- (1.) G. P. Mathur, J. This appeal has been preferred against the judgment and order dated 25-4-1990 of Civil judge, Al lahabad given in proceedings under Sec tion 20 of the Arbitration Act by which the defendant- appellant Union of India has been directed to refer claims Nos. 1 to 11 to the sole arbitrator to be appointed by it who should be an Engineer-officer outside the department.
(2.) THE case of the plaintiff-respon dent in brief is as follows. THE plaintiff is a registered partnership firm and is doing construction business. THE defendant No. 3 Chief Engineer, Lucknow Zone M. E. S. invited tenders for special repairs at C. O. D. Chheoki, Allahabad. THE tender submitted by the. plaintiff was accepted on 7-9-1982 and the plaintiff complete the work as per terms and conditions of the agreement and the general terms and con ditions of the contract within the stipu lated time i. e. , 30-9-1983. THE defendant No. 3 did not pay full amount to the plain tiff as claimed by it. In para 9 of the plaint the details of the various items of dispute have been enumerated. In spite of several letters and reminders the Engineer in Chief Army Head Quarters, defendant No. 2 who is the person to appoint an ar bitrator as per terms of the contract failed to appoint an arbitrator for setting the claim of the plaintiff and therefore, the necessity of filing a petition under Section 20 of the Arbitration Act arose. THE relief claimed in the plaint is that the defendants be directed to file the original agreement of contract entered between the plaintiff and defendant No. 1 at Lucknow for the work to be done at C. O. D. Chheoki, Al lahabad and further the Court may ap point an arbitrator or defendant be directed to appoint an arbitrator to settle the dispute. The defendants filed a written statement and their case is as follows: The plaintiff executed the contract work phase wise after taking extension of time. The plaintiff submitted some extra claims which were fake and it was never asked to do any such work and therefore, the bills were finalised after rejecting the fake claims. The plaintiff was asked to sign the final bills but its representative failed to turn up to complete the formalities. Ac cordingly the final bill of the plaintiff was passed by C. D. A. Central Command, Meerut and it was asked to take payment. The plaintiff, however, did not turn up and to the final bill has been kept under deposit and as such there is no dispute regarding disbursement of the amount. In para 8 of the written statement, it is pleaded that in accordance with condition 70 of General conditions of contract which forms part of the agreement, claim Nos. 4 to 11 of the plaintiff has been referred to the sole ar bitrator Sri R. J. Kumareson, Chief Sur veyor of Works by the Engineer in Chief Army Head Quarters, New Delhi vide his letter dated 6th September, 1988. The claim Nos. 1, 2 and 3 were not referred to the arbitrator as the decision thereon had been given by the Commander Works En gineer and Chief Engineer, Lucknow under the powers vested in him in terms of the agreement. It is further pleaded that no cause of action has accrued to the plaintiff to file the suit and the plaintiff is not entitled to any relief. The learned Civil Judge framed 5 issues. He held that there being a provision for appointment of arbitrator in the agree ment, an arbitrator should be appointed. On issue No. 2 it was held that it was not proper to appoint a non-engineer as an arbitrator and consequently a retired judge cannot be appointed as an ar bitrator. On issue No. 3 it was held that claim Nos. 1 to 3 are also to be referred for arbitration. On these findings the suit was decreed with a direction to the defendant to refer claim Nos. 1 to 11 to an Engineer Officer outside his department for arbitra tion.
