STATE Vs. SAGARMULL AGARWALA

JUDGEMENT

(1.) JUDGMENT : - The learned District Judge having upheld the award passed in favour of the respondent contractor against the Sikkim Public Works Department, the State of Sikkim representing the Department has come up in appeal against the order of the District Judge. It appears that on an application filed under S.8, Arbitration Act, 1940, by the respondent-contractor for the appointment of an arbitrator, the learned District Judge has, by his order dt. 30-4-1980 passed in Misc. Case No. 43 of 1980, not only appointed an arbitrator but has further referred two items of disputes to the arbitrator for arbitration. It is obvious that under Section 8 of the Arbitration Act, the Court is empowered to appoint an arbitrator in the circumstances mentioned therein, but has no power to make a reference to arbitration and any such reference being ultra vires S.8 is invalid and without jurisdiction. Mr. N. B. Kharga, and then Mr. B. C. Sharma, the learned Advocates appearing for the appellant State at different stages, have accordingly urged that the award of the arbitrator in this case, having been made in pursuance and on the basis of such invalid and ultra vires order of reference, is also equally invalid and ultra vires.

(2.) THAT an order of reference by Court on an application made to it for appointment of an arbitrator under S.8, Arbitration Act, is without jurisdiction is so obvious from a plain reading of the provisions of S.8 that reference to the decision of the Supreme Court in Union of India v. Om Prakash AIR 1976 SC 1745 at p. 1748 as an authority for such proposition may not be necessary. But reference to that decision may still be necessary for the further proposition laid down therein (at 1749) that an award passed pursuant to and wholly depending on such reference alone is invalid and is liable to be set aside under S.30, as the said decision has overturned the contrary view of some of the High Courts on this point.

(3.) WHILE an arbitration agreement must, in view of S.2(a), be in writing, a reference to arbitration under such an agreement is not required to be in writing. It is true that, as pointed out by the Supreme Court in Waverly Jute Mills v. Raymon and Co. AIR 1963 SC 90 at pp. 97-98, an arbitration agreement being the very foundation of jurisdiction of the Arbitrator, he cannot assume jurisdiction to determine disputes not covered by the agreement, even though the parties before him voluntarily participated in their determination unless there is a fresh arbitration agreement covering those disputes. But in an arbitration under Chap. II without intervention of Court, if the arbitration agreement covers the disputes in which the parties have participated before the Arbitrator voluntarily and without protest, the Arbitrator would have jurisdiction to decide those disputes, even though no formal reference was made or the initial reference did not include them, as in that case the parties shall be deemed to have made a reference of those disputes by their acts of voluntary participation without protest.