ORIENT PAPER MILLS BRAJRAJNAGAR Vs. STATE OF M P

JUDGEMENT

(1.) BEING aggrieved by the order dated 4.1.1996 passed by Additional District Judge, Khairagarh to the Court of District Judge, Rajnandgaon in Civil Suit No. 11 -A/1987 the applicant has preferred this Civil Revision under Section 115 of the Code of Civil Procedure. By the impugned order the application filed by the non-applicant under section 8 of the Indian Arbitration Act, 1940 (hereinafter referred to as Act for brevity) the parties were directed to appoint the arbitrator in accordance with law and get their dispute adjudicated.

(2.) FACTS giving rise to the instant revision petition are that an agreement dated 19.10.1944 was entered into between the applicant and Khairagarh Durbar for felling, cutting and removing bamboos in Khairagarh State for a total period of twenty four years commencing from 1.9.1944. As per clause 8 of the said agreement royalty was fixed at 12 annas per 100 bamboos subject to revision by mutual consent in 8th and 16th year i.e. on 1.9.1952 and 1.9.1960. Clause 24 of the agreement which is an arbitration clause, reads as under. If at any time hereafter either during the continuance or after the determination of this agreement, any doubt, difference or dispute shall arise between the parties hereto touching or concerning their respective rights or privileges hereunder or otherwise arising out of these presents, then the same shall be referred to the Arbitration of a person acceptable to both parties to be appointed and paid for by the parties equally or to the Arbitration of two independent persons, one to be appointed by each party to the reference and in the event of difference of opinion between such arbitrators to an Umpire to be nominated by them by writing under their hands before proceeding with the reference and every such reference shall be deemed to be a reference to an Arbitration within the meaning of the Indian Arbitration Act, 1899 or any re-enactment or statutory modification thereof for the time being in force and shall be regulated and conducted accordingly. Petition under section 8 of the Act was filed by the State/non-applicant averring therein that as per the lease agreement the royalty was raised in the year 1952 from 12 annas to 1.37 paisa per hundred bamboos and accordingly supplementary agreement was drawn in the year 1963. In the year 1960 question of determination of rate of royalty again arose between the parties and the State proposed the rate of royalty at Rs. 4.50 paisa per hundred bamboos which was not acceptable to the applicant/defendant and no agreement could be arrived at and thus the dispute regarding royalty of Rs. 4.50 paisa per hundred bamboos from 1960 onwards still survived. Thereupon a notice was given to the applicant/defendant by the State for appointment of arbitrator. On their behalf State appointed the then Chief Conservator of Forest Shri K.N. Mishra as arbitrator and Orient Paper Mills appointed Shri J.S. Dave as its arbitrator. However, because of inability of Shri J.S. Dave, the arbitration could not proceed and on 6.10.1965 Shri K.N. Mishra, arbitrator appointed on behalf of the State adjourned the case sine-die. However, parties continued to negotiate revised rates even after the adjournment of the arbitration proceedings and there were meetings and correspondences between the parties regarding rates of royalty. The respondent urged that retired Chief Justice of India maybe appointed Umpire for fixing the revised rates of royalty. It was further averred that the parties reached an agreement for revision of rate of royalty and the amount under revised rate of royalty was paid by the applicant/ defendant. The amount under the old rate was accepted subject to further payments under revised rate of royalty. However, as the parties did not arrive at any mutually agreed revised rate of royalty, the matter was referred for arbitration and the dispute regarding revision of rate of royalty for the entire period 1952-60 was open before arbitrators. Petition under section 5 of the Act was filed before the trial court which was rejected on 4.4.1977 with an observation that the respondent/ plaintiff may file an application under section 8 of the Act, whereupon a notice dated 11.1.1978 was given to the applicant/defendant to nominate their arbitrator on behalf of the Orient Paper Mills in place of Shri J.S. Dave.

(3.) THE non-applicant/ plaintiff examined Shri R.S. Awasthy, Conservator of Forest whereas defendant/applicant examined Shri K.N. Tenany, Vice President of the Mill, Dr. Rajendra Kumar Bansal, Personal Officer and Shri R.N. Bajpai, Sr. Executive of the Company. Learned District Judge allowed the application by recording a finding inter alia;(i) that there is a dispute between the parties in terms of clause 24 of the agreement which is referable to the arbitrator for adjudication; (ii) it was incorrect to say that revision of royalty could be undertaken only by mutual consent as per clause 8 of the agreement;(iii) dispute between the parties is a subject matter as per clause 24 for referring the dispute for arbitration, the question whether revised rate of Rs. 4/- per hundred bamboos with effect from 1960 or from 1965, is a disputed question;(iv) application under section 8 of the Act is not time barred and the same cannot be dismissed on that ground and the defendant is not estopped from raising a dispute because he agreed for arbitration in the year 1963; (v) in the light of judgment in Misc. Civil Suit No. 6/1974 the applicant is not estopped from challenging the maintainability of the application, (vi) the doctrine of res judicata is not applicable in the instant case and (vii) the defendant has failed to prove that plaintiff abandoned the earlier arbitration proceedings by not participating in it.