SAILABALA BISWAL Vs. AKSHAYA KUMAR ROUTRAY

JUDGEMENT

(1.) DEFENDANTS are appellants against an order directing appointment of two arbitrators for disposal of the disputes to be referred to them by the Court who will choose an umpire, on a petition filed under Section 20 (1) of the Arbitration Act.

(2.) THE case of the plaintiff is that in 1974 he submitted a scheme to the Small Industries Service Institute and the Director of Fisheries. THE plaintiff was the sole proprietor of the scheme THE scheme was approved and was registered by the Director of Industries. THE plaintiff thereafter applied to the Orissa State Financial Corporation for sanction of loan. THE State Financial Corporation suggested that a partnership firm should be formed for the purpose oil sanction of the loan. A partnership firm was constituted with the plaintiff and the defendants as partners the plaintiff having 51% share; defendant No. 1 having 31% and defendant No. 2 having 19% (18%?) share in the firm. THE defendants are very close relations of the plaintiff and they were taken as partners at their own request. THE firm was also registered. Towards the end of July, 1978, the plaintiff fell ill and he entrusted the work of production and sale of the ice-blocks to defendants on 1-8-1978 for two months and directed them to pay him the sale proceeds. On 25-9-1978 the plaintiff demanded payment of the sale proceeds lying with the defendants. But the latter though promised to pay the same within 2/3 days, in fact, did not pay the same. On 29-9-1978 the workers of the firm approached the plaintiff alleging that they had been dismissed by the defendants and their husbands. When the plaintiff came to enquire about this, the husband of defendant No. 2 and the defendants hurled a sharp edged knife towards the plaintiff and threatened to kill him. THE defendants with the help of their husbands declined to render any accounts of the sale proceeds; they dismissed the workers of the firm without any authority and wanted to oust the plaintiff from the firm. THErefore, the plaintiff issued a notice to the defendants on 27-5-1979 to show cause why they should not be expelled from the partnership firm. THE plaintiff also issued a notice to the defendants requesting them to refer the disputes arising between them for disposal by arbitrators and to name one of the arbitrators for the purpose. THE defendants then sent a reply stating that there was no dispute among them and, as such, there was no necessity to refer any matter to arbitrators. Hence, the suit.

(3.) THE appellants contend that the agreement was unworkable. It is well settled that reference cannot be made on an agreement which is invalid. An invalid agreement is an agreement which is void ab initio, i.e. that the agreement was against public policy or is against any provision of law, or is tainted with fraud, misrepresentation or coercion. I have already held that the appellants have not taken the stand of fraud, misrepresentation or coercion in their objection filed in the trial court. In view of such circumstances, the conclusion should be that the agreement is not invalid. It is further contended that the term of appointment of the arbitrators is also confusing. THE term in the agreement (Ext. 2) about the appointment of arbitrators can be covered under Section 10 of the Arbitration Act, THEre are two parties in this case - plaintiff is one party and both the defendants are one party. Both the parties have also fought out this litigation on that stand. THEir case in the trial court as well as in the agreement is that the plaintiff is one party and the defendants are the other party. In view of this position, no prejudice is caused to the defendants at all, inasmuch as they have been constantly taking this stand. According to Section 10, if two arbitrators are appointed, both the arbitrators can appoint one umpire and the decision can be given by them. THE trial court has also based his order according to the terms of Section 10 of the Arbitration Act. In view of this position, I, do not find anything wrong in the decision of the trial court.