1. This is an application by the defendants/petitioners under S. 8 of the Arbitration and Concilition Act, 1996 (“the said Act” for short) inter alia for an order for reference of the claim of the plaintiff in this suit to arbitration in terms of the arbitration agreements entered into by and between the plaintiff and the first petitioner Grapco Mining & Co. Ltd. The said arbitration agreements are contained in two several lease agreements respectively dt. 9th Sept. 1994 and 21st Oct. 1994. The said lease agreements are signed by the plaintiff and the first petitioner. The said lease agreements are both annexures to the present application.
2. The arbitration clauses contained in the aforesaid lease agreements are identical and it would be convenient at this stage to set out one of the said arbitration clause (at page 72 of the petition):—
“Except where it has been provided otherwise, any dispute or difference arising out of or in connection with the agreement between the parties including any dispute or difference relating to the interpretation of the agreement or any clause thereof shall be referred to the sole arbitration of a person appointed by…………and the provisions of The Arbitration Act, 1940 and rules framed thereunder and any amendment thereto, from time to time, shall apply. No objection shall be taken on the ground that the arbitrator so appointed is an employee of the Lessor or is in any way associated with the Lessor. The award of the arbitrator shall be final, conclusive and binding on all the parties. The arbitrator shall be competent to decide whether any matter of dispute or difference referred to him falls within purview of arbitration as provided for above and/or any matter relating to arbitration under the Arbitration Act, 1940”.
3. It is not in dispute that by reason of the repeal of the Arbitration Act, 1940 by the said Act, the provisions of the said Act would apply to the said arbitration clause.
4. It appears from the plaint which is also an annexure to the present application (at pp. 15-26 of the petition) that by further agreements in writing dt. 9th Sept. 1994 and 21st Oct. 1994 entitled “supplemental lease agreements” between the plaintiff and the first and second petitioners. The second petitioner was made a party to both the aforesid lease agreements “having thereunder the same rights and jointly and severally the same liabilities” as those of the first petitioner. The said supplemental lease agreements have not been annexed to the present application.
5. The claim of the plaintiff as laid in its plaint is against both the first and second petitioners for recovery of the amounts due and payable by them under the aforesaid lease agreements as modified from time to time by mutual agreements between the parties and delivery of possession of each and every item of equipment referred to therein. It is quite obvious that the second petitioner is a necessary and proper parly to this suit.
6. In resisting the present application the learned counsel appearing for the plaintiff has submitted as follows:—
a) Neither the original arbitration agreement nor a duly certified copy of the same has been annexed to the present application as required under S. 8(2) of the said Act.
I am not impressed by the aforesaid submission. What have been annexed to the present application are the xerox copies of the aforesaid lease agreements which also form part of the plaint filed in this suit. Indeed the said lease agreements are relied upon by both the plaintiff as well as the petitioners and it is not in dispute that the said xerox copies are in fact the true copies of the same. It appears to me that the xerox copies of the said lease agreements containing the said arbitration clause that have been annexed to the present application are in sufficient compliance with the said S. 8(2) of the said Act:
b) As the claim of the plaintiff in this suit is not in dispute the same cannot be referred to arbitration. In support of his said submission, the learned counsel relied on the following cases:—
i) ‘Union of India v. Birla Cotton Spinning and Weaving Mills Ltd.’. AIR 1967 SC 688. In this case the Supreme Court held that where a suit had been instituted for recovery of price under a contract for sale of goods which contained an arbitration clause, the refusal of the defendant to pay the agreed price in order to appropriate it to his claim under a separate contract was not a dispute arising under or in connection with the said contract for sale and as such the suit instituted thereon could not be stayed under S. 34 of the 1940 Arbitration Act:
ii) Mathuradas Goverdhandas v. Khusiram Benarshilal, (1949) 53 Cal WN 873, This is a Bench decision of this Court where it was held that it is only the existence of a difference or dispute which confers jurisdiction upon an arbitrator to adjudicate upon the dispute and if there is no dispute there can be no right to demand arbitration at all;
iii) ‘Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority’, AIR 1988 SC 1007. In this case the Supreme Court held that the existence of dispute is essential for appointment of an arbitrator under S. 8 or a reference under S. 20 of the 1940 Arbitration Act.
