SUPREME COURT OF INDIA
A.C. GUPTA AND JASWANT SINGH, JJ.
The Union of India, Appellant
Versus
Shri Om Prakash, Respondent.
Civil Appeals Nos. 1284 to 1290 of 1968
Decided on 2-4-1976.
Mr. L. N. Sinha, Solicitor General, Mr. G. L. Sanghi. Sr. Advocate (in C A No. 1284 of 1968). (Mr. Girish Chandra, Advocate with them), for Appellant; Mr. S. L. Bhatia, Sr. Advocate (Mr. H. K. Puri, Advocate, with him), for Respondent.
Arbitration Act, 1940 - Sections 39 (1) (vi), 8, 30, 8, 8 (2), 32, 33 and 32 - Code of Civil Procedure,1908 - Seeking to challenge the agreement - Order of reference to the arbitrator - Notice - During the World war, the respondent, a contractor, entered into seven agreements with the military department of the Government of India for the construction of hospital, three other buildings and three tubewells - These agreements there was a clause providing that any dispute arising between the parties would be referred to an arbitrator - In four cases the agreements provided for arbitration by the Director of Farms, General Headquarters in two cases the Officer Commanding, Lucknow, was to be the arbitrator, and in the remaining other case, a Quarter-Master at was chosen as the arbitrator - Disputes having arisen between parties, the respondent made seven applications in the court of First Civil Judge – Held, Court do not find any reason why the general and unqualified language of clause (c) should not include an award on an invalid reference which is a nullity - Cases cited at the Bar show that all the High Courts with only one or two exceptions have taken this view. We hold therefore that the awards challenged in these appeals are nullities and have been rightly set aside by High Court. In the view we have taken it is not necessary to consider other question, whether who made awards was the officer answering the description of Director of Farms, General Headquarters Simla to whom the court had referred the disputes - Appeals dismissed
JUDGMENT
GUPTA, J.:— These seven appeals by certificate have been preferred by the Union of India against a common judgment of the Allahabad High Court disposing of seven appeals under Section 39 (1) (vi) of the Arbitration Act, 1940. The appeals turn on the true meaning and scope of Ss. 8 and 30 of the Act. Section 8 is in these terms:
"8. Power of Court to appoint arbitrator or umpire.
(1) In any of the following cases-
(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act. or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or
(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him:
any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all paraties."
The question that arises for consideration is whether the court having appointed an arbitrator under subsection (2) of Section 8 can proceed further to make an order of reference to the arbitrator. According to the respondent the court becomes functus officio after appointing an arbitrator and has no jurisdiction to refer the matter to him.
2. The facts leading to the appeals are these. During the last World war, the respondent, a contractor, entered into seven agreements with the military department of the Government of India for the construction of hospital, three other buildings and three tubewells. In each of these agreements there was a clause providing that any dispute arising between the parties would be referred to an arbitrator. In four cases the agreements provided for arbitration by the Director of Farms, General Headquarters, Simla; in two cases the Officer Commanding, Lucknow, was to be the arbitrator, and in the remaining other case, a Quarter-Master at Delhi was chosen as the arbitrator. Disputes having arisen between the parties, the respondent made seven applications in the court of the First Civil Judge, Meerut, under Section 8 (2) of the Act stating that the offices by reference to which the arbitrators were selected in the agreements had been abolished and it was therefore necessary to appoint new arbitrators. In the applications the respondent named several officers praying that one of them be appointed to act as arbitrator "who shall have like power to act in the reference and to make an award as if he has been appointed by the consent of the parties." It will be noticed that the prayer repeats the material portion of 1747 sub-s. (2) of Section 8. On February 13. 1950 the court appointed Col. Ranbir Singh whose name was not in the respondents list. to act as arbitrator in all the seven cases and further directed the papers to be sent to him, asking him to give his award within two months from that date. If the respondents contention in these appeals is correct that after appointing an arbitrator under Section 8 (2) the court ceases to have jurisdiction and cannot make an order of reference, the further directions given in the order of February 13, 1950 were invalid. However, the question did not assume importance at that stage because both sides agreed to submit the d
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