 2 of the Scheme for Appointment of Arbitrators by the Chief Justice of the Allahabad High Court, 1996 do provides that the request to the Chief Justice under Section 11 of the Act shall be in writing and shall be accompanied by the original arbitration agreement or a duly certified copy thereof. 14. The aforesaid Rules is a Rule of procedure. The scheme or the Act no where provides for the effect of non filing of the original arbitration agreement or the duly certified copy thereof. In such a situation,the aforesaid rule despite the use of the word ‘shall’ therein cannot be regarded as mandatory but only directory in nature. Therefore, the use of the word ‘shall’ therein has to be read as ‘may’. 15.
In such a situation,the aforesaid rule despite the use of the word ‘shall’ therein cannot be regarded as mandatory but only directory in nature. Therefore, the use of the word ‘shall’ therein has to be read as ‘may’. 15. The filing of the original of the agreement or the duly certified copy thereof may be necessary in cases where there is a dispute regarding existence of the arbitration agreement but not where the arbitration agreement is admitted. In the instant case, the existence of the arbitration agreement is not disputed. 16. In these circumstances, the non filing of the original or the certified copy of the arbitration agreement is not fatal to the proceedings. 17. It is also not in dispute that earlier the parties have initiated proceedings for interim measures under Section 9 of the Act and the matter had travelled up to this Court wherein petition under Section 9 of the Act was disposed of with certain conditions with order of interim measures till the final adjudication of the disputes between the parties. 18. In view of the above proceedings between the parties, it is apparent that there are disputes between the parties in relation to the development agreement which require adjudication by the arbitrator. 19. The development agreement is dated 10.8.2004 and under the said agreement the constructions were to be completed by 31.7.2007. The notice invoking the arbitration clause was issued on 19.12.2007 whereupon on failure of the parties to arrive at consensus regarding arbitrator, the petition under Section 11 of the Act was filed on 1.7.2009. Thus the filing of this petition does not appear to be patently beyond time. In case any dispute of limitation arises, it can be adjudicated by the arbitral tribunal itself as has been held by the Apex Court in Schlumberger Asia Services Limited v. Oil and Natural Gas Corporation Limited, (2103) 7 SCC 562 and the petition for appointment of Arbitrator is not liable to thrown out at this stage. 20. In view of the aforesaid facts and circumstances, as the parties have failed to appoint arbitrator for resolving the dispute in relation to the above development agreement, Mr. Justice Subhash Chandra Agrawal, Former Judge of this Court resident of 31, Duplex Ambedkar Vihar Colony, Chauphataka, Allahabad Mobile No. 9415140266 is appointed as the sole arbitrator. 21.
20. In view of the aforesaid facts and circumstances, as the parties have failed to appoint arbitrator for resolving the dispute in relation to the above development agreement, Mr. Justice Subhash Chandra Agrawal, Former Judge of this Court resident of 31, Duplex Ambedkar Vihar Colony, Chauphataka, Allahabad Mobile No. 9415140266 is appointed as the sole arbitrator. 21. Let a copy of this order be communicated to the learned arbitrator with request to enter into arbitration forthwith and to complete it most expeditiously. 22. Petition allowed.