JUDGMENT
Bilal Nazki, J.
1. This is a revision petition filed against an order of learned Prl. Senior Civil Judge, Rajahmundry in O.P. No. 90 of 1994, which was filed under Sections 12 and 17 of the Arbitration Act, 1940 (for short “the Act”) for appointment of an Arbitrator to arbitrate the dispute that has arisen in respect of terms and conditions of an agreement dated 19.5.1987 entered into between the parties.
2. The facts leading to filing of OP No. 90 of 1994 were that the respondent herein entered into an agreement on 19.5.1987 with the revision petitioner for supply of natural gas for commercial purposes. In between the parties a dispute arose and in terms of an arbitration clause 15.01 in the agreement, the matter was referred to arbitration. One A.T. Thomas was appointed who could not conclude the arbitration proceedings within four months and he requested the parties to give their consent for extension of time for passing an award. The revision petitioner declined, by a letter dated 20.11.1991, to give consent for extension of time. Thereupon the respondent filed OP No. 101 of 1992 under Section 28 of the Act for extension of time. The said OP was dismissed on 22.9.1993. The respondent, however, subsequently appointed a second Arbitrator viz., K.V. Chandran to decide the dispute between the parties. The Arbitrator, on 7.3.1994, gave notices to the parties of his intention to take up the arbitration. This was challenged by the revision petitioner by filing OP No. 34 of 1994 under Section 33 of the Act. The revision petitioner sought a declaration that the arbitration clause 15.01 in the agreement had come to an end. He also wanted the Trial Court to hold that the appointment of the second Arbitrator was void. The Trial Court allowed the OP on 7.4.1994 and declared that the appointment of second Arbitrator was void and the arbitration clause in the agreement had come to an end as per the orders in OP No. 101 of 1992.
3. According to the revision petitioner, these orders have become final, as no appeal or revision has been preferred against the orders in OP No. 101 of 1992 and OP No. 34 of 1994, therefore the respondent could have not filed OP No. 90 of 1994 under Sections 12 and 17 of the Act for appointment of another Arbitrator. It is contended by the revision petitioner that the order in OP No. 90 of 1994 was as such bad.
4. It is submitted by the respondent that since A.T. Thomas had expressed his unwillingness to continue as an Arbitrator, OP No. 101 of 1992 filed by him for extension of time was dismissed, therefore he appointed another Arbitrator viz., K.V. Chandran to decide the disputes between the parties. When the Arbitrator gave notice to the parties, by a letter dated 7.3.1994, it was challenged by the revision petitioner in OP No. 34 of 1994. The OP was allowed by the Trial Court holding,
“In the absence of specific clause, the second Arbitrator cannot be supplied to the previous vacancy by unilateral decision.”
5. The respondent was, however, given liberty to approach the Court for appointment of an Arbitrator. It is submitted by the respondent that the net result was that the dispute was not settled and therefore he was within his right to move the Court again for appointment of an Arbitrator.
6. The basic question in this case would be whether, after dismissal of OP No. 101 of 1992 on 22.9.1993 and after appointment of second Arbitrator was declared void in OP No. 34 of 1994 on 7.4.1994, the respondent could have approached the Court yet again, without challenging those orders, which had become final between the parties.
7. The facts are not in dispute, therefore it is purely a legal question which has to be decided in this revision. The Trial Court has applied the provisions of Section 8(1 )(b) of the Act to the facts of the case, whereas the contention of the revision petitioner is that the Trial Court could not have exercised powers under Section 8 of the Act suo motu in the absence of any application having been made before it. It is also contended that in view of the orders passed in O.P. No. 34 of 1994, even the powers under Section 8 of the Act could not be exercised. On the other hand, the respondent submits that there was no impediment for the Trial Court to exercise the powers under Section 8(1 )(b) of the Act.
8. Before coming to the rival contentions of the parties, it will be necessary to reproduce certain provisions of the Arbitration Act and also arbitration clause 15.01 of the agreement.
