UNION OF INDIA versus OM PARKASH

Citation: [1976] 3 S.C.R. 998 · Decided: 02-04-1976 · Supreme Court of India · Bench: A.C. GUPTA · Disposal: Dismissed

Judgment (excerpt)

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998 
UNION OF INDIA 
v. 
OM PARKASH 
April 2, 1976 
[A. C. GUPTA AND JASWANT SINGH, JJ.] 
Arbitration Act, 1940-Secs. 8, 20, 30, 32, 33-Whether c·ourt appointing an 
,urbitrator can further make an order referring disputes to arbitrator-/llvard can 
be set aside on the ground of invalidity of reference--Whether "otherwise in~ 
valid' includes invalid reference. 
The respondent, a contractor, entered into 7 agreements with the Union 
of India for the construction of a hospital. some buildings and tubewells. In 
each one of these agreements there was a clause providing that any dispute 
arising between the parties would be referred to an arbitrator. The designations 
of the arbitrators were also mentioned in 4 agreements as Director of Farms, 
in two agreements as the Officer Commanding, Lucknow. and in one agreement 
as the Quartermaster General at Delhi. The offices by reference to which the 
arbitrators were mentioned in the agreement were abolished. The respondent, 
therefore, made 7 applications in the court of Civil Judge at Meerut under 
section 8(2) of the Aribtration Act, 1940, praying for appointment of 
an 
arbitrator. The Trial Court appointed Col. Ranbir Singh to act as an arbitra-
tor in all the 7 cases and further directed the papers to be sent to him asking 
him to give his award within 2 months from that date. 
With the consent of 
both the parties the arbitrator made some progress. 
However, the Government 
counsel submitted before the arbitrator that he should not proceed further 
since he was not competent to deal with the questions of law arising for deci-
sion. Thereafter the, District Judge Meerut transferred the cases to the Judge 
of the Small Causes Court at Meen1t presumably on the assumption that the 
respondent's application for the appointment of arbitrator were pending. 
The 
learned Judge of Small Causes Court appointed Director of Farms, General 
Headquarters, to act as arbitrator in all the' 7 cases and he was further direct-
ed to file his award within one month of the said order. The papers were 
then sent to Brig. Bhandari assuming that he was the Director of Farms. Later 
on, the respondent applied to the court for review of its order alleging that 
the office of the Director of Farms was abolished and, therefore, Brig. Bhandari 
could not be the officer mentioned in the order. The respondent did not take 
part in the arbitration proceedings but before the respondent could obtain a 
stay the arbitrator filed his award in the Court. 
The respondent made 7 applications for setting aside the award before the 
Small Causes Court, Meerut, which were rejected. Against that. the respond· 
ent preferred 7 appeals to the Allahabad High Courf. The High Court allow-
ed the appeals accepting the contention of the respondents that the court was 
functus officio after appointing the arbitrator under section 8(2) and had no 
jurisdiction to refer the cases to the arbitrator. The High Court held that it 
was for the parties to refer the disputes to the arbitrator after he was appointed 
by the court and the reference by the court being without jurisdiction the 
awards were invalid. The High Court also held that when the court made the 
order of. reference there was no post of Director of Farms and as such, Brig. 
Bhandari was not competent to act as an arbitrator on the basis of the order 
of the Court. 
In these appeals by certificate, the appellants challenged the findings of the 
High Court. 
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Dismissing the appeals, 
HELD : An agreement to submit differences to arbitration implies an agree-
ment to. refer the differences to the arbitrator. Section 8 only empowers the 
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UNION v. OM PARKASH (Gupta, J.) 
999 
Court to appoint an arbitrator where the parties do not concur in the appoint-
ment. 
Section 20 contains provisions for arbitration with the intervention of 
a Court where there is no suit pending. This section confers lJOWer on the 
court to order the agreement to be filed and further to make an order of refer-
ence to_ the arbitrator appointed by the parties or where the parties cannot 
agree upon an appointment, to an arbitrator appointed by the court. On the 
other band, section 8 does not contain any provision empowering th~ court to 
make a reference to the arbitrator as one finds in section 20. 
Therefore. the 
Small Causes Court at Meerut had no jurisdiction after appointing an arbitra-
tor- under section 8 (2) to proceed further to make an order r

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