Back
2005 Supreme(Cal) 179
High Court Of Calcutta
ASHIM KUMAR BANERJEE
A.TOSH, SONS (INDIA) LTD - Appellant
Versus
HAPPY VALLEY TEA COMPANY PVT.LTD - Respondent
AP 188 Of 2004
Decided On : 03/15/2005
The pendency of any other proceeding does not debar the Arbitrator to proceed with the reference or to enter upon reference, if asked for, under Section 8(3) of the Arbitration and Conciliation Act, 1996.
Headnote:
ARBITRATION - REVOCATION OF ARBITRATOR'S AUTHORITY - SECTIONS 5, 8(1), 8(3), 14, 15 ARBITRATION AND CONCILIATION ACT, 1996 - Where the arbitrator expressed his unwillingness to act as arbitrator, his authority was revoked under Section 14 of the Arbitration and Conciliation Act, 1996, and the petitioner was given liberty to take appropriate steps for the appointment of a new arbitrator.
Fact of the Case:
The petitioner and respondent entered into an agreement on March 12, 1992, whereby the petitioner lent money to the respondent for the smooth running of the Tea Estate. As the monies were not repaid, the petitioner filed a suit and applied for an interim injunction under Order 39 of the Code of Civil Procedure. The petitioner also moved the Criminal Court against the Directors of the respondent-Company. The respondent got the criminal case stayed due to the pendency of the civil proceedings. The petitioner approached the arbitrator in 2000 and filed their statement of claim. The arbitrator did not conduct the arbitration effectively. In 2002, the petitioner approached the Civil court with an application under Order 23 of the Code of Civil Procedure, praying for the withdrawal of the suit. The suit was allowed to be withdrawn with liberty to "file afresh". The arbitrator was still not proceeding with the reference effectively. The petitioner paid Rs. 10,000/- to the Arbitrator for the purpose of advertisement of public notice in the newspaper. The respondent's advocate wrote to the Arbitrator, contending that once the Civil Suit was filed, the parties waived their right to go for arbitration. The Arbitrator expressed his unwillingness to act as Arbitrator.
Finding of the Court:
The Court held that the petitioner was wrongly advised to approach the Civil Court. Once the agreement incorporated the arbitration clause, the parties were bound to adhere to the said terms, and the arbitrator was approached by the petitioner. It was incumbent upon the Arbitrator to proceed with the reference irrespective of the pendency of the suit in view of Section 8 (3) of the Arbitration and Conciliation Act, 1996. The arbitrator did not effectively hold any sitting for the last five years. Once he expressed his unwillingness to act as Arbitrator, his authority should be revoked.
Issues: Whether the petitioner was entitled to invoke the arbitration clause and proceed with the arbitration after initially approaching the Civil Court and inviting the respondent to appear in the said proceeding.
Ratio Decidendi: The Court relied on Sections 5, 8(1), 8(3), 14, and 15 of the Arbitration and Conciliation Act, 1996. It held that under Section 5, no judicial authority is empowered to deal with any issue covered by the arbitration agreement. Under Section 8 (1), the judicial authority is duty-bound to refer the dispute to arbitration in case an arbitration clause is drawn attention to on an application by any party. Under sub-section (3) of Section 8, the pendency of any other proceeding does not debar the Arbitrator to proceed with the reference or to enter upon reference, if asked for.
Final Decision: The Court revoked the authority of the arbitrator under the agreement dated March 12, 1992, and gave liberty to the petitioner to take appropriate steps for the appointment of a new arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
( 1 ) THE parties entered into an agreement on March 12, 1992 whereby the petitioner lent and advanced diverse sums of money to the respondent for smooth running of the Tea Estate. As the monies were not repaid in terms of the agreement, the petitioner initially approached the Civil court by filing a suit as also applied for interim injunction under Order 39 of the Code of Civil Procedure.
( 2 ) THE suit was filed by the plaintiff being the petitioner herein suppressing the arbitration clause incorporated in the agreement. The petitioner also moved the Criminal Court as against the Directors of the respondent-Company. The respondent got the criminal case stayed in view of pendency of the civil proceedings. The petitioner realising their mistake although belatedly approached the named Arbitrator in 2000 and filed their statement of claim before him. According to the petitioner although the arbitrator was approached in 2000 there was hardly any attempt by the arbitrator to conduct the arbitration effectively. Ultimately, in 2002 petitioner approached the Civil court with an application under Order 23 of the Code of Civil Procedure, inter alia, praying for withdrawal of the suit. In the order-sheet annexed to the affidavit-in-op-position filed by the respondent it appears that the application was allowed by the Civil judge, Senior Division, Darjeeling wherein it was recorded that the application for withdrawal was made on the ground that the arbitration proceeding had been initiated in terms of the contract between the parties and the said proceeding was pending on the said date. Upon hearing both the parties the learned Civil Judge, Senior Division, darjeeling allowed the suit to be withdrawn with liberty to "file afresh". The learned counsel appearing for the respondent submits that the said application was not opposed by the respondent.
( 3 ) EVEN after the withdrawal of the suit the Arbitrator was not proceeding with the reference effectively. According to the petitioner, they paid a sum of Rs. 10,000/- to the Arbitrator for the purpose of advertisement of public notice in newspaper as the respondent was not appearing before the arbitrator. Accordingly, advertisement was published. Pursuant to the advertisement the learned Advocate appearing for the respondent wrote to the Arbitrator on March 10, 2003, inter alia, contending that once the Civil Suit was filed, the parties waived their right to go in for arbitration and, as such, the Arbitrator was not entitled to proceed. According to the Arbitrator there were other issues which the petitioner was insisting to be gone into beyond the scope of the agreement and, as such, it was difficult for the Arbitrator to proceed with the reference. In course of hearing Mr. Mishra, leafned advocate on instruction submits that the arbitrator is not willing to act as Arbitrator and he should be relieved of responsibility. He, however, has filed an affidavit denying all the allegations made against him by the petitioner.
( 4 ) THE present application has been made under Sections 14 and 15 of the arbitration and Conciliation Act, inter alia, for revoking the authority of the Arbitrator and also for consequential relief. Mr. Uptal Bose, learned counsel appearing in support of this application, submits that the petitioner was wrongly advised to approach the Civil Court. Once the agreement incorporate the arbitration clause the parties were bound to adhere to the said terms and, as such, the arbitrator was approached by the petitioner. According to Mr. Bose it was incumbent upon the Arbitrator to proceed with the reference irrespective of pendency of the suit in view of Section 8 (3) of the said Act of 1996. Mr. Bose further submits that for last five years the arbitrator did not effectively hold any sitting. In any event once he has expressed his unwillingness to act as Arbitrator his authority should be revoked.
( 5 ) MR. Ahmed, learned counsel while opposing this appli