Clause 15.01 of the agreement reads as under:
“If any dispute, difference or question shall at any time hereinafter arise between the parties hereto or their respective representatives in respect of the construction of these presents or concerning anything hereunder contained or arising out of these presents or as to the rights, liabilities or duties of the said parties hereunder which cannot be mutually resolved by the parties, the same shall be referred to sole arbitration. The right of appointment of sole Arbitrator shall be with the concerned member having administrative control over the marketing section of the seller. The sole Arbitrator so appointed shall give a reasoned award. The decision of the Arbitrator shall be binding on both the parties. The arbitration proceedings shall be held in accordance with the provision of the Indian Arbitration Act, 1940 and the rules made thereunder as amended from time to time. The Arbitrator shall decide by whom and in what proportions the Arbitrator’s fees as well as cost incurred in arbitration shall be borne. The Arbitrator may with the consent of the parties, enlarge the time, from time to time, to make and publish award, as the case may be.”
Section 8 of the Arbitration Act reads:
“8. Power of Court to appoint Arbitrator or umpire :-(1) In any of the following
(a) where an arbitration agreement provides that the reference shall be to one or more Arbitrators to be appointed by consent of the parties, and all the parties do not after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed Arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the Arbitrators, as the case may be, do not supply the vacancy; or
(c) where the parties or the Arbitrators are required to appoint an umpire and do not appoint him; any party may serve the other parties or the Arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an Arbitrator or Arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.”
Section 12 reads:
“12. Power of Court where Arbitrator is removed or his authority revoked :-(1) Where the Court removes an umpire who has not entered on the reference or one or more Arbitrators, (not being all the Arbitrators), the Court may on the application of any party to the arbitration agreement appoint persons to fill the vacancies.
(2) Where the authority of an Arbitrator or Arbitrators or an umpire is revoked by leave of the Court, or where the Court removes an umpire who has entered on the reference or a sole Arbitrator or all the Arbitrators, the Court may, on the application of any party to the arbitration agreement, either-
(a) appoint a person to act as sole Arbitrator in the place of the person or persons displaced, or
(b) order that the arbitration agreement shall cease to have effect with respect to the difference referred.
(3) A person appointed under this section as an Arbitrator or umpire shall have the like power to act in the reference and to make an award as if he had been appointed in accordance with the arbitration agreement.”
Section 17 reads:
“7. Judgment in terms of award :-Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with the award.”
Section 28 reads:
“28. Power to Court only to enlarge time for making award :-(1) Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award.
(2) any provisions in an arbitration agreement whereby the Arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect.”
Section 33 reads:
“33. Arbitration agreement or award to be contested by application :-Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits :
Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit.”
9. In the light of the arguments advanced, two questions will have to be answered in this revision, which are:
(1) After the orders in OP Nos.101 of 1992 and 34 of 1994 having become final, could the parties again agitate the issue of appointment of Arbitrator, and;
(2) Even if the issue could be agitated, could the Court appoint an Arbitrator under Section 8 of the Arbitration Act in the facts and circumstances of the present case.
10. Coming to these questions, an application being OP No. 101 of 1992 was made by the respondent under Section 28 of the Act for extension of time when the time of four months had elapsed and the revision petitioner had not given consent to extension of time to A.T. Thomas, the Arbitrator. This OP was dismissed for reasons given in the order. Section 28 of the Act lays down the powers of the Court to enlarge the time for making of award. Since the time had elapsed and the time was not extended with consent, the respondent approached the Court under Section 28 of the Act and the Court declined to grant further time and dismissed the OP. Thereafter without challenging the order in OP No. 101 of 1992 and allowing that order to become final, the respondent appointed on his own a second Arbitrator which was challenged by the revision petitioner in “OP No. 34 of 1994. This OP was allowed on the ground that there was no provision in the agreement to appoint a second Arbitrator. However, this order stated that the respondent was at liberty to approach the Court for appointment of an Arbitrator.
11. Now in the light of these facts, the learned Counsel for the revision petitioner submits that subsequent application under Sections 12 and 17 of the Act was not maintainable. Section 12 of the Act mentions the power of the Court where an Arbitrator is removed or his authority is revoked. Bare perusal of this Section would show that where the Court removes an umpire who has not entered on the reference or one or more Arbitrators, the Court may on the application of any party to the arbitration agreement appoint persons to fill the vacancies. Sub-section (2) of Section 12 lays down where the authority of an Arbitrator or Arbitrators or an umpire is revoked by leave of the Court or where the Court removes an umpire, who has entered on the reference or a sole Arbitrator or all the Arbitrators, the Court may, on the application of any party to the arbitration agreement, appoint a person to act as sole Arbitrator in the place of the person who was displaced. Admittedly Section 12 of the Act has no application to the facts of the present case, as no Arbitrator has been removed nor his authority has been revoked. Even the Trial Court did not see that whether it had any power under Section 12 to appoint an Arbitrator. Section 17 is not at all relevant which relates to a judgment in terms of the award.
