1. This is an application by M/s. Hope (India) Ltd. under Ss.30 and 33 of the Arbitration Act for setting aside the award dated 30-8-1980. M/s. Hope (India) Ltd. entered into a contract for supply of goods to the respondent and indeed supplied certain quantity of the said goods. Thereafter disputes and differences arose relating to the said transaction. The contract between the parties contained an arbitration clause but the validity of the same was disputed. In that view of the matter, an application u/S. 33 of the Arbitration Act was taken out for determination of the existence and the validity of the said arbitration agreement being Matter No. 364 of 1977. The said application was heard by Mr. Sabyasachi Mukharji J., and it was held that there was a valid and subsisting arbitration agreement between the parties. Against that Order, M/s. Hope (India) Ltd. moved the Supreme Court and took out a special leave petition being S. L. Petition (Civil) No. 115 of 1979. But the said S. L. P. was not pressed. What transpired before the Honble Supreme Court on that date was recorded in the order dated 3-5-1979 which is set out in full below :-

Honble Mr. Justice P. M. Singhal..

Honble Mr. Justice A. D. Koshal.

For the petitioner : Mr. S. S. Roy, Sr. Adv., Mr. H. K. Puri, Adv.

For the respondents Mr. Soli J. Sorabji, Addl. Solicitor Gen. of India with Mr. A. K. Ganguli and Mr. K. Jayaram and Mr. K. Ramkumar, Advs.

Upon hearing counsel, the court made the following order :-

"Heard the learned counsel.

The special leave petition is not pressed and is, therefore dismissed. Learned counsel are however in agreement that the dispute and difference between the parties be referred to the sole arbitration or Mr. Justice Sudhamoy Basu or Mr. Justice Masud who are the retired Judges of the Calcutta High Court. The learned Additional Solicitor General wants to place on record that this has been agreed to in response to a suggestion which fell from the court and that this will not be precedent for the future. It is ordered accordingly..

Sd/- A. Appa Rao .

Assistant Registrar.

2. What followed thereafter clearly appears from the records filed by the arbitrator in this proceeding. I find from this record that one S. L. Ganguli, Secretary of the respondent Mining And Allied Machinery Corporation Ltd. wrote a letter dated 16-5-1979 to the retired Judge Mr. Justice Sudhamoy Basu in following terms :

To,.

Mr. Justice Sudhamoy Basu (Retired)

53, Southern Avenue

Calcutta-29.

Dear Sir,

Sub. : Dispute between M/s. M.A.M.C. Ltd. and M/s. Hope (India) Ltd. arising out of

Purchase Order No. P/6209982/VPC dated 24-6-1975.

3. In pursuance to the direction of the Honble Supreme Court of India dated 3-5-1979 in Special Leave to appeal (Civil) No. 115 of 1979 (copy enclosed) we hereby nominate you to act as sole Arbitrator in the above mentioned dispute.

4. Kindly signify your acceptance to act as sole Arbitrator in the above mentioned dispute.

M/s. Hope (India) Ltd. is being informed separately.

Yours faithfully,

Sd/-

(S. L. Ganguli)

Secretary.

Copy to :

M/s. Hope (India) Ltd.

Pench Steel Division

Kanak Building

41 Chowringhee Road

Calcutta 700071.

5. In response to that letter Mr. Justice Sudhamoy Basu wrote both the parties on 21-5-1979 as follows :-

"I have received a letter dated 16-5-1979 from M/s. Mining and Allied Machinery Corporation Ltd. by which they nominated me in pursuance to the Supreme Court Order to act as the sole Arbitrator in the above matter. From the copy of the order of the Supreme Court dated 3rd May, 1979 it appears that I have been appointed to act as the sole Arbitrator by the Supreme Court on the submissions of both the parties. On that understanding I consent to act in the matter."

