1985 Supreme(Cal) 343

High Court Of Calcutta
PRATIBHA BONNERJEA
HINDUSTAN STEEL WORKS CONSTRUCTION LTD. - Appellant
Versus
N.V.CHOWDHURY - Respondent
Matter 601  Of  1984
Decided On : 08/22/1985

Section 31(4) of the Arbitration Act, 1940 overrides Clause 12 of the Letters Patent by virtue of the provisions of Clause 44 of the Letters Patent.

Headnote:

ARBITRATION ACT - Appointment of Umpire - Leave under Clause 12 of the Letters Patent - Whether necessary - Jurisdiction of the High Court - Sections 2(c) and 31(1), (2), (3) and (4) of the Arbitration Act, 1940 - Clause 12 of the Letters Patent - Interpretation.

Fact of the Case:

The petitioner entered into a contract with the respondent on 22nd/23rd November 1982 by accepting the tender submitted by the respondent. The contract contained an arbitration clause that disputes arising out of the contract would be decided by arbitration. Disputes arose and reference was made to the joint arbitrators in accordance with the agreement. The petitioner alleges that the joint arbitrators entered upon the reference without appointing an umpire. The petitioner by letter dated 23-4-84 pointed out to the joint arbitrators that they did not appoint an umpire before entering upon the reference and requested them to appoint the umpire. It is alleged that in spite of such notice, the joint arbitrators did not appoint any umpire. Hence the present application was taken out on 30-5-85.

Finding of the Court:

The High Court held that: (i) Section 31(4) of the Arbitration Act, 1940 overrides Clause 12 of the Letters Patent by virtue of the provisions of Clause 44 of the Letters Patent. (ii) In any event, the decision of the Appeal Court in Tobu Enterprises Pvt. Ltd. v. Camco Industries Ltd. (AIR 1984 Cal 24) must remain confined to the application under Section 20 of the Act only. (iii) The observations of the Appeal Court regarding Sections 2(c) and 31(1) and (2) as well as Clause 12 of Letters Patent in Tobu Enterprises Pvt. Ltd. v. Camco Industries Ltd. (AIR 1984 Cal 24) will require qualification and fresh interpretation under the new circumstances when considered in the light of the provisions of Section 31(4) of the Arbitration Act read with Clause 44 of the Letters Patent. (iv) The arbitration agreement between the parties provides "umpire to be appointed by the Arbitrators in writing before proceeding on the reference". In view of this express agreement, that Umpire should be appointed before the Arbitrators would enter upon the reference, the provisions of Rule 2 of the 1st schedule of the Act would not be applicable by virtue of the operation of Section 3 of the Arbitration Act. (v) The Joint Arbitrators, proceeded with the reference without appointing an umpire in violation of the express provision of the agreement and committed the default. The notice dated 23rd April 1984 was a valid notice perfectly in accordance with the provision of Section 8 of the Act.

Issues: Whether leave under Clause 12 of the Letters Patent is necessary for filing an application under the Arbitration Act, 1940 in the High Court.

Ratio Decidendi: The High Court held that: (i) Section 31(4) of the Arbitration Act, 1940 overrides Clause 12 of the Letters Patent by virtue of the provisions of Clause 44 of the Letters Patent. (ii) In any event, the decision of the Appeal Court in Tobu Enterprises Pvt. Ltd. v. Camco Industries Ltd. (AIR 1984 Cal 24) must remain confined to the application under Section 20 of the Act only. (iii) The observations of the Appeal Court regarding Sections 2(c) and 31(1) and (2) as well as Clause 12 of Letters Patent in Tobu Enterprises Pvt. Ltd. v. Camco Industries Ltd. (AIR 1984 Cal 24) will require qualification and fresh interpretation under the new circumstances when considered in the light of the provisions of Section 31(4) of the Arbitration Act read with Clause 44 of the Letters Patent. (iv) The arbitration agreement between the parties provides "umpire to be appointed by the Arbitrators in writing before proceeding on the reference". In view of this express agreement, that Umpire should be appointed before the Arbitrators would enter upon the reference, the provisions of Rule 2 of the 1st schedule of the Act would not be applicable by virtue of the operation of Section 3 of the Arbitration Act. (v) The Joint Arbitrators, proceeded with the reference without appointing an umpire in violation of the express provision of the agreement and committed the default. The notice dated 23rd April 1984 was a valid notice perfectly in accordance with the provision of Section 8 of the Act.

Final Decision: The High Court appointed a retired Judge of the High Court as the sole Umpire in the arbitration proceedings.