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Judgment
Dua, J.—This is a revision by the State of Himachal Pradesh and Union of India from the order of Shri A. S. Gilani, Senior Subordinate Judge, Shimla, dated 10th May 1962 disposing of an application filed by the present Petitioners praying for revocation of the reference to the arbitration of Shri H. S. Pathania and in the alternative for directing the arbitrator for adjudicating upon all the points on which the parties are at issue in the arbitration proceedings and, if necessary, for making a supplementary reference. The learned Senior Subordinate Judge on the first point observed that the reference could not be revoked as the matter was pending on appeal in the Supreme Court which had by its order dated 30th November 1961 directed the arbitrator in question to continue the proceedings. The court below also observed that the arbitrate would be entitled to go into the question of limitation regarding the claim which had already been raised by the Government in the arbitration proceedings.
Here, it is desirable to briefly state relevant facts giving rise to the present controversy. In November, 1950 some agreement was entered into between the Himachal Pradesh Government and the Respondents in this Court inter alia for the purchase of Deodar, Rail etc, the details of which are not relevant for our present purposes. In this agreement, there was an arbitration clause. In 958. it appears that some dispute arose between the parties and the Respondents approached the Civil Court for filing the agreement of reference and for the appointment of an arbitrator. On 16th August 1960, the Court filed the agreement but after revoking the authority of the arbitrator mentioned in the agreement (clause 33) appointed Shri H. S. Pathania to act as arbitrator. Against that order, the Himachal Pradesh Government unsuccessfully applied to this Court for revision. The matter is now stated to be pending in the Supreme Court on special leave appeal. On the question of staying further proceedings before the arbitrator, it is common case that the Supreme Court by means of its orders dated 30th November 1961 directed that the arbitration proceedings should continue but the arbitrator should not make his award till the hearing and final disposal by the supreme Court of the appeal by special leave.
On 27th June 1961, the arbitrator is stated to have entered on the reference and reply to the present Respondents'' claim was called from the Petitioners who objected that without a formal claim being filed before the arbitrator by the Respondents the Petitioners could not put in any reply. To this objection there was a rejoinder by the Respondents on 22nd March i962. The arbitrator, however, observed that the parties should seek proper redress from the Court and that he would adjudicate on the dispute as contained in paragraph 20 of the Respondents'' petition for filing the agreement presented in the Court of the Senior Subordinate Judge. It was as a result of this order by the arbitrator that the Petitioners are stated to have approached the Court below for. to begin with, revocation of the reference to the arbitration of Shri Pathania and in the alternative for directing the arbitrator to adjudicate upon all the pleas contained in the written statement filed before him by the present Petitioner, on which the Court below, as already noticed, has declined to entertain the prayer for revocation but has directed the arbitrator to decide the plea of limitation, without giving him any further instructions.
On revision, the learned Advocate General has submitted that after making the reference the Court below was functus officio and could not add to the directions contained in its judicial order making the reference. This argument has been advanced because the arbitrator is stated to have relied on the contents of a covering letter dated the 30th May 1931 from the Court by means of which the order of reference was forwarded to him. Reliance has for this submission been placed on Dhanrajamal Gobindram Vs. Shamji Kalidas and Co., , in which at page 1294 while dealing with the scope of Section 20, Indian Arbitration Act, it is observed as follows:
* * * the powers and duties of the Court in Sub-section (4) of Section 20 are of two distinct kinds. The first is the judicial function to consider whether the arbitration agreement should be filed in Court, or not. That may involve dealing with objections to the existence and validity of the agreement itself. Once that is done, and the Court has decided that the agreement must be filed, the first part of its powers and duties is over. It is significant that an appeal u/s 39 lies only against the decision on this part of Sub-section (4). Then follows a ministerial act of reference to arbitrator or arbitrators appointed by the parties.
It is emphasised that the letter by means of which the Court''s order is forwarded to the arbitrator cannot be construed as the expression of judicial opinion of the Court. The learned Advocate General then read out Section 20 of the Arbitration Act and by a reference to Sub-section (4) submitted that the law does not restrict the controversy to be determined by the arbitrator only to the points contained in the application for filing the arbitration agreement in Court, It is argued that the entire dispute between the parties has to be tried by the arbitrator including the points raised by the opposite party, for, the latter cannot be left to file a separate suit or to ask for another reference in regard to the disputes which that party may raise of course arising out of the arbitration agreement. By way of analogy the counsel has referred me to Union of India (UOI) Vs. Himco (India) Ltd., , where the Calcutta High Court on the original side merely passed an order filing the arbitration agreement and passing an order of reference to the arbitrator concerned, without any limitation.
Shri Sikri further submitted that the learned Senior Subordinate Judge is wrong in holding that he could not entertain a prayer for revocation merely because an appeal was pending in the Supreme Court, for, according to the counsel, if on account of some subsequent event, a party to the arbitration proceedings finds grounds of judicial misconduct against the arbitrator then the original Court cannot be considered powerless or prohibited from entertaining those grounds. The reasons on which revocation is sought, according to the Petitioners'' counsel, are not before the Supreme Court and, therefore, mere pendency of appeal there cannot operate as a bar to the adjudication of his allegation by the Court below. It was also contended that instead of allowing the arbitration proceedings to go on which would if the Petitioner is right, be set aside after the making of the award, it is desirable that the Court should revoke the reference as soon as grounds for revocation come into existence. Reference was made to some observations at pages 56 and 67 of Russel on Arbitration (16th edition). In this connection reference was also made to Exhibits R. D. and R. E., two documents of the year 1953, on the basis of which it was contended that the arbitrator had already expressed his opinion on some points in controversy in the present proceedings. These documents, according to him, came to his knowledge only recently, though it was admitted that they were all along in the Petitioners'' records.
