Union of India (UOI) vs Raj Narain Misra

S.R. Das Gupta, J.—This is an application by the Union of (sic) inter alia for an order that the suit No. 2616 (Raj Narain (sic) v. Union of India) be stayed.

On December 13, 1945, the Respondent, Raj Narain Misra (sic) into a contract with the Governor-General in Council for (sic) domestic building at Salua near Kharagpur. The (sic) contained an arbitration clause, which was to the owing effect:

Clause 25. Except where otherwise provided in the contract all questions and (sic) relating to the meaning of the specifications, designs, drawings and (sic), hereinbefore mentioned and as to the quality of workmanship, or materials; on the work, or as to any other question, claim, right, matter or thing whatever, in any way arising out of, or relating to the contract, designs, drawings (sic), estimates, instructions, orders or these conditions, or otherwise (sic) the works, or the execution, or failure to execute the same whether (sic) during the progress of the work or after the completion or abandonment of shall be referred to the arbitration of the Superintending Engineer of the (sic) for the time being in the manner provided by law relating to arbitration he time being in force who on such investigation as he may think proper shall her his award which shall be final, conclusive and binding on all parties to this (sic).

The Respondent has filed a suit, being Suit No. 2616 of 1950 the recovery of Rs. 1,84,699-9-6 for the works done in connect with the said contract. There cannot be any dispute that subject-matter of the suit is covered by the arbitration (sic). The Petitioner under the circumstances has made present application before me for stay of the said suit.

Mr. Dutt appearing on behalf of the Plaintiff has raised (sic) contentions before me. Firstly, he contended that the (sic) clause is void for uncertainty, Mr. Dutt has tended that it is not certain whether the expression "for the (sic) being" covers the Superintending Engineer of the Circle I is it clear as to which of the Superintending Engineers was arbitrate. In other words, is it the Superintending Engineer was in charge of the Circle at the time when the works were e or is it the Superintending Engineer, who was in charge the Circle at the time when the arbitration-clause was liked, or is it the Superintending Engineer who was in charge the Circle when this suit was instituted? Mr. Dutt has said these points not being clear the arbitration-clause is void uncertainty and he has relied upon the case of Governor-General in Council v. Simla Banking and Industrial Company A.I.R.(1947) (Lah.) 215 and iv my attention to the observations of their Lordships in the case. The said observations are as follows:

The words "for the time being" in the above clause have first to be construed they go with the word "circle" only or do they go with the words "Superining Engineer"? The words are to say the least ambiguous. It is quite possible (sic) that the circles, being merely administrative, may change from time to time and what work is being done in one circle may by administration arrangement be assigned to another. But even if the expression "Superintent "Engineer of the Circle" is to be taken collectively, it is not, in my (sic) possible to say with certainty as to which of the Superintending Engineers intended to arbitrate.

Mr. Dutt on the strength of the said authority content before me that I should hold that the arbitration agreement? void.

This very point came up for decision in this Court more to once and in the suit of Basantlal Jagatramka v. Dominion India (unreported), decided by the Court of appeal, (sic) C.J. observed as follows:

When parties refer disputes to the decision of the Superintending Engineer the Circle for the time being, their meaning is clear. They agree to refer the (sic) to the gentleman holding the office of the Engineer of the Circle at the t the disputes are to be referred. The use of the words "for the time being" so from creating ambiguity makes the matter in my view beyond all question s therefore, I cannot agree with the view of the learned Judges of the (sic) High Court.

This very decision of the Lahore High Court, which is r placed before me by Mr. Dutt in support of his contention, also placed before the Court of Appeal in the said case Basantlal Jagatramka v. Dominion of India (supra) a their Lordships considered the same but disagreed with the vi of the learned Judges of the Lahore High Court.

It appears that Sen J., in the case of Engineers Bureau Governor-General in Council (unreported) also held the same (sic) namely, that where a contract provides for arbitration by Superintending Engineer for the time being the meaning of said clause is that it must be the arbitration of the Superintend Engineer holding that office at the time when the dispuarose and had to be referred. That being so, in my opinion, cannot be said that the arbitration clause is void for uncertain.

