- (1.)THIS is a first appeal against an order of the d Chief Justice sitting in Chambers and arises v an application purporting to be under S. 20 with S. 81a of the Arbitration Act, made by Mr. C Rai applicant against the Union of India, prayer that an arbitration agreement which subsists between the parties be filed and appointment of an arbitrator be ordered to adjudicate
(2.)UPON certain matters of dispute between the parties. This application was resisted by the Union of India on various grounds, one of such grounds being that the notice given by the applicant was not a valid notice and as such the present application was not competent. The application came up before the learned C. J. sitting in Chambers who dismissed the application on the ground that "the notice which had been served on the non -applicant Union of India was not in conformity with S. 42 of the Arbitration Act, inasmuch as the provisions of Cl. 17 of the lease agreement have not been complied with."
(3.)ON behalf of the applicant, his learned counsel, Mr. Bali, attacked the order of the learned C. J. on the following grounds: firstly, that under the circumstances of the present case no notice was necessary to be given to the Union of India and any defect in the notice was therefore1 immaterial, and secondly, that cl. 17 of the lease agreement does not make the giving of a notice to the non -applicant Union of India a condition precedent for making an application to the Court. He has further submitted that cl. 17 does not lay down that no notice can be given directly to the Government of India and that it should have been given only through the Lands, Hirings and Disposal Service, 24, Parganas, Howrah and Hoogly.
Before dealing with the argument submitted by the applicants learned counsel, some facts about this case may be given here, so as to understand the legal position taken by the non -applicant, the Union of India. The Indian Military authorities had taken on lease two houses belonging to the applicant -appellant by means of two lease deeds dated 29 -9 -48 and 7 -10 -48. On 21 -9 -50, both these houses caught fire and were completely gutted. The applicant -appellant claimed compensation from the Army authorities for the loss sustained by him on account of the fire which, according to him, had broken out as a result of willful negligence of the respondents servants, i.e. the army personnel residing there. The non -applicant, Union of India constituted a Board of officers somewhere in September 1950 to go into the question of payment of compensation. The Board rejected the applicants claim, with the result that the appellant sent a notice through his counsel to the Union of India Ministry of Defence, on 1 -3 -53 in which a submission was made in the following words: "Now that the Government has finally refused to pay any compensation either on account of fire or the unauthorized removal of goods from these bungalows by the army personnel, a dispute has arisen between my client and the Government which has under cl. 18 of the lease deed to be referred to an arbitrator to be appointed by the Government of India." This notice was held by the learned Judge in Chambers as not having been given in accordance with the provisions of S. 42 of the Arbitration Act. Reference may be made to cl. 18 of the lease deed which runs as follows: "Should any dispute or difference arise out of or concerning the subject -matter of these presents or any covenant clause or tiling therein contained or otherwise arising out of this lease, the same shall be referred to an arbitrator to be appointed by the Government of India and the decision of the said arbitrator shall be conclusive and binding on the parties thereto. The provisions of Arbitration Act, 1940, shall apply to such arbitration. According to this clause, in case of a difference or dispute arising between the parties, power was vested in the Government of India to appoint an arbitrator to go into the matter, the decision of such arbitrator appointed being conclusive and binding upon the parties. The learned Judge in Chambers seems to be of the view that according to Ss. 8 and 42 of the Arbitration Act notice was necessary to be given to the Government of India before seeking redress from a Court of law, and as the notice was defective in so far as it was given direct to the Union of India, the present application was not competent. Now with all respect it appears to us that S. 8 of the Jammu & Kashmir Arbitration Act is not applicable to the facts of this case. According to S. 8 1 a: "Where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties and all the parties do not, after differences have arisen, concur in the appointment or appointments, any party may serve the other parties or the arbitrators as the case may be, with a written notice to concur in the appointment or appointments. b ..................... c ...................... In S, 8 2 it is laid down that; - "If the appointment is not made within 15 clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like powers to act in the reference and to make an award as if he or they had been appointed by consent of all parties." Cls. b and c of S. 8 of the Arbitration Act have no connection with the facts of the present case and as such need not be discussed. Now cl. a gives power to a Court to appoint an arbitrator on failure of the parties to do so, if the following conditions are satisfied: - a That there is a valid arbitration agreement; b That there is provision in the arbitration agreement for appointment of an arbitrator by consent of the parties; c That all the parties do not concur in the appointment of an arbitrator and that notice to the parties was given in terms of Ss. 8 and 42 of the Jammu and Kashmir Arbitration Act. A reference to cl. 18 of the lease agreement which provides for the reference of any dispute between the parties to arbitration, would show that in the present case there is no question of an arbitrator being appointed by consent of the parties, nor was there room for any difference to arise with regard to the appointment of an arbitrator, for the simple reason that this clause provides that it is the Union of India, i.e., the non -applicant which alone had the power to appoint an arbitrator. Such being the case, the applicants consent or no consent was immaterial. The applicant had agreed to absolute power being given to the Union of India for making, appointment of an arbitrator whose decision had to be final and binding upon the parties. A reference to S. 8 of the Arbitration Act would make it clear that it is only when common consent of the parties is needed for the appointment of an arbitrator and that there is disagreement between the parties that the provisions of S. 8 would be attracted.