JUDGMENT
S.K. Marajan, J.
1. The short point I have to decide in this suit whether an application under Section 20 of the Arbitration Act is maintainable in a case where the appointed arbitrator after having started to function and after having entered upon the reference at a later stage neglects or refuses to proceed with the reference.
2. The parties to the suit are closely related to each other. Certain disputes had arisen between the parties in respect of the partnership firms namely, M/s. Arora Auto and Electric Trading Co., M/s. Paramite Cable Co. (Arora Trading Corporation). M/s. Udyog Sheel, M/s. Orient Cable Industries, in which one or the other party to the suit was associated either as a partner or sole proprietor. The said disputes were referred for adjudication to Shri J. P. Bajaj as an arbitrator on 11th August, 1983. Some of the disputes are stated to have been resolved before arbitrator. However, no award was made and published by him. After the time for making and publishing the award had expired, a petition was filed in this court being OMP No. 96/84 under Section 28 of the Arbitration Act for extension of time to enable the arbitrator to make and publish his award. By an order dated 4th February, 1986, this court, with the consent of the parties, revoked the authority of Shri J. P. Bajaj as an arbitrator and appointed Shri P. L. Rahi as the arbitrator. It is stated in the petition that Shri P. L. Rahi continued to hold arbitration proceedings, however, on 4th October, 1990 in a suit which had been filed by the respondent No. 1 in the courts at Bangalore, the petitioners came to know that Shri P. L. Rahi had declined to continue as an arbitrator. The present petition was, therefore, filed on 24th July, 1993 under Section 20 of the Arbitration Act for appointment of an arbitrator.
3. In reply, the respondent stated that the petition was barred by limitation inasmuch as the arbitrator vide his letter dated 1st June, 1990 addressed to all the parties to the suit had expressed his inability to proceed with the arbitration and according to the respondents, the present petition having been filed more than three years after the arbitrator having expressed his inability to proceed with the reference, was barred by limitation. The petition was also stated to be barred by doctrine of estoppel and acquiescence and waiver and by the conduct of the petitioners. It is also stated that Mr. P. L. Rahi had expressed his inability to proceed with the arbitration because the petitioners were not cooperating with him and had not filed their statement of claims in spite of the registered letters having been written by the arbitrator to them. It is also stated that the respondents had filed some civil suits in the courts at Bangalore for rendition of accounts and recovery of their shares which are the same disputes which were sought to be referred for decision of the arbitrator. In the replication, the petitioners have denied the receipt of the letter dated 1st June, 1990 from the arbitrator. They have, therefore, denied that the petition was barred by limitation. It is the case of the petitioners that they received a letter dated 4th October, 1990 from their advocate from Bangalore and it was only from that letter that they came to know about the reluctance shown by the arbitrator to proceed with the arbitration.
4. No issues have been framed in the petition and no evidence has been led by the parties. However, the parties have argued this case without issues and without any evidence on record. The contention of the petitioner is that as the petitioners have come to know about the reluctance of the arbitrator to proceed with the reference from letter dated 4th October, 1990 written by their advocate to them, the present petition was within time and as the arbitrator is not willing to act, this court should appoint an arbitrator under Section 20 of the Arbitration Act. It is stated that the petition is within time as the petitioners have derived their knowledge only from the letter dated 4th October, 1990 written by their advocate.
5. Mr. D. P. Sharma, learned counsel for the plaintiff has relied upon the judgment reported Jagdish Chander Gupta v. Laximan Dass , to support his contention that the present, petition under Section 20 was no incompetent even if the provisions of of Section 8 of the Arbitration Act were applicable to the present case. Mr. Sharma submits that instead of proceeding under Chapter II in which Section 8 falls the party concerned may apply for filing the arbitration agreement in court. It is his contention that reading two provisions together the clear intention of the legislature was to give option to a party to an arbitration agreement to adopt a course laid down in Section 8(1)(a) or straightaway come to the court under Section 20 for appointment of the arbitrator.
6. In the present case, admittedly, no notice had been given by the petitioner to the respondents to concur in the appointment or appointments or in supplying the vacancy. The first question, therefore, to be decided in the case is whether without such a notice having been given by the petitioner to the respondents calling upon them to concur in the appointment of the arbitrators, the present petition is maintainable and whether the ratio of the judgment reported as Jagdish Chander Gupta v. Laxman Dass (supra) is applicable to the facts of the present case.
7. With a view to appreciate the rival contentions of the parties, it will be useful to reproduce Sections 8 & 20 of the Arbitration Act.
8. Power of court to appoint arbitrator or umpire-(1) In any of the following cases :
(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 appoints or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after 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.
20. Application to file in court arbitration agreement. – (1) Where any persons have entered into an agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen in which the agreement applied, they or any of them, instead of proceeding under Chapter II may apply to a court having jurisdiction in the matter of which the agreement relates, that the agreement be filed in court.
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff of plaintiffs and the remainder as defendant or defendants, if the application has been by all the parties, or if otherwise, between the applicant as plaintiff and the other parties as defendants.
(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the court.
(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.”
