Full Judgment
P.P. Naolekar, C.J.
1. Heard Mr. M. Gunedhar Singh, learned counsel for the appellants and Mr. R.K.T. Singh, learned counsel for the respondent.
2. An agreement was entered into between the State of Manipur and the respondent Th Haridas Singh for construction of Earthen Dam and Diversion Work at Phayeng in the State of Manipur. After the construction work was started by the respondent, certain dispute arose between the parties and an application has been moved by the respondent Under Section 20 of the Arbitration Act, 1940 praying that direction may be issued for filing of the arbitration agreement and referring the dispute to arbitration. The court has allowed the application of the respondent and the following direction have been issued:-
'For the foregoing reasons I am satisfied with the application for the plaintiff above. It is ordered that the agreement No. EDD/Th.MC/188/1 of IFCD, Manipur be filed in the Court and be referred to the arbitrator.'
Aggrieved by the said order, the present appeal is filed. The learned counsel for the appellant-State argues that the trial court has committed and error in directing the reference to be made to the arbitrator, even before the agreement of arbitration is filed before the Court. Under Section 20 of the Arbitration Act where any person have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part thereof and where a difference has arisen to which the agreement applies, they may apply to the court for filing of the arbitration agreement in the court and the court after scrutiny of the application and after hearing the parties before it, reach to the conclusion that no sufficient cause has been shown by the other side for denying the relief to the applicant directing the agreement to be filed in the court. The court may also make a reference to the arbitrator appointed by the parties in the agreement or otherwise or where the parties cannot agree upon an arbitrator by itself. The appointment of arbitrator will and is only after the agreement is filed in the court, because the court has to appoint an arbitrator named in the agreement or otherwise, and when parties do not agree for particular arbitrator, court has to exercise powers to appoint arbitrator. Thus, the order passed by the court with regard to appointment of arbitrator even before the agreement of arbitration is filed, is not in accordance with law and that direction is set aside. The parties shall file the arbitration agreement before the trial court as directed by the trial court and thereafter the court shall proceed in accordance with law. The parties shall be at liberty to satisfy the court as to applicability of the Arbitration and Conciliation Act, 1996 to the proceeding pending in the court and orders to be passed in accordance with the new Act of 1996.
3. The appeal stand disposed of.