On behalf of the Respondents, Shri A. C. Hoshiarpuri has very fairly pointed out that the arbitrator has to adjudicate upon all the points in controversy whether raised by one party or the other and that the problem could not be limited merely to the disputes mentioned in paragraph 20 of his clients'' petition for filing the arbitration agreement. He has, however very forcefully contended that as a matter of fact all the points raised by the parties have been put in issue and that even on the plea of limitation on which the Court below has directed the arbitrator to adjudicate upon had already been put into issue.
The Petitioners'' counsel has, however, by way of illustration submitted that the Government had made a counter claim of several lakhs of rupees which the arbitrator has expressly excluded from the dispute which he is going to adjudicate upon and also that the plea on the basis of Article 299 of the Constitution is not being entertained by the Arbitrator.
Shri Hoshiarpuri has, however, attempted to show that the existing issues cover all the points.
Without going into the record and coming to a positive decision as to whether or not the existing issues cover all the pleas, I would merely clarify the position and observe that the arbitrator, which is a private forum constituted by the parties for the purpose of adjudicating upon the difference between them, in place of the ordinary Courts of law and justice, must entertain and decide all essential points of difference between the contesting parties arising out of or relating to the arbitration agreement and it is not open to him to exclude from consideration any such plea.
In so far as the question of revocation of the reference to arbitration is concerned, in my opinion, the documents Exhibits R. D. and R. E. were admittedly with the Petitioners and if they failed to rely on them for the purposes of objecting to the reference being made to the arbitration of Shri Pathania in the Court of first instance and then again in this Court on revision, and finally in the Supreme Court, then they cannot be heard now to base their prayer for revocation on these documents in the Court below at this late stage. If the law permits them it may be open to them to rely on them before the Supreme Court, but I do not think they can be permitted now to challenge the reference to the arbitration of Shri Pathania on this ground in the Court below. Shri Hoshiarpuri apprehends, and in my opinion, not without some justification, that the Petitioners are relying on these documents with the object of somehow getting behind the order which is now the subject matter of appeal in the Supreme Court. The counsel has also submitted that the Petitioners are trying to delay the final disposal of the controversy by the arbitrator, and it is vehemently urged that is is for this very reason that the present revision has been filed for redress which has already been granted by the arbitrator. I have already observed that I should not like to express any opinion on the merits whether or not the issues framed by the arbitrator cover all the pleas. Therefore, I need not advert to the allegation that the present revision was wholly unnecessary, for, there is certainly some material on the record, to which my attention has been drawn, which suggests that the arbitrator was inclined to restrict the scope of his enquiry only to the disputes contained in paragraph 20 of the present Respondents'' application.
Before concluding, I may also notice a preliminary objection raised on behalf of the Respondents about the competency of the present revision. It has been urged that no revision lies from an interlocutory order particularly when such an order is passed in the course of arbitration proceedings. I do not think there is any force in the plea because Section 115, CPC or Article 227 of the Constitution which also empowers this Court to keep the subordinate Courts and tribunals within the bounds of law, do not exclude from their operation orders in the course of arbitration proceedings. The impugned order in the present case, in my opinion, does suggest that the Court below took a view which is tainted with material irregularity and illegality in the exercise of its jurisdiction, even if it may be urged that the Court had not failed to exercise jurisdiction vested in it. Shri V. C. Mahajan also drew my attention to a Bench decision of the Lahore High Court in AIR 1930 26a (Lahore) , for the view that in cases covered by Schedule 2, CPC Code, (since repealed) the High Court should not exercise its revisional power in respect of interlocutory orders but, in my opinion, that decision has nothing to do with the case in hand to which neither Schedule 2 Para 3(2), CPC Code, nor Section 23(2), Arbitration Act on which, start with, the counsel placed reliance, applies. Section 23, occuring as it does in Chapter IV of Arbitration Act, applies only to arbitration in suits and not to arbitration with the intervention of a Court where no suit is pending. In any case, the power of this Court under Article 227 which can also be exercised suo motu can certainly be utilised even in cases of interlocutory orders, like the one before me. In the present case, it is noteworthy the order of the Court below is not an interlocutory orders but it disposes of the matter contained in the present Petitioners'' application finally.
I would, therefore, modify the order of the Court below in the terms slated above and direct that the arbitrator should proceed to adjudicate upon the dispute between the parties in accordance with law and in the light of the observations made above. The parties are directed to appear before him on 10th December, 1962 when another short date would be given for further proceedings. I do not think it is necessary for me to pass any other order, for, the making of the final award has been stayed by the Supreme Court till the hearing and final disposal of the appeal pending there. In the peculiar circumstances of this case, there would be no order as to costs in this Court.