(3.) THE principal submission of learned Counsel for Union of India (defendant No. 1) is that after filing of the plaint but before the notice thereof had been received by the appellant, an ar bitrator had been appointed and there fore, the suit had become infructuous and the same was liable" to be dismissed. In this connection it may be noticed that the suit was filed on 10-5-1988 on which date the learned Civil Judge passed an order for registering the same and issuing summons to the defendants fixing 2-11-1988 for filing of written statement and 14-11-1988 for framing of issues. In the written state ment, which was filed on 2-5-1989, it was pleaded in para 8 that Engineer-in-Chief Army Head Quarter, New Delhi, vide his letter No. 13600/cc/445/e 8, dated 5th September, 1988 had referred claims Nos. 4 to 11 of the plaintiff tor arbitration to Sri R. J. Kumareson, Chief Surveyor of Works. THE record of the trial Court shows that on 16-11-1983 the plaintiff-respondent Vidyawati Construction Co. moved an ap plication stating that a reference had been made to Sri R. J. Kumareson, Chief Sur veyor of Works, vide letter dated 5-6-1988 but the whole dispute had not been referred to him and that Sri Kumareson (arbitrator) had issued a letter dated 25-10-1988 to the plaintiff to file claim before him by 30-1w988 and as the whole dis pute had not been referred to the ar bitrator an injunction be issued restrain ing the arbitrator not to proceed with the case till further orders of the Court. After hearing Counsel for the plaintiff, the learned Civil Judge passed an order dated 30-11-1988 that the arbitrator Sri R. J. Kumareson may give his award on the claims made by the plaintiff which had been enumerated in para 9 of the plaint and in case the defendants, Union of India, had any objection to such a course of ac tion, the arbitrator may stay the proceed ings till further orders of the Court. By the same order Court issued notice to defen dants fixing l5-2-1989for objections. The question which requires con sideration is whither on the facts of the case the learned Civil Judge was j ustified in decreeing the plaintiffs suit and in issuing directions to the defendants to refer the dispute for arbitration to an Engineer Of ficer outside his department. The plaintiff had filed the petition under Section 20 of the Arbitration Act (hereinafter referred to as the Act) and the requisite conditions for maintaining such an application are - (i) there is a valid and subsisting agree ment between the parties; (ii) such agree ment was entered into between he partite before institution of a suit with respeeoo the subject-matter of the agreement or any part of it; (iii) a difference to which the agreement applies has arisen; and (iv) the application is made to a Court having jurisdiction in the matter to which the agreement relates (see Wazir Chandra Mahajan v. Union of India, AIR 1967 SC 990 ). In the present case the reference to arbitrator has been made shortly after filing of the suit and before notice thereof had been served upon the defendants. The record further shows that the arbitrator who had been appointed had entered upon the reference and had issued a letter dated 25-10-1988 asking the plaintiff to file claim before him by 30-11-1988 and on 16-11-1988 the plaintiff moved an injunction before the Civil judge with a prayer to application restrain the arbitrator from proceeding with the matter. Thus, there cannot be a slightest doubt that soon after filing of the plaint a reference to arbitrator had been made and the arbitrator so ap pointed had entered upon the reference and had also issued notices to the parties. Section 20 of the Act has been amended by UP. Act No. 51 of 1976 which came into effect on 1-1-1977 and sub-section (1) of Section 20 after amendments reads as under: - "section 20 (1 ).- Where any persons have entered into 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 a reference be made according to the agreement. " In Jupiter Chit Funds v. Dwarika Dhees Dayal, AIR 1981 AM 257, a learned Single Judge of this Court after relying upon an earlier Full Bench decision in Mangal Prasad v. Lakshman Prasad, AIR 1968 Alld. 108, has held that an applica tion can be moved under sub-section (1) of Section 20 before a reference has been made to the arbitration or the latter has entered in the reference and that no ap plication can be made under this section where a reference has already been made to arbitrator and he has entered upon the reference but for some reason has not proceeded with the same. In WBCECS Corporation v. MIS I. T. Corporation, AIR 1984 Cal 313, a Division Bench has held that where an arbitrator had already been appointed, the application under Section 20 of the Act would not be maintainable, for in such a case the Court would have nothing to do in the matter. In Vijay Singh Amar Singh v. Hindustan Zink Ltd. , AIR 1992 Raj 82, the trial Court, on being informed by the respondent that an ar bitrator had already been appointed in terms of the agreement, disposed of the application under Section 20 without passing any order. The High Court ap proved such an order holding that when the has arbitrator been appointed in terms of the agreement, the proceedings under Section 20 do not survive and have to be disposed of without passing any order. In Build India Construction Co. v. Union of India, ILR 1970 (2) Cal 127, it has been held that the application is not main tainable when a reference has already been made during the pendency of the applica tion and in the ends of justice a direction was issued that the agreement be filed in Court and the arbitrator to proceed with the reference. In the present case, condi tions requisite for filing of the petition under Section 20 of the Act were fully satisfied and, therefore, the petition was maintainable. However as a reference was made to the arbitrator soon after filing of the petition and even before notices had been served upon the defendants, the relief which the plaintiff had sought in the suit had already been granted. Therefore, in such circumstances the proper course for the Court was not to proceed further in the case and in the interest of justice the Court could ask the arbitrator to proceed with the reference for adjudication of dis pute relating to agreement. The learned Civil Judge erred in not adopting such a course of action after it had been brought to his notice even by the plaintiff himself that the Engineer-in-Chief had appointed Sri R. J. Kumare son Chief Surveyor Works as Arbitrator vide letter dated 6-9-1988 and, therefore, the order passed by him cannot be sustained.;