ORDER
M.L. Bhat, J.
1. Petitioners pray that respondents 1 and 2 be directed to file the arbitration agreement arrived at between the petitioners and the authorities and respondent No. 3 be directed to file the award before this Hon’ble Court and the same be set aside. This composite type of application under Sections 20 and 33 of the Arbitration Act has a peculiar history.
2. Petitioners are retired employees of
the respondent No. 1 who were retired from service in 1978, 1982 and 1979 respectively. Services before the Cantonment Board, Badamibagh came under the control of respondent No. 2 in 1954. In 1954 Ministry of Defence, Govt. of India took over the control of the Cantonment Board and the service conditions of the petitioners continued to be governed by the Cantonment Fund Servants Rules framed under Section 280 of the Cantonment Act, 1924.
3. In 1969 a settlement appears to have been arrived at between the representatives of the employees of the Cantonment Boards of India and other workmen of the Cantonment Boards with the authorities. This settlement was in respect of revision of their emoluments and wages. Prior to this settlement an award was made by National Industrial Tribunal. However, it is denied that the said award was not applied to the State of Jammu and Kashmir. In para 8 of the memorandum of settlement option was given to the employees either to opt for revised scale of pay in accordance with the terms of settlement or to continue, on the then existing terms, that is, terms of service effective up to 19-5-1969. This option was to be exercised within thirty days in writing. Option once exercised was final. If option was not given by an employee he was to be deemed as an employee entitled to draw pay on the basis of the then existing pay scales i.e. which were operative up to 19-5-1969. Petitioner’s case is that they were not given the benefit of the award passed by the National Industrial Tribunal. The conditions of settlement were not acceptable to them, therefore they did not exercise the option as provided under para 8 of the settlement. Petitioners further submit that their conditions of service were governed by KCS rules up to the stage when they came to be governed by Cantonment Board Act and prior to 1954 labour laws were not applicable in the Jammu and Kashmir State. Petitioners were not therefore treated equally with the other employees of the Cantonment Board of India. Respondents have denied these contentions. The memorandum of settlement provides, in its para 20, that if any question arises relating to the interpretation or implementation of these terms of settlement and also in cases of error
or discrepancy, the matter shall be referred for decision to such person as the Secretary, Ministry of Defence may nominate. It will be open to the Secretary, Ministry of Defence, to nominate any officer of the Ministry of Defence. This provision is termed by the petitioners as arbitration clause and the respondents deny the contention and submit that there is no arbitration clause in the terms of settlement. Petitioners seem to have aired their grievance which was sent on 24-7-1984 to the respondent No. 3 for decision. Under para 20 of the memorandum of settlement, the Chief Secretary of the Cantonment Board and Cantonment Board Federation was granted liberty to be heard in the matter and present the case. After hearing the said organisation the representation was dismissed and the decision thereon conveyed to the petitioners. Petitioners have quoted some communication in para 11 of their petition, which other side says are irrelevant. Petitioners claim that they were entitled to get higher pay than what they were drawing at the time of their retirement. Respondents 1 and 2 seem to have forwarded their representation to respondent No. 3 which is termed by the petitioners as acceptance of their claim by the other side.
4. I have heard learned counsel for the parties. Memorandum of settlement is Annexure A to the petition. Para 20 of the said memorandum reads as under : —
“If any question arises relating to the interpretation or implementation of these terms of settlement and also in cases of error or discrepancy, the matter shall be referred for decision to such person as the Secretary, Ministry of Defence may generally or specially nominate in this behalf, and the decision of such nominee shall be final and binding. It will be open to the Secretary, Ministry of Defence, to nominate any officer of the Ministry of Defence. The nominee will, however, give an opportunity to a representative of the Federation on (of ?) being heard before giving his decision.”
5. From the reading of the memorandum
of settlement, it cannot be said that para 20
envisages arbitration of any dispute in respect
of terms of settlement. It simply provides
that if any question would arise about the
interpretation or implementation of the terms of settlement or in respect of error or discrepancy, the matter be referred to a person named in the para. In terms of this para petitioners’ application in admittedly referred to the authority named in the para and the authority has taken a decision by its order dated 24-7-1984 which was placed on record during the course of arguments. The memorandum of settlement itself was in the nature of an award so there could not be any clause in the memorandum for referring the matter to arbitration in case of any question relating to the interpretation of the memorandum. Learned counsel for the petitioners seem to have laboured under the misconception of law and has incorrectly read into para 20 of Annexure A an arbitration clause. By no standard para 20 can be termed as arbitration clause of any dispute or difference between the parties. It provides for interpretation to be given by the competent authority if a question arises for such an interpretation. That interpretation has been given and there is nothing which can be referred to arbitration in terms of para 20 of the memorandum of settlement.
6. The procedure of making an application under Section 20 for filing the award and at the same time for setting it aside is unknown. A party who wants the Court to proceed under Section 20 of the Arbitration Act will not be permitted to invoke Section 33 of the Arbitration Act before an order under Section 20 is made. Section 20 of the Arbitration Act provides that where any persons have entered into an arbitration agreement and where any difference or dispute has arisen to which the said agreement applies and before the institution of any suit on the basis of the agreement, any of the parties to the agreement may apply to the Court having jurisdiction in the matter for filing the agreement in the Court. On receiving such an application, the Court is called upon to issue notice to other party to show cause within the time specified as to why the agreement should not be filed in the Court. Where no sufficient cause is shown, Court has to order filing of agreement and make an order of reference to the arbitrator whether appointed by the agreement of parties or by the Court. Thereafter the arbitrator shall enter upon the reference and give an award.
7. Section 33 of the Arbitration Act provides that any party to an arbitration agreement or any person claiming under him may challenge the validity and existence of an arbitration agreement or an award and Court shall determine the same and decide the question on affidavits or on evidence as the Court may deem just and expedient.
8. This section pre-supposes that there must be an arbitration agreement and award in existence. Without there being an agreement or award in existence, Section 33 of the Arbitration Act cannot be invoked by any party in anticipation of coming into being of arbitration agreement or award, Section 33 cannot be applied or attracted. Arbitration Act provides a scheme for settlement of dispute under that Act and that scheme has a sequence and the provisions of the Act are to be applied in the manner in which they are required to be applied by the legislature.
9. The memorandum of settlement and its para 20 cannot be held to be an arbitration agreement. As already indicated that this was settlement about the payment of higher pay and wages and about the option to be exercised by the employees etc. It did not provide arbitration in any manner pertaining to payment of wages or enhancement of pay. It only provided that interpretation on any question mentioned in para 20 may be obtained from the competent person named in the para. By no stretch of imagination it can be countenanced that arbitration agreement is in existence because para 20 provides interpretation to be given by an authority. Mr. Hagroo forgets the basic requirements for bringing into existence an arbitration agreement. Unless there is an arbitration agreement, there cannot be reference under Section 20. Arbitration agreement is defined as under : —
“means a written agreement to submit present or future differences to arbitration : whether an arbitrator is named therein or not.”
10. So from the definition of arbitration agreement it is clear that there must be written agreement for submissions of the differences present or future to arbitration. Memorandum of a settlement cannot be termed as arbitration agreement because para 20 incorporated
therein does not relate to any difference present or future between the parties. It provides interpretation of any questions which are provided in the memorandum. It does not provide reference to be made to the arbitrator. Therefore, contention of Mr. Hagroo that para 20 has an arbitration clause and para 20 should be read as an arbitration agreement cannot be accepted.
11. Consequently application under Section 33 of the Arbitration Act is misconceived. There is no arbitration agreement providing reference to the arbitrator. Therefore its validity or otherwise under the Arbitration Act cannot be considered. No award can come into being on the basis of para 20 of the memorandum of settlement nor is arbitration agreement in existence. Therefore, nothing can be considered under Section 33 in respect of validity or otherwise of an award. The award, according to Mr. Hagroo is still-born, but is required to be set aside before its birth. The application of Mr. Hagroo and his contention in respect of applying Section 33 at this stage is violative of the Arbitration Act itself.
12. When this judgment was being prepared, Mr. Hagroo submitted some authorities before me. It is, therefore necessary to make a mention of these authorities in this judgment.
13. Ram Chandra Ram Nag Ram Rice & Oil Mills Ltd. v. Howrah Oil Mills Ltd., (AIR 1958 Cal 620) explains as to how an arbitration agreement is brought into existence. It says that in order to constitute an agreement in writing within the meaning of Section 2(a) it is not necessary that the agreement should be signed by both the parties. All that is necessary is that the parties should accept the terms of the agreement. The acceptance may be in writing or by conduct or by oral agreement.
14. This authority may not help Mr. Hagroo because the point canvassed before the Calcutta High Court was entirely of a different nature.
15. To the same effect is M/s. Ram Lal Jagan Nath v. Punjab State, (AIR 1966 Punj 436) (FB). Section 2(a) of Arbitration Act defines arbitration agreement. It has dealt with construction and form of arbitration
agreement. It is held that no particular form is needed for constituting an arbitration agreement. Intention of parties to submit to arbitration and treatment of the decision as final is essential. If the parties had desired and intended that the dispute be referred to arbitrator for its decision and they would undertake to abide by the said decision, arbitration clause would at once come into existence. Nothing new is laid down by this authority. On the plain reading of Section 2(a) it is to be inferred that there has got to be an agreement in writing which would indicate that parties had intended to refer the differences, if any, to the decision of the arbitrators. So the intention of the parties to refer the matter to arbitration is one of the essential ingredients of the arbitration agreement. In the present case that intention cannot be inferred merely because something is required to be interpreted by an authority named in the memorandum on which Mr. Hagroo seeks to rely.
16. State of Maharashtra v. M/s. Rajeet Construction, (AIR 1986 Bom 76) is also an authority to the effect that where the parties had understood a particular clause as an arbitration clause and the contractor invoked the clause against the Govt. and the Govt., submitted to the jurisdiction of the arbitrator, thereafter the parties cannot resile from the position they had once taken. This authority has a different import. It pre-supposes the existence of the arbitration clause and submissions by the parties to the jurisdiction of the arbitrator and thereafter it lays down that the parties cannot resile from that position.
17. In the present case as already stated there is no arbitration clause nor have the parties intended to refer any dispute to arbitration. Therefore, this authority will have no application.
18. Finance Centre v. Ram Parkash, (AIR 1977 NOC 269 (J & K) : 1977 Kash LJ 218) also deals with the form of arbitration agreement. It need not be in any particular form. The only requirement of a valid agreement is that the same should be in writing and should be in accordance with Section 2(a) of the Arbitration Act.
19. This authority also is not of any help to Mr. Hagroo because no arbitration agreement is in existence between the parties nor is the term ‘interpretation’ used in the memorandum on which reliance is placed by Mr. Hagroo to be confused with the arbitration. The two terms are distinct and the arbitration agreement cannot be said to have come into existence merely because some authority has to give interpretation of clauses of memorandum.
20. The law placed before me by Mr. Hagroo is of general nature. He has not been able to convince me that the memorandum is an arbitration agreement. It cannot be an arbitration agreement because it has none of the attributes of the arbitration agreement. Nor has he been able to show as to how an application under Section 33 and Section 20 of the Arbitration Act in a composite form would be maintainable.
21. For the reasons stated above this petition has no merit and must be rejected. I. therefore, dismiss the petition. However, in the peculior circumstances of the case, parties are left to bear their own costs.