THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Arb.Case No.39 of 2009 Reserved on: 8.10.2009 Date of decision: December 29, 2009. Himachal Pradesh State Volley Ball ‘Association’ …..Petitioner Versus State of Himachal Pradesh & others …Respondents. Coram: The Hon’ble Mr.Justice R.B. Misra, ACJ Whether approved for reporting?1 For the Petitioner: Mr. N.K. Shekhawat and Mr. Baldev Singh, Advocates. For the Respondents: Mr. Ankush Sood, Addl Advocate General. 1 to 3. For the Respondent No 4: Mr. T.S. Chauhan, Advocate. For the Respondent No.5: Mr.Ashwani Pathak, Advocate. For the Respondent No.6: Mr. Shrawan Dogra, Advocate. R.B. Misra, ACJ. Heard learned counsel for the parties. The present Arbitration case has been filed with prayer for the appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 ( in short called “Arbitration Act”) and Section16 of the Himachal Pradesh Sports (Registration, Recognition and Regulation of ‘Association’s) Act, 2005, inter-alia, to adjudicate the disputes / differences between the parties. 2. An application, namely OMP No. 196 of 2009 was preferred on behalf of the petitioner which was adjudicated on 5th 1 Whether reporter of local papers are allowed to see the judgment? 2 June, 2009 by this court and a detailed order was passed, whereby, the respondent No.5 was restrained from releasing any grant in aid or other funds to the respondent No.6 or any other ‘Association’ headed by him and recognized by respondent No.5. The reply has been filed by the respondent No.6 herein for vacating the interim order passed earlier. 3. An another application, namely, OMP No. 380/2009 was preferred on behalf of applicant-petitioner, with prayer that the respondent No.6 be restrained from taking part in annual elections being conducted under the auspicious of Volleyball Federation of India (in short called ‘‘VFI’’) to be held at Chennai on 23rd August, 2009 or at any place on any other day and for restraining respondent No.5 from recognizing anybody framed under the self styled President-ship of respondent No.6 for the purpose of holding the annual elections of “‘VFI’’. 4. As per the submissions made by the learned counsel for the petitioner the dispute is covered within the four corners of Article XVIII of “Constitution and Bye laws” of the “‘VFI’”. As per the averments made in the present application the petition/application preferred under Section 11 of the Arbitration Act has to be allowed with a direction to the Arbitrator to decide the dispute within 30 days and OMP No. 380 of 2009 in Arbitration Case No. 39 of 2009 is to be considered for interim relief. Whereas, on the other hand, learned counsel for respondent No.6 Mr. Shrawan Dogra, has vehemently argued the maintainability of the present Arbitration Case by saying that the present application is to be dismissed in view of the provisions 3 of Section 7 of the ‘Arbitration Act’. However, after hearing at length, this court vide order dated 21.8.2009, restrained the petitioner as well as respondent No.6 to participate in election of ‘‘VFI’’ to be held on 23rd August, 2009 at Chennai or any other date or place. 5. The petitioner’s case is that Himachal Pradesh State Volleyball ‘Association’ ( hereinafter referred to as ‘the ‘Association’’) is an ‘Association’ duly registered with the Registrar, Cooperative Societies, Himachal Pradesh and is affiliated with H.P. Olympic ‘Association’, H.P. Sports Council and ‘VFI’. As per Article 6 of the Constitution for electing the office bearers of the ‘Association’ the elections were held at Bushaher Sadan, Rampur, District Shimla at 4.30 PM on 13.10.2008 in presence of one Sh. Sannet Kalet as the representative of H.P. Sports Council, where Sh. Ram Avtar attended the said meeting as an observer of ‘‘VFI’’. Sh. Rakesh Verma was unanimously elected as an Election Officer for holding election of the office bearers of the ‘Association’. Sh. Ramesh Sharma, President, District Volleyball ‘Association’, Mandi proposed the name of Sh. Virender Kanwar, which was endorsed by Sh. Vidya Sagar Sharma, Secretary, District Volleyball ‘Association’, Hamirpur, consequently Sh. Virender Kanwar was elected as President of ‘Association’ by the Election Officer and was authorized to nominate other office bearers of the ‘Association’. 6. As per the Constitution of the ‘Association’, there are total 31 votes and the office bearers are to be elected for a period of 4 years. Out of total 12 District Units of State of H.P.. There are two (2) votes each of the President and the Secretary. Besides this, there 4 are other 7 votes from various Government Departments. In the said meeting held on 13.10.2008, total 23 voters/representatives were present, thereby completing the quorum for election being conducted. Except Sh. Ram Lal, the respondent No.6, all other voters casted their votes in favour of Sh. Virender Kanwar. Election was conducted in the presence of observer of ‘VFI’ as well as observer of H.P. Sports Council. Sh. Sannet Kalet, the observer of H.P. State Council has certified the proceedings. However, Sh. Ram Avtar, observer of ‘VFI’ remained present during the election proceedings, but refused to sign and verify the said proceedings. 7. After the election was over, ‘VFI’ was informed on 23.10.2008 itself by registered post followed by the office bearers, requesting the ‘VFI’ for recognizing the duly elected office bearers of the ‘Association’. When no heed was taken on their request, several subsequent communications were made to ‘VFI’. Sh. Sannet Kalet, observer, H.P. Sports Council submitted his report with regard to the election of the office bearers of the ‘Association’. Even the Director, Youth Services and Sports, Himachal Pradesh sent a letter on 3.11.2008 to ‘VFI’ requesting him to recognize the new election body of the ‘Association’. Despite such endeavour, ‘VFI’ did not respond. On 28.11.2008, General Secretary of the ‘Association’ again informed the Secretary General of ‘VFI’ that Sh. Ram Lal, the respondent No.6 is describing himself as President of the ‘Association’ illegally and had announced that he is going to conduct trials of the sportsman at Kalka in the State of Haryana. In that respect, ‘VFI’ was requested to restrain Sh. Ram Lal from functioning as President of the 5 ‘Association’. However, H.P. Sports Council and H.P. Olympic ‘Association’ both have granted recognition to the petitioner as elected President on 13.11.2008 and other office bearers of newly elected ‘Association’ and its functioning. The Director, Youth Services and Sports, Himachal Pradesh has also written a letter on 3rd November, 2008 (Annexure P-5) to the Secretary General, ‘VFI’ stating that the petitioner is elected President. One Shri Jagir Singh stated to be General Secretary of HP State Volley Ball ‘Association’ has also written to the General Secretary of ‘VFI’ informing him that “the petitioner was unanimously elected as President.” 8. Learned Counsel for the petitioner has highlighted that on the date of election the persons participated in the election (shown as in Annexure R-6/4 annexed with the reply filed by respondent No.6) were not in consonance and in harmony to the District-wise Members of the Volley Ball ‘Association’ actually to participate (out of all 12 Districts of Himachal Pradesh), as shown in Annexure P-13 to the application preferred by the petitioner under Section 9 of the Arbitration Act/OMP No.380 of 2009. 9. On the other hand, Shri Dogra, learned Counsel has argued that the respondent No.6 has written a letter on 6th September, 2008 to the General Secretary of Himachal Pradesh Volley Ball ‘Association’ about the conducting annual meeting in second week of October, 2008. Shri H.C. Pathik, the General Secretary, however, has written vide letter dated 12th September, 2008 about conducting of the election of HP Volley Ball ‘Association’ on 13th October, 2008 where number of delegates have been shown 6 at Annexure R-6/4 (page 92) and in view of Annexure R-6/5 shown at page 97 the name of Shri Ram Lal Thakur, respondent No.6 was proposed by Shri Jagdish Handa, seconded by Shri Durga Singh Thakur and consequently he was elected as President and on that occasion Shri Ramavtar Singh Jakhar was present as Observer who had informed on 15.10.2008 to the General Secretary of ‘VFI’ that respondent No.6 has been elected as President. By letter dated 31st October, 2008, the Secretary, HP Volley Ball ‘Association’ has also congratulated the respondent No.6 for being elected as President and a list of elected persons has been conveyed on 22nd May, 2009. The annual subscription fee has also been paid regarding registration of the HP Volley Ball ‘Association’ headed by respondent No.6. 10. The petitioner is disputing the election and locus- standi of respondent No.6 as President, whereas, respondent No.6 is disputing the status position of the petitioner inter alias stating that it may be the dispute between the petitioner and respondents No.5 and 6 and other respondents No.1 to 4 have no locus-standi in the present case. According to learned Counsel for respondent No.6 acknowledging the petitioner as President of the Volley Ball ‘Association’ of Himachal Pradesh by Mr. J.P. Nadda is not relevant. 11 According to the learned counsel for the petitioner, ‘VFI’ is an apex body to which State Volleyball ‘Association’s are affiliated. The present petitioner is also affiliated to ‘VFI’. The constitution of ‘VFI’ has been annexed as Annexure P-11 to the present Arbitration Case. The relevant extract of the constitution of ‘VFI’ has been reproduced below: 7 “Article No. XVIII (a) Disputes/conflicts in member ‘Association’ In the event of a dispute/conflict in a member ‘Association’ or its constituent unit, a complete statement of case shall be submitted to the Federation. The case will be immediately put up by the Secretary General to the Executive Committee. If necessary an emergent meeting of the Executive Committee will be called. The Executive Committee will appoint an Arbitrator or a Committee of Arbitrators for the dispute/conflict who will give the decision within 30 days of the submission of the case. All the disputes among the Member ‘Association’ or its constituent unit shall be decided by reference to Arbitration alone as mentioned herein under the Arbitration Act, 1940. All Member ‘Association’ and its constituents are required to insert this clause in their Constitution by which they freely renounce their right to take the dispute/conflict before the Court of law without exploring all avenues and undertakes to accept the decision of the Arbitrator.” 