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1979 Supreme(Cal) 417
High Court Of Calcutta
Pratibha Bonnerjea
EXCALCER - Appellant
Versus
STATE OF WEST BENGAL - Respondent
Matter 1076 Of 1979
Decided On : 12/24/1979
Amaresh Chakraborty, HERANMAY DUTT
The appointment of an arbitrator is not complete without his acceptance, and silence for over five months after knowledge of the appointment implies acceptance.
Headnote:
ARBITRATION - Appointment of Arbitrator - Chief Engineer designated as sole arbitrator or persona designata to appoint arbitrator - Chief Engineer's appointment subject to acceptance - Silence for over five months after knowledge of appointment construed as acceptance - Statutory presumption of negligence and refusal to act - Court's power to appoint arbitrator under Sections 8 and 9 of the Arbitration Act, 1940.
Fact of the Case:
Petitioner entered into a contract with the respondent for flood protection work. Disputes arose and the petitioner called upon the Chief Engineer, designated as the sole arbitrator in the contract, to enter upon the reference. The Chief Engineer did not respond. The petitioner served a notice under Section 8 of the Arbitration Act, 1940 to concur in the appointment of an arbitrator, which was not concurred by the respondent. The petitioner filed an application under Sections 5, 8, 11, and 12 of the Arbitration Act for the appointment of an arbitrator.
Finding of the Court:
The court held that the appointment of the Chief Engineer as the sole arbitrator or persona designata to appoint an arbitrator was not complete until and unless it was made known to him and he got an opportunity to elect and exercise his option and signify his intention as to in what capacity he would act. The Chief Engineer's silence for over five months after knowledge of his appointment implied his acceptance of the position as an arbitrator. The statutory presumption of negligence and refusal to act under Section 9 of the Act arose due to his failure to enter upon the reference within one month from the date of receipt of the letter informing him of his appointment.
Issues: 1. Whether the appointment of the Chief Engineer as the sole arbitrator was complete without his acceptance? 2. Whether the Chief Engineer's silence for over five months after knowledge of his appointment constituted acceptance of the position as an arbitrator? 3. Whether the statutory presumption of negligence and refusal to act under Section 9 of the Arbitration Act, 1940 arose due to the Chief Engineer's failure to enter upon the reference within one month?
Ratio Decidendi: 1. The court interpreted the arbitration agreement and held that the appointment of the Chief Engineer as the sole arbitrator was subject to his acceptance. His confirmation was necessary as he was conferred two distinct, separate, and alternative capacities or rights: to act as the sole arbitrator or as a persona designata to appoint an arbitrator. 2. The court found that the Chief Engineer's silence for over five months after knowledge of his appointment implied his acceptance of the position as an arbitrator. This was based on the principle that an arbitration agreement has to be construed and interpreted on the basis of the language of the agreement and the facts of the case. 3. The court held that the statutory presumption of negligence and refusal to act under Section 9 of the Arbitration Act, 1940 arose due to the Chief Engineer's failure to enter upon the reference within one month from the date of receipt of the letter informing him of his appointment.
Final Decision: The court appointed Mr. Mathura Nath Banerjee as the arbitrator to arbitrate on the disputes between the parties. He was directed to enter upon the reference forthwith and make and publish his award within 4 months from the date of entering upon the reference.
( 1 ) IN April 1977 the petitioner entered into a contract with the resnondent for execution of flood protection work from chainage 903 to 906 along the left bank of Mundeswari river. Such contract was arrived at by the acceotance of the petitioner's tender No. 55/s/m of 77-78 in BF No. 2911 (i) (ii) by the respondent by its letter No. 296 dated 11-5-77. Pursuant to this agreement, the respondent issued works order on or about 11-5-77. It is alleged that the petitioner had to execute various extra works in course of execution of the works under the contract at the instance of the respondent. Thereafter disputes and differences arose between the parties in connection with the said contract which contained an arbitration clause as follows :--"clause 25 -- Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or those conditions or otherwise concerning the works, or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof shall be referred to the sole arbitration of the Chief Engineer of the Department. Should the Chief Engineer be for any reason unwilling or unable to act as such aribitrator, such questions and deputes shall be referred to an Arbitrator to be appointed by the Chief Engineer. The award of the arbitrator shall be final, conclusive and binding on all parties to the contract. "
( 2 ) BY a letter dated 29-11-77, addressed to the Chief Engineer the petitioner called upon him to enter upon the reference as the sole arbitrator but the Chief Engineer sat tight over the matter and did not take any step. Thereafter by a notice dated 2-7-79 issued under Section 8 of the Arbitration Act 1940 the petitioner called upon the respondent to concur in the appointment of Sri Durga Mohan Mukherjee, a retired Chief Engineer, Agriculture Department, as the sole arbitrator. The respondent did not concur in the said appointment and the statutory period of 15 days expired. Under the cricumstances the petitioner has taken out his present application under Sections 5, 8, 11 and 12 of the Arbitration Act for appointment of Sri Durga Mohan Mukherjee as the sole Arbitrator and/or for appointment of any fit person by Court as the Arbitrator on the ground that the Chief Engineer as the sole Arbitrator has neglected and refused to act.
( 3 ) THE respondent filed its affidavit-in-opposition through one Ramendra Mohan Ganguly affirmed on 19-11-79 denying the allegations in the petition. In paragraph 11 of the said affidavit, the respondent has alleged that the notice dated 2-7-79 is bad in view of the fact that such a notice can only be issued after the Chief Engineer is called upon to nominate an arbitrator but he fails to do so. According to the respondent, the application is premature.
( 4 ) THE counsel for the respondent submitted that the petitioner has no right to move the Court for appointment of an arbitrator without first requesting the Chief Engineer to nominate an arbitrator in terms of the express agreement between the parties. He submitted that the court has no jurisdiction to appoint an arbitrator in absence of such a prior request. The petitioner's counsel disagreed with this submission on behalf of the respondent and stated that the appointment of the Chief Engineer as the sole arbitrator being complete, his unwillingness or inability to act is a ground for moving the court under Section 8 of the Act. To ascertain which view is correct, interpretation and construction of the present arbitration agreement would be necessary. We very often come a
