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HIGH COURT OF ORISSA
G. K. Misra, J.
STATE OF ORISSA - Appellant
Versus
GOVINDA CHOUDHURY - Respondent
Civil Revn. 24 Of 1969
Decided On : April 23, 1969
ARBITRATION - APPOINTMENT OF ARBITRATOR - SECTION 8 (1) (A) OF THE INDIAN ARBITRATION ACT - IMPLIED CONSENT - JURISDICTION OF COURT TO APPOINT ARBITRATOR - REVIEW OF APPOINTMENT.
Fact of the Case:
The petitioners, the State of Orissa and the Executive Engineer, Bhubaneswar Division, challenged the appointment of Shri S. K. Palit as an arbitrator in a dispute between them and the opposite party, Govinda Chowdhury. The arbitration clause in the agreement between the parties provided for the appointment of a Superintending Engineer of the State Public Works Department unconnected with the work as nominated by the concerned Chief Engineer. However, the court appointed Shri S. K. Palit, a retired Chief Engineer, as the arbitrator.
Finding of the Court:
The court held that the arbitration clause came within the ambit of Section 8 (1) (a) of the Indian Arbitration Act, which empowers the court to appoint an arbitrator in case no arbitrator is appointed in accordance with the arbitration clause. The court found that there was an implied consent amongst both the parties that the concerned Chief Engineer would make the selection of the arbitrator out of the two groups referred to in the arbitration clause. Therefore, the court had jurisdiction to appoint an arbitrator to settle the dispute.
Issues: 1. Whether Section 8 (1) (a) of the Indian Arbitration Act applies to an arbitration clause that vests the entire discretion for choice of arbitrator in one of the parties? 2. Whether the court has jurisdiction to appoint an arbitrator in case no arbitrator is appointed in accordance with the arbitration clause? 3. Whether the court can review its order appointing an arbitrator?
Ratio Decidendi: 1. Section 8 (1) (a) of the Indian Arbitration Act applies to an arbitration clause that vests the entire discretion for choice of arbitrator in one of the parties, provided that there is an implied consent amongst both the parties that the party with the discretion will make the selection out of a specified group or class of persons. 2. The court has jurisdiction to appoint an arbitrator in case no arbitrator is appointed in accordance with the arbitration clause. 3. The court can review its order appointing an arbitrator, but such discretion should not be exercised in favor of a party who has acquiesced in the appointment or where substantial progress has been made in the arbitration proceedings.
Final Decision: The court dismissed the civil revision petition filed by the petitioners, upholding the appointment of Shri S. K. Palit as the arbitrator.
G. K. MISRA, J.
( 1 ) GOVINDA Chowdhury, opposite party, filed an application before the subordinate judge, Bhubaneswar, making a prayer that the petitioners (State of Orissa and the executive Engineer, Bhubaneswar Division) should be directed to file the agreement, notice under Section 8 of the Indian Arbitration Act (hereinafter. , referred to as the Act) and other papers relating to dispute, and to appoint an arbitrator for giving an award. It is not necessary to give the detailed terms of the agreement. Clause (23) of the agreement, so far as relevant, runs thus:
"except where otherwise provided in the contract all questions and disputes. . . . . . shall be referred to the sole arbitration of a Superintending engineer of the-State Public Works Department unconnected with the work at any stage nominated by the concerned Chief Engineer. If there be no such Superintending Engineer it should be referred to the sole arbitration of the Chief Engineer concerned. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to this contract. "
The opposite party took up construction of high level bridge over the river bhargabi at 3rd mile on the Pipili-Konark Road. He filed a claim and wanted early disposal. The matter is pending from 30-5-62. The opposite party served a notice under Section 8 of the Act and the petitioners received the same on 7-4-66. A counter was filed on behalf of the opposite party wherein the names of 3 superintending Engineers, Sri M. M. Bhanj, Shri P. Fatnaik and Shri N. Misra were mentioned to be arbitrators. The opposite party filed a subsequent application wherein the names of Sri Mamtaj Ali, Sri B. N. Sahu and Shri A. M. Mohanty were mentioned as persons who should be appointed as arbitrators. On 6-10-67 the learned Subordinate Judge, Bhubaneswar appointed Shri Mamtaj Ali, Additional chief Engineer as the arbitrator. Obviously Shri Mamtaj Ali must have the status of ,a Superintending Engineer not connected with the work. At any rate, no objection was raised before the court that Shri Mamtaj Ali was not a person coming within the ambit of the arbitration clause. It appears from the order dated 29-4-68 that Shri Mamtaj Ali wrote a letter on 22-4-68 expressing his inability to act as arbitrator. He wrote thus:
"due to pressure of work I have not been able to attend to the said cases, as in the meantime I have been appointed as Chief Engineer, R and b Bhubaneswar. There is hardly any time for me to attend to the case work. Therefore I seek the Court's permission to submit that a retired chief Engineer like Shri S. K. Palit may be appointed and on Intimation I shall submit' the records," on 4-5-68 the court passed the following order: "advocates for both the parties have already given their consent as per endorsement made in the remarks cloumn regarding appointment of shri S. K. Falit as arbitrator. As the appointed arbitrator is unwilling to act and both the parties have agreed to the appointment of Sri Palit in his place, it is ordered that the appointment of Shri Ali is cancelled and shri Palit, retired Chief Engineer is appointed as arbitrator. "
On 25-7-68 Shri Mamtaj Ali wrote another letter to the learned Subordinate Judge making a request that the appointment of Shri S. K. Palit as the arbitrator should be cancelled. The letter runs thus:
"i am to say that my willingness given to appoint Shri S. K. Palit, retired chief Engineer as arbitrator in the above letter may kindly be treated as cancelled as I was not in the know of the fact that the award of Shri S. K. Palit in another case has been challenged by the State and an appeal has been filed in the High Court. . . . "
This letter was followed by a petition to the same effect. The matter came up for consideration on 7-10-68. The learned Subordinate Judge rejected the prayer of shri Mamtaj Ali. The substantial groun
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