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Andhra Pradesh High Court
Judges : P.L.N.SHARMA, P.VENKATRAMA REDDY
Government Of A.P. - Appellant
Versus
N.V.Choudary - Respondent
Decided On : 10-08-93
Whether a panel of arbitrators comprising of three designated officials is vague and uncertain if there is more than one incumbent conforming to that designation? Whether the civil court has jurisdiction to appoint a sole arbitrator in exercise of its discretion under Section 20 of the Arbitration Act, 1940, if the panel of arbitrators is held to be vague and uncertain? Whether the designated officials can be appointed as arbitrators only on the ground that they are government servants?
Fact of the Case:
The batch of five Civil Miscellaneous Appeals and three Civil Revision petitions arose out of suits filed under Sections 8 and 20 of the Arbitration Act, 1940. The suits were instituted by the plaintiff-contractor alleging that the defendants never co-operated with him for completing the work and did not pay him the amounts due to him for the work completed, raised several disputes and issued a notice in that regard (Ex. A-4 dt. 8-9-1985) and as there was no reply, he was constrained to file the suit. It was alleged in the plaint that the Arbitration clause prescribing the panel of Arbitrators is so vague that the plaintiff cannot make his submissions to a particular panel of arbitrators. According to the plaintiff, there are more man one designated Officers in the category of Chief Engineer (R and B), and Deputy Secretary, Finance and that there was no provision anywhere in the arbitration clause empowering a particular officer or person to draw the panel from the members mentioned in the said clause. Therefore, the plaintiff-contractor sought relief that an Arbitrator may be appointed in each of the cases to decide the disputes between the parties with respect to each of the agreements.
Finding of the Court:
The court held that the panel of arbitrators cannot be said to be vague and it can be made certain by referring the dispute to any one of the persons who are holding the post of specified designation. Even if it is held that the panel is vague and uncertain, having regard to the fact that there is more than one incumbent in any one or two or even an of the designated offices, it would be proper for the Court to refer the dispute/ disputes to a panel but not to a sole arbitrator. The panel may consist of the incumbents satisfying the designations mentioned in the agreement. If for any reason, it is not feasible to do so, it is open to the Court to refer the disputes to a panel consisting of serving senior officials having technical and accounts experience. Such a reference will be in conformity with the intention of the parties as reflected in the arbitration clause. As a matter of rule or law, it cannot be said that the designated officials who constitute panel of arbitrators are biased by virtue of their office in favour of the State. No hard and fast rule can be laid down in that regard. If bias is attributed, it is for the party to prove the same and if so proved, the Court while appointing arbitrator must keep in mind what is stated in the preceding paragraph.
Issues: 1. Whether the panel of arbitrators comprising of three designated officials is vague and uncertain if there is more than one incumbent conforming to that designation? 2. Whether the civil court has jurisdiction to appoint a sole arbitrator in exercise of its discretion under Section 20 of the Arbitration Act, 1940, if the panel of arbitrators is held to be vague and uncertain? 3. Whether the designated officials can be appointed as arbitrators only on the ground that they are government servants?
Ratio Decidendi: 1. The court held that the panel of arbitrators cannot be said to be vague and it can be made certain by referring the dispute to any one of the persons who are holding the post of specified designation. 2. The court held that even if it is held that the panel is vague and uncertain, having regard to the fact that there is more than one incumbent in any one or two or even an of the designated offices, it would be proper for the Court to refer the dispute/ disputes to a panel but not to a sole arbitrator. 3. The court held that as a matter of rule or law, it cannot be said that the designated officials who constitute panel of arbitrators are biased by virtue of their office in favour of the State.
