HEGDE - (1.) THESE appeals by special leave raise a common question of law. Therefore they can be dealt with together. The appellants herein entered into agreements with the Union of India under which they were allotted certain areas in a forest to tap Resin Blazes and supply the same to the Turpentine Factory at Sirmur. The agreements entered into included an arbitration clause. That clause is common in all the three agreements. That clause reads thus: "If any question, difference or objection whatsoever shall arise in any way connected with or arising out of this or the meaning or operation of any part thereof or the debts dues or liabilities of either party, then save in so far as the decision of any such matter is hereinbefore provided for and has been so decided, every such matter including whether its decision has been otherwise provided for and whether it has been finally decided accordingly or whether the contract should be terminated or has been rightly terminated and as regards the rights and obligations of the parties as the result of such termination shall be referred for arbitration to the Judicial Commissioner, Himachal Pradesh, and his decision shall be final and binding and where the matter involves a claim for or the payment or recovery or deduction of money, only the amount, if any, awarded in such arbitration shall be recoverable in respect of the matter so referred."
(2.) THE parties are agreed that no other clause in the agreements is relevant for our present purpose. Disputes arose between the appellants and the respondents in respect of some claims arising from the said contracts. THE appellants requested the respondents to refer the disputes to the arbitration of the Judicial Commissioner, Himachal Pradesh. THE respondents declined to agree to make the reference in question. THEreafter the appellants moved the Senior Sub Judge, District Sirmur Nihan under Sec. 20 of the Indian ARBITRATION AND CONCILIATION ACT, 1940 (to be hereinafter referred to as the Act) for ordering the respondents to file the agreements in question in his court and for referring the disputes to the Judicial Commissioner, Himachal Pradesh for arbitration. THE learned Sub-Judge accepted these applications and directed the respondents to file the agreements in question into his Court. THEreafter he referred the disputes to the arbitration of the Judicial Commissioner, Himachal Pradesh. THE Judicial Commissioner, in our opinion rightly declined to act as an arbitrator. THEreafter the learned subordinate judge was moved to appoint some other arbitrator in place of the Judicial Commissioner. THE respondents opposed that prayer on the ground that arbitration clause did not provide for such an appointment. THE learned subordinate judge accepted that contention and dismissed the applications. As against that decision the appellants went up in revision to the Judicial Commissioner, Himachal Pradesh. THE Judicial Commissioner following an earlier decision of that Court in District Cooperative Federation Ltd. v. Khub Chand, AIR 1961 Him Pra 35 dismissed the revision petitions holding that under the agreements no reference for arbitration can be made to anyone other than the named authority. THE question for decision is whether the interpretation placed by the Courts below on the relevant provision in the arbitration agreements is correct. It may be noted that the agreements in these appeals relate to the exploitation of certain forest produce. The disputes that have arisen between the parties are not of technical nature requiring any specialised knowledge on the part of the arbitrator. It is clear from the terms of the agreements that the Judicial Commissioner was not appointed as an arbitrator because of any special or technical knowledge possessed by him relating to the subject matter of the dispute. Evidently he was appointed, though in our opinion quite improperly, arbitrator because he was a high judicial officer. The relevant provisions of the Act which bear on the point under consideration are Sections 8 (1) and 20 (4) of the Act. Section 8 (1) reads: "Power of Court to appoint arbitrator or umpire. "In any of the following cases- (a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parries do not after differences have arisen, concur in the appointment or appointments; or (b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be filled and the parties or the arbitrators, as the case may be, do not supply the vacancy. (c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy." Section 20 reads thus: "(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. (2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants. (3) On such application being made, the Court shall direct notice thereof to be given to all the parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed; (4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitration, to an arbitrator appointed by the Court. (5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable."
(3.) SECTION 20 is merely a machinery provision. The substantive rights of the parties are found in SECTION 8 (1) (b). Before S. 8 (1) (b) can come into operation it must be shown that (1) there is an agreement between the parties to refer the dispute to arbitration; (2) that they must have appointed an arbitrator or arbitrators or umpire to resolve their dispute; (3) anyone or more of those arbitrators or umpire must have neglected or refused to act or is incapable of acting or has died; (4) the arbitration agreement must not show that it was intended that the vacancy should not be filled and (5) the parties or the arbitrators as the case may be had not supplied the vacancy.;