HINDUSTAN STEEL LTD Vs. INGENIURS AND CONTRACTORS

JUDGEMENT

(1.) THIS appeal by the defendant is directed against an order passed by the Special Subordinate Judge, Ranchi, directing it to submit to the Court within seven days the name of an agreed person as the sole arbitrator to whom reference would be made. The facts leading to this case are, these. The defendant invited tenders for various works in the power plant of the Hindustan Steel Ltd. Rourkela. The plaintiff filed tenders in respect of some of the works and they are accepted on 25-11-1958. There was an agreement between the plaintiff and the defendant in respect of the work undertaken by the plaintiff. The plaintiff completed the work on 15-9-1959 and later on there was a dispute between the plaintiff and the defendant in respect of several claims of the former, after the bills were submitted to the latter. The plaintiff served a notice on the defendant under Section 8 of the Arbitration Act informing it that the plaintiff had appointed Shri B.N. Choudhary, retired District and Sessions Judge, residing at Lucknow, as the sole arbitrator to decide the dispute. The former asked the latter to concur in his appointment as sole arbitrator! within 15 days from the date of the receipt of the notice. The defendant received the notice on 5-9-1962, but did not care to send reply. In these circumstances, the plaintiff filed a petition under Section 20 of the Indian Arbitration Act in the Court of the Subordinate Judge at Ranchi and made a prayer that the defendant; should be ordered to file the agreement and the contract and on the defendant's failure to do so the agreement and the contract filed by the plaintiff along with the application should be deemed to have been filed. The plaintiff made a further prayer that Shri B. N, Choudhary should be deemed to be the arbitrator or, alternatively, the Court should appoint an arbitrator and in that event the dispute should be referred to that arbitrator for making an award. THIS application was registered as Title Suit No. 122 of 1962.

(2.) THE defendant showed cause and challenged the maintainability of the application under Section 20 of the Arbitration Act. THE defendant's case was that the Managing Director was no doubt appointed as the sole arbitrator according to the contract, but the post of Managing Director having been abolished, the duties assigned to the Managing Director were being carried on by the General Manager of the Company and as such the dispute should be referred to that General Manager for making an award. THE defendant did not agree to the appointment of Shri B. N. Choudhary as arbitrator.

(3.) NEST question is as to whether the Court had jurisdiction to call upon the parties to agree to the appointment of an arbitrator. Learned counsel for the appellant urged that on account of the non-availability of the Managing Director, who was appointed as an arbitrator, the agreement for arbitration could not be enforced and the Court had no jurisdiction under Section 20 to entertain the application of the plaintiff. In other words, according to him, the agreement to refer the dispute to an arbitrator could no longer be enforced and the contract in that respect was frustrated in accordance with the provisions of Section 56 of the Contract Act. Section 56 provides inter alia that a contract to do an act, which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, become void when the act becomes impossible or unlawful. Impossibility of performance is one of the modes of discharge of contract. Impossibility of fulfilment may be due to some supervening circumstance and in that case the party liable is discharged from performance. He thus urged that the post of Managing Director having been abolished, there was no Managing Director and as such, the plaintiff had no right to get the dispute referred to anyone as arbitrator. In support of this, he referred to a decision of this Court in Tara Prasad v. Baijnath Prasad, ILR 19 Pat 927: (AIR 1941 Pat 155). The agreement there was to refer the dispute to the arbitration of four gentlemen named in the agreement. The arbitrators made some attempt to carry on the arbitration, but, on account of laches of the parties, they could not proceed in the matter. Thereupon a petition was filed under paragraph 17 of Schedule 2 of the Civil Procedure Code praying that the agreement dated 11-5-1937 should be filed in Court. That application was opposed on various grounds, the most important of wbich was that the arbitrators had refused to act and give their award. The Subordinate Judge refused to make reference to any arbitration and hence there was an appeal against that order. It was urged on behalf of the appellants that there being a valid agreement, the Court was bound to make a reference, although all the arbitrators were not willing to proceed with the arbitration. The contention was that under paragraph 5 of the same Schedule it was open to the Court to appoint new arbitrators in their place. Clause (4) of paragraph 17 of Schedule 2, Civil Procedure Code, reads as follows: