ORDER
Lalit Mohan Sharma, J.
1. This Civil Revision Application arises out of a proceeding started by the opposite party by an application under Section 20 (4) of the Arbitration Act. The application was registered as Title Suit No. 30 of 1971 in the court of the Subordinate Judge, Chaibasa, and the opposite party was described as the plaintiff and the petitioners as defendants. There was an agreement entered into by the parties on the 5ih December, 1962 and Clause 23 thereof provided that in case of any dispute between the parties the matter would he referred to the sole arbitration of the Superintending Engineer, Jamshedpur Circle. The plaintiff opposite party filed an application which was described as an application under Section 20 of the Arbitration Act and made a prayer therein that the defendants should be directed to file the arbitration agreement dated 5-12-1962, “an Arbitrator” should be appointed and reference should be made to him with respect to the matter in dispute between the parties. On the 10th April, 1972, the Court allowed the plaintiff’s prayer and directed the defendants to file the original agreement of arbitration. The post of the Superintending Engineer, Jamshedpur Circle, was abolished and, therefore, the choice of the Arbitrator remained to be decided. On the same day, that is, 10-4-72, the plaintiff filed an application wherein it was suggested that any of the three arbitrators mentioned by the plaintiff, namely Shri Braj Bans Prasad, Shri D.P. Dubey and Shri Niranjan Roy might be appointed as an Arbitrator. The Court fixed 24-4-72, as the date for hearing the parties on this matter and on this date the petitioners on their prayer were granted a short adournment. The matter was postponed for being taken on 2-5-72 On 2-5-72, the matter was heard and the petitioners by a written application gave their concurrence to the appointment of Mr. D P, Dubey as the sole Arbitrator. The Court, however held that as the amount involved in the case was considerable, the interest of justice would be better served if besides Shri D.P. Dubey, Shri Braj Bans Prasad was also appointed as an Arbitrator The Court ruled that the fact that the petitioners agreed to the appointment of Shri D.P. Dubey as the sole Arbitrator did not fetter the right of the Court to appoint Shri D.P. Dubey and Shri Braj Bans Prasad as joint Arbitrators It indicated that the Arbitrators were empowered to choose an Umpire in case of disagreement and directions regarding their remunerations were also given. The petitioners have filed the present civil revision application against the said order appointing two Arbitrators in place of one,
2. Mr. J.C. Sinha, learned Counsel for the petitioners has contended that Sub-section (4) of Section 20 of the Arbitration Act did not permit the Court to appoint an Arbitrator of its own choice where the parties have reached an agreement. Emphasis has been laid down on the last part of the sub-section wherein it is stated that where the parties cannot agree upon the Arbitrator, the Court shall make an order of reference to an arbitrator appointed by Court. It has been enjoined that the Court ‘shall’ make order of reference to ‘the arbitrator’ appointed by parties, ‘whether in the agreement or otherwise’. I have underlined the words ‘or otherwise’ which indicate that it is not necessary for the application of the first part of Sub-section (4) that the parties must have reached an agreement by instrument of the arbitration itself. Having regard to the language of the section discussed above, there appears to be considerable force in the point made out by Mr Sinha.
3. The Court below has held that Section 8 (2) of the Arbitration Act is applicable to the present case and the Court has absolute discretion in the matter of appointment of an Arbitrator or Arbitrators. In my view, the Court is not right It is true that Section 20 of the Act is merely a machinery provision and substantive rights of the parties are found in Section 8 and that the arbitration shall proceed as stated in Sub-section (5) of Section 20, in accordance with the other provisions of the Act, but this stage is reached only after the stage of the application of Sub-section (4) is over. For that reason, Sub-section (5) starts with the word Thereafter’. In the present case, we find that the plaintiff-opposite party made an offer for the appointment of Shri D.P. Dubey as the sole Arbitrator and the petitioners agreed to the same, in that situation, the Court below was bound to follow the procedure as laid down in the first part of Sub-section (4) of Section 20- Dealing with this sub-section, although in a slightly different context, the Supreme Court in the case of Dhanrajmal Gobindram v. Shamji Kalidas and Co., AIR 1961 SC 1285 observed that
“the powers and duties of the Court in Sub-section (4) of Section 20 are of two distinct kinds, The first is the judicial function to consider whether the arbitration agreement should be filed in Court or not. That may involve dealing with objections to the existence and validity of the agreement itself. Once that is done, and the Court has decided that the agreement must be filed, the first part of its powers and duties is over.” Proceeding, it was held that “then follows a ministerial act of reference to arbitrator or arbitrators appointed by the parties. That also was perfectly possible in this case, if the parties appointed the arbitrator or arbitrators. If the parties do not agree, the Court may be required to make a decision as to who should be selected as an arbitrator and that may be a function either judicial, or procedural, or even ministerial; but it is unnecessary to decide which it is.”
