ORDER
D.N. Baruah, J.
1. This revision petition is directed against the judgment dated 31-5-85 passed by the Subordinate Judge, West Tripura District, Agartala in T.S. No. 118 (Arb) of 1983, rejecting the application under S: 8(2) of the Arbitration Act.
2. The petitioner fifed an application under Section 8(2) of the Arbitration Act (for short “the Act”), praying for appointment of an Arbitrator. The said application was registered as Suit (T.S. 118 (Arb)/ 83). The facts of the case are in narrow compas : the petitioner submitted a tender in respect of supply of stone boulders. His tender was accepted and a deed of agreement was executed between the parties. As per the agreement, the work was to be completed within 31-12-82. The value of the tender was Rupees 11,90,000/-. After execution of the deed of agreement, the petitioner took up the work but the work could not be completed in time. The third respondent therefore extended time up to 31-12-82. Meanwhile, there had been a hike in the price of diesel, engine oil and railway freights etc. which compelled the petitioner to make a request for enhancement of the rate as per terms and conditions of the contract agreed upon. The petitioner claimed Rs. 62,710.67, but the respondent paid Rs. 14,476.57 leaving a balance of
Rs. 48,233.50. In spite of repeated requests, the third respondent did not pay the balance amount. The amount was still pending with the respondents. The respondents prepared a final bill in connection with the contract work without making the payment as claimed by the petitioner. At that time, the petitioner was passing through financial difficulties and, therefore, he was compelled to receive the amount of the final bill under objection and this was recorded by the petitioner in the original final bill. The agreement contained an arbitration clause. Clause 14 is that clause. The said clause of the agreement provides that in case of any dispute that may arise in relation to the contract work is to be referred to the sole Arbitration of the Chief Engineer, Public Works Department, Tripura, and in the event of his inability to act as an Arbitrator, any person to be appointed by such Chief Engineer.
3. A dispute arose in respect of the said contract work. The petitioner, therefore, filed a petition before the second respondent to decide the dispute by making an award, the second respondent by his letterdated 21-5-83 informed the petitioner that his request was receiving his attention. Thereafter, the second respondent by yet another letter dated 30-7-83 informed the petitioner that as he received the payment in full and final settlement, the arbitration clause ceased to subsist. He accordingly refused to decide the dispute. On receipt of the said letter, the petitioner again sent another letter dated 8-8-83 informing the second respondent that he had received the payment of the final bill under objection. This letter was, however, not responded.
4. Situated thus, the petitioner issued a notice under Section 8 of the Act requesting to refer the dispute to arbitration. However, the second respondent refused to decide the dispute by his letter dated 19-11-83. Under this circumstance, the petitioner filed an application before the Subordinate Judge, West Tripura, Agartala, under Section 8(2) of the Act, with a prayer for appointment of an Arbitrator. This application was registered as a suit (TS 118(Arb)/83). The respondents filed objection against the petition. The
Subordinate Judge after hearing the parties by his order dated 31-5-85 rejected the prayer of the petitioner. Hence this petition.
5. The Subordinate Judge by the impugned judgment rejected the prayer of the petitioner on the following grounds :
(a) The original final bill was prepared and the petitioner put his signature acknowledging the payment in full and final settlement of his claim.
(b) Section 8(1) of the Act is applicable only where parties agree to appoint Arbitrator by consent and in the present case Arbitrators were already named, therefore, Section 8(1) was inapplicable; and
(c) There was no evidence that the notice was served under Section 8(1) of the Act.
6. I have heard both sides. The petitioner’s contentions are that the Subordinate Judge failed to exercise his jurisdiction vested in him by not appointing an Arbitrator. He acted illegally and with material irregularity in exercise of his jurisdiction by holding that under the facts and circumstances of the case, invocation of Section 8 of the Act was not warranted. The finding of the Subordinate Judge regarding service of notice under Section 8(1) was perverse.
