MANOHAR SINGH SAHAY AND CO Vs. JOGENDRA SINGH KALRA

JUDGEMENT

(1.) THIS application under Section 115 of the Civil P. C. arising out of an order passed under Section 8 of the Arbitration Act (briefly 'the Act') by the court below on an application filed by opposite party No. 1, has been referred to the Division Bench by a learned single Judge as some important points of law are involved in this case. The main question of law is as to whether the court exercising powers under Section 8 of the Act could appoint a new arbitrator in place of the named arbitrator in the arbitration clause of the agreement between the parties.

(2.) THE relevant facts are these; According to the case of opposite party No. 1 (being the managing partner of the firm of the petitioner); the petitioner had entered into a contract with M/s. Heavy Engineering Corporation for erection of a steel structure work of about 950 metric tonnes and machinery repairing and other equipments for boiler house and Gas producer plant of approximately 1800 metric tonnes. This job was entrusted to opposite party No. 1 under a work order dated 4-2-1971 containing an arbitration clause to the effect that in case of any dispute between the parties i. e. the petitioner and opposite party No. 1, it will be decided through arbitration which will be binding on both the parties and Sri Manohar Singh Sahay will be the sole arbitrator. THE Work Order was executed by opposite party No. 1 in accordance with the terms of the agreement which was relating to 6000/- tonnes Hydrolic press in E. O. T. cranes and also some extra work Opposite Party No. 1 is thus said to have carried the work for over Rs. 4,00,000/- (Four Lacs). THE petitioner, however, did not settle the claim and accordingly the opposite party No. 1 requested the petitioner on 21-9-1974 to refer the matter to opposite party No. 2 for arbitration.

(3.) THE court below, on taking into consideration all the facts and circumstances, mentioned above, and the series of letters addressed by opposite party No. 1 to the arbitrator and his replies, came to the conclusion that "the arbitrator should have entered upon the reference within one month of the receipt of the letter dated 10-1-1975 (Ext. A). But admittedly he did not enter into the reference and, for the first time sent a letter dated 28-7-1975 (Ext. A/7). THE sole arbitrator, therefore, entered into the reference after the expiry of more than six months...........THE sole arbitrator has, thus, neglected to act as the sole arbitrator". THE court below has also referred to para 3 of the First Sch. where a period of four months, only has been fixed for submission of the award and then came to the conclusion that the sole arbitrator has lost his jurisdiction to act as the arbitrator. THE court below, accordingly took the view that the sole arbitrator had neglected to act as the arbitrator and, was liable to be removed- and accordingly it removed apposite party No. 2 and appointed Sri D.N. Chatterjee, advocate as the arbitrator in his place to act as the sole arbitrator in the matter. THE court below has also observed that the petitioner did not state any word against the appointment of Sri D.N. Chatterjee advocate as the sole arbitrator.