It appears to me that on an application under S. 8(1) of the said Act, the Court is only concerned to sec that the matter on which a suit is instituted is also the subject of an arbitration agreement, it is also stated in the present application that the petitioners “have a substantial defence to the claim of the plaintiff in this suit………..” Having regard to the aforesaid it cannot be said that the claim of the plaintiff as laid in its plaint is not disputed by the petitioners.
c) The arbitration clause which provides that “…….. sole arbitration of a person appointed by (left blank)…….” is uncertain and vague and cannot be given effect to. In support of his said submission the learned counsel relied on the following decisions:—
i) ‘Tcamco Private Ltd. v. T.M.S Mani’, AIR 1967 Cal 168, This is a Bench decision of this Court where it was held that the expression “arbitrators” in the arbitration agreement clearly expressed intention that reference would not be to a single arbitrator and as such the same was vague and uncertain and could not be made certain. This case is also an authority for the proposition that the arbitration agreement must be construed with reference to the language used therein:
ii) ‘Kanpur Agra Transport Corpn. v. United India Insurance Co. Ltd.’. 93 Cal WN 1183 : (AIR 1990 Cal 59). This is also a Bench decision of this Court where it was held that the arbitration agreement sought to be relied on by a party thereto stipulated that the Manager of the Company would be the arbitrator but it could not be inferred therefrom as to who was to be the arbitrator as the Company had several branches throughout the country and as such the arbitration agreement was uncertain and vague. The learned Counsel also relied on illustration (b) to S. 93 of the Evidence Act which provides as follows:— “A deed contains blanks. Evidence cannot be given of facts which would show how they were meant to be filied”.
In reply the learned Counsel for the petitioners relied on the following Bench decision of the Allahabad High Court:— ‘Union Of India… v. Janki Prasad Agarwal…., AIR 1986 Allahabad 15. In this case an appeal was preferred from an order under S. 8 of the 1940 Arbitration Act, in which the following arbitration agreement came up for consideration by that Court:—
“the same shall be referred to for decision to a Sole Arbitration who shall be the (left blank) or a person appointed by him in that behalf…..” It was submitted on behalf of the appellant before that Court that in view of the non-mentioning of the name of the arbitrator the arbitration clause was to be deemed in law to be non-existent. Repelling the said submission that Court held that the naming of the arbitrator in the arbitration agreement is not necessary and in any case it would not make it non-existent. This case is clearly distinguishable as no argument appears to have been advanced that the arbitration agreement was uncertain and vague. In any event, the aforesaid Bench decisions of this Court are clearly binding on me.
In my judgment, if the subject arbitration clause is capable of being made certain having regard to the language used therein as well as to the provisions of Ss. 10 and 11 of the said Act then the same would be valid and binding on the parties thereto. In this connection see S. 29 of the Contract Act. The said arbitration clause provides as follows— “…..No objection shall be taken on the ground that the arbitrator so appointed is an employee of the Lessor or is any way associated with the Lessor…..” The ‘Lessor’ in this case is the plaintiff. It is not clear however as to whether the plaintiff or any person designated by it would be the appointing authority. One has therefore to look to S. 10 and 11 of the said Act to sec whether the said arbitration clause is capable of being made certain Clearly S. 10(2) of tic said Act providing for Sole Arbitrator applies to the said arbitration clause.
Sections 11(2) and (5) provides as follows:—
“(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators”.
“(5) failing any agreement referred to in sub-section (2) in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party by the Chief Justice or any person or institution designated by him”.
Sub-section (6) of S. 11 is not relevant for the present purpose. By the said arbitration clause the parties clearly intended that the arbitrator would be appointed by an appointing authority. However, the identity such as the name or designation of the said appointing authority has been left undisclosed and as such the same is vague and uncertain. The aforesaid sub-sec. (5) does not appear to me to cure the said defect. The phrase “Failing any agreement” in the said sub-sec. (5) clearly contemplates a situation where the procedure for appointing an arbitrator has not been agreed upon by the parties to the arbitration agreement, the said sub-section therefore appears to me to be inapplicable.
In the view that I have taken I find the submission of the learner Counsel for the plaintiff that the said arbitration clause is vague and uncertain to be well-founded.
d) The second petitioner has not signed the aforesaid lease agreements containing the said arbitration clause and as such the said petitioner cannot enforce the arbitration agreement. In this connection reference was made by learned Counsel for the plaintiff to S. 7(4)(a) of the said Act. It was therefore submitted that the claim of the plaintiff in this sun winch is against both the first and second petitioner cannot be refened to arbitration. I have already held that the second petitioner is a necessary and proper party to this suit (supra). The claim of the plaintiff cannot be adjudicated in the absence of the second petitioner.
I therefore find that the aforesaid submission of the learned Counsel for sue plaintiff to be equally well-founded.
7. For the foregoing reasons, I dismiss this application of the petitioners. There will however be no Order as to costs.
Petition dismissed.