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1962 Supreme(Guj) 89

Gujarat High Court
Judgename :V.B.RAJU
BHAILAL MANILAL - Appellant
Versus
AMRATLAL LALLUBHAI SHAH - Respondent
Civil Revision 547 of 1960
Decided On : 09/06/1962

Advocates Appeared: AKSHAY H.MEHTA, N.C.SHAH

Headnote:

Indian Arbitration Act , 1940 – Section 12 , 19 , 21 , 23 , 25 and 34 - Arbitration of disputes that may arise between the parties file a suit without getting the dispute settled by arbitration - The suit was stayed and arbitrators were appointed by the parties - On of the arbitrators limited that he wanted to resign vide Ex. 40 Then the plaintiff gave an application Ex. 41 to the Court to supersede the arbitration and the Court - Appeal and aggrieved by this order the defendant has now come in revision - Opponent contends that the order is perfectly correct in view of the scheme of the Act - Chapter II of the Act deals with arbitration without intervention of a Court Chapter III of the Act deals with arbitration with intervention of a Court where there is no suit pending - Chapter IV deals with arbitration in suits - Contention of the learned counsel for the opponent is that Chapter IV which deals with arbitration in suits deals with arbitration in suits whether the arbitration agreement be prior to the suit or subsequent to the suit – Held, In the present case as one of the arbitrators had wanted to resign - Provisions of sec. 9 of the Act would have been applicable and should have been followed - But the parties did not follow the provisions of sec. 9 of the Act and the Court also did not pay its attention to the provisions of sec. 9 and without doing so passed an order under sec. 25 of the Act - Court itself had appointed the arbitrators and issued a letter of authority to the arbitrators - Act is clear and where the Act does not contemplate an order under sec. 25 of the Act - Contemplate that the parties should follow the provisions contained in Chapter II to pass an order under sec 25 which is in Chapter IV of the Act is clearly a material irregularity in the exercise of jurisdiction and is not warranted by the application of the principle of inherent powers - Revision application is therefore allowed and the order of the lower Court is set aside - Question whether an order under sec. 12 (2) (b) of the Act should be passed should be considered by the Court at the proper stage - No order as to costs throughout - Application allowed.

V. B. RAJU, J.

( 1 ) ONE of the parties to an agreement which contained a clause relating to arbitration of disputes that may arise between the parties file a suit without getting the dispute settled by arbitration. The suit was stayed and arbitrators were appointed by the parties. On 6-4-59 on of the arbitrators limited that he wanted to resign vide Ex. 40 Then the plaintiff gave an application Ex. 41 to the Court to supersede the arbitration and the Court passed the following order :-THE order of the appointment of arbitrators is superseded and the stay of the suit is vacated and I order to proceed further with the suit.

( 2 ) THIS order was confirmed in appeal and aggrieved by this order the defendant has now come in revision.

( 3 ) IT is contended that the Court should have followed the provisions contained in sections 9 and 10 of the Indian Arbitration Act 1940 which will hereinafter be referred to as the Act and that the learned Judge was wrong in passing an order which purported to be one under section 25 of the Act.

( 4 ) THE learned counsel for the opponent contends that the order is perfectly correct in view of the scheme of the Act. Chapter II of the Act deals with arbitration without intervention of a Court Chapter III of the Act deals with arbitration with intervention of a Court where there is no suit pending. Chapter IV deals with arbitration in suits. The contention of the learned counsel for the opponent is that Chapter IV which deals with arbitration in suits deals with arbitration in suits whether the arbitration agreement be prior to the suit or subsequent to the suit. Section 21 which is in Chapter IV reads an follows: Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration they may at any time before judgment is pronounced apply in writing to the Court for an order of reference. It is therefore clear that if this Chapter applies the parties interested in the suit must agree that any matter in difference between them in the suit shall be referred to arbitration; they should then apply to the Court for an order of reference and the Court should under section 23 of the Act refer to the arbitrator the matter in difference which is required to be referred to him. In cases to which Chapter IV is applicable a provision is made in section 25 of the Act. Section 25 reads as follows:- The provisions of the other Chapters shall so far as they can be made applicaable apply to arbitrations under this Chapter: Provided that the Court may in any of the circumstances mentioned in sections 8 10 11 and 12 instead of filling up the vacancies or making the appointments make an order superseding the arbitration and proceed with the suit and where the Court makes an order superseding the arbitration under section 19 it shall proceed with the suit. The order in question has obviously been made under section 25 of the Act. It is conceded by the learned counsel for both sides that the order in question has been passed under section 25 of the Act. In cases to which Chapter 4 is not applicable the Court may order that the arbitration agreement shall cease to have effect with respect to the difference referred. This can be done under section 12 (2) (b) of the Act in cases to which Chapter II is the applicable. Under section 19 of the Act also the Court has power to supersede arbitration in cases to which that section is applicable. On this contention it is necessary to remember the provisions of section 34 of the Act. Section 34 reads as follows:-WHERE any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred any party to such legal proceeding may at any time before filing a written statement taking any other steps in the proceedings apply to the judicial authority before which the proceed





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