Hon'ble Raghvendra Kumar,J.
( Per Raghvendra Kumar,J.)
1. Heard learned counsel for the appellant.
2. This First Appeal From Order is directed against the judgment and order dated 13.7.2015 passed by District Judge,Kanpur Nagar in Misc. Case No. 201/70 of 2007 whereby the award dated 27.10.2001 passed by Sri Indra Pal Singh Chauhan, Advocate ( Sole Arbitrator) in Arbitration Case No. 1 of 2001 has been set aside.
3. The award of the Arbitrator was challenged before the Court below by the respondent on the ground that the appointment of Arbitrator was not valid.
4. The appellant has taken a stand before the District Judge, Kanpur Nagar that in spite of request made by appellant, the respondent did not appoint any Arbitrator. The appellant appointed Sri Indra Pal Singh Chauhan, Advocate as Arbitrator which was perfectly valid. The award was given by the Arbitrator which was challenged by the respondent under section 34 of the Arbitration and Conciliation Act of 1996. The challenge made by respondent was sustained and consequently, the award was set aside.
5. The brief facts, as per the General Manager Bharat Sanchar Nigam Ltd. (G.M.T.D.) Kanpur Nagar, Kanpur - respondent, are as follows :-
Sri Indra Pal Singh Chauhan, Advocate passed an award on 27.10.2001 in Arbitration Case No. 1 of 2001 (Sri Niwas Agarwal Vs. General Manager B.S.N.L. ). The respondent -G.M.T.D. came to learn about the award through execution Case No. 27 of 2006. The Arbitrator was requested to provide a certified copy of the award but the same was not provided. Ultimately, a notice by registered post was given on September 7, 2006, but no certified copy of the award was provided. G.M. B.S.N.L.has challenged the authority of Sri Indra Pal Singh Chauhan, Advocate to act as an Arbitrator. He has been appointed ex-parte. The Arbitrator could have been appointed by Chief Justice. As per the condition No.28, the dispute could be referred to the G.M.Telecom, Kanpur Nagar and the right to appoint an Arbitrator vests in the G.M.Telecom, Kanpur Nagar ( respondent). The Arbitrator did not serve any notice prior to hearing. The authority of the Arbitrator was challenged but the respondent was not given any opportunity of hearing. The Arbitrator did not follow the legal procedure. On 23.8.1997, a notice was given to the appellant regarding appointment of Sri R.R.Man Singh Advocate as an Arbitrator. Thereafter in October 1997 an information was transmitted to the respondent about appointment of Sri Yatindra Shukla as Arbitrator. Subsequently, in 1999, the appellant moved an application under Section 8 of the Arbitration Act, 1940 for appointment of Arbitrator, which was registered as Misc. Case No. 23/77 of 1999. That case was dismissed on 16.5.1999. As such the appellant had no right to appoint an Arbitrator on his own accord.
6. Being aggrieved by the impugned order dated 13.7.2015, the instant First Appeal From Order is before this Court.
7. The learned Court below has reproduced the relevant part of Arbitration Clause regarding resolution of dispute between the parties through an Arbitrator.
"All disputes, differences and questions arising out of incidental to this agreement or in any way touching or concerning this agreement or the subject matter thereof of the reparative rights, duties or liabilities of the parties under or in respect of this agreement (Except the decision where of is herein before otherwise expressly provided for ) shall be referred to the sole arbitration of G.M.Telecom, Kanpur or any person nominated by him or in case his designation is changed or his office is abolished, to the sole arbitration of any person appointed by the officer who for the time being is entrusted whether or not in addition to other function with the function of G.M. Telecom, Kanpur by whatsoever such officers may be called thereinafter referred to as " the said officer."
8. It has been submitted by learned counsel for the appellant that arbitration proceedings in the case would be governed by the Arbitration Act, 1940, as such, learned District Judge has erred by invoking the provisions of Section 34 of the Arbitration and Conciliation Act, 1996. Further submission is that the Arbitrator in the instant case was appointed in accordance with Section 9(b) of the Arbitration Act, 1940. Learned counsel for the appellant has placed reliance upon the proposition of law laid down by the Apex Court in Kaikara Construction Co.Vs. State of Kerala and others 2014 (4) A.W.C.4843 (S.C.). In the instant case, the controversy revolves around the legality of the appointment of Arbitrator.