12. Now the learned Counsel for the revision petitioner has contended that once the Court had held that the arbitration clause in the agreement had come to an end in OP No. 34 of 1994 and the decision had become final, OP No. 90 of 1994 was not at all maintainable. He contends that once an arbitration clause is determined, no proceedings under the Arbitration Act can be initiated and if there was any remedy, that was by way of civil remedy. In this connection he refers to various judgments.
13. In M/s. R.N. Ganekar and Co. v. M/s. Hindustan Wires Ltd., , while interpreting Section 33 of the Arbitration Act, the Supreme Court held:
“It is clear from the provision that the Court had jurisdiction under this Section (i) when it is desired to challenge the existence of an arbitration agreement; (ii) when it is desired to challenge the validity of that agreement and (iii) when it is desired to have the effect of the arbitration agreement determined. In all these cases it is the arbitration agreement only which is the subject-matter for consideration before the Court. Indeed if an arbitration agreement forms one of the clauses in a contract and that contract is for some reason invalid in law or non-existent in law, it would automatically follow that the arbitration agreement also was invalid or non-existent in the eye of the law. But when it is not the case that the arbitration agreement has become non-existent or invalid for that reason, the Court under Section 33 is merely concerned with the three questions relating to the arbitration agreement only. As pointed out by this Court in Shiva Jute Bating Limited v. Hindley and Co. Ltd. .
“An arbitration agreement may come into existence in one of two ways: it may either arise out of an agreement which contains nothing else besides the arbitration agreement, or it may arise out of a term contained in a contract which deals with various other matters relating to the contract, which is the present case. Where one is dealing with an arbitration agreement of the second kind, Section 33 is concerned only with the term relating to arbitration in the contract and not with the other terms of the contract which do not arise for consideration on an application under that section.”
14. He also relies on a judgment of the Supreme Court reported in Satyadhyan Ghosal and Ors. v. Smt. Deorjin Debi and Anr., . This judgment laid down the principles of res judicata. In Paras 7 and 8 the Supreme Court held:
“7. The principle of res judicata is based on the need of giving a finality to judicial decisions. What it says is that once a res is judicata, it shall not be adjudged again. Primarily it applies as between past litigation and future litigation, When a matter whether on a question of fact or a question of law has been decided between two parties in one suit or proceeding and the decision is final, either because no appeal was taken to a higher Court or because the appeal was dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. This principle of res judicata is embodied in relation to suits in Section 11 of the Code of Civil Procedure; but even where Section 11 does not apply, the principle of res judicata has been applied by Courts for the purpose of achieving finality in litigation. The result of this is that the original Court as well as any higher Court must in any future litigation proceed on the basis that the previous decision was correct.
8. The principle of res judicata applies also as between two stages in the same litigation to this extent that a Court whether the Trail Court or a higher Court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceedings. Does this however mean that because at an earlier stage of the litigation a Court has decided an interlocutory matter in one way and no appeal has been taken therefrom or no appeal did lie, a higher Court cannot at a later stage of the same litigation consider the matter again?”
15. A Full Bench of Kerala High Court in a judgment reported in State of Kerala and Anr. v. C. Abraham and Anr., (FB), held in Paras 8 and 34:
“8. Even after the attempted annihilation of the arbitration clause, could something spring up in the form of an arbitration provision for the only reason that the Arbitration Act by its Section 20 enables appointment of an Arbitrator in specified contingencies? Is the question that needs to be tackled now. One fact to be immediately and seriously noted is that Section 20 can be of avail only if there is fundamental situation of an alive arbitration arrangement.