Final Decision: The court answered the reference as follows: Where the panel of arbitrators comprises of three designated officials and if there is more than one incumbent conforming to that designation, the panel cannot be said to be vague and it can be made certain by referring the dispute to any one of the persons who are holding the post of specified designation. Even if it is held that the panel is vague and uncertain, having regard to the fact that there is more than one incumbent in any one or two or even an of the designated offices, it would be proper for the Court to refer the dispute/ disputes to a panel but not to a sole arbitrator. The panel may consist of the incumbents satisfying the designations mentioned in the agreement. If for any reason, it is not feasible to do so, it is open to the Court to refer the disputes to a panel consisting of serving senior officials having technical and accounts experience. Such a reference will be in conformity with the intention of the parties as reflected in the arbitration clause. As a matter of rule or law, it cannot be said that the designated officials who constitute panel of arbitrators are biased by virtue of their office in favour of the State. No hard and fast rule can be laid down in that regard. If bias is attributed, it is for the party to prove the same and if so proved, the Court while appointing arbitrator must keep in mind what is stated in the preceding paragraph.
( 2 ) PLAINTIFF is the respondent in all these matters. Defendants are the appellants in all the appeals and petitioners in the revision petitions. They are. challenging the Judgments and decrees of the IInd Additional Judge, City Civil court, Hyderabad appointing sole Arbitrator in each of the cases.
( 3 ) THOUGH suits were decreed appointing sole Arbitrator in each of the cases by separate Judgments, as common questions arise in this batch of cases, it will be convenient to dispose of mem together by a common Judgment. It is not necessary to refer to the allegations contained in the respective plaints as they are almost similar insofar as they relate to the questions to be determined in these proceedings. However, the works, for which agreements were executed and the amounts claimed differ in each of the cases.
( 4 ) SUITS were instituted under Sections 8 and 20 of the Arbitration Act, 1940, hereinafter referred to as "the Act", by the plaintiff-contractor alleging that he is a Class-I Contractor and pursuant to the different works mentioned in the respective plaints, he submitted his tenders for the respective works which were ultimately accepted and agreements were concluded between the plaintiff- contractor on the one hand and third defendant on the other. The period of contract was fixed as twelve months from the date of handing over of the site. The terms of the contract are subject to the conditions set forth in the Preliminary specifications to the Andhra Pradesh Detailed Standard Specifications and such other conditions as are contained in the specifications forming part of the contract. Clause 73 of the Preliminary Specifications provides that in case of dispute or difference between the parties to the contract during the progress or after the completion of the work; the same shall be referred to Arbitration. Basing on the said clause, Artice 3 of the Articles of Agreement was included in the terms of the agreement. According to the relevant term, the Arbitration for fulfilling the duties setforth in the Arbitration Clause of Standard Preliminary specifications shall consist of members as laid down in G. O. Ms. No. 876, Tr. R and B, dated 31-7-1975 and Government Memo. No. l323-Cl / 75007, dt. 27-11-1975. According to the said clause, for claims of Rs. 1. 00 lakh and above, the panel shall consist of (1) Chief Engineer (R and B); (2) Deputy Secretary, finance; and (3) Director of Accounts, Pochampad Project. Plaintiff-contractor claiming that the defendants never co-operated with him for completing the work and did not pay him the amounts due to him for the work completed, raised several disputes and issued a notice in that regard (Ex. A-4 dt. 8-9-1985) and as there was no reply, he was constrained to file the suit. It is alleged in the plaint that the Arbitration clause prescribing the panel of Arbitrators is so vague mat the plaintiff cannot make his submissions to a particular panel of arbitrators. According to the plaintiff, there are more man one designated Officers in the category of Chief Engineer (R and B), and Deputy Secretary, Finance and mat there was no provision anywhere in the arbitration clause empowering a particular officer or person to draw the panel from the members mentioned in the said clause. Therefore, the plaintiff-contractor sought relief that an Arbitrator may be appointed in each of the cases to decide the disputes between the parties with respect to each of the agreements.
( 5 ) SUITS were resisted by the defendants by filing written statements, wherein all the allegations made by the plaintiff-contractor with regard to the completion of more than 75% of the work and non-payment of the amounts due and payable to the plaintiff-contractor and that due to non-co-operation and non-payment of the amount by the defendants the wor
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