- (1.) This appeal arises out of the order dated 7th February, 1974 passed by the First Civil Judge, Kanpur, on an application under Sections 5, 9 and 20 of the Arbitration Act.
(2.) The facts of the ease, shorn of unnecessary details, can briefly be stated as follows: On 22nd of March, 1956, M/s. J.K. Cotton Spinning and Weaving Mills, Kanpur, hereinafter to be called 'the Appellant', and the Government of Uttar Pradesh entered into an agreement under which the State of Uttar Pradesh, hereinafter to be called as 'Respondent No. 1', agreed to advance an amount of Rs. 90,00,000.00 for setting up a rayon factory in the State of Uttar Pradesh on the terms and conditions contained in the agreement. The agreement provided for the repayment of the principal amount of Rs. 90,00,000.00 with interest at the rate of 5 per cent per annum by 1st of September, 1967 in six monthly installments of principal and interest. The agreement further provided that in the event of the principal or interest, or both, not being paid on the due date, interest shall be charged at the rate of 6 per cent per annum. Later on the rate of interest was slightly enhanced. As required by the agreement, the Appellant mortgaged land, building, machinery and plant as security for the loan and a mortgage deed dated 21st March, 1957 was executed in connection therewith. Since defaults were committed in paying the principal and the interest on the due dates, a proclamation for sale of the mortgaged property, as stipulated in the mortgage-deed, was issued on 1st of November, 1972. The Appellant then filed a writ petition in this Court and obtained an order staying the sale of the mortgaged property. The original agreement dated 22nd March, 1956, executed between the parties, carried an arbitration clause which was as follows: That if at any time any dispute, doubt or question was raised between the company and the State Government or any person claiming under them touching or arising out or in respect of this deed or subject matter thereof, the same shall be referred to the two arbitrators, one to be appointed by the each party to the agreement and in case of difference of opinion between them to the Secretary to the Government of Uttar Pradesh Judicial Department and the decision of the Arbitrators as the ease may be, shall be final and binding on the parties. The Appellant accordingly served a notice dated 22nd September, 1972 on the State of Uttar Pradesh detailing the points of difference between them and appointing Sri S.S. Agrawal, Respondent No. 2, as arbitrator on their behalf for the adjudication of the dispute, and further calling upon Respondent No. 1 to appoint an arbitrator within fifteen days of the receipt of the said notice. Ultimately, Respondent No. 1 appointed Sri B.R.P. Singhal as the arbitrator on their behalf. Respondent No. 1, however, at the same time said that the arbitration shall be confined to the matters enumerated in Sub-clauses (a), (b), (c) and (d) of the letter dated 22nd of September, 1972 sent by the Appellant. In regard to the other disputes, Respondent No. 1 maintained that it could not be legally referred to arbitration. Before the two arbitrators viz Respondent No. 2 and Sri B.R.P. Singhal could enter upon a reference, the Appellant sent a letter dated 13th October, 1972 to the Respondent No. 1 taking a plea that the appointment of Sri B.R.P. Singhal being conditional was not acceptable to him and further that the appointment made by Respondent No. 1 not being a valid appointment, the arbitrator appointed by the Appellant became the sole arbitrator entitled to proceed with the arbitration. Respondent No. 2 then sent a letter to the Appellant intimating that he had fixed 9th of November, 1972 for preliminary hearing. Respondent No. 1 then filed an application under Sections 5, 9 and 20 of the Indian Arbitration Act in the court of Civil Judge, Kanpur, which has given rise to this appeal. The reliefs prayed for in the application were: (a) that the appointment of Respondent No. 2 as sole arbitrator be set aside or, in the alternative, his authority to act as sole arbitrator be revoked: (b) The agreement be directed to be filed in court and orders of reference be made in terms of Section 20 of the Arbitration Act; (c) costs of the proceedings be awarded to the Respondent No. 1; (d) any other relief to which the Respondent No. 1 be entitled be passed against the Appellant and Respondent No. 2. The aforesaid application was opposed by the Appellant on several grounds which it is not necessary to mention in any detail.
(3.) The trial court on a consideration of the contentions raised on either side and the material on record, allowed the application and referred the dispute between the parties for adjudication to Sri B.R.P. Singhal and Respondent No. 2 as the arbitrators. The trial court also revoked the authority of Respondent No. 2 as the sole arbitrator. It is against that order that the present appeal is directed.;