Mr. Dutt then pointed out that by the arbitration clause parties argeed that the Superintending Engineer for the (sic) being should arbitrate. The said Superintending Engineer Mr. Agarwal is not according to the case of the Petitioner available and if that is so then the arbitration agreement cannot given effect to. In order to understand the contention of Mr. Dutt I shall have to state a little more fully as to what actual happened in this particular case. It appears that after disputes arose the Plaintiff asked for appointment of arbitrator. Thereafter three persons were named on behalf the Union of India being 1. Mr. Agarwal who was Superintending Engineer, Calcutta Aviation Circle, 2. Mr. De Mello Superintending Engineer, Calcutta Central Circle No. I.

Mr. Lalvani, Superintending Engineer, Calcutta Central (sic) No. II. In answer to the said suggestion the Plaintiff (sic) that he is willing to abide by the arbitration of anyone of (sic) persons. Thereafter, correspondence followed between the (sic) and it is unfortunate that nothing was done for a (sic) period. I shall have to refer to this aspect of the a later on. But if would be sufficient for me to say now that timately the Union of India informed the Plaintiff that it had pointed Mr. Agarwal as arbitrator. On December 7, 1949,(sic). Agarwal asked, the Plaintiff to file his statement of facts which the Plaintiff did on December 16, 1949. On December 28, 49, a letter was written on behalf of the Union India informing the Plaintiff that as Mr. Agarwal was (sic) the department it would not be possible to take up this se and the other two Engineers are busy in Government duties (sic) it would not be possible for them also to act as Arbitrator, the said letter the Plaintiff was asked to suggest the names of o other Engineers of this department before whom the Plaintiff would like to place the matter for arbitration and final Element. On January 5, 1950, the Plaintiff wrote in (sic) insisting on Mr. Agarwal going on with the arbitration. January 16, 1950 the Union wrote that Mr. Agarwal is proceeding to Punjab and that Mr. C.P. Malik, his (sic) could be appointed the arbitrator. Thereafter, the Plaintiff gave notice u/s 80 and filed the present suit.

Mr. Dutt contended that the parties did not and could not (sic) intended that if the Superintending Engineer for the time (sic) Mr. Agarwal was not available and could not do the (sic), some other person should act in his place. Mr. Dutt (sic) that there was special reason for the parties to agree ion the arbitration of the Superintending Engineer who, for stance, was acquainted with all the facts and circumstances of e case and it was under his control that the works were done his decision as an Arbitrator would be obtained quickly and (sic) the least delay. Mr. Dutt submitted before me it I should conclude that there was no intention on the part of 3 parties to fill up the vacancy which might be caused by the ability of Mr. Agarwal and I should also hold that as Mr. Agarwal was unable to complete the arbitration, the arbitration (sic) has come to an end. I cannot agree with Mr. Dutt''s atention on this point as well. It is now well-established on 3 authorities that unless there is an indication in the agreement at the vacancy caused in the office of the Arbitrator will not be applied, there cannot be any question of the arbitration coming infructuous, as there is a provision in the Arbitration it itself for supplying such vacancy.

Mr. Justice S. It. Das in the case of Governor-General Council v. Associated Live Stock Farm, (India) Ld. ILR (1948) 1 Cal. 161, which considering the observations of Mitter J. in the case of (sic) Singh Bedi v. Kalyani Prasad Sing Deo ILR (1939) 2 Cal. 181, came to (sic) following'' conclusion:

I read the above observations of Mitter J., as intended to be confined to a (SIC) where parties agree to refer to a designated person and where there is (sic) in the agreement that the vacancy in the office of the arbitrator will not be supplied It is only then that there can be a real impediment in the way of arbitration, the absence of any such indication there is provision in the Act for supplying t vacancy and there can be no question of arbitration becoming infructuous.

In the said case his Lordship did not find anything in the arbitration clause suggesting that the parties agreed that an vacancy in the office of arbitrator should not be filled us Sinha J. also took the same view in Ramiayan Singh Dominion of India (unreported) and his Lordship observed follows:

I am also not satisfied that the agreement shows that the intention of 1 parties was that the vacancy should not be supplied. If, therefore, there is arbitrator available the court I think is entitled to appoint an arbitrator u/s 8 of the Indian Arbitration Act.

The application before his Lordship Sinha J. (sic) also an application for stay u/s 34 of the Indian Arbitration Act and it was contended before his Lordship that the (sic) of the Major-General in charge of Administration, (sic) Command, had been abolished and there was no (sic) Command and that is why there could not be any arbitrate by the Major-General in charge of Administration, (sic) Command, whose decision according to the Arbitration (sic) was to be final and conclusive between the parties. His (sic) allowed the application and granted a stay u/s 34 of t Arbitration Act.

