ORDER
V.R. Datar, J.
1. Petitioner and respondents both are companies. After discussion and negotiations, contract was entered into between the petitioners and respondents for supply of heavy duty four-High Rolling Mill, as per specifications given in the contract as contained in letter dated 3rd October, 1991 at Exhibit A to Petition No. 20 of 1996. It is unnecessary to reproduce various terms of the agreement, but the one material for the present purpose is about the dispute viz. in case of any dispute between the parties, the same shall be referred to the Arbitrators who should have the technical Knowledge and the same shall be done as per Indian Arbitration Act. It appears that a dispute arose between the parties and, therfore, by letter dated 27th November, 1992 at Exhibit B (to Petition No. 20/91), respondent informed the petitioners that the respondent had appointed one Shri Amin of M/s National Dia Casting as their Arbitrator and called upon the petitioners to appoint their Arbitrator for deciding the dispute. This letter dated 27th November, 1992 was not replied and, therefore, another letter dated 10th March, 1993 (Ex. C) was addressed, by which respondents again brought this fact to the notice of the petitioners and further cancelled contract and claimed a sum of Rs. 4,80,000/- by way of damages as per statement annexed to the said letter. It was stated that in case of default on the part of the petitioners to pay the said amount within four days from the date of receipt of the letter, the respondents will lodge their claim with the said Nathubhai Amin, Arbitrator appointed by them. Statement of claim consisted a sum of Rs. 2,75,000/- which was paid by them to petitioners on 23rd October, 1991, 16th November, 1991 and 12th May, 1992, Rs. 2 Lacs towards different in the price prevailing at the time of placing order and market value on that day and Rs. 5,000/- towards lawyer’s charges. By another letter dated 15th March, 1993, (Ex. E), claim was amended as amount of interest was omitted in the earlier claim, a sum of Rs.79,951/- was claimed as interest, thus a total claim was made for Rs. 5,59,951./- and the same was referred to Shri Nathubhai Arnin. It appears that thereafter, Shri Amin wrote two letters to the petitioners to appear before him and have discussion and inspection of the documents of claims, but those letters were not replied by the petitioners and ultimately, by letter dated 5th April, 1993 (Ex.G)., the Arbitrator informed the petitioners that he would be acting as sole Arbitrator since petitioners have failed to nominate their Arbitrator. By another letter dated 3rd August, 1993, the arbitrator informed the petitioners that hearing was fixed on 17th August, 1993 at 11p.m. at his office. To this letter, petitioner replied by their Advocate’s letter dated 16th August, 1993 that there is no agreement between the parties and that the petitioners have filed a suit in the High Court and appointment of Shri Amin as Arbitrator is illegal. Petitioners therefore, called uponthe Arbitrator not to proceed in the matter.
2. However, on 8th December 1993, Shri Amin made an Award and forwarded copies thereof to the parties under his forwarding letter, which is the subject matter of challenge in the present Petition (Arb. petition No, 20 of 1996).
3. Arbitration Petition No. 31 of 1995 has been filed by the claimant for decree in terms of the award while Petition No. 20/96 is filed for setting aside the said Award.
It is contended on behalf of the petitioner in Petition No. 20 of 1996, that agreement of arbitration reproduced above is in uncertain terms and therefore, invalid. In that behalf, provision of sections 8, 9 and 10 of the Indian Arbitration Act along with Appendix I, Rules 1 and 3 thereof would be relevant. It was contended that the so-called Arbitrator entered upon the reference at the latest by 3rd August, 1993 at any rate. As such, the Arbitrator was bound to make Award within four months from the said date as per provisions of Rule 3 read with Schedule I of the Act. As such, it was contended that Arbitration agreement itself is invalid being vague and uncertain and though the word used in the agreement is “Arbitrators* it should be read as “Arbitrator”. It is a case of sole Arbitrator which was required to be appointed by the consent of the parties and that the petitioners never consented for appointment of Shri Amin as Arbitrator. As such, respondent could have applied to the Court for appointment of the Arbitrator and one appointed by them cannot be sole Arbitrator and, therefore, Shri Amin had no jurisdiction to pass Award.
3-A. On behalf of the respondents, it was contended that though agreement does not provide specific number of Arbitrators, but use of the expression “Arbitrators”, clearly indipates that there was more than one Arbitrator and subsequent conduct of the parties viz. that of respondents in writing letters to the petitioners to nominate one Arbitrator with the one appointed by the respondents as well as conduct of the petitioners in not refuting this mode of appointment, would to show, it was a case covered by section 9 of the Act. As such, when respondents called upon the petitioners to appoint their Arbitrator and the petitioners failed to do so within 15 days, respondents were entitled to nominate their Arbitrator as sole Arbitrator and award passed by such Arbitrator is therefore, perfectly valid and binding upon the parties.
4. It would be necessary to first refer to provisions of section 3 of the Indian Arbitration Act. It provides that an agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as applicable to the reference. First Schedule provides in all 8 clauses and material for the present purpose are Clauses 1 and 3. Clause 1 states that unless otherwise expressly provided, the reference shall be to a sole arbitrator. Section 8 of the Act provides that 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; and if any appointed arbitrator or umpire neglects or refuses to act or is incapable of acting or dies, and the agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrator, as the case may be, do not supply the vacancy or where the parties or the Arbitrators are required to appoint an umpire and do not appoint him, then 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. Sub-section (2) of section 8 provides that 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 powers to act in the reference and to make an award as if he or they had been appointed by consent of all parties.
