STATE OF ORISSA Vs. GANGARAM CHHAPOLIA

JUDGEMENT

(1.) DISPUTES in relation to the work "FDR to Nabuda Ringh Bundha at Ranpal" undertaken by the opposite party No.1 - contractor under agreement No.51 F-2 of 1968-69 having arisen, the contractor issued notice following the arbitration clause in the contract for appointment of an arbitrator. On failure of the Chief Engineer to appoint arbitrator, the contractor moved the learned Subordinate Judge, Cuttack, under S.8 of the Arbitration Act for appointment of an arbitrator. The learned Subordinate Judge by judgement dated 10-2-1982 in Misc. Case No.387 of 1980 granted the prayer and directed the parties to suggest names by 12-2-1982 for selection of the personnel. On 12-2-1982, the contractor filed a panel of names and the petitioners submitted in a memorandum that any member of the arbitration tribunal might be appointed as arbitrator. The learned Subordinate Judge, thereupon, appointed Sri R.C. Kar, a retired District Judge, and one from the panel of names submitted by the contractor by a cryptic order to the following effect :-

(2.) THE grievance of the State is that after the panel of names was filed by the contractor and the State intimated to the Court that any member of the arbitration tribunal could be appointed as arbitrator, there should have been a hearing on this question. Selection of the personnel of the arbitrator is not of less importance. THE arbitrator is the king-pin in the scheme of arbitration. Not only must he be competent, but it is no less imperative that he is sans bias, sans prejudice towards any of the parties. Selection made by the Court is deemed in law to be a voluntary selection of the parties. THE Court, therefore, must be very cautious in not imposing an incompetent and undesirable person as an arbitrator. THE power has been vested in the Court under the various provisions of the Arbitration Act relating to the selection of arbitrator in the trust that the said power shall be exercised judiciously and with circumspection. THE arbitrator is not bound to give reasons and generally there is no appeal from his decision. Howsoever erroneous the Court may consider his decision to be, the Court is powerless. At the stage of adjudging the personnel, it is essential, therefore, that both sides must have their say. Each party should be given adequate opportunity to convey to the Court its views and reaction to the name suggested. If there is likelihood of some bias, prejudice, interestedness, however remote, in relation to the person suggested, the person is non-grata.

(3.) EVERY adjudication shall conform to the principles of natural justice, and shall ensure to the parties just and fair play. The principle of just and fair play in action varies from facts to facts, situation to situation. However, it is essential in any adjudication that the parties should know what they are to meet in order to be able to focus their attention thereon. In such context, the question of framing of issues arises. The requirement of framing of issues under O.14 of the Civil P.C. is not a dry, bookish or pedantic requirement. It subserves a purpose and the purpose is to pinpoint the real and substantial point of difference and focus attention of the parties and the Judge thereon. Call these issues, or points of difference or controversies, what you may. They are useful and efficacious. Framing of issues is in furtherance of the process of decision making. It enables the Judge, the arbitrator to rivet his mind to the essential question from amongst the forest of trivialities and unnecessary matters. Order 14 has been enacted with a view to achieving this purpose in the adjudicatory process. But the spirit behind the requirement, if I may say so, has application also in kindred fields, not governed by the Code. I am not unaware that in some decisions, it has been held that O.14, C.P.C. has no application to arbitration proceedings. With great respect to the learned Judges, I part company on this issue. In my view, the approach has to be functional and purposive. The law permits an aggrieved party to question the validity of an award on the ground of lack of jurisdiction in the arbitrator. Lack of jurisdiction can be urged on various grounds. viz., on the ground as in Union of India v. Om Prakash, (AIR 1976 SC 1745), where it was held that reference to arbitration by the Court was bad after the appointment of an arbitrator under S.8(2) or on the ground that the arbitrator lacked jurisdiction because the controversies were not arbitrable, or were "excepted matters." In an application under S.20, the Court has to adjudge if having regard to the arbitration clause, the dispute/disputes disclosed is/are covered by the arbitration agreement, viz., if the dispute/disputes is/are arbitrable. If the dispute is not arbitrable, the Court cannot confer jurisdiction on the arbitrator. In a proceeding under S.8, often questions arise if the disputes or some of them are arbitrable. If such question is raised, the principles of just and fair play require that the arbitrator cannot avoid or evade the question and must give his decision thereon. A denial of this procedure would tantamount to denial of justice to the party raising the question. A arbitrator, though a chosen tribunal of the parties, is not above the principles of natural justice. If the end of all procedures is doing justice, exclusion of this requirement would not subserve the end. Framing of issues on the points of differences ensures application of mind. Issues or give whatever name you please, crystallise the controversies, the points of difference. In any adjudicatory process, it is imperative to know what are the questions to decide. The necessity, therefore, arises for formulation of the points of difference, specification of the disputes, particularisation of the controversies and decision thereon. How does a party exercise his right if the controversy has not been specifically formulated and the decision thereon given by the arbitrator? Failure to formulate or specify and to record decision thereon would deprive a party of valuable right conferred by law.