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2017 DIGILAW 962 (ORI)

Siddharth Rice Mill v. State of Orissa

2017-08-30

BISWANATH RATH

body2017
ORDER 30.08.2017 Heard Sri Gautam Mishra learned counsel for the petitioner, Sri Sahoo, learned Additional Standing counsel for the State-opposite parties and Sri Mishra, learned counsel for the opposite party Nos. 2 & 3. This civil miscellaneous petition involves challenge to the order dated 5.5.2015 passed by the learned Civil Judge (Sr. Divin.), Bhawanipatna in Civil Suit No. 135 of 2014 vide Annexure-4 to this petition. Based on an application under Section 8 of the Arbitration and Conciliation Act, 1996 learned counsel for the petitioner during course of argument limited his challenge to the extent the direction of the trial Court referring the dispute to the Arbitrator i.e. the Managing Director NAFED, New Delhi to adjudicate upon the dispute involving the parties. In substantiating his argument Sri Gautam Mishra, learned counsel for the petitioner submitted that for involvement of the Managing Director, NAFED in the affairs of the establishment, there may not be any impartial adjudication of the dispute and it is for this reason while allowing the application under Section 8 of the Act, the trial Court should have left it open to the parties to resort to Section 11 of the Arbitration Act. To support his contention Sri Mishra, learned Counsel for the petitioner referring to the paragraph nos. 41 & 47 of a decision of the Hon’ble Apex Court in the case in between Bipromasz Bipron Trading SA v. Bharat Electronics Limited (BEL) reported in (2012) 6 Supreme Court cases 384 submitted that the decision of the Hon’ble Apex Court has direct application to the case of the petitioner. Further referring to the decision of the Hon’ble Apex Court in the case in between DENEL (PROPRIETARY)LIMITED v. MINISTRY OF DEFENCE as reported in (2012) 2 Supreme Court Cases 759 Sri Mishra, further submitted that this decision has also the direct application to the case at hand. For the decision referred to hereinabove, Sri Gautam Mishra, learned counsel for the petitioner requested this Court for interfering with the operative part of the impugned order and modifying the same appropriately. In his opposition Sri Mishra, learned counsel for the opposite party Nos. For the decision referred to hereinabove, Sri Gautam Mishra, learned counsel for the petitioner requested this Court for interfering with the operative part of the impugned order and modifying the same appropriately. In his opposition Sri Mishra, learned counsel for the opposite party Nos. 2 & 3 submitted that for the agreement of the petitioner for adjudication of the disputes involving the contract with the Managing Director (NAFED) as the arbitrator, the petitioner is stopped to challenge the condition contained in the agreement for the Managing Director (NAFED) functioning as the arbitrator. Referring to the amended provision in the Arbitration Act, learned counsel for the opposite party Nos. 2 & 3 submitted that the amended provision having been made subsequent to entering into the agreement between the parties, has not application to the case at hand. It is under the premises, Sri Mishra, learned counsel appearing for the opposite party Nos. 2 & 3 submitted that neither the decisions nor the amended provision has any application to the case at hand and consequently, this Court should refuse to interfere with the impugned order for their being no infirmity in the impugned order. Considering the rival contentions of the parties, this Court finds, there is no dispute that the petitioner was a party to the agreement with a clear clause in the agreement for arbitration of the disputes involving the Managing Director of the establishment as the Arbitrator, but however, taking into consideration the settled position of Law decided by the Hon’ble Apex Court referred to hereinabove, this Court finds, similar question has already been decided in both the above decisions of the Hon’ble Apex Court where the Hon’ble Apex Court while observing that the Managing Director of a company cannot act impartially in a arbitration proceeding for his involvement with the establishment, held the arbitration proceeding of this nature in such contingency should be conducted with an arbitrator other than the Chairman-cum-Managing Director of the establishment. Finding the decisions have a direct support to the case of the petitioner, this Court feels inclined to interfere with the impugned order particularly in the direction part and consequently in partial modification of the impugned order this Court while allowing the application at the instance of the defendant no.2 under Section 8 of the Arbitration Act, directs the matter will be referred to the arbitrator following the procedures contained in Section 11 of the Arbitration Act. The other part of the impugned order remains intact. The writ petition stands disposed of with modification of the impugned order to above extent. Petition disposed of.