9911796707
TMI Blog1982 (3) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 and 33 of the Arbitration Act and the application of the respondent was registered as Misc. Case No. 240/80. It was alleged that the appellant did not transport the entire quantity of timber and did not perform any work in some coupes. Therefore, the Divisional Manager got the work done with the help of other contractors. Without raising any dispute, the appellant filed an application under Section 20 of the Arbitration Act for appointment of arbitrator. With fraudulent design, the appellant impleaded the Divisional Manager representing the Orissa Forest Corporation, though the Divisional Manager had no authority to represent the corporation in legal matters. No notice was served on the corporation or any other principal officer of the corporation. By practising fraud on the court, the appellant got Shri Rao appointed as arbitrator, who is a retained lawyer and the legal adviser of the appellant. It was further pleaded that according to the arbitration clause, any dispute arising shall be decided on the sole arbitration of the Chairman of the Corporation, or the Managing Director, or the Chief Executive Marketing, as may be nominated by the Chairman. In case the said Chairm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the arbitrator lacked initial jurisdiction. The appointment under Section 20 was void and the arbitrator had misconducted himself as he had not issued proper notice to the respondent expressing his intention to proceed ex parte. 4. The following facts are not disputed. An agreement was entered into by the parties on 11-8-1978. On 28-3-1979 the appellant filed a petition for appointment of arbitrator and the said petition was registered as O. S. No. 41/79. Service of notice on the present respondent was held to be sufficient on 19-8-1979. On 3-9-1979, an application was sent by the Divisional Manager of the respondent to adjourn the suit and the suit was adjourned to 26-11-1979 when ex parte order was passed, directing filing of the agreement and the decree was drawn up in the next month. On 27-11-1979 notice was served on the Divisional Manager to appear on 10-12-1979 and to produce the document. On 10-12-1979, Shri S. Hanu-manta Rao, Advocate was appointed as the arbitrator. The arbitrator issued notice on 27-12-1979 to both parties to file their statements. The notice was received by the Divisional Manager on 29-12-1979. On 7-1-1980 a letter was sent by the Divisional Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrator are reasonable, and due notice has been given to the parties, but one of the parties refuses to at-tend, the arbitrator may proceed with the reference in his absence. Where the arbitrator proposes to proceed with the reference notwithstanding the absence of one of the parties, it is advisable that he should give that party distinct notice of his intention to do so (See Halsbury's Laws of England, Fourth Edition, Vol. 2, 306 para 590). The question came up before a Division Bench of the Calcutta High Court in Udaichand Panna Lall v. Debibux Jewanram, AIR 1920 Cal 853. Sir Asutosh Mukherjee, J. held that there is no statutory rule however that if an arbitrator proceeds ex parte without giving notice of his intention to proceed in that manner, the award made by him must be set aside. In the absence of such an inflexible statutory provision, the question of notice is a rule of prudence and convenience. If either party, after the arbitrator has given him sufficient notice and proper opportunities of attending, will not appear, the arbitrator may proceed in his absence. The true test is, has the complainant, who takes exception to the validity of the award, been in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts were recorded and award was to be passed. This would show that there was no prejudice to the respondent. The case reported in AIR 1920 Cal 853 (supra) has been followed by the Calcutta High Court in Bhowanidas Ram Govind v. Harsukhdas Balkishandas; Premchand Manickchand v. Fort Gloster Jute Manufacturing Co. Ltd. and Dipti Bikash Sen v. India Automobiles. The Allahabad High Court also in Dori Lal v. Lal Sheo, has followed the principles laid down in AIR 1920 Cal 853. A Division Bench of this Court in V. Gurumurty Raju v. V. Narasimha Raju has also held that if reasonable and substantial principle has been complied, then that will amount to compliance of the principles of natural justice. Even, verbal information is sufficient. To the same effect are also two decisions of the Sind High Court. In Grahams Trading Co. v. Chandulal Parmanand AIR 1935 Sind 228, it has been held that if there was no intention of a party to appear in spite of notice, there would be no prejudice if an ex parte award was passed against such an recalcitrant party. So also in Thadomal v. Menghraj AIR 1930 Sind 190, it has been held that when actual knowledge of notice is there and there is non-appearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at that time. The facts and circumstances of that case are different. This principle was again followed in Smt. Dulari Devi v. Rajendra Prakash. But I have already held that these decisions are not contrary to the principles laid down in AIR 1920 Cal 853 and the facts and circumstances were different, 6. The next question is whether the reference to the arbitrator was without jurisdiction and whether the proceeding before the arbitrator was without jurisdiction. Clause 20 of the agreement runs as follows:-- 20. If any dispute arises regarding any matter arising out of or incidental to this agreement or regarding interpretation of any clause or term of this agreement, the matter shall be decided on the sole arbitration of the Chairman of the Corporation or the Managing Director or the Chief Executive Marketing as may be nominated by the Chairman and the provisions of the Indian Arbitration Act, 1940 shall apply. In case the said Chairman or the Managing Director or the Chief Executive Marketing as the case may be is not available or willing to be the arbitrator, this arbitration clause should be ignored and considered nonexistent. In anticipation of relief from arbitrator no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as the present appellant alleged that the arbitrator named in the agreement was unfit to be the arbitrator and this allegation was before the court when he appointed the arbitrator. It has been held in a Division Bench of the Calcutta High Court in Union of India v. M.S. Grewal Co., AIR 1968 Cal 333, that in the absence of any allegation that the arbitrator is unfit, the appointment of another arbitrator amounts to refusing to file the arbitration agreement and if such an order is passed that is appealable. It would appear that in the instant case appeals were filed and were dismissed. It has also been held in Yar Muhammad v. Ghulam Sarwar AIR 1950 Lah 145, that if the arbitrator named in the agreement is found not to be competent for acting as such, it will be presumed that it was intended to supply the vacancy and the parties may themselves agree to another arbitrator being nominated by them, or failing that, by the Court. Unless it is shown that it was intended by the parties that the vacancy shall not be filled up, the agreement will be kept alive and allowed to be filed. There is no ban in the arbitration clause that the parties cannot fill up the vacancy and in absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the application under S. 20 of the Arbitration Act was under consideration that the arbitration clause is not available. The party cannot be allowed to say this afterwards to frustrate the entire proceeding. It was open to the respondent to state at that stage that the persons named in Clause 20 of the agreement are (not) willing and (not) available and that the arbitration clause is nonexistent. 9. It is contended by the respondent that there was no proper notice on the respondent. The notice that was served on the Divisional Manager is not sufficient notice. The learned Subordinate Judge has negatived this contention. I entirely agree with the reasoning given by the learned Subordinate Judge. It has also been held in - AIR 1979 Orissa 19 para 7 (referred to above) that such notice is also sufficient. In the instant case, the Divisional Manager is the person who admittedly signed the agreement. Notices have been received by the Divisional Manager. He has also intimated the court that the respondent was not willing for the appointment of Shri S.H. Rao as the arbitrator. The very same points were also urged in the Miscellaneous Appeal as well as in the petition under Order 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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