1976 (9) TMI 179 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the arbitrator's appointment.
2. Authority of Daljeet Singh to bind the partnership to the arbitration agreement.
3. Waiver of objection to the arbitrator's appointment by participating in arbitration proceedings.

Summary:

1. Validity of the Arbitrator's Appointment:
The primary issue was whether the appointment of the arbitrator by the Secretary, Department of Food in the Ministry of Food & Agriculture, was valid. The High Court had set aside the award on the grounds that the arbitrator was not validly appointed due to the bifurcation of the Ministry of Food and Agriculture into two separate ministries, which rendered the arbitration agreement in clause (17) of the contract "dead and unenforceable." The Supreme Court, however, held that the Secretary in charge of the Department of Food in the Ministry of Food & Agriculture was the appropriate authority to nominate the arbitrator, as he was concerned with the subject matter of the contract. The Court emphasized a commonsense approach to interpreting the contract, stating that the Secretary in charge of the Department of Food filled the description of "Secretary in the Ministry of Food & Agriculture" as intended by the parties.

2. Authority of Daljeet Singh:
The respondents argued that Daljeet Singh, a partner, had no authority to bind the other partners by an arbitration agreement, making clause (17) non-binding. Both the Sub-Judge and the High Court rejected this argument, concluding that Daljeet Singh had the authority to enter into the contract, including the arbitration clause, on behalf of the partnership. The conduct of all partners indicated that Daljeet Singh had the necessary authority.

3. Waiver of Objection:
An alternative argument was presented by the appellant, asserting that the respondents, by participating in the arbitration proceedings without objection, had waived their right to challenge the arbitrator's appointment. The Supreme Court found it unnecessary to address this argument, as it had already determined that the arbitrator was validly appointed.

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's order, and dismissed the application for setting aside the award. A decree was passed in terms of the award, with no order as to costs.