FLEXI PACK Vs. MODERN FOOD INDUSTRIES I LIMITED

JUDGEMENT

(1.) M/s. Flexipacks, petitioner contracted to supply 129 MT of double colour waxed wrapper on conversion basis to M/s.Modern Food Industries (India) Ltd., respondent, as per the order dated 16.8.84. The tender conditions which formed part of the order and also the order contained an arbitration clause. Disputes arose between the parties with respect to the performance of the contract and the petitioner, therefore, through a notice dated 3.8.87 called upon the respondent to appoint an arbitrator to resolve the disputes. By the reply dated 20.10.87, respondent informed the petitioner about the appointment of Mahesh C.Jain as arbitrator. Dissatisfied with that appointment, petitioner filed Arb.O.P.No. 23/88 under Section 8(1)(a) of the Arbitration Act before the Principal Sub Judge at Kollam in February 1988 which was consted by the respondent. By the order dated 30th May, 1990, aforesaid petition was allowed and K.P.Veeran (Retired General Manager of the respondent) was appointed as arbitrator to settle the claim and counter claim of the parties. Respondent filed C.R.P.No. 2285/90-F against the said order dated 30th May, 1990. By an order dated 13th December, 1991 revision petition was allowed by the High Court of Kerela at Ernakulam holding that since the arbitration agreement entered into between the parties names the sole arbitrator, the petitioner cannot invoke Section 8 of the Act and the petition was not legally maintainable. In the meantime, Mahesh C.Jain entered upon the reference and made and published the award on 5.12.88 as under:- @SUBPARA = "The claim, if any, of the Claimant's firm against the aforesaid purchase order is hereby dismissed as no appearance has been made by them and no claim has been filed by the claimant firm, i.e. M/s.Flexipacks, Quilon." Aforesaid arbitrator filed the award in this Court on 27.3.90. In response to the notice of the filing of the award, the petitioner filed objections (IA No.5479/90) under Sections 30 & 33 of the Arbitration Act which have been contested by filing reply by the respondent. On 3.4.91 following issues were framed :- @SUBPARA = 1. Whether the award is liable to be set aside on the objections raised in the objection petition? @SUBPARA = 2. Relief.

(2.) By an order dated 3.4.91, the arbitration proceedings were ordered to be read in evidence and the matter decided on affidavits.

(3.) The first contention advanced by the learned counsel for the petitioner-objector was that the Mahesh C.Jain was virtually forced to work as arbitrator against his wish and the award given by him is, therefore, ab initio void. Strong reliance was placed on Paramjit Singh vs. State of Himachal Pradesh AIR 1979 HP 17. In this decision, award dated 20.11.74 given by M.L.Bansal, Superintending Engineer, 3rd Circle, Himachal Pradesh Public Works Department, Solan was set aside by Himachal Pradesh High Court. In para No.8 on page 18 of the report which is relevant, it was held thus :- @SUBPARA = "It is one of the cardinal principles of all judicial and quasi-judicial proceedings that the Judge or the Arbitrator concerned cannot be compelled to work as such. If one is so compelled, against his wish, then the decision given by him would obviously not remain the decision of a free agent. This principle is accepted by S.8(1)(b) of the Arbitration Act which says that if any appointed Arbitrator neglects or refuses to act or is incapable of acting, or dies and the arbitration agreement does not show that it was intended that the vacancy should be supplied, and the parties or the Arbitrator, as the case may be, do not supply the vacancy, any party may serve the other parties or the Arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy. This section, therefore, gives a statutory recognition to the principle that no Arbitrator can be compelled to work in face of his refusal to act as an Arbitrator. @SUBPARA = "The principle is recognised by several decisions, the earliest of which is Allahabad decision in Shibcharan v. Ratiram reported in (1885) ILR 7 All 20. It was held in that case that where several matters were referred to Arbitrators who refused to act and the court of the first instance passed an order directing them to proceed and to make award and they on the passing of such order made the award, all the proceedings taken by the Arbitrators in obedience to the order of the court directing them to arbitrate against their will would be null and void. The same view is expressed by that High Court in the subsequent case of Basdeo Mal v. Kanhaiya Lal reported in AIR 1921 All 361, wherein it is observed that it is one of the essential principles of law of arbitration that the adjudication of disputes by arbitration should be the result of the free consent of the Arbitrator to undertake the duties of arbitrating between the contending parties who have agreed to repose confidence in his judgment. This view is reiterated in the Lahore decision in Lal Khan vs. Kashmere Lal reported in AIR 1980 Lah. 125."