Back
High Court Of Delhi
KISHANCHAND - Appellant
Versus
UNION OF INDIA - Respondent
Suit 327-A of 1973
Decided On : 05/29/1974
ARBITRATION - APPOINTMENT OF ARBITRATOR - CONSTRUCTION OF ARBITRATION CLAUSE - POWER OF COURT TO APPOINT ARBITRATOR - SECTIONS 8(1)(A), 20(4) OF THE ARBITRATION ACT, 1940.
Fact of the Case:
In two cases, disputes arose between the parties, and arbitration clauses were invoked. The arbitration clauses provided that the Chief Engineer or the Administrative Head of the Central Public Works Department would appoint an arbitrator. In one case, the Chief Engineer failed to appoint an arbitrator within 15 days of receiving a notice from the petitioner, and in the other case, two arbitrators resigned. The petitioners approached the court under sections 8(1)(a) and 20(4) of the Arbitration Act, 1940, seeking the appointment of an arbitrator by the court.
Finding of the Court:
1. Section 8(1)(a) of the Arbitration Act, 1940, applies only when the arbitration agreement provides for the appointment of an arbitrator by consent of the parties. In the present cases, the arbitration clauses vested the power to appoint an arbitrator exclusively in the Chief Engineer or the Administrative Head of the Central Public Works Department, and therefore, section 8(1)(a) did not apply. 2. Section 20(4) of the Arbitration Act, 1940, empowers the court to appoint an arbitrator only if there is no arbitrator appointed by the parties, whether in the agreement or otherwise, and the parties cannot agree upon an arbitrator. In the present cases, the arbitration clauses expressly excluded the power of the court to appoint an arbitrator, and therefore, the court had no power to appoint an arbitrator under section 20(4).
Issues: 1. Whether section 8(1)(a) of the Arbitration Act, 1940, applies to an arbitration agreement where the power to appoint an arbitrator is vested exclusively in a designated person. 2. Whether the court has the power to appoint an arbitrator under section 20(4) of the Arbitration Act, 1940, when the arbitration clause expressly excludes the power of the court to appoint an arbitrator.
Ratio Decidendi: 1. The plain language of section 8(1)(a) of the Arbitration Act, 1940, requires that the arbitration agreement must provide for the appointment of an arbitrator by consent of the parties. In the present cases, the arbitration clauses did not provide for such consent, and therefore, section 8(1)(a) did not apply. 2. Section 20(4) of the Arbitration Act, 1940, empowers the court to appoint an arbitrator only if there is no arbitrator appointed by the parties, whether in the agreement or otherwise, and the parties cannot agree upon an arbitrator. In the present cases, the arbitration clauses expressly excluded the power of the court to appoint an arbitrator, and therefore, the court had no power to appoint an arbitrator under section 20(4).
Final Decision: The court held that it had no power to appoint an arbitrator under either section 8(1)(a) or section 20(4) of the Arbitration Act, 1940, and directed that the cases be placed before a Single Judge for disposal in accordance with the opinion recorded.
( 1 ) THESE two cases have been referred for decision by a larger Bench. One was referred by me. and the other by Mr. Justice Avadh Echari. They came before each of us sitting singly on the Original Side. Both the cases have now been heard conjointiv as the arbitration clauses round which they turn are substantially the same, and the questions which have arisen are associated. First, we will deal with the case referred by me.
( 2 ) IN October 1971, the Union of India accepted a tender submitted by the petitioner, Kishan Chand, for developing the site of the Third Asian International Trade Fair 1972 and providing roads and paths and concrete pavements in the Exhibition Grounds. The formal contract subsequently executed contained an arbitration clause. This was clause 25, of which the relevant part reads:
except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before 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, specification, estimates instructions orders or these 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 person appointed by the Chief Engineer, Central Public Works Department, in charge of the work at the time of dispute or if there is no Chief Engineer, the Administrative Head of the said Central Public Works Department at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of his contract that no person other than a person appointed by such Chief Engineer or administrative head of the C. P. W. D. as aforesaid should act as arbitrator and if for any reason, that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of thhe claim in dispute is Rs. 50,000. 00 (Rupees fifty thousand and above), the arbitrator shall give reasons for the award.
subject as aforesaid the provisions of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the rules made thereunder, and for the time being in force shall apply to the arbitration proceeding under this clause.
( 3 ) DISPUTES did arise between the parties. So, on 22nd June 1973, the petitioner wrote a letter to the concerned Chief Engineer invoking the arbitration clause, and requested him-
to appoint an arbitrator within the statutory period of 15 days from the date of receipt of this notice as per provisions of section 8 of the Indian Arbitration Act 1940.
( 4 ) AT the end of this letter, the petitioner said :
be it noted that in case no arbitrator is appointed by you within a period of 15 days, the claimant shall proceed further under the provisions of section 20 of the Indian Arbitration Act 1940 or any other provisions of the same which may be open to him or be advised. It may also be noted that in that case the Union of India shall have to bear the costs
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
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
