Union of India vs Hari Krishan Joshi and Others

This petition for revision is directed against the order of the trial Court holding that there could be no unilateral reference to arbitration. The case of the petitioner is that there was a contract between the Union of India and the respondents. In the contract there is an arbitration clause to the effect that any differences or disputes arising between the parties with reference to the contract, will be settled by the sole arbitration of General Manager or his nominee. According to the petitioner the disputes having arisen the matter was referred to the nominee of the General Manager. It is common ground that no notice of this reference was given to the respondent or that after notice he refused to participate in the reference. It is only after the reference had been made that the arbitrator sent a notice to the respondent and the respondent then made an application u/s 33. Two principal grounds were urged in that application, that the arbitration may be set aside u/s 33 wherein a prayer has been made (1) that there is no valid reference and the arbitrator cannot proceed with the same; and (2) that there was no completed contract and, therefore, there is no arbitration clause on the basis of which the arbitration can proceed. The petitioner also took the plea in the application u/s 33 of the Arbitration Act that the Civil Court at Julundar where the application was made had no jurisdiction to entertain the same.

The trial Court came to the conclusion on November 28, 1969 by a separate order that the Civil Court at Jullundur had jurisdiction. This order was not called in question by the petitioner in revision. The trial court then proceeded to determine only one question, namely, that the reference being a unilateral was not legal. Basing itself on the decision of the Supreme Court in Seth Thawardas Pherumal Vs. The Union of India (UOI), the court below came to the conclusion that such a reference would be no reference in the eye of law and on that basis allowed the application u/s 33. It did not in this situation decide the other question that there was no arbitration agreement because there was no completed contract.

The petitioner being dissatisfied has come up in revision to this Court.

Mr. Gujral, learned counsel for the petitioner in the first instance contended that the Jullundur Court had no jurisdiction to decide the application u/s 33 of the Arbitration Act. I am unable to entertain this objection at this stage because the order that Jullundur Court had jurisdiction was passed on November 28, 1969 and no revision petition has been preferred against that order. The present prayer even if it is taken in the application for revision against that order, is hopelessly barred by limitation. Therefore, this plea must be rejected outright.

The other contention of Mr. Gujral is that there can be a unilateral reference and the learned counsel relies on the decision of the Allahabad High Court in Balika Devi and Another Vs. Kedar Nath Puri, . In this case the learned Judges of the Allahabad High Court distinguished the Supreme Court decision in Seth Thawardas Pherumal Vs. The Union of India (UOI), . They, however, did not doubt the correctness of the Supreme Court decision which naturally they could not. The Allahabad case was one where u/s 8, the matter had arisen. That itself presupposes that the parties were ad idem in the matter of arbitration. Anyhow the matter stands concluded by the decision of the Lahore High Court reported as The Punjab Province v. Dr. Lakhmi Dass (1944)46 P LR 50 :AIR 1944 Lah 149 and Seth Thawardas Pherumal Vs. The Union of India (UOI), . In Lakhmi Dass''s case (1944)46 P LR 50 : AIR 1944 Lah 149 it was observed as follows:--

"One sided reference to arbitration is illegal, until and unless the other party has refused to join in the reference, when it is desired to take advantage of an arbitration clause it is necessary that the party seeking the reference should first call upon the other party to join in the submission and it is only when the other party has refused to join that a unilateral reference becomes competent."

In Seth Thawardas Pherumal Vs. The Union of India (UOI), it was observed as follows:--

"A reference requires that assent of ''both'' sides. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the Court u/s 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub-s. (4).

In the absence of either, agreement by ''both'' sides about the terms of reference or an order of the Court u/s 20(4) compelling a reference the arbitrator is not vested with the necessary exclusive jurisdiction."

These observations conclude the matter.

Faced with this situation Mr. H. S. Gujral was forced to the argument that Section 20 is in Chapter 3 and the present reference is under Chapter 2 but he has been unable to point his finger to a provision in Chapter II which enables a party to an arbitration agreement to proceed to a reference unilaterally. However, in view of the Supreme Court decision and the decision of the Lahore High Court by which I am bound, I must affirm the decision of the trial Court.

For the reasons recorded above, this petition fails and is dismissed. There will be no order as to costs.

Petition dismissed.