Case: Union Of India Vs. D.M. Revri &amp; Co

the machinery for nomination of an arbitrator, the arbitration agreement in clause (17) could still be enforced by the Court by appointing an arbitrator in a proceeding under section 20 of the Arbitration Act. But the position again changed and the Ministry of Food &Agriculture came into being as a result of integration of the Ministry of Food and the Ministry of Agriculture, with this change, namely, that the new Ministry of Food &Agriculture had two departments, one of Food and t he other of Agriculture and there was a Secretary incharge of each department. There were thus, after integration, two Secretaries in the Ministry of Food & Agriculture and the argument of the respondents was--and that argument found favour with the High Court--that this event rendered the arbitration agreement vague and uncertain, inasmuch as it did not specify which of the two Secretaries was to nominate the arbitrator "in his absolute discretion".7. Though this argument appears attractive at first sight, a little scrutiny will reveal that it is unsound. It is based on a highly technical and doctrinaire approach and is opposed to plain commonsense.it must be remembered that a contract is a commercial document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it. I t would not be right while interpreting a contract, entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents. The meaning of such a contract must be gathered by adopting a commonsense approach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation. Here, at the time when the arbitrator came to be nominated and the reference was made, there was a Ministry of Food &Agriculture and there was a Secretary in that Ministry, but the only difficulty, according to the High Court, was that there were. instead of one, two Secretaries and it could not be predicated as to which Secretary was intended to exercise the power of nominating an arbitrator. We do not think this difficulty is at all real. Let us consider, for a moment, why in clause ( 17), the power to nominate an arbitrator was conferred on the Secretary in the Ministry of Food &Agriculture and not on a Secretary in any other Ministry. The reason obviously was that at the date of the contract the Secretary in the Ministry of Food &Agriculture was the Officer dealing with the subject-matter of the contract. If this object and reason of the provision of clause (17) is kept in mind, it will become immediately clear that the "Secretary in the Ministry of Food & Agriculture" authorised to nominate an arbitrator was the Secretary incharge of the Department of Food who was concerned with the subject-matter of the contract. The Secretary incharge of the Department of Food filled the description "Secretary in the Ministry of Food & Agriculture" yen in clause (17). The respondents relied strongly on the use of the definite article the before the words "Secretary in the Ministry of Food & Agriculture" and urged that what the parties to the contract had in mind was not a Secretary in the Ministry of Food & Agriculture, but the Secretary in the Ministry of Food & Agriculture and that clearly postulated one definite Secretary in the Ministry of Food & Agriculture and not one of two Secretaries in that Ministry.8. This is, in our opinion, a hyper technical argument which seeks to make a fortress out of the dictionary and ignores the plain intendment of the contract. We fail to see why the Secretary in the Ministry of Food & Agriculture incharge of the Department of Food could not be described as the Secretary. He would be the Secretary in the Ministry of Food & Agriculture concerned with the subject-matter of the contract and dearly and indubitably he would be the person intended by the parties to exercise the power of nominating the arbitrator. The parties to the contract obviously could not be expected to use the words "a Secretary in the Ministry of Food & Agriculture", because their intendment was not that any Secretary in the Ministry of Food &Agriculture should be entitled to exercise the power of nominating an arbitrator, but it should only be the Secretary in the Ministry of Food & Agriculture concerned with the subject-matter of the contract. That is why the use of the definite article the. It is also significant to note that when the Secretary in charge of the Department of Food in the Ministry of Food & Agriculture nominated the arbitrator, the respondents did not raise any objection to the appointment of the arbitrator and participated in the arbitration proceedings without any protest. The respondents knew at that time that there were two Secretaries in the Ministry of Food and Agriculture and the appointment of the arbitrator was. made by the Secretary in charge of the Department of Food and yet they acquiesced in the appointment of the arbitrator and took part in the proceedings. This circumstance is also clearly indicative of the intendment of the parties that the Secretary in the Ministry of Food & Agriculture concerned with the subject-matter of the contract should be the person entitled to nominate the arbitrator. Or else the respondents would have objected to the appointment of the arbitrator and declined to participate in the arbitration proceedings or at any rate, participated under protest. We are, therefore, of the view that the arbitrator was validly nominated by the Secretary in charge of the Department of Food in the Ministry of Food & Agriculture.This view renders it unnecessary for us to consider whether by participating in the proceedings before the arbitrator without objection or protest and taking the chance of obtaining an award in their favour, the respondents could be said to have waived the defect in the appointment of the arbitrator.9.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We fail to see why the Secretary in the Ministry of Foodincharge of the Department of Food could not be described as the Secretary. He would be the Secretary in the Ministry of Foodconcerned with theof the contract and dearly and indubitably he would be the person intended by the parties to exercise the power of nominating the arbitrator. The parties to the contract obviously could not be expected to use the words "a Secretary in the Ministry of Foodbecause their intendment was not that any Secretary in the Ministry of Food &Agriculture should be entitled to exercise the power of nominating an arbitrator, but it should only be the Secretary in the Ministry of Foodd with theof the contract. That is why the use of the definite article the. It is also significant to note that when the Secretary in charge of the Department of Food in the Ministry of Foodnominated the arbitrator, the respondents did not raise any objection to the appointment of the arbitrator and participated in the arbitration proceedings without any protest. The respondents knew at that time that there were two Secretaries in the Ministry of Food and Agriculture and the appointment of the arbitrator was. made by the Secretary in charge of the Department of Food and yet they acquiesced in the appointment of the arbitrator and took part in the proceedings. This circumstance is also clearly indicative of the intendment of the parties that the Secretary in the Ministry of Foodd with theof the contract should be the person entitled to nominate the arbitrator. Or else the respondents would have objected to the appointment of the arbitrator and declined to participate in the arbitration proceedings or at any rate, participated under protest. We are, therefore, of the view that the arbitrator was validly nominated by the Secretary in charge of the Department of Food in the Ministry of Foodview renders it unnecessary for us to consider whether by participating in the proceedings before the arbitrator without objection or protest and taking the chance of obtaining an award in their favour, the respondents could be said to have waived the defect in the appointment of the arbitrator.