1994 (4) TMI 406 - HC - Indian Laws

Arbitrator appointment by M.T.N.L. instead of Central Govt. under Indian Telegraph Act deemed ultra vires

Fly Wings Travels (P) Ltd. Versus Mahanagar Telephone Nigam Ltd. and Ors.

The court held that the appointment of the arbitrator by M.T.N.L. instead of the Central Government under Section 7-B of the Indian Telegraph Act, 1885 ... - Issues:Challenge to Arbitration Award under Indian Telegraph Act, 1885 - Appointment of Arbitrator by M.T.N.L. instead of Central Government - Legality of Arbitrator's Appointment - Ultra vires of Section 7-B of the Act - Quashing of Arbitrator's Appointment and Award - Direction to Central Government for Appointment of Arbitrator - Stay on Recovery of Disputed Amount.Analysis:The judgment pertains to a challenge against an Arbitration Award dated 13-2-1993 under the Indian Telegraph Act, 1885. The petitioner contested the appointment of the arbitrator by respondent No. 1 (M.T.N.L.) under Section 7-B of the Act, arguing that the arbitrator should have been appointed by the Central Government. The primary grounds of challenge included the legality of the arbitrator's appointment and the constitutionality of Section 7-B. The court opined that while deciding the constitutionality issue was unnecessary, the arbitrator must be appointed by the Central Government as per Section 7-B, not by the M.T.N.L. itself.The court highlighted Section 7-B of the Act, emphasizing that disputes between a subscriber and the telegraph authority regarding telephone bill payments must be referred to an arbitrator appointed by the Central Government. Since the arbitrator in this case was not appointed by the Central Government, the appointment was deemed void ab initio, rendering the award unsustainable. The respondent failed to prove that the arbitrator was appointed by the Central Government, leading to the setting aside of the appointment and the award.Referring to a Supreme Court judgment, the court acknowledged the potential prejudice caused by reopening settled cases due to arbitrators' improper appointments. However, the court clarified that it was solely addressing pending matters and had no intention to disturb previously settled cases. Consequently, the court quashed the appointment of the arbitrator and the award, directing the Central Government to appoint an arbitrator to resolve the dispute lawfully. Additionally, the respondent was instructed not to recover any disputed amount or disconnect the telephone connection pending the arbitrator's adjudication.In conclusion, the writ petition was disposed of, granting costs to the petitioner. The judgment emphasized the importance of proper arbitrator appointments under Section 7-B of the Act and the need for Central Government involvement in such appointments to ensure the legality and validity of arbitration proceedings.