7. Mr. A.M. Lodh, learned counsel appearing on behalf of the petitioner has submitted that the Court below had no jurisdiction to examine whether the amount was received under protest or-not? According to the learned counsel, this is a matter to be dealt with by the Arbitrator only. He has further submitted that the Subordinate Judge acted illegally and with material irregularity in exercise of his jurisdiction by holding that Section 8(1) of the Act is applicable only when the parties by consent agree to appoint an arbitrator and in the instant case, there is no such provision in the arbitration clause to invoke the power under Section 8(1) of the Act. Mr. Lodh has also submitted that the finding of the Subordinate Judge regarding the service of notice under Section 8(1) of the Act was perverse.
8. Mr. D. B. Sengupta, learned Government Advocate, while supporting the impugned judgment of the Subordinate Judge has submitted that there is no jurisdictional error was committed by the Subordinate Judge. Therefore, this Court in exercise of the revisional jurisdiction may not interfere with the finding of the Subordinate Judge. Clause 14 of the Agreement does not envisage I appointment of an Arbitrator by the Court. The intention of the parties is not to supply the vacancy which is apparent from the arbitration clause.
9. Now the questions fall for determination are : (i) Whether under the facts and circumstances of the case, it is necessary for the Court to appoint an Arbitrator in exercise of power under Section 8 of the Arbitration Act? (ii) Whether the Court below had any jurisdiction to determine the question of receiving the bill amount under protest or not? and (iii) whether the finding arrived at by the Subordinate Judge regarding the service of notice is perverse?
10. Mr. Lodh has placed reliance on the following decisions : (i) Fertiliser Corporation of India Ltd. v, Ravi Kumar Ohri, AIR 1979 Orissa 19, and a Full Bench decision of the Delhi High Court in Ved Prakash Mithal v. Union of India, AIR 1984 Delhi 325. Relying on these decisions, Mr. Lodh has submitted that the Subordinate Judge was Only required to see under the facts and circumstances of the case whether the dispute required to be referred to an Arbitrator or not? It was not the function of the Subordinate Judge to look into the question whether the amount received in full and final settlement was under objection or hot?
11. In Fertiliser Corporation of India Ltd. (supra) the Orissa High Court has held thus (at pages 21 & 22; AIR 1979 Ori) :
“…..Under Section 8 of the Arbitration Act, the
Court does not make any reference to any. dispute. Its powers are limited only to the appointment of arbitrator or an umpire, as the case may be, if there is an arbitration agreement between the parties and there is no appointment or concurrence despite notice
under Section 8(1) of the Act. After the appointment is made, it is for the parties to file their claims before the arbitrator who is to decide the same on merits. There is a clear distinction between the provisions of Section 8 and Section 20 of the Act. Under Section 20, the Court has to decide where dispute or differences have arisen and after directing the parties to file the agreement, the Court has to make a reference of the disputes to the arbitrator,”
The said court further held as follows :
“…..Whether a particular claim is untenable by the arbitrator oh the ground that notice of the claim has not been given to the Corporation and whether the same is time barred or not, are all matters for examination by the arbitrator and not by the Court while exercising its jurisdiction under Section 8.”
12. Similarly in the Full Bench decision in Ved Prakash (Supra) the Delhi High Court observed that when the designated person refused to make appointment of an arbitrator on request by the petitioner on the ground that the request for appointment of arbitrator was made after expiry of the period as per terms of the clause. The Court held that this question falls within the province of the Arbitrator, to whom the dispute is to be referred and the Arbitrator can decide this question. The court is not concerned with this question. The Court is only to see whether there is a dispute and this dispute is to be referred to arbitration as per agreement between the parties.
13. Mr. Sengupta, learned Government Advocate has placed reliance on a decision in Prabhat General Agencies etc. v. Union of India, AIR 1971 SC 2298. Relying on this decision, Mr. Sengupta has submitted that the intention of the parties is manifest in Clause 14 of the agreement that in case of any dispute, it has to be decided by the Chief Engineer or any other person appointed by him and that being so, there is nothing to show that the vacancy to be supplied in case of the failure of the Chief Engineer to decide the dispute either by himself or by a person appointed by him, and, therefore, the question of exercising power under Section 8 does not arise.
