FRANCIS PERRY Vs. SAMUEL JOHNSON

JUDGEMENT

(1.) PETITIONER was the defendant in O.S. No. 3865/2012. Respondent -plaintiff in the said suit sought for a direction to the defendant to pay a sum of Rs. 90,00,000/ -. Defendant on service of suit summons, appeared, filed the written statement and contested the matter. He also filed an application under Order VII Rule 11(d) read with Section 151 of CPC for rejection of plaint for want of jurisdiction. Trial Court by the order dated 13.11.2013, allowed the application filed under Order VII Rule 11(d) read with Section 151 of CPC, which order itself is palpably erroneous and contrary to law. Be that as it may, trial Court having allowed said application, has referred the matter to arbitration under the same order. Thereafter, none of the parties pursued their grievance and plaintiff after waking up from his slumber, filed an application under Section 151 CPC vide Annexure -F, requesting the Court which had referred the matter to arbitration to refer the dispute to the arbitrator whose name was indicated in the application namely, a retired District Judge. Said application came to be allowed by the order dated 19.11.2014 which is now impugned in the present writ petition.

(2.) IT is the contention of Shri Naik Ramachandra Rama that the impugned order is contrary to Section 11(2) of the Arbitration & Conciliation Act, 1996 and application which was filed by the plaintiff was not served on the petitioner and as such, name suggested by the plaintiff as Arbitrator could not have been appointed as Arbitrator without consulting the writ petitioner. Hence, on this ground, impugned order is assailed in the present writ petition.

(3.) HAVING heard the learned Advocates appearing for the parties and on perusal of records, this Court is of the considered view that very order passed by the trial Court dated 13.11.2013 appointing the Arbitrator under Order VII Rule 11(d) requires to be noticed as erroneous and without application of mind inasmuch as power available to the Court under Order VII Rule 11(d) is to reject the plaint on the ground that statement made in the plaint appears to be barred by law. A bare reading of said order at Annexure -E does not even remotely suggest that trial Court had come to conclusion that averments/statements made in the plaint are expressly barred by any law. Be that as it may, none of the parties to the lis have assailed said order and it has reached finality. In the very same order, Arbitrator has also been appointed obviously after noticing that parties had entered into an agreement dated 5.11.2009 which contained an arbitration clause vide clause -6 and trial Court instead of permitting the defendant to invoke Section 8 of the Arbitration and Conciliation Act, 1996 has exercised powers under Order 7 Rule 11(d) to refer the parties to Arbitration which was not called for. As stated hereinabove and at the cost of repetition, it has to be noticed that parties to the lis have not questioned the said order dated 13.11.2013 and they have accepted the fact that both parties are governed by arbitration agreement. Thus, only course which was left open to the trial Curt was to appoint an Arbitrator pursuant to said order. However, for the reasons best known in the order dated 13.11.2013, such an exercise was not undertaken by trial court. It is thereafter, plaintiff filed an application under Section 151 CPC to appoint Shri Kukkaje Ramakrishna Bhat, retired District Judge as Arbitrator under Section 11(4) of the Act and trial court has appointed said person as Sole Arbitrator. A bare reading of Sub -Section (2) of Section 11 of the Act would indicate that parties are free to agree as to procedure for appointing the Arbitrator/s, subject to Sub -Section (6). Sub -Section (6) of Section 11 indicates where parties having agreed on appointment procedure, fails to act as required under that procedure, or the two (2) appointed Arbitrators or their parties fail to reach an agreement agreed to by them under that procedure or a person including an institution fails to perform any function entrusted, then in such an event a party may request the Chief Justice or his designate to take necessary measure. Sub -Section (3) indicates that parties failing to arrive at an agreement with regard to appointment of an Arbitrator as referred to in Sub -Section (2) then, each party will have to appoint one arbitrator and third arbitrator will be appointed by these two (2) arbitrators and he will act as the Presiding Arbitrator. In the event of appointment procedure prescribed in Sub -Section (3) applies and such party fails to appoint an arbitrator within 30 days from the receipt of a request from other party or two (2) appointed arbitrators fail to agree on third 3rd arbitrator within 30 days of their appointment then appointment would be made upon request of a party by the Chief Justice or his designate. Thus, it would emerge from reading of these provisions that if Sub -Section (3) apply, then only Sub -Section (4) would come into play and in such an eventuality, where the parties fail to appoint an Arbitrator within 30 days from the date of receipt of request, Hon'ble Chief Justice or any person or Institution designated by him would be empowered to appoint the Arbitrator.