LAKSHMI NARAYAN PADHI Vs. BHASKAR PANDA

JUDGEMENT

(1.) THIS is an appeal under Section 39(1)(vi) of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'). The Appellant and Respondent commenced their partnership business on 1.1.1971 and the deed of partnership was executed on 15.3.1971. Differences having arisen between them, on 15.12.1971 the Appellant filed a petition under Section 20 of the Act which was registered as T.S. No. 187 of 1971. The suit was held to be not maintainable and dismissed on 10.7.1974. Misc. Appeal No. 138 of 1974 filed against, the order of dismissal was allowed by this Court 011 8.12.1975 and the suit was remanded to the learned lower court for fresh disposal. On 22 -6 -1976 the learned lower court passed a preliminary decree and inter alia directed the Respondent to file the original deed of partnership agreement dated 15 -3 -1971 for making a reference to an arbitrator. By order dated 9.11.1977 the learned lower court appointed an arbitrator and made a reference to him under Section 20 of the Act. The Arbitrator filed his award in court on 29.10.1979. The Respondent filed objection against the award on 29.6.1981 which was registered as Misc. Case No. 14/81. By order dated 17 -12 -1982 the proceeding was registered as T.S. No. 576 of 1982. Finally, on 6.1.1983 the learned Subordinate Judge set aside the award and dismissed the suit. This order dated 6.1.1983 is the subject matter or this appeal.

(2.) IN this case the reference to arbitration was under Section 20 of the Act after the arbitration agreement had been filed in court. Courts dealing with arbitration applications should never lose sight of the distinction between Sections (sic) and 20 of the Act. The former section deals with arbitration without intervention of a court and the latter with arbitration with intervention of a court where there is no suit pending. In this context reference may be made to the following two important decisions of the Supreme Court. In The Union of India v. Shri Om Prakash : A.I.R. 1976 S.C. 1745, it was held:

(3.) THE learned lower court has submitted to this Court a true -copy or the reference made by that court to the Arbitrator, vide order No. 157 dated 9.11.1977. On going through the copy it is seen that the order of the court dated 9.11.1977 has been extracted and by Memo No. 13 dated 7 -1 -1978 the said extract of the order has been forwarded to the Arbitrator "for favour of making award". Such reference by the court to the Arbitrator is clearly invalid in view of the provisions contained in Section 20 of the Act as interpreted by the Supreme Court in the decisions referred to above. Further, Rule 19 of the Arbitration Rules made under the Act contained in Chapter IV of the G.R. & C.O. (Civil), Volume -I enjoins that orders of reference under Sections 20(4) and 23(1) of the Act shall be made in form No. (J) 47. This form is given at page 190 of G.R. & C.O. (Civil), Volume -II. In view of the provisions of Section 20(4) of the Act read with Rule 19 of the Arbitration Rules it was duty of the court to first determine the dispute or disputes between the parties and thereafter refer the same to the arbitrator for arbitration.