UNION OF INDIA Vs. MATAHI

JUDGEMENT

(1.) This appeal by the Union of India is against the order of the Subordinate Judge, Ottappalam dated 20-8-1983 in O. S. No. 22 of 1982 appointing Shri. M. Ramachandran, Retired District Judge, Ponnani, as arbitrator and making a reference to him of she dispute between the plaintiff respondent and defendants appellants. The appellants contend that the learned Judge exceeded his power in making a reference to arbitration otherwise than as provided by the parties in their agreement dated 18-6-1979.

(2.) The plaintiff (whom we shall refer to as the contractor) entered into Ext. B1 contract dated 18-6-1979 with the President of India acting through the Deputy Chief Engineer (Construction), Egmore, Madras. (We shall refer to the appellants-defendants as the Railway). Differences arose between the contractor and the Railway on account of non payment of the contractor's claim dated 22-2-1981 (Ext. B2). Ext. B3 dated 11-5-1981 was sent by the contractor to the Railway requesting for immediate settlement of the outstanding bills. By Ext. B4 dated 10-11-1981 the contractor requested the Railway to furnish a panel of names to nominate arbitrators in terms of Clause.63 of the agreement. This clause prescribes the mode of appointing the arbitrators. Since the Railway did not comply with the request of the contractor, he filed an application before the Sub Court, Ottappalam under S.20 of the Arbitration Act, 1940. Both sides were heard by the court and it pronounced judgment on 14-6-1983 ordering the Railway to file the arbitration agreement between the parties and also directing the Railway to furnish a panel containing the names of persons for the contractor to make his nomination in accordance with the provisions of Clause.63 of the agreement. On 29-6-1983 the Railway filed a panel containing four names of its officers On 30-6-1983 the contractor filed his objections stating that the persons included in the panel were unknown to the contractor and that they did not inspire confidence ia his mind about their impartiality. The court, accepting the objections, passed the impugned order appointing Shri. M. Ramachandran as the arbitrator.

(3.) Counsel for the Railway Shri. M. C. Cherian submits that, where the parties had agreed to the mode of appointment of the arbitrators, the court had no power to act otherwise than in accordance with such agreement, particularly when the designating authority specified under the agreement promptly complied with the direction of the court to furnish a panel in accordance with the agreement. Counsel submits that to appoint an arbitrator otherwise than in accordance with the agreement is to refuse to file an arbitration agreement thereby making the impugned order an order within the scope of S.39(l)(iv). Counsel relies on the decisions in Union of India v. At. 3. Grewel and Co., AIR 1968 Cal. 333 and Controller of Stores v. K. T. Agencies, AIR1975 P & H 321. Counsel further submits that S.20(4) postulates that where there was an agreement between the parties designating an arbitrator or a person entitled to nominate an arbitrator, the only function of the court after ordering the agreement to be filed is to make a ministerial order of reference to the arbitrator so designated or nominated. The court in ignoring such contractual provisions acted in excess of and without jurisdiction.