' This is an application moved by the petitioners under section 8 of the Arbitration Act, 1940 praying therein for the appointment of a sole arbitrator in substitution of the earlier appointed arbitrator Mr. Muhammad Yousuf who neglected to make the award.
1. The facts briefly stated giving rise to the filing of the above application are that the parties on 24th March, 1970 entered into a contract described as 'Agency Agreement' which inter alia provided for the settlement of disputes as follows :- "Any dispute, question or difference arising out of or relating to his agreement and any dispute, question of difference relating to the construction or interpretation of this agreement shall be referred to the decision of a sole arbitrator to be appointed by mutual consent of the Principal and the Agent and the parties. Reference to "the arbitrator shall be condition precedent to any other action at law. The Arbitration Act, 1940 (X of 1940) and the rules framed thereunder shall apply to the arbitration proceedings. The venue of the arbitration shall be Karachi."
2. As disputes and differences arose between the parties relating to the contract mentioned above, the arbitration clause was invoked and Mr. Muhammad Yousuf, Director-General Export Promotion Bureau, Karachi, was appointed by consent of the parties as the sole arbitrator. Before the said arbitrator, after filing of the claim, counter-claim and framing of the issues, the case was adjourned to 18th October, 1975 for submission of admitted documents. It appears that thereafter for one reason or the other no progress was made and the time for making the award expired.
Consequently the petitioners applied under section 28 of the Arbitration Act for extension of time to enable the arbitrator make the award. Before the said application could be disposed of, the petitioners moved the present application under section 8 of the said Act for appointment of a sole arbitrator in substitution of Mr. Muhammad Yousuf who according to them neglected and/or refused to act.
' In the above circumstances the earlier application made under section 28 was dismissed by the Court by order passed on 10th February, 1982 as having become infructuous.
3. Mr. Chundrigar the learned counsel for the applicant has in support of the present application contended that in view of the fact that the arbitration clause has not been superseded and that the sole arbitrator has neglected to act, it is a fit case in which under section 8 of the said Act and in the interest of justice this Court may appoint a sole arbitrator to act in the reference and to make an award.
' I have heard the learned counsel for the petitioners and on enquiry made he frankly conceded that before moving the present application the petitioners did not serve the other party with any written notice to concur in the appointment or in supplying the vacancy. The learned counsel however, submitted that since the sole arbitrator earlier appointed by consent, refused to act or otherwise became incapable of acting, it is a fit case where the Court may supply and fill the vacancy.
4. In order to appreciate the argument of the learned counsel, it would be relevant to refer to section 8 of the Act, which reads as follows :- ' Section 8."Power of Court to appoint arbitrator or umpire.-(1) In any of the following cases a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy ; or
(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him ; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the ' other parties in opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."
A careful reading of section 8 reproduced above, could show that the Court is not competent to appoint an arbitrator or assume jurisdiction to acts, under the said section unless it is shown that a written notice to concur in the appointment of an arbitrator or arbitrators or in supplying the vacancy has been served by the party making the application and that the appointment has not been made within 15 clear days after the service of the said notice. Admittedly no such notice has been served b the applicant upon the respondent as required under subsection (1) of section 8 of the Act.
' In the circumstances the application made by the petitioners, without following the procedure laid down in subsection (2) of section 8, would not lie.
' 4-A. I am fortified in the conclusion reached as above by the cases reported as Thakurdas v.
Ramdas (1); Abdul Ghani v. Din Dayal (2); Poran Lal v. Rupchand (3) and Durga Prasad v. Barati La!
(4). In these cases the principle was recognised that the Court could not take action for the removal of an arbitrator and the substitution of another, where notice was served upon the other party. These cases were decided under the provisions of Para. (2), Sch. 2, Civil Procedure Code (1908) which partly correspond to section 8 of the Arbitration Act, 1940.
' Reference may also made here to the Base's commentary on the Arbitration Act, 1940 (7th Edition) where the procedure which governs cases, as the one under consideration, falling under section 8
(1) (b) of the Act is summarised as follows :- "The Court may appoint an arbitrator or arbitrators or umpire, as the case may be, in the following cases :-
(i) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting or dies,
(ii) the arbitration agreement does not show that it was intended that the vacancy could not be supplied,
(iii) the parties or the arbitrators, as the case may be, do not supply the vacancy,
(iv) that notice has been served by one party to another party or parties following the procedure laid in section 42 of the Act,
(v) that no appointment was made within 15 days after the service of notice, and
(1) AIR 1925 Lah. 374 (2) 50 I C 655
(3) AIR 1931 All. 761 (4) AIR 1933 Oudb 540
(vi) that opportunity was given to the defaulting party to have his say before the Court."
5. I may also refer here with advantage to the case of Chief Engineer Pak. P. W. D. v. Mls. Samir & Co.
(1). In the said case the sole arbitrator appointed by the Chief Engineer as per terms of the arbitration agreement refused to act as an arbitrator. Thereafter one of the parties to the arbitration agreement served notice upon the other party to concur in the appointment of an arbitrator from amongst a list of three persons supplied by him. But the said party before the expiry of the notice period (15 days) as allowed by section 8 (2) of the Act, filed an application in the subordinate Court for appointment of an arbitrator, which was opposed. The trial Court however accepted the application and appointed an arbitrator to adjudicate the dispute between the parties. This order was challenged in the High Court on the plea that the application was not maintainable as the same had been filed before the lapse of 15 days whereas subsection (2) provides that if the appointment is not made within 15 days after service of the notice then the Court is entitled on the application of the party who serves the notice, to appoint an arbitrator in the matter. The learned High Court while holding that filing of an application for the purpose of appointment of a new arbitrator before the expiry of the notice period is at the most an irregularity which does not vitiate the proceeding, observed :- "The embargo is actually on the power of the Court in making the appointment before the expiry of this period of 15 days from the date of service of notice. What is intended by the Legislature in this subsection is that the Court itself will not derive its jurisdiction until 15 days expired and the parties failed to reach unanimity on appointment of a new arbitrator."
' Mr. Chundrigar, the learned counsel for the petitioners was unable to show any law under which the Court could invoke its inherent jurisdiction and appoint an arbitrator, or the requirement of the law of service of notice by the party making the application upon the other party to concur in the appointment or in supplying the vacancy, could be dispensed with.
6. The upshot of the above discussion is that this application for the appointment of a sole arbitrator in substitution of the sole arbitrator earlier appointed by consent of the parties, is dismissed as the petitioners failed to give the requisite written notice as required under section 8
(1) and follow the procedure laid down in section 8 (2) of the Arbitration Act, 1940.
(1) 1970 D L C 984 revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.