State of J&K & Ors. vs Kewal Krishan Gandotra

Shah, J.—The above noted seventeen appeals are filed under Section 39 of the J&& Arbitration Act, 2002 (1945 A. IX) (hereinafter called

the Act) against the order passed by learned Single Judge of this Court on November 18, 1987 in the seventeen petitions filed by the respondent

under Section 20 of We Act file appellants herein have assailed the orders of references made in Arbitration Application Nos. 470 to 486 of l987

on various guru acts including therein that the references made under the impugned orders are based on no agreement or an arbitration clause,

which is a sineguanon for orders on applications under Section 20 of the Act (It is also alleged that the Government Advocate on the very day,

when he accepted a notice was invalid and without any specific instructions from the appellants. Moreover, the said concession cannot endure for

giving jurisdiction to the Court for directions to produce the agreement containing the arbitration clause for referring the dispute to arbitration. It is

also submitted that the learned Single Judge without any application under Section 8 of the allegation that, the post of Chief Engineer, Leh has been

abolished. Even if for the sake of arguments there was any concession, the appointment of independent Arbitrator could not be done unless the

circumstances shown in Section 20 of the Act exist, In the orders, impugned, there is no such satisfaction recorded nor the learned Stogie Judge

.satisfied himself as to the existence of any dispute based on after (arbitration clause.)

At the time when the appeals were admitted, Mr, Permod Kohji appeared on the Caveat and in his presence the appeals were admitted for

hearing.

Learned counsel for the respondent at the out set attacked the maintainability of the appeals on the Aground that these do not fall within the

ambit of any of the Act and secondly, because the orders impugned were passed with the consent of the parties and hence no appeal lay against

such an order.

Record was sent for. From the perusal of the record, it transpires that on October 30, 1987, when the cases were taken up for consideration on

the first bearing before the Court, Mr. Devinder Singh on the very day on issuance of note accepted notice on behalf of the respondents. He

sought time to file objections The Court granted two weeks time for filing of objections and directed the cases to be listed in the third week of

November, 1987: All the cases were taken up together for consideration by the learned Single Judge. It is no doubt true that despite opportunity,

which was granted on October 3, 1987 the objections were not filed by the present appellants. Mr Devinder Singh learned Government Advocate

suggested the name of Shri Asbok Vijay Gupta, Additional Advocate General for appointment of Arbitrator which was adopted by the I

respondent followed by the orders of reference impugned in the Appeal.

In order, to meet the preliminary objection regarding the maintainability of the appeal learned Government Advocate Mr. Amriah Kapoor

submitted that even if Mr. devender Singh suggested the name of Shri Ashok Vijay Gupta, Additional Advocate General for the appointment of

Arbitrator it does not demote that he made any concession regarding the existence of the dispute or the arbitration 1 clause so as to empower the

Court to make the references as such it is contended by him that the orders of making the references cannot be deemed to be consented orders so

as to deprive the appellants to file the appeals, Secondly, learned Government Advocate by referring to clause (iv) of subsection (1) of Section 39

of the Act submitted that the orders impugned squarely fall with in the purview of the said clause to make the orders appealable under Section 39

of the Act, as such the appeals are rightly admitted1 and maintainable.

Learned counsel for the respondent was unable to show any counter attack on the arguments advanced on the preliminary objection. On a

critical examination of the orders impugned, we are of the opinion that in the facts and circumstances as enumerated in the orders mere suggesting

the name for the appointment of an Arbitrator does not denote that the Advocate concerned conceded regarding the existence of dispute or of the

arbitration clause. It merely indicates the declaration on the part of the counsel for the respondent in Arbitration Petitions that in case Court comes

to the conclusion that a dispute exists and there is an arbitration clause binding the parties to go for arbitration on account of the abolition of the

post of Chief Engineer, Leh, the Court was empowered to exercise the powers conferred on it to appoint another Arbitrator named by the parties

in terms of Section 8 of the Act Under these circumstances we find force in the arguments of learned counsel for the appellants that it was not a

consented order so as to take away the right of the appellants to .file an appeal under the provisions of the Act.

Similarly it is apparent from the impugned orders that the Court ordered for the making of references in terms of Section 20 of the Act, which is

inter linked with the filing of the arbitration agreement as the title of the Section and the substance indicates in subsection (1) of Section 30 of the

Act, which is reproduced here under;

Application to file in Court arbitration agreement

(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subjectmatter of the

agreement or any part of it and where difference has arisen to which, the agreement applies, they or any of them, instead of proceeding under

Chapter II may apply to a Court having jurisdiction in the matter to which the agreement relates that the agreement be filed in Court

Subsection (4) of the said Section empowers the Court to order the agreement to be Sled before making reference, which runs as follows:

(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of referenceto the arbitrator

appointed by the parties, whether in the agreement or otherwise or where the parties cannot agree upon an arbitrator, to an arbitrator appointed by

the Court.

