STATE OF WEST BENGAL versus NATIONAL BUILDERS

Citation: [1993] SUPP. 3 S.C.R. 251 · Decided: 13-10-1993 · Supreme Court of India · Bench: S. RATNAVEL PANDIAN · Disposal: Dismissed

Judgment (excerpt)

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\ . 
STATE OF WEST BENGAL 
v. 
NATIONAL BUILDERS 
OCTOBER 13, 1993 
[S.R. PANDIAN, R.M. SAHAI AND A.S. ANAND, JJ.] 
Arbitration Act 1940-Section 8( 1)-'Refuse/ to act-Meaning of-Held 
refusal of' an arbitrator to resign while not accepting the joint request of the 
parties to extend time for arbitration and leave it to them to decide their future 
course of action amounts to refusal to act by the Arbitrator. 
Statutory duty of court's power to inteifere and appoint an Arbitrator 
comes into operation if the Arbitrator refuses to act and the agreement does 
not show that the parties did not intend that the vacancy should not be 
supplied. 
A dispute arose between the respondent-contractor and th'! appel-
lant-state about the settlement of a claim in respect of construction of a 
hospital. A Superintending Engineer was appointed as arbitrator in ac· 
cordance with clause 25 of the agreement for arbitration. 
Despite 59 sitting, the proceedings before the arbitrator did not come 
to an end. The respondent sought the resignation of the arbitrator for legal 
misconduct. The arbitrator refused to resign. He also did not acede to the 
request of the parties to extend time for arbitration and left it to the parties 
to decide their future course of action. 
The respondent approached the Chief Engineer, requesting him to 
appoint a retired Additional Chief Engineer, named in the application, as 
the sole Arbitrator on the ground that the sole arbitrator had refused to 
act. The Chief Engineer rejected the request. The respondent approached 
A 
B 
c 
D 
E 
F 
the Assistant District Judge under Section 12(2) of the Arbitration Act for G 
revoking authority of the sole arbitrator _and filling the vacancy by ap· . 
pointed another arbitrator. The court allowed the application holding that 
the Arbitrator in the circumstances of the case had refused to act. 
The appellant State filed a Writ petition before the High Court 
challenging the trial court's order. The High Court dismissed the petition, H 
251 
252 
SUPREME COURT REPORTS [1993] SUPP. 3 S.C.R. 
A 
and upheld the interference drawn by the trial court that the Arbitrator 
B 
had refused to act. 
' 
In the appeal filed before thi., t·ourt, on behalf of the State, it wa·s: 
contended that the principle of agreement clau~e coming to an end could ; 
not apply where thr sole arbitrator had been given power to nominate . · 
another per!lon. 
Dismissing the appeal, thi!.. Court 
HELD: 1.1 Section 8(1)(b) of the Arbitration Act, 1940, vests the 
Courts with supervisory jurisdiction to Interfere with relationship between 
C the partie:i and the Arbitrator if any of the situations as provided in 
sub-section arises. Refusal to act in legal sense means denial to do some-
thing which one is obliged to do undtr law. An arbitrator who is appointed, 
with common consent of parties, may not proceed with Arbitration for 
various reasons. Whether an arbitrator has failed. to discharge his obliga-
D lion so as to give rise to an inference ~hat he has refused to act shall have 
to be decided by the Court on facts and circumstances of the case. 
(256-D-H, 257-D-E] 
1.2 In the instant case, the arbitrator refused to extend time and 
brought llrbitration to an and leaving it open to parties to decide their 
E 
future course of action as one of the parties whose vital stakes were 
involved did not have confidence in him. The Courts below have not 
committed any error of law in drawing inference that the Arbitrator had · 
refused to act. [258-B] 
Black's Law Dictionary; Shivcharan v. Rati ·Ram, ILR 1885 (7) Al-
p 
lahabad 20; Priyabrata Bose v. Phani Bhushan Ghosc, AIR (1937) Calcutta 
523; Manohar Singh Sahay & Co. v. Jogendra Singh, AIR (1984) Patna31; 
State of U.P. v. Sardul Singh, AIR (1985) All.67 and Gajanand Sita Ram v. 
Phu/ Chand Fateh Chand, AIR (19~0) All. 675, referred to. 
2.1 Settlement of dispute between the parties through medium of an 
G independent person in whom both parties repose confidence is the basic 
foundation on which the entire law of arbitration is founded. When the 
agreement provides that dispute between parties shall be referred to the 
person named In an agreement it is an appointment by consent. But where 
the arbitrator so appointed refuses to act, the next appointment could 
H again be made either as agreed between the parties and prov~ded for in 
! : 
I 
, 
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STATE v. NATIONAL BUILDERS 
253 
the arbitration clause or by consensus. But where either is absent 

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