12. According to the learned counsel for the petitioner, a perusal of the said provision would clearly show that the dispute could be referred to the Arbitrator and there is no need of creation or existence of a separate arbitration agreement between the parties. The ‘Association’ is bound by the constitution of the apex body and the petition under Section 11 of the Arbitration and Conciliation Act deserves to be allowed. 13. Learned counsel for the petitioner has referred and placed reliance on the following decisions: 8 (a) In Food Corporation of India Vs. Indian Council of Arbitration and ors etc. etc 2003 (4) RCR (Civil) 411 where the Hon’ble Supreme Court has held that the Arbitration clause ought to be construed more to perpetuate the intention of parties to get disputes resolved through arbitration rather than thwarting it by adopting a narrow, pedantic and legalistic interpretation-Agreement between parties to resolve their dispute by reference to an arbitration through the ICA in accordance with rules prescribed by ICA and the ICA refusing to proceed with arbitration till parties agree in writing afresh. It was also observed that even if there was any infirmity in arbitration clause which undermined constitution of arbitral tribunal it had to be adjudicated by the same tribunal after a reference is made to it on being so constituted the ICA directed to nominate arbitrator within in sixty days. (b) In Punjab State & Ors Vs. Dina Nath with Executive Engineer, Anandpur Sahib Hydel Construction Divn Vs. Dina Nath & others AIR 2007 SC 2157, Hon’ble Supreme has observed that the Arbitration agreement has to be in writing, but need not be in any particular form. If intention of parties to refer dispute to arbitration and to abide by that decision is clear, arbitration agreement comes into existence. ( c) In Jagdish Chander Vs. Ramesh Chander & ors, 2007 (2) RCR (Civil) 860, Hon’ble Supreme Court has held as below: “Para 8. This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in K.K. Modi Vs K.N. Modi [1998(3) SCC 9 573], Bharat Bhushan Bansal V. U.P. Small Industries Corporation Ltd. [1999 (2) SCC 166] and Bihar State Mineral Development Corporation Vs. Encon Builders (I) (P) Ltd [2003 (7) SCC 418]. In State of Orissa V Damodar Dass [1996 (2) SCC 216], this court held that a clause in a contract can be construed as an ‘arbitration agreement’ only if an agreement to refer disputes or differences to arbitration is expressly or impliedly spelt out from the clause. We may at this juncture set out the well settled principles in regard to what constitutes an arbitration agreement. (i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement. (ii) Even if the words ‘arbitration’ and ‘arbitral tribunal (or arbitrator) are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause 10 relating to settlement of disputes, it does detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are: (a) The agreement should be in writing (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal (c ) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the private Tribunal in respect of the disputes will be binding on them. (iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either 11 party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement. (iv) But mere use of the word ‘arbitration’ or ‘arbitrator’ in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as ‘parties can, if they so desire, refer their disputes to arbitration’ or ‘in the event of any dispute, the parties may also agree to refer the same to arbitration’ or ‘if any disputes arise between the parties, they should consider settlement by arbitration’ in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that ‘if the parties so decide, the dispute shall be referred to arbitration’ or ‘any disputes between parties, if they so agree, shall be referred to arbitration’ is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future.” 12 (d). In Ace Pipeline Contracts Pvt Ltd V Bharat Petroleum Corporation Ltd AIR 2007 SC 1764, Hon’ble Supreme has observed in para 13 as under:- “13 It may also not be out of place to mention that we are aware of the departmental lethargy in making appointment of arbitrators in terms of the arbitration clause. Therefore, mandamus can be issued by the courts in exercise of powers under section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within the reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms of arbitration clause & appoint the arbitrator/arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name.” (e) In Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Limited 2008(10) SCC 240, Hon’ble Supreme has observed in para 12 as under:- 13 “ 12. A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement being adhered to and/or given effect as closely as possible. The court may ask to do what has not been done. The court must first ensure that the remedies provided for are exhausted. It is true that it is not mandatory