14. In Prabhat General Agencies (Supra), the Supreme Court held thus (at page 2301; of AIR 1971) :–
“…..The Judicial Commissioner had
refused to act as the arbitrator. The parties have not supplied that vacancy. Therefore the only question is whether the agreement read as a whole shows either explicitly or implicitly that the parties intended that the vacancy should not be supplied. It may be noted that the language of the provision is not ‘that the parties intended to supply the vacancy’ but on the other hand it is that ‘the parties did not intend to supply the vacancy’. In other words if the agreement is silent as regards supplying the vacancy, the law presumes that the parties intended to supply the vacancy. To take the case out of Section 8(1)(b) what is required is not the intention of the parties to supply the vacancy but their intention not to supply the vacancy.
15. In Union of India v. Raghunath Singh, AIR 1980 SC 103 : (1979 All LJ 1317), the Supreme Court held that the Court has no power to supply the vacancy under Section 8(I)(b) if the arbitration agreement does not show that the parties do not intend to supply the vacancy. If no such intention can be culled out from the arbitration caluse, Court can supply the vacancy.
16. In Smt. Shila Banerjee v. State of West Bengal, AIR 1982 Calcutta 9, the Calcutta High Court held that where the appointed arbitrator expressed his unwillingness to act as an arbitrator, it is the Court who can appoint an arbitrator when the arbitration agreement does not indicate the intention of the parties that the vacancy should not be filled up. Therefore, it will be necessary for the court to appoint an arbitrator Under Section 8(1)(b).
17. After considering the submissions of the learned counsel for the parties and on going through the records, I find that the Arbitration Clause is abundantly clear that in case of any dispute arising out of a contract, the Chief Engineer, Public Works Department, Tripura, Agartala is to decide the dispute and in case he is unable to act as such any other person appointed by him. Here, the
petitioner has raised a dispute that he did not receive the money in full and final settlement. The petitioner has further contended that the payment was received under protest. In spite of notice, the Chief Engineer refused to refer the matter to arbitration. Further, after going through the Clause 14 of the Agreement, I do not find that the intention of the parties is not to supply the vacancy. Therefore, the Subordinate Judge was wrong in rejecting the prayer by holding that the petitioner accepted the payment in full and final settlement and that the exercise of power under Section 8 was not warranted. In my opinion, the instant case squarely comes under Section 8(1) of the Arbitration Act.
18. The next question regarding the service of notice. The Subordinate Judge rejected the prayer of the petitioner on the ground that no notice under Section 8(1) of the Arbitration Act was ever served. According to the Subordinate Judge, there was nothing on record to show that a notice under Section 8(1) was served on the second respondent. The Subordinate Judge also in his judgment observed that the respondents challenged the service of notice in their written objection and in spite of this the petitioner failed to prove the service of notice. In paragraph 14 of the plaint, the petitioner has specifically stated that notice was served on second respondent, to which I do not find any denial in the written objection filed by the respondents. More specifically in para 22 of the written objection which is in reply to paras 13 and 14 of the plaint. In this paragraph the petitioner specifically averred regarding service of notice. As there is no specific denial regarding service of notice, it is deemed to be admitted as per the provisions of law. Therefore, in my opinion, the finding of the Subordinate Judge in this regard is contrary to records.
19. In view of the above discussions, I find that the Subordinate Judge failed to exercise his jurisdiction vested on him under Section 8 of the Act by not appointing an arbitrator, when the Chief Engineer refused to act as an arbitrator or appoint any other person in terms of Clause 14 of the agreement. The Subordinate Judge also acted without jurisdiction by determining the question whether the petitioner accepted the payment in full and final settlement without objection or not, inasmuch as, the Court has no jurisdiction to determine this point. Moreover, the finding larrived at by the Subordinate Judge regarding the service of notice was also contrary to the records as observed earlier.
20. For what have been stated above, I find that the impugned judgment of the Subordinate Judge is not sustainable in law. I, therefore, set aside the impugned judgment with following directions to the Subordinate Judge :
(a) The Subordinate Judge shall give notice to the Chief Engineer, Public Works Department, Tripura, Agartala, to act as an Arbitrator and if he is not in a position to act as such, he may appoint any person to be an Arbitrator to decide the dispute; and
(b) If the Chief Engineer fails to do so, the Court may appoint an arbitrator, who will be comptent to decide the dispute after giving opportunity to the parties.
In the result, the petition is allowed. No
costs.