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1994 Supreme(HP) 91
HIMACHAL PRADESH HIGH COURT
A.K. Mishra, J.
M/S. HIMACHAL KHAND UDYOG - PLAINTIFF/CLAIMANT
v.
THE CHAIRMAN, UNITED INDIA INSURANCE CO. AND ANOTHER - DEFENDANTS.
Civil Suit No. 40 of 1992
Decided on : May 31, 1994.
Advocate Appeared:
Mr. D. D. Sood, for the Plaintiff.
Mr. Chhabil Das, for the Defendants.
Headnote:
ARBITRATION - APPOINTMENT OF ARBITRATOR - SOLE ARBITRATOR - CONDITIONS - VALIDITY - ARBITRATION ACT, 1940, SECTIONS 8, 9, 30, 33.
Fact of the Case:
The claimant, Himachal Khand Udyog (P) Ltd., had two insurance policies issued by the objectors, United India Insurance Company. Disputes arose between the parties, and the claimant referred the matter to arbitration. The sole arbitrator, Shri R. D. Sharma, Advocate, was appointed by the claimant. The objectors did not participate in the arbitration proceedings, and the arbitrator made an ex-parte award in each case.
Finding of the Court:
The court held that the appointment of Shri R. D. Sharma as the sole arbitrator was void and that he had no jurisdiction to entertain the disputes and finally decide the same. The court found that the appointment of the arbitrator was not made in accordance with the terms of the agreement between the parties and the provisions of the Arbitration Act, 1940. The court also held that the objections preferred by the objectors, which were within the scope of Issue No. 1, were legally maintainable, despite the proceedings that took place before the Senior Sub-Judge, Una.
Issues: 1. Whether the Arbitrator had no jurisdiction to entertain the dispute and finally decide the same? 2. Whether the Arbitrator mis-conducted himself as also the proceedings, as alleged? 3. Whether the objections on issue No. 1 are maintainable in view of the fact that the objectors-defendants had submitted to the jurisdiction of the Arbitrator or in view of the civil court's judgment dated 19.3.1992, as alleged?
Ratio Decidendi: The court held that the appointment of the sole arbitrator was void and that he had no jurisdiction to entertain the disputes and finally decide the same. The court found that the appointment of the arbitrator was not made in accordance with the terms of the agreement between the parties and the provisions of the Arbitration Act, 1940. The court also held that the objections preferred by the objectors, which were within the scope of Issue No. 1, were legally maintainable, despite the proceedings that took place before the Senior Sub-Judge, Una.
Final Decision: The court accepted the objections preferred by the objectors under Sections 30 and 33 of the Arbitration Act, 1940, and set aside the awards dated 26.12.1992 and 21.3.1992. The claimant's prayer to make the awards a rule of the court was disallowed. Parties were left to bear their own costs.
A. L. Vaidya, J. - Both the suits referred to above have arisen between the same parties, having common questions of law and facts involved, and with that background they are being disposed of by this common judgment.
2. The plaintiff-claimant in both the suits happened to be M/s. Himachal Khand Udyog (P) Ltd., a private Ltd. Company registered under the Companies Act, with one Shri Mahant Sugriva Nand as its Managing Director. Two policies were issued by the Objector - respondents in the name of M/s. Himachal Khand Udyog on 12.1.1988 and 20.1.1988 insuring the building and machinery, stocks of the company against fire, tempests, floods and rains etc. In Civil Suit No. 40 of 1992 the policy was effective from 12.1.1988 to 11.1.1989 in respect of the risk covered for building and machinery in the total sum of Rs. 33,00,000/- (rupees thirty three lacs), that is, rupees seventeen lacs for building and rupees sixteen lacs for machinery. On the other hand of civil suit No. 72 of 1992, the policy was effective from 20.1.1988 to 19.1.1989 in respect of the risk covered for stocks of sugar and raw materials, referred to in the policy itself in the sum of rupees ten lacs.
3. On account of payment of some amount, on the basis of the aforesaid policies, some disputes arose and the plaintiff referred the matter for the arbitration of sole Arbitrator, Shri R. D. Sharma, Advocate, Una. The objectors, that is, the Insurance Company did not participate in the proceedings and the Arbitrator made an ex-parte Award in each of these cases.
4. In Civil suit No. 40 of 1992 the Award is dated 26th December, 1990. The relevant portion of the Award runs as under :
"I award and direct that
(A) Reference claims of M/s. Himachal Khand Udyog (P) Ltd.
The sum total of the amounts shown under award column against respective items :
-------------------------------------------------------------------------------------Claimant' Brief description of claim Award Claim No. -------------------------------------------------------------------------------------
1. Damage to the building and machinery caused by flood Amount of claim-Rs. 6,48,870.00 (Claim partially sustained) Rs. 4,00,336.00
2. Loss of Interest on borrowed amount Rs. 50,600.00 Amount of claim Rs. 73,130.38 (Claim partially sustained)
3. Loss of interest on excess drawn of sums from Bank Amount of Claim Rs. 38,665.00 (Claim rejected) Nil (Original Award on Stamp paper of Rs. 120.00. Rupees one hundred and twenty only)
4. The compensation on the basis of interest lost on balance claimed sum. Rs. 1,49,000.00
Amount of Claim Rs. 2,41,592.00 Claim partially sustained) -------------------------------------------------------------------------------------
(B) Interest
The respondents shall pay to the claimants amounts directed above within 60 days of the publication of this Award failing which the respondents shall pay an interest at the rate of 18% per annum on the amounts awarded from the date of this Award till the date of payment of Court decree, whichever is earlier."
5. In civil Suit No. 72 of 1992, the Award is dated 21st March, 1992. The relevant portion of the Award runs as under :
"I Award and Direct that Reference Claims of M/s. Himachal Khand Udyog Pvt. Ltd.
The Chairman, United India Insurance Company represented by the Branch Manager United India Insurance Company Ltd. Nangal Road, Near Bus Stand, Una, (H.P.) shall pay to M/s. Himachal Khand Udyog Pvt. Ltd., the claimant the sum total of the amounts show under Award Column against respective item of claims :
------------------------------------------------------------------------------------ Claim No. Brief Description of Claims Award ------------------------------------------------------------------------------------
1."Losses of Lying stocks due to flood" Rs. 5,30,000.00 Amount of claim Rs. 5,60,985.00 (Claim partially al
