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1970 Supreme(Pat) 176
PATNA HIGH COURT
B.N.Jha and B.D.Singh JJ.
Satya Narayan Agarwall
Versus
Baidyanath Mandal
Appeal From Original Order No. 48 of 1970 ; 49 of 1970 ;
Decided On : DECEMBER 23, 1970
The court has wide discretion to condone the delay in nomination of an arbitrator, and that the entire arbitration proceedings should not be set aside for such delay.
Headnote:
ARBITRATION - Appointment of sole arbitrator - Validity - Delay in nomination of arbitrator by respondents - Condonation of delay - Setting aside of entire arbitration proceedings - Modification of order.
Fact of the Case:
The appellant and the respondents entered into a lease agreement for sixty hard-coke ovens. A dispute arose between the parties, and the appellant initiated arbitration proceedings by appointing an arbitrator. The respondents challenged the appointment of the arbitrator, and the court below set aside the appointment and dismissed the appellant's application to make the award a decree of the court.
Finding of the Court:
The court held that the appointment of the sole arbitrator was invalid because it was made within fifteen days of the service of notice on the respondents. The court also held that the delay in nomination of an arbitrator by the respondents could be condoned, and that the entire arbitration proceedings should not have been set aside.
Issues: 1. Whether the appointment of the sole arbitrator was valid. 2. Whether the delay in nomination of an arbitrator by the respondents could be condoned. 3. Whether the entire arbitration proceedings should have been set aside.
Ratio Decidendi: 1. The court held that the appointment of the sole arbitrator was invalid because it was made within fifteen days of the service of notice on the respondents. The court relied on Section 9(b) of the Arbitration Act, which provides that a party can appoint a sole arbitrator only if the other party fails to appoint an arbitrator for fifteen clear days after the service of notice. 2. The court held that the delay in nomination of an arbitrator by the respondents could be condoned. The court relied on the proviso to Section 9(b) of the Arbitration Act, which gives the court wide discretion to allow further time to the defaulting party to appoint an arbitrator. 3. The court held that the entire arbitration proceedings should not have been set aside. The court held that the court below erred in setting aside the entire arbitration proceedings, and that only the appointment of the sole arbitrator and the award given by him should have been set aside.
Final Decision: The court modified the order of the court below to the extent that it set aside the entire arbitration proceedings. The court directed the respondents to appoint their own arbitrator within one month from the date of the judgment, and to proceed with the arbitration proceeding along with the arbitrator already nominated by the appellant. In default, the appellant would have the right to appoint his own nominee as a sole arbitrator, who would conduct the arbitration proceeding afresh.
B.D.Singh, J.
1. These two miscellaneous appeals under Sec.39 of the Arbitration Act, 1940 (hereinafter referred to as the Act) have been filed by Satya Narayan Agarwalla, being aggrieved with the order of the Subordinate Judge II, Dhanbad, dated the 8th December, 1969, passed in Miscellaneous Cases Nos. 55 and 113 of 1969, whereby the learned Subordinate Judge, in Miscellaneous Case No. 55, set aside the appointment of M.L. Rathor (respondent No. 7 in M.A. 48) as the sole arbitrator, made by the appellant, and dismissed Miscellaneous Case No. 113, which was filed by the appellant, for making the award given by M. L. Rathor as the decree of the Court.
2. Miscellaneous Appeal No. 48 arises out of Misc. Case No. 55 which was filed by the respondents challenging the appointment of Rathor as the sole arbitrator at the instance of the appellant, whereas Miscellaneous Appeal No. 49 arises out of Miscellaneous Case No. 113 which was filed by the appellant for making the award given by Rathor as the decree of the Court. Both the miscellaneous cases were heard together by the Court below who, after examining the evidence on record and hearing the parties, came to the conclusion referred to above. The two miscellaneous appeals have also been heard together in this Court and they will be governed by this common judgment.
3. In order to appreciate the points urged on behalf of the parties in these two appeals, it will be necessary to state some relevant facts. Baidyanath Mandal (respondent No. 1) and the other respondents (Nos. 2 to 8) in both the appeals are owners and proprietors of Mandals Bilbera Colliery situated in village Bilbera. Respondent No. 6 Sudhir Chandra Mandal is a constituted agent of respondents Nos. 1 to 5. On the 8th August, 1967, respondent No. 6 for self and also on behalf of respondents Nos. 1 to 5 executed an agreement of lease in favour of the appellant for letting out sixty hard-coke ovens of the said colliery on certain terms and conditions incorporated in the lease. The appellant was, however, put in possession of the leasehold properties from the 1st August, 1967. The lease was for a period of three years with option of its renewal by either of the parties. One of the terms of the lease was that the appellant would pay a sum of three thousand rupees per month to those respondents in the manner stipulated in the lease. According to the respondents, the appellant did not pay the stipulated sum from the month of July, 1968 to November, 1968 and he also did not pay the price of the coal supplied to him. Therefore, the respondents sent a notice dated the 2nd December, 1968, through their advocate to the appellant demanding payment of the arrear amount and by the said notice also terminated the lease on the expiry of one month from the date of notice according to one of the terms of the lease. On the other hand, the appellant sent a notice dated the 17th December, 1968, through his advocate intimating the respondents that the dispute between the parties would be decided by arbitrators according to one of the terms of the lease, and that the appellant had nominated M.L. Rathor as his arbitrator, and requested the respondents to appoint their arbitrator within the time prescribed under Section 9 of the Act According to the appellant, the respondents received the notice on the 18th December, 1968 whereas according to the respondents they received it on the 19th December, 1968. Since the respondents failed to appoint their arbitrator for fifteen clear days after receipt of the notice, the appellant appointed Rathor on the 3rd January, 1969 as the sole arbitrator as provided under Section 9 (b) of the Act. The respondents, however, posted a letter (Ext. D/1) on the 4th January, 1969, in reply to the letter of the appellant dated the 17th December, 1968, intimating that they had nominated Manilal B. Sanghavi as their arbitrator. On the 9th January, 1969, the appellant sent a reply to that letter alleging therein t