9. For better appreciation of the validity of the appointment of Arbitrator, we feel it necessary to reproduce Section 9 of the Arbitration Act, 1940.
9.Power to party to appoint new arbitrator or in certain cases, a sole arbitrator- Where an arbitration 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,-
(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place;
(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days- after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an. arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent:
Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit.
Explanation.- The fact that an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of section 8 and this section.
10. The Section 9 of the Arbitration Act, 1940 applies in a case where the Arbitration clause contemplates for resolution of dispute in terms of Arbitral Agreement by Arbitral Tribunal. Here in the instant case, the Arbitration agreement contemplates for the appointment of sole Arbitrator. Hence we are of the considered opinion that Section 9 (b) of the Arbitration Act, 1940 is not attracted in the fact of this case and the appointment of the sole Arbitrator cannot, as such, cannot be sustained in the light of legislative mandate contained under section 9 (b) of the Arbitration Act, 1940.
11. The submission of the learned counsel for the appellant that the proposition of law in 2014 (4) A.W.C.4843 (S.C.) (Supra) is attracted in the case is contrary to the submission that it is a law laid down with reference to Arbitration and Conciliation Act, 1996 and more so for the obvious reason that the facts of the case law cited are entirely different. It is the settled proposition of law that any proposition of law laid down by the Apex Court is applicable in subsequent cases where the fact of the case law and the case in hand have fair resemblance. In view of the fact and circumstances , we are of the considered opinion that the proposition of law (Supra) is not attracted in the fact and circumstances of the case.
12. It has been submitted by learned counsel for the appellant that Arbitral agreement provided that the Indian Arbitration Act, 1940 shall be applicable to the arbitration proceedings. The submission of learned counsel for the appellant that learned court below has erred in invoking the section 34 of the Arbitration and Conciliation Act, 1996, it is the settled proposition of law that this agreement, which is the basis for redressal of the grievance arising out of the contract would be vital for deciding the applicability of law at the relevant time the agreement was entered into between the parties. The agreement is dated 14.1.1992, hence the law contained in Arbitration Act 1940 would govern the procedure for redressal of grievances of the parties by the Arbitrator.
13. The ground taken by the appellant in the memo of appeal that the notice was given to the respondent to appoint an Arbitrator though the appellant did not receive the response. He appointed the sole Arbitrator. Hence the appointment was perfectly legal and the award made by Sri Indra Pal Singh Chauhan, the sole Arbitrator was valid in law.
14. Chapter III of the Arbitration Act, 1940 deals with the arbitration with intervention of a Court where there is no suit pending.
Section 20 of the Arbitration Act, 1940 is reproduced hereunder :-
Section 20. Application to file in Court arbitration agreement.
(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.
(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court.
(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.
15. In view of Section 20, the phraseology used by the legislature is explicit. The appellant had an option of taking recourse to Section 20 wherein sub clause (4) deals with power of the Court for the appointment of Arbitrator. No recourse to section 20 of the Act has been taken by the appellant. The fact that in 1999 the intervention of the Court was sought by way of filing Misc. Case No. 23/77 of 1999 under section 8 of the Arbitration Act of 1940, this fact has not been disputed in the present F.A.F.O. which finds mention in the order. Even if the fact that the appellant requested the respondent to appoint Arbitrator is in terms of Arbitral Agreement which was not acceded by the respondent, the appellant was expected to take recourse to Section 20 of the Act for the appointment of the Arbitrator with the intervention of the Court which has not been done.
16. It is evident that the appointment of Arbitrator was not made in accordance with law, as such, the award given by Arbitrator is vitiated in law or has no validity in the eyes of law.
17. In view of the discussions made above, we are of the considered opinion that the Arbitrator was not appointed in accordance with law and the award cannot be held to be a valid and legal award and, as such, it cannot be given effect to.
18. Thus, the appeal is bereft of merit and is, accordingly, dismissed.
Dated : February 22nd, 2016.
Su