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1962 Supreme(Online)(Cal) 5

CALCUTTA HIGH COURT
Bagchi, J
Gannon Dunkerley and Co. v. Union Carbide (India) Lt.
Arbitration Application No. 15 of 1960



Advocates:
For the Appellant: Mr. Bhabra
For the Respondents: Mr. Niren De

The court ruled that it has authority to file an arbitration agreement and appoint an arbitrator, even when the designated arbitrator is unwilling to act, per the Indian Arbitration Act.

Headnote:(A) Indian Arbitration Act, 1940 - Section 20 - Arbitration Agreement - The application for filing an arbitration agreement under S.20 of the Act was made regarding a dispute over workmanship certification in a building contract. The Architect's decision regarding quality and sufficiency of work was deemed final. The plaintiff sought to determine whether an Architect wrongfully withheld payment certificates and what sums were due under the contract. The court upheld that an arbitration clause exists and referred the matter for arbitration, instructing the arbitrator to respect the Architect's final decisions in related matters. (Paras 1-17)

(B) Arbitration Procedure - The court noted that the arbitration agreement's framing allowed for disputes about the withholding of certificates to be arbitrated and articulated that previous notices must specify the dispute intended for arbitration. Sufficient notice had been given per the circumstances. (Paras 3, 10, 15, 16)

(C) Jurisdiction of the Court - The court addressed objections regarding the appointment of an arbitrator and distinguished cases where the named arbitrator was unwilling or unable to act. It emphasized a broader interpretation of the provisions allowing the court to make a reference. (Paras 11-13)

Table of Content
1. facts surrounding arbitration agreement and construction contract. (Para 1 , 2)
2. arguments against reference to arbitration based on contract conditions. (Para 3 , 5)
3. court's observations concerning validity and applicability of arbitration clause. (Para 4 , 6 , 8 , 9)
4. ratio decidendi regarding appointment and authority of arbitrators under the arbitration act. (Para 7 , 13)
5. final conclusion regarding court's power and discretion to appoint arbitrator and order filing agreement. (Para 10 , 11 , 12 , 14 , 15 , 16)
6. order to appoint arbitrator and decide disputes. (Para 17)

1. This is an application under S.20 of the Indian Arbitration Act for an order that the clause arbitration agreement be filed in Court and reference made. The arbitration agreement is a in a building contract subsisting between the parties. The defendant employed the plaintiff to do the construction work of a factory building to be used and occupied by Eveready Flashlight Company. The building contract provided for the certification of workmanship by a firm of architects to wit Messrs. Ballardie Thompson and Matthews. The contract further provided that the works shall be carried out to the reasonable satisfaction of the Architect whose decision as to sufficiency and quality of the work and material shall be final and binding upon all parties. The plaintiff is the contractor and the building work is - alleged to have been completed sometime in 1957. During the progress of the work eight running bills were submitted and paid in terms of the contract. The payment of the ninth bill, however, was withheld on the ground that the roof of the factory building constructed was leaking at several places. It appears that the contractor at first attempted to effect repair. The repairs effected, however, was not found to be satisfactory. The Architect was, of opinion that the workmanship, was bad which was disputed by the contractor. The dispute between the parties as appearing in the correspondence will appear from the letter addressed by the plaintiff to the Chief Engineer, Central Public Works Department of May 23, 1960 which is set out thereunder :
"Whereas National Carbon Company has complained about leakages, the arbitrator should examine and give an award as to the said leakages, reasons and extent thereof, and determine the responsibility, if any, of Gannon Dunkerley for the same, and, if so the extent of cost recoverable from Gannon Dunkerley for its rectification. The arbitrator shall also give directions as to the date of payment of monies due to Gannon Dunkerley and Co., and consider whether, and the extent to which, interest is admissible on the same."
In that letter the plaintiff purported to refer the' dispute stated in the said letter to the arbitration), of the Chief Engineer Central Public Works Department, in terms of the arbitration clause. The Chief Engineer in reply protested that he never agreed either to arbitrate or to nominate an arbitrator and wondered how his name came to be incorporated in the agreement without his consent. Thereupon the present notice has been, taken out by the plaintiff under S.20 of the Indian Arbitration Act .


2. Clause 30 of the contract contains the arbitration agreement which reads as follows :
"30. Provided always that in case any dispute or difference shall arise between the employer, or the Architects on his behalf, and the Contractor, either during the progress of the works, or after the determination, abandonment or breach of the Contract as to the construction of the Contract, or as to any matter or thing arising thereunder (except as to the matters left to the sole discretion of "the Architects under Clauses 1, 4, 9, 16, 19, 19A and 28 and as to the exercise by them, under Clause 18 of the right to have any work opened up), or as to the withholding by the Architects of any certificate to which the Contractor may claim to be entitled, then either party shall forthwith give to the other wri
























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