M/S. GURU NANAK TRUNK HOUSE, AMRITSAR Vs. M/S. CHANAN FINANCE AND CHIT FUND (P.) LIMITED, AMRITSAR AND OTHERS

JUDGEMENT

(1.) THIS revision petition arises from the facts which are not disputed. A loan of Rs 2.000/ - was advanced by the firm Respondent No. 1 to the Petitioner, based on Promissory Note (Exhibit P. 7) dated March 24, 1971, executed by the latter in favour of said Respondent. An agreement (Mark 'B') was also executed by the parties on the same day wherein a provision was made for reference of all disputed matters to the arbitration of Shri Kulwant Singh, Managing Director of Respondent No. 1 firm. The amount of loan not having been repaid by the Petitioner, made a request (Exhibit P. 16) to the Arbitrator to enter upon the reference and give his award in accordance with the terms of the agreement referred to above. The Arbitrator made the award on July 25, 1972, affing(sic) liability upon the Petitioner for payment of Rs. 2,252.60 to Respondent No. 1. Thereafter, an application was made by the Arbitrator to the Court under Sections 14/17 of the Indian Arbitration Act for making the award a rule of the Court and passing a decree in terms thereof.

(2.) THE application was resisted by the Petitioner who pleaded, inter alia, that (sic) agreement for a reference to arbitration had been entered into and as such an agreement, as alleged by Respondent No. 1, was the outcome of forgery and misrepresentation. It was also contended that the Arbitrator being the controllin Respondent No. 1 g hand of Respondent No. 1, was not competent so act as such. These objections found their way into the relevant issues framed and adjudicated upon by the trial court. It was held that although the other objections against the validity of the award had not been substantiated, the award was made by the Arbitrator in consequence of a unilateral reference by Respondent No. 1 and the Petitioner not being a party to this reference, the award was invalid and could not be made the rule of the Court. The application filed for this purpose was, therefore, dismissed. The contesting Respondent, however, carried an appeal against the decision of the trial Court and was rewarded with success in the lower appellate Court. The Additional District Judge differed with the trial Court as regards the finding that the reference to the award was unilateral and while accepting the appeal of Respondent No. 1, the said Court made the award dated July 25, 1972, a rule of the Court. It is against this verdict that the present revision petition is directed.

(3.) THE case in hand is to be viewed in the light of above interpretation of law. A perusal of the agreement for reference to arbitration (Mark 'C') would reveal some noteworthy features. The agreement was entered into on March 24, 1971, i.e. on the same day when the loan was advanced. It was clearly stipulated in the agreement that in case of any dispute arising out of or relating to the loan, whether in regard to its repayment, interest, future interest or any other matter pertaining to the transaction, the said dispute shall be referred to the sole arbitration of Shri Kulwant Singh, whose decision shall be final and binding upon the parties It was further agreed that the arbitrator shall be fully entitled to proceed ex parte against any party who fails to appear on the date fixed after the arbitrator has given notice to the parties. This later clause goes a long way to indicate that the parties did not contemplate only a bilateral reference as the arbitrator had been authorised to proceed ex parte against any party not appearing before. In view of these facts, to argue that the reference made by Respondent No. 1 to the arbitrator was illegal as being unilateral and thus bad, is entering the realm of conjectures and not reality. The award made by the arbitrator did not suffer from any infirmity or illegality and was thus rightly made the rule of the Court.