8. While Section 8 appears in Chapter II of the Arbitrator Act. Section 20 is in Chapter III. It is not disputed that in case initially an arbitrator has to be appointed any party to the agreement may instead of proceeding under Chapter II may apply to the court for getting the agreement filed in Court and have an arbitrator appointed under Section 20 of the Act. The question, however, is whether in case an arbitrator has been appointed by the court, the provisions of Section 20 will be applicable for getting a new arbitrator appointed or the party will necessarily have to approach the court under Section 8 of the Arbitration Act for appointment of the Arbitrator.
9. In Jagdish Chader Gupta v. Laxman Dass (supra), after certain dispute had arisen between the parties the respondent had appointed one Shri K. K. Adiya as the arbitrator which appointment was agreed by the appellant. However, later on despite notice he did not appear before the arbitrator and ultimately informed him that the appellant had withdrawn the appointment of the arbitrator. On receipt of such information the arbitrator refused to proceed with the arbitration. The respondent thereupon filed an application under Sections 8 & 20 of the Arbitration Act for filing the agreement in court and for appointment of any other arbitrator to adjudicate upon the disputes that had arisen between the parties. The application was allowed and the court appointed one Shri Jalandri Prasad as the sole arbitrator vide order dated 22nd January, 1985. One of the point taken in appeal by the appellant challenging the order of the subordinate court was that new arbitrator could not be appointed as the respondents had not complied with the provisions of Section 8(1) of the Arbitration Act under which they were required to serve notice upon the appellant to agree to the appointment of a fresh arbitrator after earlier arbitrator had refused to proceed with the reference. The Court while disposing of the appeal held :
“According to the clear language of this provision a party to the partnership agreement has an option to apply under Section 20 instead of proceeding under Chapter II in which Section 8 occurs. If the intention was to confine that remedy of a party to an arbitration agreement only to Section 8 in case an Arbitrator refuses to act or is incapable of acting the language of Section 20(1) would have been materially different. The legislature in that case would not use the expression “instead of proceeding under Chapter II” but would have said “except in a case falling under Chapter II”. Reading the two provisions together. I find that the clear intention of the legislature was to give an option to a party to an arbitration agreement to adopt the course laid down in Section 8(1)(a), or straight way come to the court under Section 20. It is significant that even under Section 8 if the parties do not agree to the appointment of a fresh arbitrator when the requisite notice is given, the matter is to be taken to the court and it is for the court to make the appointment of another arbitrator or umpire. The decision of the Allahabad High Court, to which the learned counsel for the petitioner has referred, no doubt indicates that unless notice under Section 8 is given, the court has no jurisdiction to proceed with the appointment of fresh arbitrator or umpire, but those observations may apply to the action which is taken under that Section. I fail to see how the jurisdiction of the court under Section 20 if properly invoked, can be taken away merely because of the omission of a party to serve the notice on the opposite party for appointment of an arbitrator when sub-section (1) of Section 20 specifically lays down that instead of proceeding under Chapter II, in which Section 8 falls, the party cone med may apply to the court for filing the arbitration agreement.
10. In Mangal Prasad v. Lachhman Prasad, a Full Bench of the Allahabad High Court had held that where an arbitrator having entered upon the reference, at a later stage, neglects or refuses to proceed with it further, he can be removed under Section 8(1) or under Section 11(1) of the Arbitration Act. It has been further held that Section 20(1) will not be applicable in a case where the arbitrator has already entered upon the reference and thereafter the court cannot direct the agreement to be filed because it is already with the arbitrator and he is not under the court’s jurisdiction. While dealing with the scope of Section 20 of the Arbitration Act, the court held :
“When the arbitrator has entered upon the reference the agreement must have been filed with him. A notice of the application under Section 20(1) which is to be registered as a suit between the parties is to be given only to the parties and the arbitrator has not to figure as a party to it. It is not understood how the agreement can be ordered to be filed when it is with him and he is not under the court’s jurisdiction. The provisions pre-supposes that the agreement is with one party or the other who can be ordered by the court to file it. This would be the position when the arbitrator has not entered upon the reference.”
11. It appears that this Full Bench judgment of the Allahabad High Court was not brought to the notice of the learned Single Judge of the Punjab and Haryana High Court. The question which had been referred to the Full Bench was. “whether an application under Section 20 of the Indian Arbitration Act can be made in a case like the present one where the arbitrator had started to function and had entered upon the reference who at a later stage could not proceed with the same” and the Bench answered the question in the negative.
12. With the deference to the observations of the Hon’ble Judge of the Punjab and Haryana High Court, I am not in agreement with the views expressed by him in Jagdish Chander v. Lachhman Das (supra) and I am of the considered opinion that the present petition is not maintainable under the provisions of Section 20 of the Arbitration Act.
13. I cannot consider this petition as a petition under Section 8 of the Arbitration Act as Section 8 pre-supposes the service of the notice by one party upon the other to concur in the supplying of the vacancy caused by the inability or refusal of the appointed arbitrator to act. In the absence of such a notice, in my opinion, the court will not have jurisdiction to treat this petition as a petition under Section 8 of the Arbitration Act.
14. As I have held that the petition is not maintainable under Section 20 of the Arbitration Act nor can it be treated as one under Section 8 of the Act. I need not dwell upon other questions involved in the petition.
15. Petition is, accordingly, dismissed leaving the parties to bear their own costs.