4. It is rightly not suggested by either party that as there is no post of Superintending Engineer, Jamshedpur Circle now. Section 20 of the Act does not apply, Mr. S.K. Chaudhury, appearing for the opposite party, has argued that the present case is governed by Section 8 of the Act and the order passed by the court below is perfectly legal, He is right in saying that the fact that Section 20 is mentioned can the top of the plaintiff’s application in the court below, does not conclusively determine the scope of the application, but a question arises whether Section 8 can be applied to the present case at this stage. Sub-section (2) of Section 8 lays down that a notice has to be given by a party and if the appointment is not within 15 clear days, after service of the same, the Court may on the application of the party who gave the notice appoint an Arbitrator or Arbitrators or an Umpire, as the case may be. Admittedly, it were the petitioners who on 16-10-68, sent a letter to the plaintiff-opposite party suggesting the reference to arbitration and there was no notice served by the plaintiff on the petitioners Mr. Choudhary has relied upon the fact that on the 2nd January, 1969, the plaintiff agreed to the suggestion with certain amendments. I do not think that one of the conditions mentioned in Sub-section (2) of Section 8 has been fulfilled thereby and I am of the view that the plaintiff was right in making his application under Section 20 of the Act.
5. The other Conditions given in the application of Section 8 of the Act also do not appear to exist in the present case. On the other hand, it cannot and has not been suggested by Mr. Chaudhary that the proceeding started in the Court below was not under Section 20 of the Act Mr. Choudhary has relied upon a number of decisions in Karam Chand v. Sant Ram Tarachand, AIR 1958 Punj 418, Union of India v. D.P. Singh, AIR 1961 Pat 228 and Kashi Prasad Singh v. Gupteshwar Singh, AIR 1956 All 431 for showing that Section 8 applies to a case started under Section 20 of the Act also. There is no dispute to that. The question which arises in the present case, namely, whether the Court has unfettered power to appoint an Arbitrator or Arbitrators ignoring the agreement of the parties was not involved in any of those cases and they do not appear to be relevant. The scopes of Chapter II and Chapter III of the Arbitration Act have been discussed with clarity in the case of Gannon Dunkerley and Co. v. Union Carbide (India) Ltd., AIR 1962 Cal 360. In the case of Fertilizer Corporation of India Ltd. v. Domestic Engineering Installation, AIR 1970 All 31, it was emphasised that a perusal of Sub-section (4) of Section 20 of the Act indicates that there are three courses open to the Court. After the arbitration agreement has been ordered to be filed, the Court shall proceed to make reference firstly to the arbitrator appointed by the parties in the agreement; secondly, to the arbitrator not named in the agreement, but with regard to whom the parties agree otherwise; and, thirdly, when the parties cannot agree upon an arbitrator, to an arbitrator appointed by itself. This was referred to by the Supreme Court in Parbhat General Agencies v. Union of India, 1971 (1) SCC 79 = (AIR 1971 SC 2298) with approval. In the case before me, the parties have come to the agreement relating to the choice of the arbitrator not named by the instrument of arbitration but during the course of the proceeding and, therefore, there is no question of the Court exercising its discretion in the matter.
6. Mr. Choudhary lastly contended that from what has been said in paragraph 2 of the Judgment under revision, it appears that the parties stated before the Court below that the Court could exercise its authority in making appointment of a suitable arbitrator and in that view the petitioners cannot be permitted now to challenge the Court’s authority. Mr. J.C. Sinha has strongly challenged the interpretation put by Mr. Choudhary on the language used by the Court in its order. He appears to be right when he says that the statement on behalf of the petitioners, referred to in the order under revision was made before the agreement in regard to the appointment of Shri D.P. Dubey was reached. It is significant in this regard to appreciate that the petitioners decided to agree to the suggestion made on behalf of the plaintiff regarding the appointment of Shri D.P. Dubey as the sole arbitrator on 2-5-72, itself for the first time, that is, on the date on which the order under revision was passed. It was actually a proposition of law submitted on behalf of the petitioners in the Court below through their Counsel applicable to a stage when there is no agreement between the parties and I hold in agreement with the contention of Mr. Sinha that there was no surrender by the petitioners in the Court below of their rights under Sub-section (4) of Section 20. From what has been stated in paragraph 3 of the Judgment, it is quite clear that the petitioners were pressing for appointment of Shri D.P. Dubey as the sole arbitrator and that the court was under a duty to do so.
7. In the result, this civil revision application succeeds, the order passed by the Court below appointing two arbitrators is set aside and consequential directions are also accordingly set aside. Shri D.P. Dubey will be appointed the sole arbitrator in the case. It has not been suggested by either party that the remuneration of Shri D.P. Dubey at the rate of Rs. 100/- for each sitting of six hours is exhorbitant and the same is confirmed. As directed by the Court below, if the sitting be for less than three hours, the remuneration would be reduced to Rs. 50/-. The Arbitrator shall hold the sittings either at Patna or at Adityapur or at Jamshedpur. All other directions will be given by the Court from time to time. This application is accordingly allowed with costs. Hearing fee Rs. 200/-.