Back
High Court Of Orissa
R. N. Misra, J.
TATA IRON AND STEEL CO.LTD. - Appellant
Versus
RAJRISHI MINERAL INDUSTRIES - Respondent
Misc. Appeal 281 Of 1977
Decided On : 07/05/1978
ARBITRATION - APPOINTMENT OF ARBITRATOR - VACANCY - POWER OF COURT TO APPOINT ARBITRATOR - SECTION 8(1)(B) AND SECTION 20(4) OF THE ARBITRATION ACT, 1940 - INTERPRETATION.
Fact of the Case:
Tata Iron and Steel Co. Ltd. (Company) and a firm of contractors (Firm) entered into two agreements for mining and transportation of chromite and dolomite. Both agreements contained an escalation clause and an arbitration clause providing for reference of disputes to the Divisional Manager (Raw Materials Division) of the Company. After the contracts ended, the Firm claimed escalation under the clause, which was rejected by the Company. The Firm sent a notice to the Company to concur in the appointment of an arbitrator, but the Company did not respond. The Firm filed applications under Section 20 of the Arbitration Act, 1940, seeking appointment of an arbitrator.
Finding of the Court:
The Court held that there was an existing dispute between the parties, as the Company had rejected the Firm's claim for escalation and failed to respond to the notice for appointment of an arbitrator. The Court also found that the named arbitrator was not available as the office of Divisional Manager (Raw Materials Division) had been abolished and the functions divided among other positions. The Court further held that the arbitration clause did not indicate a negative intention of the parties not to fill the vacancy, and therefore, under Section 8(1)(b) and Section 20(4) of the Arbitration Act, the Court had the power to appoint an arbitrator.
Issues: 1. Whether there was an existing dispute between the parties. 2. Whether the named arbitrator was available. 3. Whether the Court had the power to appoint an arbitrator in the absence of a named arbitrator.
Ratio Decidendi: 1. The existence of a dispute is a factual question to be determined based on the circumstances of the case. In this case, the Company's rejection of the Firm's claim and failure to respond to the notice for appointment of an arbitrator indicated the existence of a dispute. 2. The availability of the named arbitrator is determined by the terms of the arbitration clause and the circumstances of the case. In this case, the abolition of the office of Divisional Manager (Raw Materials Division) and the division of its functions among other positions rendered the named arbitrator unavailable. 3. Under Section 8(1)(b) and Section 20(4) of the Arbitration Act, the Court has the power to appoint an arbitrator in the absence of a named arbitrator, unless the arbitration agreement shows that the parties intended not to fill the vacancy.
Final Decision: The Court dismissed both appeals and affirmed the orders of the lower court, directing the Company to file the arbitration agreement for reference of the disputes to arbitration.
R. N. MISRA, J.
( 1 ) THESE two appeals under Section 39 (1) (iv) of the Arbitration Act of 1940 (hereinafter referred to as the 'act') are directed against two separate decisions of the learned Subordinate Judge of Cuttack allowing the applications under section 20 of the Act and directing the defendant-appellant to file the arbitration Agreement for a reference of the disputes to arbitration.
( 2 ) MESSRS. Tata Iron and Steel Co. Ltd. (hereinafter referred to as the 'company') are holders of a chromite mine located at Sukinda and a dolomite mine in the district of Sundergarh-- both within the State of Orissa. Plaintiff-respondent in these-appeals is a firm of contractors registered under the Indian Part-tier-ship act of 1932 (hereinafter referred to as the 'firm' ). On 8-2-1969, an agreement was entered into between the Company and the Firm (Ext. H) initially for a period of 13 months from February, 1969, but the same had been extended up to Feb. , 1973, whereunder, the Firm undertook to do mining, sorting, cleaning, trimming, blending, transport and stacking of chromite from the chromite mine at Sukinda and to transport the same to rail-head. A similar agreement was entered into on 1-11-1969 between the parties whereunder the Firm undertook to perform similar acts in the dolomite mine of the Company located within the district of Sundergarh. Initially the contract was for one year, but was extended on the same terms and conditions up to February, 1973. Both these agreements contain an escalation clause and an arbitration clause on similar terms. The Firm pressed for enhancement of the rates under the escalation clause in the two contracts in Dec. , 1972, but it was turned down on 9-2-1973 (Ext. 1) and the Firm was informed:
"with reference to your letter No. RMI/bsp/72/659 dated 5th Dec. , 1972, the question of increasing your rates Cinder the escalation clause for your work at Gomardih and Sukinda mines was examined by the Accounts Division. 2. It has been pointed out to you earlier that - (a) the agreements for your work at Sukinda and Gomardih were entered into by our Company with you from 1-2-1969 and 1-1-1970 respectively and have since been renewed on annual basis Since renewals of the agreements have been made 'under the same terms and conditions of the original agreement', a revision of rate cannot now be considered;. (b) moreover, none of the cost increases have arisen on account of the factors specified in the 'escalation clause' contained in the agreements.
( 3 ) IN the circumstances, we regret our inability to accede to your request for any increase over the prevailing rates. " on 20th January, 1975, the Firm renewed its claim reiterating that the claims were genuine and appeared to have been not entertained in the absence of supporting materials. For the chromite contract, the Firm claimed Rs. 5,98,671. 66 and for the other, claimed Rs. 12,35,562. 11. On 16-4-1975, the company intimated the Firm :
". . . . . . . . . We have looked into the matter and are prepared to pay to you the amount of Rs. 3,01,554. 80 as per settlement arrived at, in full and final settlement of your claim under the mining contracts at gomardih and Sukinda but without prejudice to your claim for escalation which has since been received by us under cover of your letter. . . . . . . . . . . . dated 20-1-1975. Kindly note that no interest as claimed by you in your letter No. . . . . . . . . . . . . of 13-2-1975 will be paid. On receipt of your acceptance, we shall let you have our cheque for the aforesaid amount of Rs. 3,01,554. 80 p. The escalation claim is receiving our attention and will be dealt with on its own merits. "
After waiting for about six weeks, the Firm sent a notice on 2nd June, 1975, saying :
"your are fully aware that certain disputes have arisen regarding our claims of Escalation and the outstanding payments and the interest accrued thereon, as advised to you in our various letters. As these have not been mutually settled
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
