MATHAI AND ORS. Vs. MANI

JUDGEMENT

(1.) THIS civil revision petition was referred to a Division Bench for decision by one of us, and it arises from an order passed by the lower court under Section 8 of the Indian Arbitration Act. The respondent, who was the petitioner in the court below filed an application praying that an arbitrator may be appointed for deciding the six matters mentioned in the application. There were five counter - petitioners to the application. The petitioner in the court below and the counter -petitioners there, have entered in to a partnership under an agreement dated 1 - -12 - -1961 for running a business in engineering contracts and supplies. According to the terms of the agreement the works of contract undertaken by the partnership have to be properly executed and accounts maintained and the profit and loss of every year to be taken after submission of accounts for auditing to the auditors approved by the partners. The parties got on amicably for some time, but subsequently differences arose among them. Alleging that counter -petitioners 2 to 5 are only the nominees of the 1st counter -petitioner, that the 1st counter petitioner is managing the partnership affairs without consulting the petitioner, and that the 1st counter -petitioner has diverted the funds of the partnership unauthorisedly to other purposes without consulting the petitioner, the petitioner sent a registered notice on 14 - -7 - -63 expressing his intention to retire from the partnership after the expiry of three months in accordance with the provisions contained in the deed of partnership and requesting the 1st counter -petitioner to concur in the appointment of an arbitrator to decide the matters in dispute between the parties. As there was no agreement among the partners with regard to the nomination of an arbitrator, the petitioner filed the petition for the appointment of an arbitrator to decide these matters. The petition was opposed by the counter -petitioners. Their case was that the business of the partnership was being carried on by the 1st counter -petitioner in consultation with the petitioner, that the funds of the partnership have not been diverted for other purposes, that the 1st counter -petitioner has intimated that there was no objection for the appointment of an arbitrator to settle the disputes which may arise in the course of the winding up of the partnership, that the counter -petitioners 3 and 4 have sent similar notices, that Section 8 of the Act was not applicable, and that the majority of the partners have nominated an arbitrator in accordance with the provisions of the partnership deed. Clause (17) of the partnership agreement provides:

(2.) IT is unnecessary in the circumstances of this case to consider the other points in dispute between the parties in the view which we are taking about the applicability of Section 8 (1) (a) to the facts of this case. Section 8 of the Arbitration Act reads as follows:

(3.) THESE rulings, in our opinion, would show that Section 8 (1) (a) can apply only to a case where the parties agreed to refer the matter to an arbitrator without mentioning the name of the arbitrator or the method of appointing him. In such a case the appointment can only be made with the concurrence of ail the parties and if there is no concurrence among the parties, the court is given the power to appoint one. Mr. Krishnamurthy Iyer, appearing for the respondent, has brought to our attention the ruling reported in Union of India v. D. P. Singh ( : A.I.R. 1961 Pat 228) in support of his contention that Section 8 (1) (a) will apply to the case in hand. There the arbitration agreement provided that the difference between the parties shall be settled by an arbitrator to be nominated by the General Manager of the Northern Railway. The General Manager in spite of receiving the notice to appoint an arbitrator did not take any steps for appointing him. The opposite party thereupon filed an application under Section 8 of the Act for appointment of an arbitrator by the court and for referring the matter in dispute to his arbitration. The court held that Section 8 (1) (a) applied to the facts of the case and 'appointed an arbitrator. We are unable to agree with the reasoning given by the learned Judge for applying Section 8 (1) (a) to the facts of that case. The only reason given by the learned Judge for coming to the conclusion that Section 8 (1) (a) applied is that by the agreement of submission it was provided for the appointment of the arbitrator by the General Manager, Northern Railway, and that his decision would be final, conclusive and binding on the parties. The learned Judge observed at page 230 as follows: