HARBANS SINGH Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is an application to supersede an arbitration agreement, to revoke the authority of the arbitrator and to vacate an order for stay of the suit instituted by the plaintiff in this court. The plaintiff is a contractor who did certain construction works at Sindri. In terms of the contract the petitioner furnished security deposit for the sum of Rs. 5,000/-. A suit was instituted by the contractor against the Union of India in the court to recover the security deposit. By an order dated September 8, 1954 the suit was stayed under Section 34 of the Indian Arbitration Act. Thereafter, the Government referred the disputes to the arbitration of Sri O. P. Mittal under the arbitration clause in the contract and the petitioner was informed of this reference sometime at the end of May 1955. It appears that the petitioner took considerable time and only filed his State-of-Facts on February 10, 1959. The Government filed its Counter-State-of-Facts on May 5, 1959. The date fixed by the arbitrator for hearing was August 12, 1959. It was pointed out in the said sitting by the petitioner's advocate Sri A. N. Mitter that the time to make the award had expired and the case could only be proceeded with when the extension of time had been obtained from a competent court. Sri A. N. Mitter promised that he would send the contractor's consent for extension of time to be obtained from the Calcutta High Court within a week after the receipt of which the Government will apply and obtain the necessary extension of time. It was pointed out however by Sri Gajaria, Standing Counsel, for the C. P. W. D. New Delhi, that the Dhanbad Court had granted an extension of time till December 1958. Though repeatedly called upon, Sri Mitter did not send his client's consent for extension of time as promised. On September 14, 1969 the Government made another ex parte application" for extension of time in the Dhanbad Court which was granted and the time to make the award was extended till January 3, 1961. The present notice was taken Out on December 17, 1960.

(2.) IT is alleged in the petition that the time for making the award having expired, the arbitrator has become functus officio, that the ex parte order for extension of time obtained from the Dhanbad Court is bad on the ground that the Dhanbad Court had no jurisdiction and that the petitioner was guilty of interminable delay. On the basis of these averments the present application has been made. All allegations made against the Government have however been denied in the affidavit-in-opposition filed on behalf of the Government by Sri Bhatia, Executive Engineer, Dhanbad. IT is alleged that the application for extension of time was made in the Dhanbad Court according to the usual practice, and that the construction works having been done at Dhanbad the Dhanbad Court had jurisdiction in the matter. IT is further alleged that the reference made by the Government to Sri O. P. Mittal is an independent proceeding altogether having nothing to do with the stay order under Section 34. IT is pleaded that if there is delay in the matter of the arbitration it is due to acts of omission and commission 6n the part of the contractor. In that view of the matter the contractor is not entitled to make any grievance that there is delay in the arbitration proceedings.

(3.) IT is important to keep in mind that while both Section 31 and Section 34 of the Act were enacted to avoid conflict and scramble, the nature of conflict and scramble intended to be avoided are different in the two sections. Section 34 was intended to avoid conflict between the public tribunal and the private tribunal intended to be set up by the arbitration agreement. The section provides that in case where parties have agreed to adjudication of disputes by a private tribunal, the dispute cannot be adjudged by a public tribunal. Conflict is resolved by providing for stay of the suit under Section 34. After the suit is stayed there cannot conceivably be any conflict. IT is true that the suit is not altogether killed by the stay order, it is only kept in a state of suspended animation a"d can be brought to life, if for instance, the arbitration is superseded and/or fails. But so long as the stay order is operative there could not be any conflict. The conflict intended to be avoided by Section 31, is the conflict between different Courts in respect to arbitration proceedings pursuant to a reference. Only one Court will be entitled to control arbitration proceedings in any reference. That is why it is provided that the Court in which the first application under the Act is made in the reference will have exclusive control over the subject-matter, namely, the arbitration proceedings. Two conditions must be fulfilled to give the Court exclusive jurisdiction under Section 31(4) of the Act. First, an application must be made in the Court under the Arbitration Act and second that the application must be made 'in any reference'. Application under Section 34 is no doubt an application under the Arbitration Act. But is such an application an application 'in the reference? That is the question to be answered. The Supreme Court has held that the phrase 'in any reference' means 'in any matter of a reference' and that the phrase covers an application not merely during the pendency of the reference but also before the reference has taken place. There are different sections in the Arbitration Act whereby an application is to be made even before any reference has been made. Section 8 for instance provides for an application to invoke, the power of the Court, when the parties fail to concur in the appointment of an arbitrator to whom the reference can be made. So also Section 20 provides for an application to file the arbitration agreement in Court so that an order of reference to an arbitrator can be made. These are clearly applications anterior to the reference but they lead to a reference. Such applications are undoubtedly applications "in the matter of a reference". These applications, in my judgment, are well within Section 31(4) of the Act, even though these applications are made before any reference has taken place. These are the applications which My Lords of the Supreme Court had in view when making the observation above quoted. An application under Section 34 is clearly not an application belonging to the same category. IT has nothing to do with any reference. IT is only intended to make the arbitration agreement effective and prevent a party from going to Court contrary to his own agreement that the dispute is to be adjudicated by a private tribunal. No order for reference can be made in an application under Section 34 of the Arbitration Act, nor does the order for stay lead to a reference. After stay other steps must be taken under the Act so that there may be reference. Such other step is entirely different and has nothing to do with the application for stay tinder Section 34 which is intended to stay the suit simplicitor.