ORIENTAL INSURANCE CO. LTD. Vs. BALINDRA NATH SHARMA AND OTHERS

JUDGEMENT

(1.) This revision petition is directed against the order and decree dated 14-10-1985 passed by the learned Assistant District Judge No. 1, Gauhati in Miscellaneous (Arbitration) Case No. 6 of 1985 making the award passed by the Arbitrators "a rule of the Court" and passing a decree in terms of the award against the petitioner.

(2.) The dispute arose between the parties, as is revealed from the petition, when the opposite party preferred a claim of Rs. 41,266'71 Ps. against the present petitioner (The Oriental Insurance Company Ltd.) as compensation for damage of a truck bearing No. AMA 2976 belonging to opposite party No. 1 which met with an accident on 29-1-83. The said vehicle was insured with the petitioner company. However, the petitioner company estimated the cost at Rs. 11,750 less Rs. 500 as "excess clause" of the policy. The amount so assessed was based on survey of an authorised surveyor. However, the amount was not accepted to be fair and adequate by the opposite party No. 1 and the opposite party No. 1 sought for invoking the arbitration clause as per policy agreement. Ultimately, the opposite party No. 1 approached the court, namely, the court of Assistant District Judge No. 1 at Gauhati with an application under Sec. 20 read with Sec. 8(2) of the Arbitration Act for appointment of an Arbitrator. Notice was issued to the opposite party (present petitioner herein) and after hearing the parties the learned Assistant District Judge No. 1 at Gauhati appointed two Arbitrators as named by the parties. The Arbitrators entered into reference and thereafter passed an award in terms of the reference. The award was filed in court and in pursuance thereof and upon hearing the parties, the learned Assistant District Judge No. 1 at Gauhati set aside award and remitted back the matter for a fresh award by the same Arbitrators on the basis of the objection filed by the present petitioner. Against the aforesaid order passed by the learned Assistant District Judge. The petitioner preferred an appeal in this court which was numbered as M.A. (F) 90/84. After hearing the learned counsel of the parties a consent order was passed the appeal was disposed of by a Division Bench of this court on 2-8-1985. While disposing of the appeal this court at the consent of the parties, though did not disturb the impugned order, but appointed Shri S.K. Sen, Senior Advocate and Shri D.K. Talukdar, Advocate of this court as new Arbitrators in place of the former Arbitrators. This was done as agreed to and named by the respective counsel of the parties in the said appeal. The Court further directed the new Arbitrators to dispose of the matter within two months from the date of order. By the said order the remuneration to be paid to the Arbitrators by the respective parties was fixed at Rs. 2,000 each. The remuneration was directed to be paid within 15 days from the date of order. A further direction was issued to send down the records to the learned Assistant District Judge No. 1 for transmitting the necessary records to the newly appointed Arbitrators. Thereafter, in pursuance of the order passed by this court as aforesaid, the Arbitrators entered into the reference afresh and upon hearing the parties passed the award and submitted the same in the court of learned Assistant District Judge No. 1 at Gauhati for necessary orders. On receipt of the award the learned Assistant District Judge issued notices to the parties. The claimant (present opposite parties) appeared in the Court, but the opposite party (present petitioner) failed to appear though notice was duly served and no objection was filed. The learned Assistant District Judge passed the impugned order on 14-10-1985 which runs as follows :

(3.) Mr. Banerjee, learned counsel for the petitioner has at the out set of his argument has submitted that the learned Assistant District Judge has no jurisdiction to pass a decree in terms of the award as because the Arbitrators were appointed by this court and therefore this court had full control of the arbitration proceedings and to pass the following orders in respect of the award. The learned Assistant District Judge, as submitted by Mr. Banerjee, was wrong in entertaining the award and pass a decree by making the same a rule of court being absolutely without jurisdiction. It is further submitted by Mr. Banerjee that any subsequent order and/or any followup order in the arbitration matters relating to the award was to be passed by this court and not by any other court as the court had appointed the Arbitrators at the instance of the parties in M.A. (F) No. 90/84. Therefore, according to the learned counsel there appears to be a jurisdictional error for which the entire decree is vitiated and is liable to be set aside. It is further submitted that this court had the complete control over the proceeding before the Arbitrators as the Arbitrators were appointed by this court at the instance of the parties with a further direction to dispose of the matter of reference by the Arbitrators within a specific period and the parties were directed to pay the remuneration to each appointed Arbitrators. In that position, as submitted by the learned counsel for the petitioner, this court only had the jurisdiction to pass the subsequent order on the basis of the award passed by the Arbitrators and not by the learned Assistant District Judge. Therefore, the impugned decree, as submitted by the learned counsel, is liable to be set aside. In support of the above contention Mr. Banerjee, learned counsel for the petitioner has drawn our attention to the decision of the Supreme Court in almost a similarly situated case as reported in M/s. Guru Nanak Foundation Vs. M/s. Ratan Singh and Sons, (1981) 4 SCC 634. In that case, an order passed by the Delhi High Court in an arbitration matter was challenged. The Lordships of the Supreme Court appointed a sole arbitrator by removing the former arbitrator with a direction to dispose of the arbitration proceeding afresh within a specified period. When the award was passed, a question arose in which court the award would be filed. Their Lordship in interpreting the provisions of Sections 31(4), 14(2) and 2(c) of the Arbitration Act precisely held in paragraph 18 thus : "After the disposal of the appeal, C.M.P. No. 896 of 1977 was presented to this court for clarification and/or modification of the Order of the court dated Jan. 5, 1977. This court by its Order dated Feb. 10, 1977, gave further directions and a specific time-limit was fixed by this court directing the 3rd respondent as arbitrator to conclude the proceedings within four months from the date of Order of the court. Even with regard to the conduct of proceedings this court directed that the 3rd respondent should proceed with the reference from the stage where it was left by the 2nd respondent and that not only that he may permit additional evidence to be led but he must consider the pleadings and evidence already placed before the previous arbitrator. This will indisputably show that this court had complete control over the proceedings before the arbitrator." (Emphasis laid by us) A further reference in this perfect can be had from the decision of the Supreme Court in State of Madhya Pradesh Vs. M/s. Saith and Skelton (P) Ltd. and others, AIR 1972 Supreme Court 1507. Their Lordships of the Supreme Court held, that when an arbitrator is appointed by a court to make an award it is quite natural that the forum for taking further action is only in that court which appoints the arbitrator. In paragraph 19 of the aforesaid judgment their Lordships held :