Bare reading of the orders impugned in the light of the above noted provisions clearly show that it is an order falling within the amount of clause (iv)

of subsection (1) of Section 39 of the Act, which runs as follows:

(iv) filing or refusing to file an arbitration agreement"".

On the above noted discussion, we have no doubt in our mind to held that the appeals are maintainable and have been rightly admitted With out

any objection to the said effect in the presence of the counsel for the respondent Mr. Permod Kohli the preliminary objection are therefore,

rejected having no substance.

Adverting to the merits of the appeals on the arguments of the learned counsel for the parties, we would confine our findings only to the extent

whether under the circumstances enumerated here in above without holding existence of the arbitration agreement and when her there exists

dispute, does the inpugned order fulfills the legal requirement of making the references and appointing the Arbitrator under Section 20 of the Act. It

is to be seen whether in compliance of the mandate of the provisions, of subsection (4) of the Act, there was a direction for filing the agreement so

as to empower the Court to hold whether there is any arbitration clause giving power to the Court to make the references. From the perusal of the

order and the court proceedings, we find that there: is no such order on record as envisaged by SubSection (4) of Section 20 of the Act, which Is

mandatory in nature as the words ""the Court shall order the agreement to be filed"" are of significance giving jurisdiction to the Court to make an

Order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise or where the parties cannot agree upon an

arbitrator, to an arbitrator appointed by the Court. The word otherwise referred to hereinabove pertains to, the Arbitrator whether in the

agreement or otherwise and leaves no option with the Court to make an order of reference without filing of the agreement. In the instant cases,

learned counsel for the respondent was unable to show from the record that any such executed agreement was filed either by the respondent or on

order by the appellants. The copies placed on record are merely the blank J&K Government P.W D Forms of Contract, which do not bear the

name of the contracting' parties. Under the circumstances in our opinion filing of blank contract forms cannot be deemed as a compliance of the

said provision of filing the agreement.

Without commenting on the merits whether for the purposes of making the references to the Arbitrator there was sufficient material before the

Court for making the references, we would like to 'dispose of the appeals on the short point of the nonfulfilment of the legal requirement of

subsection (4) of Section 29 of the Act and leave it open for the learned Single Judge to find out whether under the facts and Circumstances as

projected in the petitions the word file used in Section 20 of the Act stood fully complied with and there exist, any clause for making a reference to

the Arbitfajor, because it is now a well settled law that direction to file on agreement, in the Court in sinequanon for allowing the application under

Section 20,pf the Act. For the proposition, learned counsel for the appellant placed reliance on latest Divisionl Bench authority of this Court

reported in 1988 K.L.J 99 (Executive Engineer Municipality, Jammu v/s Inderjit Singh & another), wherein under the similar circumstances, it has

been held in paragraph 6 :

that, apart, we find that the order passed by the learned Single Judge under Sec. 20 of tile Arbitration Act also Suffers from another legal infirmity

in as much as white directing the dispute to be referred for arbitration to the Chief "" Engineer, Public Health Engineering Department, Jammu, no

direction was issued for 'filing' the arbitration agreement in the court, which direction is a sinequanon for allowing the application under Sec. 20 of

the Act and referring the dispute to tie arbitrator. The scope of enquiry under section 20 of the Act is a limited one and is normal y to be confined

to an enquiry as to whether there is a written contract, the terms whereof provide for arbitration and as to whether there was a dispute raised in

terms of the agreement. The order to be made would depend upon the results of the enquiry

In the cases in hand, we find the same legal infirmity even in the absence of objections from the other side filing of an arbitration agreement in the

Court within the meaning of Subsection (4) of Section 20 of the Act cannot, therefore, be dispensed with. The ratio of the above noted authority

on the point applies to the facts and circumstances of the present cases with full force.

As a result of the above said discussion on account of the infirmity as noticed of nonfiling the arbitration agreement in the Court, the impugned

orders cannot be sustained.

In the result, all the seventeen appeals are ""hereby allowed. The orders impugned in the appeals are set aside and all the cases are remanded

Back to the learned single Judge for fresh Disposal in accordance with law, it ""shall be open to the learned Single Judge to allow the appellants to

file objections against petitions if the circumstances so permit. Parties are, however, left bear their own costs. It also disposes of C. M. Ps. No.

374 to other connected pending C. M. Ps. if any.

Record be sent back. The orders be placed on all the connected appeal files.