PANNA LAL KHOMANI Vs. STATE OF BIHAR

JUDGEMENT

(1.) THIS appeal is directed against the judgment and order dated 3rd June, 1981 passed by the Subordinate Judge, Buxar, in Miscellaneous Case 18 of 1970. By the impugned order, the learned subordinate Judge has refused to make the award of an arbitrator, namely, Shri Kanhaiya Singh, a retired Judge of this Court, a rule of the court on the sole ground that the reference made by the court to the arbitrator was wholly without jurisdiction as the case fell within the provisions of Section 8, Arbitration Act, 1940 (hereinafter to be referred to as the Act) and the moment the arbitrator was nominated, the court became functus officio. No other objection was taken by the respondents with regard to the merits of the award although two objections were sought to be raised with respect to the quantum of damages awardable in law to the appellant. Before us, however, the appellant gave up these objections in relation to the quantum of the damages awarded by the arbitrator. Therefore, the only question that remains to he determined in this case is as to whether the reference was made under Section 20 (4) of the Act or under Section 8 thereof.

(2.) THE relevant facts for the disposal of this appeal are admitted and are not very complex. THE appellant filed an application under Sections 8 and 20 of the Act in the court of the Subordinate Judge, 2nd court, Arrah, for calling for the original agreements from respondent 1, the State of Bihar, and for filing them in the court and further to appoint an arbitrator and refer the dispute to him for arbitration regarding the quantum of dues to be received by the appellant from respondent 1, the State of Bihar. This case was registered as Miscellaneous Case 16 of 1970. THE firm of the appellant was employed by respondent 1 as a stockist for storage of food-grains for "two places, namely, Buxar and Dumraon on the terms and conditions embodied in the written agreements executed between the State of Bihar, respondent 1, on the one hand, and the firm of the appellant on the other from time to time (annually) since December, 1956 up to May, 1967. THE written agreements contained an arbitration clause which provided that in case of any dispute the matter shall be referred to the sole arbitration of the Commissioner of Patna Division or to a person nominated by the Commissioner and the decision of the arbitrator shall be final and binding upon the parties. It is worthwhile to mention here that the system of engaging stockists for storage of foodgrains on behalf of the State Government was abolished after May, 1967. To resume the narrative, in pursuance of the aforesaid arbitration clause the appellant sent a notice dated 15th January, 1970 to the Commissioner, Patna Division, respondent 2, under registered post, to complete the arbitration Or have it completed within four months, failing which the appellant shall be compelled to seek redress in a civil court of competent jurisdiction. THE aforesaid notice dated 15-1-1970, was duly served on respondent 2 and the acknowledgment thereof was received by the appellant. THEre was complete inaction on the part of the Commissioner, respondent 2, and he kept silent all the while till 8th of June, 1970. THE appellant accordingly filed the instant miscellaneous case on 9th June, 1970 with a prayer to call for the original agreements from respondent 1 for filing them in the court and to appoint an arbitrator and refer the dispute to him for arbitration regarding the quantum of dues receivable by the appellant from respondent 1.

(3.) AFTER the submission of his award, as already stated earlier, the only ground of objection that was raised on behalf of the respondents was that the refer-ence of the matter in dispute to the arbitrator was not within the competence of the court as the nomination of the arbitrator was under Section 8 of the Act and the court, after nominating an arbitrator, became functus officio and could not have made any reference in the matter. The argument was sought to be developed by contending that since the order of reference was made after the court was functus officio. the whole reference was without jurisdiction and the award be treated as a nullity. This view has found favour with the learned Subordinate Judge who has refused to make the award a rule of the court on the sole ground that it was wholly without jurisdiction as the reference was purported to have been made under Section 8 of the Act and not under Section 20 (4) thereof.