In the arbitration agreement now before me I do not find a indication that the vacancy caused by the inability of t arbitrator to act cannot be supplied and I do not see why (sic) provision of Section 8 of the Arbitration Act would not be app cable to the present case. In my opinion, therefore, the contention of Mr. Dutt on this point also must fail.

Mr. Dutt then contended that on the facts and circumstance of this case it cannot be said that the Applicant was at the (sic) when the proceedings commenced and still is ready and (sic) to do all things necessary for the proper conduct of the arbitration. He contended before me that the facts show that (sic) Agarwal was appointed by the Applicant as arbitrator November 23, 1949. On December 7, 1949, Mr. Agarwal asked the Plaintiff to file his statement of facts which he did December 16, 1949. Shortly thereafter the Applicant by letter dated December 28, 1949, informed the Plaintiff that Mr. Agarwal was shortly going to leave the department and it would (sic) be possible for him to take up this case and the other two Superintending Engineers named by the Union were busy with (sic) Government duties and it would also not be possible for (sic) of them to take up the case and the Plaintiff was asked to suggest the names of two other Superintending Engineers of his department. In answer to the said letter the Plaintiff, trough his solicitor, wrote insisting on Mr. Agarwal acting as such arbitrator. Thereafter, on January 16, 1950, the Plaintiff has informed that Mr. Agarwal was handing over Sharge as Superintending Engineer of the Calcutta Aviation Circle and was proceeding to Punjab and it would not be possible for him to hear the case and give the award and the Union suggested the name of C.P. Malik successor of Mr. Agarwal as arbitrator and hoped that the Plaintiff would accept him as arbitrator. In the circumstances, Mr. Dutt contended firstly that the parties had agreed to the arbitration of Mr. Agarwal and the Petitioner was not willing to go to his arbitration. Secondly, Mr. Dutt contended that even as to the arbitration of Mr. C.P. Malik the Applicant cannot be said to be willing to do all things necessary for the proper conduct of the arbitration. The Applicant, Mr. Dutt contended, should have applied to the Court u/s 8 of the Arbitration Act for his appointment as (sic) arbitrator.

I should state at the outset that the point of time when the readiness and willingness required by Section 34 is to exist, is the time when the legal proceedings commenced. In this case the legal proceedings commenced on June 23, 1950. Before that and on January 16, 1950, a letter had been written on behalf of the Petitioner to the Plaintiff informing him that Mr. Agarwal was going away to Punjab and suggesting the name of Mr. C.P. Malik his successor to be appointed the arbitrator and informing the Plaintiff that it would be in the interest of both parties to accept Mr. Malik''s appointment as the arbitrator in this case and hoping that the Plaintiff would accept this position. There is no further correspondence after this letter between the parties except the notice u/s 80 of the CPC given on behalf of the Plaintiff. Thus the Petitioner had intimated to the Plaintiff its willingness to abide by the arbitration agreement and had in fact suggested the name of Mr. Malik, successor in the office of Mr. Agarwal, as the arbitrator. The Plaintiff gave no reply to that letter but proceeded to give I notice u/s 80 of the CPC and he 1 instituted this suit. In the circumstances, I have come to the conclusion that at the material time, that is, the date of the institution of the suit, the Petitioner was ready and willing to do all things necessary for the proper conduct of the arbitration.

As for the contention of Mr. Dutt, namely, that the Petitioner was not ready and willing to proceed with the arbitration of Mr. Agarwal the position seems to me to be as follows: The service of Mr. Agarwal was transferred to Punjab and therefore it (sic) not'' possible for him to hear the case and give his award except at a great disadvantage to both parties. In this connection 1 should state that I should not assume that the transfer of Mr. Agarwal to Punjab was deliberate or made with the object of defeating the arbitration agreement. I have no reason to make such assumption. If that is the position and if there is no indication, as I have already held, in the arbitration agreement itself that the vacancy in the office of the arbitrator cannot be filled up then the only thing to do in the circumstances is to have a new arbitrator appointed and the Petitioner did suggest the name of a new arbitrator. As for the contention of Mr. Dutt that the Applicant should have applied u/s 8 of the Arbitration Act to have an arbitrator appointed I cannot hold, merely on that ground, that the Petitioner was not ready and willing as contemplated in Section 34 of the Indian Arbitration Act.

