Executive Engineer, R.E. Division vs Gangaram Chhapolia

B.K. Ray, J.—An F-2 agreement was entered into between the Petitioner and the opp. party as a contractor for construction of the work ''Improvements to Darpanarayanpur Minor Irrigation Project in the District of Puri. There was an arbitration clause in the agreement to the effect that in case of any dispute arising between the parties relating to the execution of the work the same would be decided by an arbitrator to be appointed by the Chief Engineer. A dispute between the parties under the agreement having arisen, the Chief Engineer concerned appointed Shri J.B. Swain, Superintending Engineer as an arbitrator. The said arbitrator by letter dated 28-12-1976 intimated to the Court below his inability to act as such, in view of the pressing nature of his normal duties. The learned Subordinate Judge, Cuttack on 6-1-1977 on receipt of the information from the arbitrator in exercise of his powers u/s 5 of the Arbitration Act (hereinafter called the C Act'') revoked the authority of the arbitrator and posted the case to 10-1-1977 for fresh nomination. This step, as it appears from the impugned order taken by the Court below, was in exercise of his jurisdiction u/s 8(1)(b) of the Act. On 10-1-1977 the parties having been asked to supply the vacancy, the Government Pleader for the present Petitioner instead of suggesting some name to be appointed as arbitrator filed an application in the Court below challenging its territorial jurisdiction to appoint the arbitrator. As on a previous occasion the original agreement entered into between the parties was the subject-matter of another proceeding under the Act before the Court below (vide Misc. Case No. 163 of 1976) and in that misc. case the Petitioner had not raised any objection to the territorial jurisdiction of the Court below, the learned Subordinate Judge did not entertain the objection of the Government Pleader regarding want of territorial jurisdiction and held that he had jurisdiction to entertain the case for the purpose of filling up the vacancy caused by the unwillingness of Shri J.B. Swain to act as an arbitrator. The opp. party submitted two names for being considered for appointment as an arbitrator. Those names were opposed to by the learned Government Pleader in the Court below. But while opposing the names submitted by the opposite party, no fresh name was suggested by the present Petitioner through the Government Pleader. Thus, as there was no concurrence between the parties regarding the appointment of a fresh arbitrator the learned Subordinate Judge in exercise of his powers u/s 8(2) of the Act appointed Shri T.T. Patnaik, Financial Advisor, Government of Orissa (Retired) as an arbitrator to adjudicate the dispute between the parties as per the agreement in place of Shri J.B. Swain. This was so done by the impugned order. Being aggrieved by the said order the Petitioner has come up to this Court with the present revision.

Mr. D.P. Mohapatra, learned Additional Government Advocate for the Petitioner, in support of the petition urges two points, viz., (a) the Court below had no territorial jurisdiction to appoint Shri T.T. Patnaik a an arbitrator in place of Shri J.B. Swain as the arbitration agreement had been entered into between the parties at Puri and, (b) u/s 8(1)(b) of the Act after an appointed arbitrator refuses to act in a case where the arbitration agreement does not show any intention that the vacancy so caused should not be supplied, any party to the agreement has to first of all serve the other party with a written notice to concur in the appointment of a new arbitrator as suggested. In case the concurrence is not made within fifteen days of the notice, then only the party whose notice has not been complied with may file an application in Court for appointment of a new arbitrator. u/s 8(2) of the Act when such an application is made the Court is to appoint a new arbitrator after hearing the parties. In the present case, admittedly, the provisions of Section 8(l)(b) of the Act requiring the opp. party to serve notice on the Petitioner asking him to concur in the appointment of a new arbitrator have not been complied with. Further, no application also has been made by the opp. party in the Court below praying for appointment of a new arbitrator as required in Section 8(2) of the Act. Therefore, without strict compliance with the pre-requisite conditions as embodied in Section 8(1) and (2) of the Act the Court below had no jurisdiction to appoint fresh arbitrator.

Regarding the first point, the Court below has rightly negatived the same. It is not disputed that on an earlier occasion the matter relating to the arbitration in question was before the Court below (vide Misc. Case No. 163 of 1976), At that point of time the Petitioner did not raise the objection on the question of territorial jurisdiction, and as a matter of fact submitted to the jurisdiction of the Court below. It is well settled that the question of lack of territorial jurisdiction has to be raised at the earliest opportunity. The Petitioner, therefore, must be held not to have complied with this requirement of law by not raising the question of lack of territorial jurisdiction on the earlier occasion when Misc. Case No. 163 of 1976 was decided by the Court below. Nothing also has been shown to me how the Petitioner will be seriously prejudiced if he is not permitted to raise the question of lack of territorial jurisdiction of the Court below in the present civil revision. Section 21 of the CPC is a complete answer to the point raised by the learned Additional Government Advocate. I, therefore, hold that the first point raised has no substance in it.

