CR No.2464 of 1991 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CR No.2464 of 1991
Date of Decision: 17.11.2008
State of Haryana ....Petitioner
Vs.
M/s Dashmesh Woolen & Silk Mills & Anr. ..Respondents
Coram: Hon'ble Mr. Justice Vinod K.Sharma
Present: Mr.Madan Gupta, Sr.DAG, Haryana,
for the petitioner.
Mr.Sarwan Singh, Sr.Advocate with
Mr.N.S.Rapri, Advocate,
for respondent No.1.
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Vinod K.Sharma,J. (Oral)
This revision petition under Section 115 of the Code of Civil
Procedure (for short the Code) is directed against the judgment dated
18.2.1991 passed by the learned Additional District Judge, Chandigarh vide
which appeal filed against the order dated 8.9.1982 passed by the learned
Sub Judge First Class, Chandigarh was accepted.
The petitioner State of Haryana filed a petition under sections
CR No.2464 of 1991 2
14 and 17 of the Arbitration Act, 1940 (for short the Act) for making the
award the rule of the Court in which respondent No.1 filed objections under
sections 30 and 33 of the Act.
It was claimed that the contract was executed between the
State of Haryana and M/s Dashmesh Woolen and Silk Mills vide rate
contract bearing No. GL/RC/209/72-73/38505-506 dated 20.4.1973. The
case of the petitioner is that a dispute arose between the parties and in
terms of the arbitration agreement the same was referred to Smt.Sushil
Dogra, arbitrator who pronounced the award on 15.9.1978.
The respondent took a plea that the award passed was illegal,
void and without jurisdiction. It was claimed that Smt.Sushil Dogra could
not be appointed as an Arbitrator as Shri S.P.Bhatia, Joint Director of
Industries was appointed as an Arbitrator in exercise of authority vested in
the State of Haryana under clause 18 of the agreement and once the said
authority was exercised it could not thereafter appoint Smt.Sushil Dogra as
an arbitrator. It was also claimed that there was no valid contract between
the parties. A plea was also raised that the reference made to the Arbitrator
was not valid one as it was a unilateral reference.
The objections were contested.
Learned trial court rejected the objections and made the award
rule of the court.
Appeal against the rejection of objections was accepted by the
learned Additional District Judge, Chandigarh holding that there was no
concluded contract between the parties and therefore, the award passed was
without jurisdiction. The learned appellate court also held that the
CR No.2464 of 1991 3
appointment of Smt. Sushil Dogra as an Arbitrator was also vitiated as she
could not be appointed as an Arbitrator after Bhatia was appointed as an
Arbitrator.
The learned court also held that the reference made was not in
consonance with law as unilateral reference is not permissible.
Mr.Madan Gupta, learned Senior Deputy Advocate General,
Haryana challenged the impugned order on the plea that the learned lower
appellate court was in error in coming to the conclusion that there was no
valid contract between the parties. The contention of the learned counsel for
the petitioner is that the learned lower appellate court has misread Clause 6
of Ex.O.2 to come to this conclusion.
Clause 6 of Ex.O.2 reads as under:-
“6. Failure to execute agreement, deposit prescribed security,
effect supplies within the stipulated period, repeatedly offering
supplies liable to rejection, without prior inspection by this
Department may render your earnest money/security liable to
forfeiture and cancellation of this acceptance letter and also
blacklisting of your firm in addition to other remedies as
available under terms of the contract.”
There is force in this contention of the learned counsel for the
petitioner. Clause 6 of Ex.O.2 gave power to the State of Haryana to cancel
the contract which stood accepted.
This view of mine finds support from the fact that subsequent
thereto there was correspondence between the parties where the respondent
sought concession from the petitioner.
CR No.2464 of 1991 4
Learned lower appellate court, therefore, was not justified in
holding that there was no valid contract between the parties. Even
otherwise, the reading of Ex.O2 shows that offer made by respondent was
accepted, thus contract stood concluded. Clause 6 of Ex.O.2 reproduced
above only gives right to cancel the contract and is not prerequisite as was
held by learned lower appellate court.
However, this revision deserves to be rejected on other two
grounds, Arbitration Clause between the parties reads as under:-
“18. If any question, difference or objection whatsoever
shall arise, in any way connected with or arising out of this
instrument or the meaning or operation of any part thereof or
the rights, duties or liabilities of either party then save in so far
as the decision of any such matter is herein before provided for
and has been so decided, every such matter including whether
its decision has been otherwise provided for and or whether it
has been finally decided accordingly or whether the contract
should be terminated or has been rightly terminated in whole
or part and as regards the rights and obligations of the parties as
the result of such termination shall be referred for arbitration to
any officer appointed by Haryana Government and his
decision shall be final and binding and where the matter
involves a claim the amount if any awarded in such arbitration
shall be recoverable in respect of the matter so referred.”
Clause 18 authorized the State of Haryana to appoint an
Arbitrator to adjudicate the dispute. In exercise of said power admittedly an
CR No.2464 of 1991 5
Arbitrator was appointed. Thereafter, it was not open to the State to appoint
any other arbitrator as the authority appointed Arbitrator can be revoked
only by the court, unless the arbitration agreement gives such a power to a
party to fill up the vacancy.
However, no such power was given in the arbitration clause
entered into between the parties. This view finds support from the judgment
of this court in the case of Messrs Shamji Mal Vs. Messers L.Sefton &
Co. Ltd. Mirzapur and another 1954 P.L.R. 187, wherein this court was
pleased to lay down that once the power to appoint an Arbitrator under the
contract is exercised by appointing an arbitrator, thereafter there is no power
with the authority to appoint another Arbitrator.
The order passed by the learned appellate court is also required
to be upheld as it has been rightly held that it is not enough for the contract
to provide for arbitration as the arbitrator only gets jurisdiction when both
the parties specifically agree to refer specified matters or, failing that, the
court compels them to do so under the Act if the dispute is covered by it.
This view finds support from the judgment of Hon’ble Supreme
Court in the case of Seth Thawardas Pherumal V. The Union of India
(1955) 2 S.C.R. 48 and the judgment of Hon’ble Calcutta High Court in the
case of East India Construction, Co. (P) Ltd. Vs. Union of India AIR
1970 Calcutta 243, wherein it has been held that in the absence of specific
provision in agreement giving power to the appointing authority to fill up
vacancy, power to appoint arbitrator gets exhausted once it was exercised by
the said authority. Thereafter it is only the court which is competent to
appoint arbitrator.
CR No.2464 of 1991 6
In view of what has been observed above, there is no merit in
the present revision petition which is ordered to be dismissed.
17.11.2008 (Vinod K.Sharma) rp Judge