The last contention of Mr. Dutt is that on the facts and circumstances of the case I should hold that there is sufficient cause for not staying the suit. Mr. Dutt relied on the correspondence which passed between the parties in this matter starting from September 1948 and contended that the Petitioner had throughout taken an obstructive attitude and has delayed matters as best as the Petitioner could. Mr. Dutt has further contended before me that the Petitioner by its conduct has made the arbitration of Mr. Agarwal abortive and the conduct of the Petitioner suggests that the Petitioner may be equally obstructive in future and make an arbitration in future abortive. He relies on the observation of S.R. Das J. in the case of Subal Chandra Bhar v. Mohammed Ibrahim ILR (1943) 2 Cal. 298, 311 where his lordship observed as follows:

The previous abortive arbitration certainly shows that there is a possibility that one or other of the parties including the Applicant may render an arbitration in terms of the agreement equally infructuous. I cannot say that this possibility by itself must in all circumstances and of necessity be a ground for refusing the stay. Such a possibility did not stand in the way of the Court in In re Babaldas Khemchand ILR (1919) 45 Bom. 1 in directing a stay of proceedings. But I should also say that such a possibility should not be altogether overlooked in determining whether there is any sufficient reason why matters in dispute should not be referred to arbitration.

The question of possibility of a future arbitration becoming abortive depends on whether or not the arbitration by Mr. Agarwal had been made abortive by the Petitioner. I have already indicated that I should not assume that the transfer of Mr. Agarwal''s services to Punjab was deliberate or that such transfer was made with the object of defeating the arbitration. If that is so, then it is not possible on the materials before me to come to the conclusion that the Union of India made the arbitration of Mr. Agarwal abortive. Besides, even on the view taken by S.R. Das J. as aforesaid it seems to me that the possibility of making a future arbitration agreement infructuous is only a factor to be taken into consideration in determining whether there is sufficient reason why the matters in dispute should not be referred to arbitration and it cannot be said that this possibility by itself must in all circumstances and of necessity be a ground for refusing stay.

Mr. Dutt then contended that the conduct of the Union for a period of over one year has been obstructive and the said conduct shows that there is a possibility of the Union taking up a similar obstructive attitude in future and if that is so then, Mr. Dutt contends, there is sufficient reason for my refusing the stay. I have carefully gone through the correspondence. There can hardly be any doubt that there has been some delay on the part of the Union of India in moving in this matter and Union of India should have acted more promptly in this matter. But merely from this fact I cannot come to the conclusion that the conduct of the Union is such that it raises a suspicion or a possibility that in future the Union of India would be obstructive and would take up an attitude which would defeat the course of future arbitrations. The correspondence shows that on January 3, 1949, the Plaintiff asked the Union to supply the name of the Superintending Engineer. The names of three Superintending Engineers were supplied by the Union by its letter dated February 15, 1949. Thereafter, on February 17, 1949, the Plaintiff wrote that he was agreeable to go to the arbitration of any one of them. Then there was delay on the part of the Union for several months and it was not until May 25, 1949, that the Union wrote to the Plaintiff asking that the points of dispute should be formulated. The Plaintiff by his letter dated July 1, 1949, sent the points in dispute. On July 26, 1949, the Union again asked the Plaintiff to formulate the points in dispute in clear and unequivocal terms. On August 28, 1949, the Plaintiff gave further clarification and the Union appointed Mr. Agarwal as the arbitrator on November 3, 1949. Thus it appears that the delay has been mainly during the period between February 15, 1949 and May 25, 1949. Mr. Dutt contended before me that the Union was not justified in asking for clarification of the points in dispute before the matter was sent to the arbitration. Mr. Dutt further contended that this shows that the Union did not act bona fide in this matter. I am unable to go to the extent to which Mr. Dutt wants me to go and hold that the Union acted mala fide in this matter. In asking for clarification of the points in dispute in the said two letters the Union might have taken a mistaken view of the matter, but merely from this fact I cannot hold that the Union of India acted mala fide in this matter. As I have already indicated the Union of India should certainly have acted more promptly in this matter. On a proper consideration of all the facts and circumstances of this matter I have come to the conclusion that there is no sufficient reason for my refusing stay of this suit. The Petitioner has been, at least at the time of the institution of this suit, ready and willing to go to the arbitration. The result, therefore, is that the application succeeds and the Petitioner is entitled to the costs of this application.