Corning to the second point, if I have understood the learned Additional Government Advocate rightly, he means to say that after Mr. J. B. Swain refused to act as an arbitrator in the case certainly a vacancy occurred. The Court below, therefore, was right in revoking the authority of the arbitrator. The learned Additional Government Advocate also concedes that the provision in the arbitration agreement does not show that it was intended that the vacancy should not be supplied. Therefore, according to him, a case u/s 8(1) of the Act was made out. But It is said that the opp. party as required in Section 8(1) of the Act did not serve the Petitioner with a written notice to concur in the appointment of any particular person as an arbitrator. So, it is urged that the provisions of Section 8(1) of the Act not having been complied with toe Court below could not exercise jurisdiction u/s 8(2) of the Act. This contention of the learned Additional Government Advocate does not appear to have any merit in it. True, the Court below suo motu took up the matter and while the matter was pending before it the opp. party filed a memo giving two names and saying therein that one of them might be appointed as an arbitrator. The Petitioner got notice of this memo and strongly opposed through his advocate the appointment of any of the person suggested in the memo. The Petitioner, while opposing the appointment of any of the persons mentioned in the memo filed by the opp. party, also did not come forward with any fresh suggestion. In these circumstances, it must be held that there has been substantial compliance with the provisions of Section 8(1)(b) of the Act. The decisions relied upon by the learned Additional Government Advocate as reported in Union of India v. M.N. Varma A.I.R 1958 Mad. 296 and Nalini Ranjan Guha Vs. Union of India (UOI), , only lay down that unless a case is made out for appointment of an arbitrator as provided in Clauses (a) to (c) of Sub-section (1) of Section 8 of the Act a Court will have no jurisdiction to appoint an arbitrator u/s 8(2) of the Act. In the present case, I have already mentioned above that a case u/s 8(1)(b) of the Act was made out. The only lacuna as pointed out by the learned Additional Government Advocate is that there was no service of notice as required in Section 8(1) of the Act by the opp. party on the Petitioner calling upon the latter to concur in the appointment of an arbitrator suggested in the notice. Further, there was no formal application by the opp. party in the Court below praying for appointment of a fresh arbitrator. But as has been noticed earlier, the opp. party filed a memo in Court with notice to the Petitioner giving its suggestions. The impugned order reveals that the suggestion given by the opp. party was opposed by the Petitioner. The Petitioner also did not come forward with any fresh suggestion for consideration of the opp. party. That being the position, there was nothing wrong with the Court below in assuming jurisdiction u/s 8(2) of the Act and in appointing an arbitrator as has been done. In my view, in the facts and circumstances as revealed in the case, there has been compliance with the pre-requisite conditions as required under the law for appointment of an arbitrator as has been done by the Court below.

It is contended on behalf of the opp. party that after the appointment of the new arbitrator by the Court below by the impugned order the Petitioner has appeared before the new arbitrator and has ''filed adjournment petitions before him in order to enable him to file counter. It is, therefore, argued by Mr. B.H. Mohanty, learned Counsel for the opp. party, relying on the decisions reported in Prince of Co. v. G.G. in Council AIR 1955 P&H 240, Ganesh Chandra Misra Vs. Artatrana Misra and Others, , Baikunth Misser Vs. Gouri Shanker Tewari and Others, , and Ram Bali Vs. Tulsi, , that once the Petitioner has submitted to the jurisdiction of the new arbitrator who has been appointed by the impugned order it is no longer open to him to challenge the jurisdiction of the Court in appointing the arbitrator. This contention of Mr. Mohanty is also well founded. Where a party to the reference fully knows all the circumstances in which an arbitrator has been appointed and takes part in the proceeding before the arbitrator without raising any objection as to any defect in the appointment at the first opportunity, it must be held that the party was trying to take a chance of favourable decision and therefore, acquiesced in the appointment. Under such circumstances, it is not open to that party to again go back and challenge the appointment of the arbitrator by saying that the appointment is not proper and valid.

For the reasons stated above I do not find any merit in this revision which is accordingly dismissed. In the circumstances, there will be no order for costs.

Revision dismissed.