6. He entered upon the reference and made and published his award on 30-8-1980. The said award is in favour of the respondent and has been filed in this court. The present application for setting aside the said award has been taken out by M/s. Hope (India) Ltd. within the period of limitation. The grounds for setting aside are mentioned in paras. 8 to 20 of the petition. After 3/4 days hearing, Mr. Bhabra appeared on the scene on behalf of the petitioner and submitted that this court has no jurisdiction. The arbitrator was appointed by the Honble Supreme Court and the award should have been filed in that court alone. He strongly relied on S.31(4) of the Arbitration Act and submitted that the Supreme Court has exclusive jurisdiction in this matter. In support of his contention, he cited AIR 1981 SC 2075 [LQ/SC/1981/396] . In this case an order for reference on a S.20 application under the Arbitration Act was made by the Delhi High Court who appointed an arbitrator. Subsequently an application under Ss.5 and 11 of the Arbitration Act was made for the removal of the said arbitrator. The same having been dismissed, the matter went up to the Supreme Court and the Supreme Court thereafter removed the arbitrator and appointed another. Certain directions were also given by the Supreme Court regarding the conduct of the arbitration proceeding. The award made in that reference was sought to be filed in the Delhi High Court, but was contested on the ground that it ought to have been filed in the Supreme Court. It was held that the Supreme Court appointed the arbitrator, retained control over the matter and as such it had exclusive jurisdiction under S.31 (4) of the Arbitration Act. The award should have been filed in the Supreme Court. This decision was based on a previous decision of the Supreme Court reported in AIR 1972 SC 1507 [LQ/SC/1972/66] . According to Mr. Bhabra, this Court cannot entertain the award as in this matter also, the Supreme Court had appointed the arbitrator and has exclusive jurisdiction.

7. Mr. P.K. Roy, appearing on behalf of the respondent submitted that in AIR 1981 SC 2075 [LQ/SC/1981/396] , it was an application under Ss.5 and 11 where the Court had jurisdiction to appoint an arbitrator. Whereas in the present case, parties went up to the Supreme Court in connection with an application under S.33 of the Arbitration Act for declaration of the legality or validity of the Arbitration agreement. Hence the question of appointment of an arbitrator by the Supreme Court did not arise. On proper construction of the order of the Supreme Court dated 3-5-1979, it would be clear that S. L. petition was not pressed and the matter came to an end with the end of the S. L. Petition. Thereafter the parties agreed before the Supreme Court that they would refer the disputes to either of the two retired Judges of the Calcutta High Court and in fact subsequently nominated Mr. Justice Sudhamoy Basu as their sole arbitrator. Hence the arbitrator was appointed by the parties and not by the Supreme Court. He distinguished the facts of the Supreme Court case relied on by Mr. Bhabra with that of present case and pointed out that in AIR 1981 SC 2075 [LQ/SC/1981/396] , the Court retained control or seisin over the matter, passed directions for conduct of the arbitration proceeding from time to time. But it was not so in this case. This fact will clearly establish that the arbitrator was not appointed by the Supreme Court nor did the Supreme Court retain any control or seisin over this matter. He relied on S.15 of the Civil P. C.

"Every suit shall be instituted in the Court of the lowest grade competent to try it."

In support of his contention that the arbitrator was appointed by the agreement of the parties and the filing of the award in Calcutta High Court was done in accordance with S.15 of the C. P. C. The word "suit" included all other independent legal proceedings as well.

8. Mr. Bhabra submitted that S.31 of the Arbitration Act will prevail "Notwithstanding anything contained in any other law for the time being" as will clearly appear from the opening words of S.31 of the.Hence the provision of S.15 of the C.P.C. will not prevail over the provisions of S.31 of the Arbitration Act.

