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1985 Supreme(Ori) 117
High Court Of Orissa
B. N. MISRA
D.R.GUPTA - Appellant
Versus
STEEL AUTHORITY OF INDIA LTD. - Respondent
CIV. REVN. 594 Of 1980
Decided On : 05/10/1985
A.K.SAHU, ASHOK DAS, D.K.DEY, D.K.MOHAPATRA, M.R.MOHANTY, N.C.PATNAIK
A vacancy occurs in the office of the Arbitrator when the person holding the office ceases to hold it and the opposite party fails to supply the vacancy in spite of written notice from the petitioner.
Headnote:
ARBITRATION - VACANCY IN THE OFFICE OF ARBITRATOR - SUPPLY OF VACANCY - INTENTION OF PARTIES - INTERPRETATION OF ARBITRATION CLAUSE - APPOINTMENT OF ARBITRATOR UNDER SECTION 8 OF THE ARBITRATION ACT, 1940.
Fact of the Case:
The petitioner and the opposite party entered into a lease agreement for a hotel-cum-restaurant. The agreement contained an arbitration clause providing for the Chairman, Hindustan Steel Ltd. to be the Arbitrator in case of disputes. Disputes arose and were referred to arbitration. The Arbitrator split up the two cases and made an award in one case. The petitioner challenged the validity of the award and the Court set it aside. The opposite party preferred an appeal and the Court allowed the appeal in part. Meanwhile, the Chairman, Hindustan Steel Ltd. ceased to hold office and the petitioner applied to the Court for appointment of an Arbitrator under Section 8 of the Arbitration Act, 1940.
Finding of the Court:
The Court held that a vacancy had occurred in the office of the Arbitrator on the relinquishment of office by the Chairman, Hindustan Steel Ltd. and that the opposite party had failed to supply the vacancy in spite of written notice from the petitioner. The Court further held that the petitioner was entitled to call upon the Court to appoint an Arbitrator under Section 8 of the Act.
Issues: 1. Whether a vacancy had occurred in the office of the Arbitrator? 2. Whether the opposite party had failed to supply the vacancy in spite of written notice from the petitioner? 3. Whether the petitioner was entitled to call upon the Court to appoint an Arbitrator under Section 8 of the Act?
Ratio Decidendi: 1. The Court held that the arbitration clause in the agreement between the parties provided for the Chairman, Hindustan Steel Ltd. to be the Arbitrator in case of disputes. On the relinquishment of office by the Chairman, Hindustan Steel Ltd., the office of the Arbitrator fell vacant. 2. The Court held that the opposite party had failed to supply the vacancy in spite of written notice from the petitioner. The Court noted that the petitioner had written to the opposite party on 8-3-1977 to supply the vacancy on account of relinquishment of office by the Chairman, Hindustan Steel Ltd. The opposite party no doubt replied to the said letter, but failed to supply the vacancy. 3. The Court held that the petitioner was entitled to call upon the Court to appoint an Arbitrator under Section 8 of the Act. The Court noted that the petitioner had applied to the Court for appointment of an Arbitrator under Section 8 of the Act after the opposite party had failed to supply the vacancy.
Final Decision: The Court allowed the revision petition and set aside the impugned order of the learned Subordinate Judge dated 2-5-80. The Court directed the learned Subordinate Judge to proceed to appoint an Arbitrator under Section 8 of the Act after hearing both parties.
B. N. MISRA, J.
( 1 ) THIS revision is directed against the order D/-2-5-1980 passed by the learned Subordinate Judge, Rourkela in Misc. Case No. 33 of 1979 rejecting the petitioner's application under Section 8 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') for appointment of an arbitrator to adjudicate upon the disputes between the petitioner and the opposite party in respect of the petitioner's claim for Rs. 21,35,250/ -.
( 2 ) THE petitioner's case is that by an indenture of lease dated 3-10-1963 the opposite party granted to the petitioner a lease of Ac. 12. 30 decimals of land together with buildings thereon for a term of ten years from 9-2-63. The lease was for the purpose of running a hotel-cum-restaurant in the demised premises. The lease contains the following arbitration clause :"in the event of any dispute or difference arising between the Lessor and the Lessee during the period of subsistence of the lease relating to the observance of the terms and conditions of the lease and/or interpretation relating to any clause herein, the same shall be referred by both the parties to the sole arbitration of the Chairman, Hindustan Steel Ltd. whose decision and/or award in this behalf will be final, conclusive and binding between the two parties. The provisions of the Indian Arbitration Act, 1940 and any statutory modification to be made herein will be applicable for resolving the dispute through arbitration. "around 1965 disputes and differences arose between the parties and the opposite party instituted Money Suit No. 16 of 1972 valued at Rs. 50,000/ -. On an application made by the petitioner under Section 34 of the Act, the learned Subordinate Judge stayed Money Suit No. 16 of 1972 and the disputes between the parties were referred to the arbitration of Shri H. N. Bhaya, Chairman, Hindustan Steel Ltd. who was the person holding the office designated in the aforesaid arbitration clause. Thereafter the opposite party preferred a claim for Rs. 14,14,320/- against the petitioner and the petitioner preferred a claim for Rs. 35,250/- against the opposite party. The learned arbitrator by his order dated 3-7-73 directed that both the arbitration cases should be heard together. The proceedings continued for a number of years. The learned arbitrator separated the opposite party's arbitration case on 18-8-75 and made the award on 20-8-75. The opposite party was awarded Rs. 9,32,662. 37 and interest of Rs. 1,38,289. 60 and Rs. 8,500/- as costs. The petitioner challenged the validity of the award and the learned Subordinate Judge by his order dated 12-5-76 set aside the award. The opposite party preferred Misc. Appeal No. 146 of 1976 in this Court. By judgment dated 21-7-80, reported in (1980) 50 Cut LT 305 (Hindustan Steel Ltd. v. D. R. Gupta), the appeal has been allowed in part and a decree has been directed to be passed in favour of the opposite party for a sum of Rs. 9,32,662. 37 adjudged under item No. 1 of the award and for a sum of Rs. 8,500/- adjudged as costs awarded under item No. 3 of the award. It has been further directed that the aggregate amount shall bear interest at the rate of 6 per cent per annum from the date of the decree till the date of payment. In the meanwhile, with regard to the petitioner's arbitration case, the Court granted extension of time till 14-3-77. Shri H. N. Bhaya ceased to be Chairman of Hindustan Steel Ltd. on 7-3-77. On 8-3-77 the petitioner wrote to the opposite party that on the vacation of office by Shri H. N. Bhaya, both parties should amicably agree to supply the vacancy for adjudication of the disputes between them. However, the opposite party failed to agree to the appointment of another arbitrator, nor was any other person appointed as the Chairman of Hindustan Steel Ltd. in place of Shri H. N. Bhaya. Thereafter on 1-5-78 with the passing of the Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978 (No. 26 of 1978) the Hindus
