- (1.) UNDER a written work order No. MM/36/133/77 dated 30. 9. 77 the petitioner agreed to manufacture drums for the respondent No. 1 on terms and conditions contained in the said document. The said work order contained an arbitration clause as follows: cl. 9 : "in case of any dispute or difference arising out of the contract,, the matter shall be referred to the sole arbitration of an officer of the corporation designated for the purpose by the Managing Director of the corporation whose decision will be final and binding on both the parties. "
(2.) DISPUTES and differences having arisen between the parties, the petitioner, by its letter dated 30. 1. 79, addressed, to the Managing Director of the corporation, requested him to refer the disputes mentioned therein. The Managing Director, by his letter dated 22. 3. 79 appointed the respondent No. 2 as the sole Arbitrator. The Arbitrator by his letter dated nil of April 1979 directed the parties to file the statement of claim and the counter statement within the time mentioned therein. Pursuant to the said direction the petitioner filed its statement of claim on 18. 5. 79. The respondent No. 1 took several extensions for filing its counter statement. Ultimately by a letter dated 5. 6,79, addressed to the Managing Director, the respondent No. 1 alleged that they had a counter claim against the petitioner and sought his permission to press that claim in the reference. The letter did not disclose any particular of this alleged claim. The Managing Director was requested to advise the respondent No. 2 to consolidate the claims of both the parties and to adjudicate upon the same. The Managing Director, by his letter dated 5,6. 79 allowed the respondent No. 1 to press the alleged counter claim and advised the respondent No. 2 as follows : "the learned Sole. Arbitrator is hereby empowered to consolidate the claims of both the claimants and the respondents to adjudicate the dispute of the parties and give his award. " Copies of this letter were duly sent to the respondent No. 2 and the petitioner. The respondent No. 1 thereafter filed its counter statement on 8. 6. 79 claiming Rs. 9,51,885. 55 by way of counter claims. By a letter dated 11. 7. 1979, the respondent No. 1 requested the respondent No. 2 to allow it to file a rejoinder by 6. 8. 1979 but in the meantime the respondent No. 2 fixed the date of hearing on 30. 7. 79. On 30. 7. 1979, the present application under section 33 of the Arbitration was taken out.
(3.) THE counsel for the petitioner submitted that this alleged claim of the respondent No. 1 was never put forward nor any demand was ever made prior to the filing of this counter statement. Hence there was no occasion for the petitioner either to admit or to dispute this alleged claim which was for the first time, brought to light by way of counter claim. There was no dispute in existence when this counter claim was made and as such the arbitrator did not have the jurisdiction to entertain the same. He cited 53 C. W. N. 873 (Mathura Das Goverdhandas v. Khushiram Benarshilal) where the Division Bench of this High Court held: "the jurisdiction of an arbitrator depends not upon the existence of a claim or the accrual of a cause of action but upon the existence of a dispute and accordingly it is only the existence of a difference or dispute which confers jurisdiction upon a private forum to adjudicate upon that dispute. If there is no dispute, there can be no right to demand-arbitration at all. " In A, I, R. 1968 J. and K. 86'at 88 (Jammu Forest Co. v. State of Jammu and Kashmir ) it has been held : "a dispute before an arbitrator has been held to be analogous to a cause of action before a Civil Court. ";