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High Court Of Orissa
N. K. Das, J.
FERTILISER CORPORATION OF INDIA LTD - Appellant
Versus
RAVI KUMAR OHRI - Respondent
Civil Revn. 131 Of 1977
Decided On : 08/02/1978
ARBITRATION - Appointment of Arbitrator - General Project Manager named in the agreement as sole arbitrator - Notice under Section 8 (1) of the Arbitration Act issued personally to the General Project Manager - General Project Manager did not enter upon the reference, nor nominated any person as arbitrator - Court has jurisdiction to appoint an arbitrator in the facts and circumstances of the case - Once an arbitrator had been appointed, it was again a question of discretion on the part of the court whether the prayer to change him should be accepted or not.
Fact of the Case:
The Fertiliser Corporation of India (FCI) invited tenders for the supply of bricks for the construction of its factory at Talcher. The opposite party was one of the tenderers and his tender was accepted. After negotiation, a supply of 175 lakhs of kiln burnt bricks was to be completed by 30th June 1975. The opposite party filed a petition under Section 8 (2) read with Section 8 of the Arbitration Act in the court of the Subordinate Judge, Bhubaneswar, alleging that the FCI did not fix the stacking ground till 24-12-1973, resulting in a large number of bricks being blocked. The opposite party also alleged that the FCI officers were biased and that he suffered losses due to the rise in prices of tires, fuel, etc. The FCI contended that the non-availability of the stacking ground was not its concern as per the agreement and that the rate for the supply of bricks was fixed and could not be reduced or enlarged. The Subordinate Judge allowed the petition and appointed a retired District Judge as the arbitrator.
Finding of the Court:
The court held that the opposite party had given due notice to the arbitrator as per the stipulation in the agreement. The question of limitation raised by the FCI was to be decided by the arbitrator. The court also held that there were reasonable grounds for apprehension in the mind of the opposite party that he would not get proper justice from the General Project Manager, who was named as the sole arbitrator in the agreement. Accordingly, the court revoked the authority of the General Project Manager and appointed a retired District Judge as the arbitrator.
Issues: 1. Whether the court had jurisdiction to appoint an arbitrator in the facts and circumstances of the case? 2. Whether the General Project Manager, who was named as the sole arbitrator in the agreement, should be appointed as the arbitrator? 3. Whether the allegation of bias against the General Project Manager was tenable?
Ratio Decidendi: 1. The court has jurisdiction to appoint an arbitrator in the facts and circumstances of the case where the appointed arbitrator is incapable of acting and the arbitration agreement does not show that it was intended that the vacancy should not be supplied. 2. The General Project Manager, who was named as the sole arbitrator in the agreement, should not be appointed as the arbitrator where he has failed to act in terms of the statutory requirement and has disabled himself from subsequently projecting his case for appointment as the sole arbitrator. 3. The allegation of bias against the General Project Manager was tenable where he opposed the proceeding and disputed the claim, displaying an attitude that created an apprehension that he would not act justly and fairly in adjudicating the claims and disputes.
Final Decision: The revision petition filed by the FCI was dismissed.
N. K. DAS, J.
( 1 ) THE Fertiliser Corporation of India (hereinafter referred to as 'the corporation') is a company incorporated under the Companies Act and it has its branch office at Talcher in the district of Dhenkanal. For construction of its factory at Talcher, tenders were invited for supply of 175 lakhs of kiln burnt bricks and the opposite party was one of the tenderers. After negotiation, his tender was accepted and supply thereunder was to be completed by 30th of june, 1975. The opposite party filed a petition under Section 8 (2) read with section 8 of the Arbitration Act in the court of the Subordinate Judge, bhubaneswar. The said petition was allowed and one retired District Judge was appointed as arbitrator. The present revision is directed against that order.
( 2 ) OPPOSITE party was the petitioner in the court below. His case was that after negotiation, tender for supply of 175 lakhs of kiln burnt bricks was accepted and supply was to be completed within eighteen months from 22-8-73. It was further fixed that supply of 72,00,000 bricks would be made by 30-6-74 and 15,00,000 bricks were to be supplied by 30-9-74. The officers of the corporation did not fix the stacking ground till 24-12-73. Some quarters were constructed and for construction of those quarters, the corporation received 12,50,000 bricks by 6-3-74 and the stipulation was that no payment would be made on bricks at the kiln site. As huge number of bricks could not be lifted due to want of stacking ground, a large number of bricks of the opposite party was blocked, but the corporation assured him to compensate the loss sustained by him due to blocking of the area. The opposite party had to suffer a lot due to rise of prices on tyre, fuel etc. As per the terms of agreement, in case of dispute, the same should be referred to arbitration. The opposite party accordingly served notice under Section 8 (1) of the Arbitration Act to the arbitrator which was received on 31-3-76. The corporation did not act in spite of that notice and instead of being impartial and judicious, the General Project manager became biased. So, the opposite party prayed for leave to revoke the authority of the General Project Manager and to appoint another person as arbitrator. The corporation in its counter contends that non-availability of stacking ground at the kiln site was of no concern to the petitioner (corporation) as per the agreement. The rate regarding supply of bricks is fixed and there is no scope for reduction (enlargement ?) of rate as per the contract. The corporation is not responsible for the alleged loss sustained by the opposite party. The allegation of bias has been refuted and it is stated that if there would be a question for arbitration, then it is only the General Project Manager, or some other person to be appointed by him, to act as arbitrator.
( 3 ) THE learned Subordinate Judge has held that there was due notice to the arbitrator as per the stipulation in the agreement. The question of limitation raised by the corporation is to be decided by the arbitrator. Even if the present opposite party has accepted the final bill, that would not debar him to file the present petition. There was a dispute and it has been properly referred to. He also held that there was reasonable grounds for apprehension in the mind of the present opposite party that he would not get proper justice. Accordingly, he allowed the petition and revoked the authority of the General Project Manager and appointed Shri J. C. Tripathy, a retired District Judge as arbitrator.
( 4 ) IT is contended by Mr. Mohanty, the learned counsel for the petitioner, that without complying with the requirements of Clause 64 of the contract, the opposite party cannot take recourse to Clause 65. Clause 64 is general term and condition of the contract. Clause 65 particularly relates to reference to arbitration. After going through both the clauses in the contract, it does not appear that compliance of Clause
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