for the Chief Justice or any person or institution designed by him to appoint the named arbitrator or arbitrators. But at the same time, due regard has to be given to the qualifications required by the agreement and other considerations.” (f) According to the petitioner, the verdict in Firm Ashok Traders and another Vs. Gurumukh Dass Saluja & others 2004(3) SCC 155 is supporting the cause of petitioner. In my respectfully consideration, the observation made by the Hon’ble Supreme Court is not very helpful in the present facts and circumstances of the case. (g) In M/s Agri Gold Exims Ltd Vs. M/s Shi Lakshmi Knits & Wovens & Ors 2007(1) RCR (Civil) 851, it was observed by the Hon’ble Supreme Court that where there exists an arbitration agreement, the court is under obligation to refer the parties to arbitration in terms of the arbitration agreement. (h) In The Empire Jute Co. Ltd and others Vs. The Jute Corporation of India Ltd and another, 2008(1) RCR (Civil) 151, the Hon’ble Supreme Court has observed in reference to the arbitration cases that the judicial review is permissible when agreement between the parties contained an arbitration clause to 14 resolve the disputes through arbitrator. By giving indulgence in reference to the dispute between the parties, Hon’ble Supreme Court has further held as under: (i) When there exists an arbitration agreement, the writ court ordinarily would not exercise its discretionary jurisdiction to enter into the dispute. (ii) The power of judicial review vested in the superior Courts undoubtedly has wide amplitude but the same should not be exercised when there exists an arbitration clause. (iii) The dispute between the parties being covered by the arbitration clause should be referred to arbitration.” 14. On the other hand, following submissions have been made by Sh. Shrawan Dogra, Advocate for and on behalf of respondent No.6 that appointment of Sole Arbitrator under section 11 (6) of the Act depends upon the existence of Arbitration Agreement as contemplated under Section 7 of Arbitration Act between the parties between whom the dispute is alleged. Since no written arbitration agreement or arbitration clause between the petitioner and the other parties existed, hence prayer under section 11 (6) of the ‘Arbitration Act’ is not maintainable as in the election held on 13.10.2008, the respondent No.6, Ram Lal Thakur was elected as President and the observer of ‘VFI’ had submitted his report, declaring respondent No.6 as elected President. Consequently, ‘VFI’ has recognized Himachal Pradesh Volleyball ‘Association’ headed by respondent No.6, Though Article 18 of ‘VFI’ contains the arbitration clause but the same would 15 be applicable in case dispute is between ‘VFI’ (Volleyball Federation of India) on one hand and its constituent members on the other. Since in the instant case, petitioner is not admitted as member of ‘VFI’, therefore, Article 18 would not be applicable to an alleged dispute arising between the non member ‘Association’ and ‘VFI’. Thus, the claim of the petitioner that the dispute is covered by arbitration clause in the Article of ‘Association’ is wholly misplaced and without any foundation. Since the dispute is being raised by an stranger who is not recognized as member by the ‘VFI’ and in absence of any arbitration clause, Article 18 of the ‘VFI’ ((Annexure P- 11 ) would not be helpful to adjudicate the dispute if any between the petitioner and the respondent No.6. For strengthening the stand of respondent No.6, Mr. Shrawan Dogra has placed reliance on the following decisions:- (a) in Wellington Associates Ltd Vs. Kirit Mehta AIR 2000 SC 1379, Hon’ble Supreme Court has held in paragraphs No.15,16,18, which are reproduced herein as under: “15. The more important question however is whether S. 16 excludes the jurisdiction of the Chief Justice of India or his designate in this behalf if a question as to the existence of the arbitration clause is raised by the respondent in his reply to the petition filed under S. 11. (I am not concerned with the question of the validity or effect of the arbitration clause, in the present case). In my view, S. 16 does not take away the jurisdiction of the Chief Justice of India or his designate, if need be, to decide the question of the 'existence' of the arbitration agreement. 16 Section 16 does not declare that except the arbitral Tribunal, none else can determine such a question. Merely because the new Act permits the arbitrtor to decide this question, it does not necessarily follow that at the stage of S. 11 the Chief Justice of India or his designate cannot decide a question as to the existence of the arbitration clause. xx xx xx xx xx “Obviously, if the question as to the existence of the arbitration clause is raised before the arbiral Tribunal, it has power to decide the question. Again in a case where the initial existence of the arbitration clause is not in issue at the time of S. 11 application but a point is raised before the arbitral Tribunal that the said clause or the contract in which it is contained has ceased to be in force, then in such a case, the arbitrator can decide whether the arbitration clause has ceased to be in