SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

1977 Supreme(Cal) 195

High Court Of Calcutta
A. N. Sen, Bimal Chandra Basak
SUNIL MUKHERJEE - Appellant
Versus
UNION OF INDIA - Respondent
Award Matter 239  Of  1972
Decided On : 06/16/1977

Advocates Appeared:
Jayanta Mitra

Section 8 of the Arbitration Act, 1940 applies only in cases where the arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties.

Headnote:

ARBITRATION - Appointment of Arbitrators - Jurisdiction - Section 8 of the Arbitration Act, 1940 - Applicability - Consent of Parties - Construction of Arbitration Agreement - Order Appointing Arbitrators Without Jurisdiction - Nullity - Award Made by Arbitrators Without Jurisdiction - Nullity.

Fact of the Case:

The appellant, a building contractor, entered into an agreement with the Union of India for various construction works in and/or of the railway station building at Durgapur. The agreement contained an arbitration clause providing for the appointment of arbitrators by consent of the parties. Disputes arose between the parties, and the appellant applied to the Court under Section 8 of the Arbitration Act for the appointment of arbitrators. The Court appointed two arbitrators, who entered upon the reference and made an award. The appellant challenged the validity of the award and the order appointing the arbitrators.

Finding of the Court:

The Court held that Section 8 of the Arbitration Act had no application to the arbitration agreement between the parties, as the appointment of arbitrators was not to be made with the consent of the parties. The Court further held that the order appointing the arbitrators was without jurisdiction and was therefore a nullity. Consequently, the award made by the arbitrators was also a nullity.

Issues: 1. Whether Section 8 of the Arbitration Act, 1940 applied to the arbitration agreement between the parties? 2. Whether the order appointing the arbitrators was passed without jurisdiction? 3. Whether the award made by the arbitrators was a nullity?

Ratio Decidendi: 1. Section 8 of the Arbitration Act, 1940 applies only in cases where the arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties. In the instant case, the arbitration agreement did not contemplate the appointment of arbitrators by consent of the parties. Therefore, Section 8 of the Act had no application. 2. The Court has no inherent jurisdiction to appoint arbitrators. The powers of the Court in the matter of appointment of arbitrators are regulated by the Statute. In the instant case, the Court passed the order appointing the arbitrators under Section 8 of the Arbitration Act, which had no application. Therefore, the order was passed without jurisdiction and was a nullity. 3. As the arbitrators were appointed without jurisdiction, they lacked jurisdiction to enter upon the reference and to make the award. Therefore, the award made by the arbitrators was a nullity.

Final Decision: The appeal was allowed. The order appointing the arbitrators and the award made by the arbitrators were set aside.

SEN, J.

( 1 ) THIS is an appeal against the judgment and order passed by Salil K. Roy Chowdhury, J. on the 15th Nov. 1973. By his order the learned Judge dismissed, for reasons recorded in the judgment, the application made, by the appellant for setting aside an award dated the 28th June, 1971 and also for a declaration that the order dated the 21st Feb. 1961 is invalid, without jurisdiction and of no effect.

( 2 ) THE facts of the case have been fully and correctly set out in the judgment of the learned trial Judge. The facts material for the purpose of the appeal may be briefly stated. The appellant is a building contractor and entered into an agreement dated the 11th April, 1962 with the Union of India for various construction works in and/or of the railway station building at Durgapur. The said agreement contains an arbitration clause. The relevant portion of the said clause reads as follows:"clause 63 (3) (a) Arbitration. Matters in question, dispute or difference to be arbitrated upon shall be referred for decision to. . . . . . . . . . . . . . . . . . . . . (ii) Two arbitrators, who shall be Gazetted Railway Officers of equal status to be appointed in the manner laid down in Clause (3) (b) for all claims of Rs. 50,000/-and above, end for all clainig irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager shall be the sole judge to decide whether the issues are of a complicated nature or not. In the event of the two Arbitrators being divided in their opinions the matter under dispute will be referred to an Umpire to be appointed in the manner laid down in Clause (3) (b) for his decision. Clause 63 (3) (b): for the purpose of appointing two arbitrators as referred to in Sub-Clause (a) (ii) above, the Railway will send a panel of more than three names of officers of the appropriate status of different Departments of the Railway to the contractors, who will be asked to suggest a panel of three names out of the list so sent by the Railway. The General Manager will appoint one arbitrator out of this panel es the contractor's nominee and then appoint a second arbitrator of equal status as the Railway's nominee either from the panel or from outside the panel, ensuring that one of the two arbitrators so nominated is invariably from the Accounts Department. Before entering into reference the two Arbitrators shall nominate an Umpire to whom the case will be referred in the event of any difference between the two Arbitrators. "

( 3 ) IT appears that disputes arose between the parties. The appellant made various claims against the Union n respect of works done and the said claims were disputed by the Union. The appellant had called upon the Union of India to have the said dispute adjudicated upon by arbitration in terms of the arbitration agreement and had asked for appointment of arbitrators in terms of the agreement between the parties. The appellant ultimately made an application on the 29th Nov. 1965 to this Court under Section 8 of the Arbitration Act for the appointment of arbitrators. On the said application an order was passed by Mallick J. on the 21st Feb. 1966 and the material part of the said order reads as follows:"it is ordered that all matter in difference between the parties hereto including the question of the costs and of the reference hereby directed be referred to the arbitration of Mr. K. Ramani Office on Special Duty, South Eastern Railway, Garden Reach and Mr. K. C. Bose, Deputy Financial Adviser, Eastern Railway who are hereby appointed Joint Arbitrators under Section 8 of the Arbitration Act, 1940 read with Clause 63 of the Eastern Railway Engineering Department General Condition of Contract in the said petition mentioned. And it is further, ordered that the said arbitrators do make their award in writing and submit the same to this Court together with all proceedings had, deposition recorded and exhibits filed before them within four month
















Click Here to Read the rest of this document

1
2
3
4
5
6
7
8
9
10
11
SupremeToday Portrait Ad
supreme today icon
logo-black

An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers

Please visit our Training & Support
Center or Contact Us for assistance

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top