9. To find out who has appointed the arbitrator in this matter, the order dated 3-5-1979 has to be construed carefully.I agree with Mr. Roy that in S.33 application, the question of appointment of an arbitrator by court will not arise. But what happened in this case The arbitration clause in this matter is that the Managing Director of the respondent will appoint a sole arbitrator and the petitioner will not be entitled to object if an employee of the respondent, even if he had dealt with the matter earlier and had expressed his opinion in any matter or all matters relating to the disputes, is appointed as the sole arbitrator by the Managing Director. This will be clear from Cl.3001 of the General Conditions of Contract for purchase (1973) which is Annexure-B to the statement of claim before the arbitrator.There is no doubt that this arbitration clause is extremely one sided. The reasons for the petitioners taking out the application u/S.33 of the Arbitration Act was to get out of this agreement. But he lost in his attempt before the trial Court. The matter then went up to the Supreme Court and a suggestion fell from the court that it would be better for the parties to go to an independent arbitrator. Therefore, the parties reconciled their disagreement as to the validity of the arbitration agreement and the petitioner was able to persuade the respondent to have an independent arbitrator. The respondent was willing but on one condition that this exception would not be cited in future as precedent. The purpose of the petitioner in S.33 application was served. Hence there was no more any necessity of pressing the S.L. Petition. Only one difficulty remained. If after the dismissal of the S.L. Petition, the respondent tries to back out from having an independent arbitrator then how to prevent that The best safeguard would be to obtain an order of Court. Similarly, the respondent thought that if an order be obtained from court recording that this case would not be referred to in future as a precedent, then they could safely accept an independent arbitrator in this case. Hence both the parties were eager to obtain an order of court, which would be binding on the parties, and would protect their respective interests in future. All these culminated in the order dt.3-5-1979. A careful reading of this order will show that it has two distinct parts as follows :

1st part :-

"The Court makes the following order :-

Heard the learned Counsel.

The special leave petition is not pressed and is therefore dismissed."

Second Part :-

"Learned counsel are, however, in agreement that the dispute and difference between the parties be referred to the sole arbitration of Mr. Justice Sudhamoy Basu or Mr. Justice Masud who are the retired Judges of the Calcutta High Court. The learned Additional Solicitor General wants to place on record that this has been agreed to in response to a suggestion which fell from the Court and that this will not be precedent in future. It is ordered accordingly."

10. This order was passed by the Supreme Court and the S.L. petition was dismissed on these terms. No doubt that this order was passed on the submissions of the parties but still it is an order of Court and binding on the parties. I have already mentioned that Mr. P.K. Roy is putting emphasis on his control theory, that is that in AIR 1981 SC 2075 [LQ/SC/1981/396] , the Court was controlling the arbitration proceeding which conferred jurisdiction to the Supreme Court but in the present case no such control was exercised by the Supreme Court which showed that it has no jurisdiction.But I do not think that there is much substance in it. Courts power to control the arbitration proceeding in that case flowed from the order of appointment of the arbitrator by that court. If the Court only appoints the arbitrator but does not think it necessary to give any further direction regarding the arbitration proceeding still that court alone will have the exclusive jurisdiction under S.31 (4) of the.I have no hesitation to hold that in this case too, the Honble Supreme Court appointed the arbitrator. This construction is also corroborated by the subsequent facts. The respondent proceeded on the basis of the "Courts order" as will appear from its letter dt.16-5-1979 and Justice Basu also acted as the arbitrator on the basis of this order dt.3-5-1979 as will be clear from his letter dt.25-5-1979 set out above. None of the parties at that stage, came forward to say that that was not the case and that he was appointed by the parties only.No such clarification was made as there was nothing to clarify. Even on the face of the award, the learned arbitrator specifically mentioned that he was appointed by the Honble Supreme Court. Therefore, it is clear that the arbitrator and the parties themselves proceeded on the basis that the arbitrator was appointed by the Supreme Court. It is now too late in the day to say otherwise. Another point has been raised by Mr. P.K. Roy that the appointment has not been made by the Supreme Court as the order provides that Justice Basu or Justice Masud will act as the sole arbitrator.The Supreme Court merely selected two names but did not appoint any. The matter of appointment was left to the parties who appointed Justice Basu subsequently. Mr. Bhabra submitted that the true meaning of the word or in the order was that the disputes would be referred to Justice Basu failing him to Justice Masud. He relied on 59 Cal WN 623: (AIR 1955 Cal 588 [LQ/CalHC/1954/292] ) in supper of his contention. This appointment was made subject to acceptance by the persons mentioned in the order. As soon as Mr. Basu accepted it, he became the arbitrator appointed by court. Mr. Ray did not object against the construction I accept the submission of Mr. Bhabra on this point.

11. The result is that I must hold that this Court has no jurisdiction to entertain this award. In this view of the matter, the question of going to the merit of the award does not arise. I direct the awards to be taken off the record and be returned to the parties for filing the same in the proper court. In this view of the matter, there will be no order as to cost.