CENTRAL WAREHOUSING CORPORATION Vs. P GUNASEKARAN

JUDGEMENT

(1.) This civil revision petition has been preferred against the order passed by the Court below allowing an application in O.P. No. 62 of 1980 (Principal Sub Court, Madurai) filed by the first respondent herein under section 31 of the Arbitration Act praying that the reference made by the petitioner to the second respondent for arbitration is not valid in law and the second res-pendent is, therefore, not entitled to proceed with the arbitration proceedings. The circumstances giving rise to the civil revision petition are as under: On 17th January, 1974, the first respondent entered into a contract with the petitioner at Madurai town for doing the work of handling and transport of food grains, fertilizers etc., or a period of one year. On the expiry of the period, the petitioner renewed the contract in favour of the first respondent for one more year but the first respondent declined to continue to do the work for the extended period stating that he did not want any further extension. However, the petitioner maintained that it bad the option to extend the period and that during the course of such extended period, the first respondent must continue to do the work as per the rates fixed in the agreement. Ultimately, the first respondent refused to do the work within the extended period with the result that the petitioner was obliged to employ some other contractors for completing the work in respect of which the petitioner claimed to have incurred an expenditure of nearly Rs. 88,837.66. In the agreement entered into on 17th January, 1974, between the first respondent and the petitioner, provision was made for decision of disputes by reference to arbitration and clause (20) of the agreement was incorporated for this purpose. A dispute with reference to the work of handling and transport of food-grains and fertilizers and for the recovery of a sum of Rs. 88,837.66 having arisen for the extended period between the first respondent and the petitioner, the petitioner appointed one K.L.N. Rao, as the arbitrator for the purpose of deciding the dispute. The appointment was questioned by the first respondent herein by the institution of a suit in O.S.No. 1428 of 1978 (District Munsif's Court, Madurai Town) and the suit was ultimately dismissed. The arbit-rator so appointed commenced the proceedings on 19th January, 1977. Since the period fixed for submitting the award expired, the petitioner secured extension of time periodically and finally in O.P.No. 221 of 1978, time was extended upto 28th September, 1979 for the submission of the award, Meanwhile, there was a change in the arbitrator and the second respondent sent a notice to the first respondent to the effect that he had been appointed as an arbitrator and that the enquiry will be held in Madurai on a specified date. The first respondent sent a reply stating that the time granted by the Court had already expired and in view of that, the arbitrator was not competent to make a further enquiry in the matter. It appears that the second respondent had sent a telegram subsequently to the first respondent stating that he was proceeding with,the enquiry and if the first respondent did not participate therein, an ex parte award would be passed. Thereupon, the first respondent again instituted O.S. No. 11 of 1980, District Munsif's Court, Madurai, for a permanent injunction restraining the second respondent from making enquiry in the matter either on the date fixed or on any other adjourned date. But that suit was finally dismissed on the ground that the District Munsifï 1/2 s Court had no jurisdiction to entertain the suit. It is thereafter the first respondent filed O.P. No. 62 of 1980 purporting to be under section 31 of the Arbitration Act stating that the second respondent had been appointed to continue the arbitration proceedings commenced by his predecessor in Madurai, that be should have submitted his award within the extended time granted by the Sub Court, that he is not entitled to take four months time and further that the petitioner cannot grant further time to the second respondent and that therefore it has become just and necessary to pass an order that the second respondent is not entitled to proceed with the arbitration proceedings.

(2.) In the statement of objections filed by the petitioner and the second respondent, it was stated that the second respondent is a fresh Arbitrator and as such, be would have four months time from the date of bis entering upon his duties to complete the arbitration proceedings and under those circumstances, the objection of the first respondent that the second respondent is not entitled to take four months time or the petitioner cannot grant four months time to conduct the arbitration proceedings is unsustainable. Relying upon the suits instituted by the first respondent, the petitioner as well as the second respondent contended that the first respondent was estopped from questioning the validity of the agreement and the arbitration proceedings thereunder. The locus standi of the first respondent to question the appointment of the second respondent as an arbitrator and his further proceeding with the arbitration was also questioned. The petitioner and the second respondent charged the first respondent with non-co-operation with the arbitrator in the matter of the conduct of the arbitration proceedings with a view to protract the proceedings and gain time so as to cause unnecessary loss and hardship to the petitioner. Under those circumstances, the petitioner prayed that the application filed by the first respondent should be dismissed.

(3.) Before the Court below, on behalf of the first respondent Exhibits A-1 to A-3 were marked and no documents were marked on behalf of the petitioner. No oral evidence was also Jet in on both sides. On a consideration of the rival contentions of the parties, the learned Principal Subordinate Judge found that the second respondent who had taken the place of Sri K.L.N. Rao who was originally appointed as arbitrator cannot be considered to be a new arbitrator but that as per clause (9) of the agreement, the appointment of the second respondent was only in continuation of the proceedings for arbitration earlier commenced by his predecessor. However, the learned Subordinate Judge was of the view that the Court last extended the time in O.P. No. 221 of 1978 upto 28th September, 1979, and since there was a failure to get a further extension of time either with the consent of both parties or by an order of Court, the petitioner and the second respondent were not entitled to proceed further in the arbitration proceedings. In that view, the learned Subordinate Judge concluded that the reference by the petitioner to the second respondent for arbitration was not valid in law and that the second respondent was not entitled to proceed with the arbitration. In the result, O.P-No.62 of 1980 was allowed. It is the correctness of this order that is challenged in this civil revision petition.