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1996 Supreme(Raj) 98
High Court Of Rajasthan
Judgename : ARUN MADAN
STATE OF RAJASTHAN - Appellant
Versus
G.S.ATWAL - Respondent
S. B. C. R. P. 818 Of 1995
Decided On : 02/09/1996
The Court has the power to appoint an arbitrator under Section 8(2) and Section 20(4) of the Arbitration Act, 1940, in the absence of an appointment by the State Government, if the State Government fails to appoint an arbitrator within the stipulated time.
Headnote:
ARBITRATION - APPOINTMENT OF ARBITRATOR - POWER OF COURT - SECTION 8(2) AND SECTION 20(4) OF THE ARBITRATION ACT, 1940 - INTERPRETATION - COURT'S DISCRETION IN APPOINTING ARBITRATOR - APPLICABILITY OF SECTION 8(1)(A) OF THE ACT - FAILURE OF STATE GOVERNMENT TO APPOINT ARBITRATOR WITHIN STIPULATED TIME - RESPONDENT'S RIGHT TO EXERCISE VESTED RIGHTS - PURPOSE OF ARBITRATION AGREEMENT - VALIDITY OF APPOINTMENT OF ARBITRATOR BY TRIAL COURT.
Fact of the Case:
A dispute arose between the parties to an agreement, and as per Clause 23 of the agreement, the dispute was to be referred to an arbitrator appointed by the State Government. However, the State Government failed to appoint an arbitrator within the stipulated time. The respondent-claimant filed an application under Section 8(2) read with Sections 20 and 33 of the Arbitration Act, 1940, requesting the Court to appoint an arbitrator.
Finding of the Court:
The Court held that the respondent-claimant was not obliged to wait indefinitely for the appointment of an arbitrator by the State Government, as it would have defeated the purpose of the arbitration agreement. The Court further held that the trial Court was justified in appointing an arbitrator under Section 8(2) and Section 20(4) of the Act, as the State Government had failed to appoint an arbitrator within the stipulated time.
Issues: 1. Whether the respondent-claimant was entitled to file an application under Section 8(2) of the Arbitration Act, 1940, despite the existence of Clause 23 of the agreement, which provided for the appointment of an arbitrator by the State Government? 2. Whether the trial Court had the power to appoint an arbitrator under Section 8(2) and Section 20(4) of the Act, in the absence of an appointment by the State Government?
Ratio Decidendi: 1. The Court held that the respondent-claimant was entitled to file an application under Section 8(2) of the Act, as the State Government had failed to appoint an arbitrator within the stipulated time. The Court relied on the decision in Nandyal Co-op. Spinning Mills Ltd. v. K. V. Mohan Rao, where it was held that the Court should endeavor to give effect to the contract, even if a contracting party had failed to act according to the contract. 2. The Court held that the trial Court had the power to appoint an arbitrator under Section 8(2) and Section 20(4) of the Act, as the State Government had failed to appoint an arbitrator within the stipulated time. The Court relied on the decision in G. Ramachandra Reddy and Co. v. Chief Engineer, M. E. S., where it was held that the Court has jurisdiction and power to appoint an arbitrator in the absence of any named arbitrator or agreement between the parties.
Final Decision: The Court dismissed the revision petition and upheld the appointment of the arbitrator by the trial Court.
ARUN MADAN, J.
( 1 ) THIS revision petition has been preferred before this Court under Section 115 of the Code of Civil Procedure against the order dated 29th May, 1995, passed by the Addl. District Judge, Karauli in Civil Misc. Petition No. 5/95, whereby the learned trial Court had allowed the application moved by the claimant-respondent under Section 8 (2) read with Sections 20 and 33 of the Arbitration Act, 1940 (hereinafter to be referred as the Act) The brief facts giving rise to the filing of the present revision petition are that an agreement was duly executed between the parties for execution of certain work as per the agreement. Soon after the execution of the agreement certain disputes arose between the parties and for resolving the said disputes as per Clause 23 of the agreement, the same were required to be referred to the Arbitrator to be appointed by the State Government not below the rank of Superintending Engineer. It has been further contended in the petition that notwithstanding the aforesaid Clause 23 of the agreement, since no Arbitrator was appointed by the respondents, the petitioner was left with no remedy except to move the aforesaid application for appointment of the Arbitrator praying therein that the arbitration agreement be filed in the Court and the Arbitrator be appointed from amongst the persons named in the prayer clause.
( 2 ) THE aforesaid application was contested before the learned trial Court. The petitioner-State Government had raised certain preliminary objections regarding the maintainability of the application itself contending inter alia that the application under Sections 8 and 20 of the Act cannot be moved simultaneously and, therefore, the application itself was not maintainable and deserved dismissal from the trial Court. Apart from that it was also contended that the said application was also not maintainable under Section 33 of the Act. The non-petitioner did not file any rejoinder to the said reply filed by the petitioner and as such the matter was heard on merits and the learned trial Court thereafter allowed the application of the non-petitioner treating it to be the application under Section 8 of the Act and in pursuance of the prayer made in the application, appointed one Shri J. M. Gupta, retired Chief Engineer to act as an Arbitrator with the direction to pass award within a period of four months and file the same before the trial Court and the matter was fixed for compliance of the order on 5-10-95.
( 3 ) IT is in the backdrop of the aforesaid circumstances that the present revision petition has been filed in this Court wherein the petitioner has assailed the impugned order dated 29-5-95 on the grounds inter alia that the impugned order has not only been passed by the trial Court in exercise of its jurisdiction not vested in it under the Act and the same is erroneous and illegal inasmuch as the trial Court committed material irregularity without knowing the scope and procedure to be followed for deciding the application moved by the non-petitioner. It has been further contended by the learned counsel for the petitioner that the aforesaid application was not amended by the non-petitioner despite objections having been raised regarding its maintainability and to the utter surprise of the petitioner without there bring an application regarding deletion of Sections 20 and 33 of the Act, the learned trial Court treated the application as having been moved under Section 8 of the Act and thereby it failed to follow the procedure as has been provided under the provisions of the Act as well as the CPC and thus the order passed by the Court below dated 29-5-95 is illegal being not in accordance with law.
( 4 ) DURING the course of hearing Shri Manish Bhandari, learned counsel for the petitioner has contended that the trial Court has committed grave illegality in not following the procedure as envisaged under the Act and the application moved by the non-petitioner was not