34. A total extinguishment and even wiping off of all traces of arbitration arrangement, is thus clearly visible in the present case. The case is quite unlike in 1983 Ker. 583 inasmuch as the latter did not have situation where the arbitration clause specifically incorporated in the notice in the contract had got chopped off. It is different from (1987) 1 Ker. L.T. 860 which does not have a provision as express and explicit in the contract, which states that the arbitration procedure is not contemplated at all in relation to the work in question. It is, however, identical with the facts in M.F.A. 114 of 1984. On an examination of the clauses in the contract and the legal principles governing the same, we are of the view that arbitration provision in the M.D.S.S. does not any longer have application when the parties had by a conscious act, done away with the arbitration machinery. In that view of the matter, we hold, overruling the subordinate Court, that the agreement does not visualize any arbitration arrangement between the parties and consequently the Court has no jurisdiction to make any subsidiary exercise visualized in a situation when in fact an arbitration arrangement exists but with some gaps or deficiencies in the working arrangement.”
16. In O.P. No. 34 of 1994 the revision petitioner had contended in Para 5:
“While the petitioner was under the impression that the arbitration proceedings came to an end, the petitioner received a notice from the 1st respondent that Sri A.T. Thomas, appointed as Arbitrator retired from service and thereby requested the petitioner to give consent to appoint a new Arbitrator. The petitioner refused for the same and on the other hand, contended that the 1st respondent having exhausted his right of appointing a sole Arbitrator under the agreement dated 19.5.1987, had no right to appoint a new Arbitrator. To the surprise of the petitioner, the petitioner received a notice from the 2nd respondent informing the petitioner that he was appointed as sole Arbitrator by competent authority and directed the petitioner to appeal- before him on 16.3.1994 at 14.00 hrs being the first hearing date.”
17. OP No. 90 of 1994 was filed by the respondent after giving reference to the earlier proceedings in OP No. 101 of 1992 and also mentioning that he had appointed another Arbitrator which was challenged in OP No. 34 of 1994 and the Court allowed the OP on 7.4.1994 holding,
“In the absence of specific clause, the second Arbitrator cannot be supplied to the previous vacancy by unilateral decision.”
The respondent wanted the Court in Para-13:
“The petitioner therefore submits that the Hon’ble Court may be pleased to appoint an Arbitrator to arbitrate the disputes between the parties and pass an award in accordance with the terms and conditions of the agreement and as per the provisions of the Indian Arbitration Act.”
18. In defence to this OP, the revision petitioner submitted that the arbitration clause had become ineffective in terms of order in OP No. 101 of 1992 and it should not be construed that there was a vacancy available due to inability of the appointed Arbitrator to complete the arbitration. He also contended that Section 12 of the Act was not applicable as an application under Section 31(3) had already been decided and become final.
19. In view of the orders in OP Nos.101 of 1992 and 34 of 1994, in our view, the arbitration clause had worked itself out. Therefore no further proceedings under the Act could be taken least by an application under Section 17 of the Act.
20. However, the learned Counsel for the respondent relies on a judgment of the Supreme Court reported in State of W.B. v. M/s. National Builders, . In this judgment Section 8 of the Arbitration Act had been interpreted. It is also contended by the learned Counsel for the respondent that the Court was not barred from entertaining application under Section 8. There are two pitfalls in this submission. Section 8 would only apply in the first instance in case the appointed Arbitrator refuses or neglects to act or is incapable of acting or dies and secondly when the arbitration agreement does not show that the vacancy should not be supplied and the parties or the Arbitrators, as the case may be, do not supply the vacancy. In those conditions the party can serve the other party a written notice to agree for the appointment or in supplying the vacancy. In the present case, these conditions have already been decided in an earlier proceedings and it had been held that second Arbitrator could not be supplied by the Court. It is also a fact that before the application was made to the Court, no notice was served on the other side. This case was not at all a case under Section 8 of the Act before the Trial Court. The case under Section 8 of the Act was neither pleaded nor agitated before the Court. The Trial Court, having found that the arbitration Clause 15 came to an end because of appointment of A.T. Thomas as an Arbitrator and such power can be exercised only once as per the arbitration clause, could not proceed further in the matter. The order in the earlier proceedings did not entitle the Trial Court to appoint an Arbitrator in terms of Section 8(1)(b) of the Act on the basis of arbitration clause 15.01 of the agreement, which had come to an end. In our view, firstly the matter had been concluded by OP Nos.101 of 1992 and 34 of 1994, secondly the conditions contemplated under Section 8 of the Act were not satisfied and thirdly there was no case before the Trial Court to appoint an Arbitrator in terms of Section 8 of the Act. Therefore the order of the Trial Court needs to be set aside.
21. The revision petition is allowed, the order of the Trial Court is set aside. No cost.