Section 9 provides that where an agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then unless a different intention is expressed in the agreement, and if either of the arbitrators neglects or refuses to
act, or incapable of acting or dies, the party who appointed him may appoint a new arbitrator in his place.
Section 10 of the Act relates to appointment of 3 or more arbitrators, which is not of much relevance, for the present purpose.
5. It would, at once, be seen that in the present case, agreement provides clause for arbitration, but is silent as to number of Arbitrators as well as mode of their appointment. It was contended that such a clause being vague and uncertain, the arbitration agreement itself is invalid. However, I am unable to accept this submission in view of the decision of the Calcutta High Court in , Indian Hosiery Works v. Bharat Woolen Mills Ltd. The Division Bench of the Calcutta High Court has considered this aspect and in particular agreement where number of Arbitrators as well as mode of appointment is silent. In para 8 of the said judgment, the Division Bench of the Calcutta High Court has observed thus:
“Where, therefore, the agreement does not assign the right of appointment distributively to different parties in respect of different arbitrators, it is inherent in the agreement that the appointment of the arbitrator or each of the several arbitrators must be by the consent of all parties. There may be an express provision to such effect, but even in the absence of any express provision, such a provision must be taken to be necessarily implied. It is for that reason that where the agreement does not specify the number of arbitrators, nor specifies the mode of appointment, the Court first takes the agreement as providing for reference to a single arbitrator by reason of the provisions of Rule 1 of the Schedule I, then takes the mode of appointment intended necessarily to the appointed by consent of the parties and, next, if it finds that the parties cannot concur in the appointment of an arbitrator, it appoints one itself. It takes and can take the agreement to be an effective agreement, because the mode of appointment by consent of the parties is implied in it and it is not required to supply the mode of appointment and does not require any provisions enabling it to do so.*
Having regard to this decision, it would be seen that even if agreement does not expressly state which Arbitrators are to be appointed, consent of the parties is to be implied in the agreement by virtue of provisions of section 8 of the Indian Arbitration Act.
5-A. It was however, contended on behalf of the respondents that section 9 of the Arbitration Act governs the present case inasmuch as the word used in the arbitration clause is “Arbitrators” meaning thereby, more than one Arbitrator. In the circumstances, if there were only two parties, 2 arbitrators can be appointed one by each of them, must have been understanding between the parties and , therefore, having regard to the conduct of the petitioners, in not refuting this mode of appointment of Arbitrators proposed by the respondents in their letters as well as by the Arbitrator in his letters, would go to indicate that case would squarely be governed by section 9 of the Indian Arbitration Act. It is contended that if section 9 governs the case, arbitration agreement in this case would be perfectly valid and could not be challenged on the grounds which are raised in the petition. However, I am unable to accept this contention raised on behalf of the respondents. Here, in the present case, subsequent conduct of the parties is not material. What is important is the agreement clause so far as appointment of the Arbitrator is concerned. The expression “Arbitrators” used in the said agreement would go to show that more than one Arbitrator was intended. But the provision is silent as regards
appointment of one Arbitrator by each of the parties, or number of Arbitrators. It is therefore, difficult for me to accept the contention of the respondents that section 9 would be applicable in the present case and that since the petitioner failed to appoint Arbitrator of his choice, the Arbitrator appointed by the respondent could act as sole Arbitrator and that his award would be valid, and binding upon the parties.
6. In view of this position, I find that it was incumbent upon the respondents to have applied to the Court under section 20 of the Act, for ascertaining meaning of the arbitration clause as well as for appointment of the arbitrators, since section 9 did not govern the case. Shri Nathubhai Amin could not have acted as sole Arbitrator and had no jurisdiction to make award unless the petitioners consented for his appointment as sole Arbitrator. On this ground alone, therefore, the award made in this case will have to be set aside as being invalid. Consequently, Arbitration Petition No. 31 of 1995 for making the Award rule of the Court will have to be dismissed. In view of this, I find that other grounds urged on behalf of the petitioner for assailing the award are unnecessary to be considered in this case.
7. I may, however, indicate that the date upon which Arbitrator Shri Amin entered upon reference cannot be taken to be 3rd August, 1993 as submitted by the petitioner, because having regard to the decision of the Division Bench of this Court in M/s. Jolly Steel Industries Pvt. Ltd. v. Union of India, , it is only upon Arbitrator applying his mind to the facts of the case and proceeding with claims, could be date on which Arbitrator entered upon reference. Of course, I do not wish to express any opinion on this aspect.
8. It is unnecessary to consider the other contention based on section 35 of the Arbitration Act, though both sides have advanced their submissions in that behalf. In view of my conclusions above, I do not wish to express any opinion in that respect.
9. As a result of the above discussion, I feel that the award impugned in the present petition will have to be set aside. However, it would be open to the respondent to make appropriate application to the Court to enforce the arbitration clause in the agreement.
10. Accordingly. Arbitration Petition No. 20 of 1996 succeeds. Rule is made absolute therein and award dated 8th December, 1993 passed by the Arbitrator is set aside. Arbitration Petition No. 31 of 1995 is dismissed. There will be no order as to costs.
11. Order accordingly.