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1865 Supreme(SC) 12
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
MEMBERS OF THE JUDICIAL COMMITTEE, THE RIGHT HON. LORD CHELMSFORD, THE RIGHT HON. THE LORD JUSTICE KNIGHT BRUCE, THE RIGHT HON. THE LORD JUSTICE TURNER, THE RIGHT HON. SIR JAMES WILLIAM COLVILE, AND THE RIGHT HON. SIR EDWARD VAUGHAN WILLIAMS
SHEONATH, ALIAS BURRAY KAKA - Appellant
Versus
RAMNATH, ALIAS CHOTAY KARA - Respondents
On appeal from the Court of the Judicial Commissioner of Oude.
Decided On : November 28, 1865.
Privy Councillor,- Assessor .—The Right. Hon. Sir Lawrence Peel.
Under the Civil Procedure Act, 1859, a court cannot compel a party to refer a dispute to arbitration or appoint arbitrators without the party's consent. Participation in arbitration proceedings under protest does not constitute a waiver of the right to challenge the appointment's validity.
Headnote:(A) Civil Procedure Act, 1859 - Sections 312 and 314 - Reference to arbitration - Appointment of Arbitrators - The provisions of the Act require that parties must either name the arbitrators or consent to the nomination of them by the Court - The Code gives no authority to the Court to force upon a reluctant party the decision of any question in the cause by arbitrators selected at its discretion.
(B) Waiver - A defect in the nomination of arbitrators is not cured by the act of a party participating in proceedings if such participation is under continuing protest and in self-defence.
Facts of the case:
Parties were jointly interested in ancestral estates and co-partnership firms. After a partial partition and execution of mutual releases, a dispute arose regarding outstanding debts. The appellate court remitted the case to the lower court to determine the outstanding amount, suggesting arbitration. The lower court referred the matter to arbitrators previously named in a failed agreement, despite the repeated protests of one party. The arbitrators' award was subsequently adopted by the court and affirmed on appeal.
Findings of Court:
The appointment of the arbitrators was irregular as the consent of the party was essential for both the reference to arbitration and the constitution of the tribunal. The previous failed agreement to arbitrate did not validate the current appointment as the question referred was a new issue suggested by the court.
Issues: Whether the Court was competent under the Civil Procedure Act to refer a question at issue to arbitrators nominated by the Court against the protest of a party.
Ratio Decidendi: Under Sections 312 and 314 of the Civil Procedure Act, 1859, arbitration is a consensual process. The Court cannot compel a party to submit to arbitration or appoint arbitrators without the party's consent. Participation in the arbitration process under protest does not amount to a waiver of the right to challenge the validity of the appointment.
Result: Appeal allowed; decrees reversed and cause remitted to the Judge.
Legal Category Hierarchy
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practice and procedure
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arbitration
- appointment of arbitrators
- consent to arbitration
- waiver of objection
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arbitration
Judgement
In this case the suit was instituted by the Respondent against the Appellant in the Court of the Civil Judge at Lucknow. The parties were cousins, natives of Lucknow, jointly interested in certain ancestral estates. They also carried on business in co-partnership as Bankers and Merchants. The business in which they were engaged was carried on by them in three Kothees, or Firms, styled Hurjus Roy & Gungaram, and two other names. Disputes arose between them, and, to a certain extent, a partition of the joint property was made, leaving open the debts due to the Firms up to the date of the partition. Farighkhuttees, or mutual releases, were executed upon that footing. Notwithstanding this partition, the disputes between the parties relative to their rights continued, and after an; ineffectual attempt to settle these disputes by a reference to Arbitrators, which was never carried into effect, the Respondent instituted the present suit against the Appellant. By the plaint, a general account and partition was prayed for, on the allegation that no account had been settled between the parties, and that the releases given on the execution of the before mentioned arrangement were not operative, as no partition had taken place.
The suit went through its various stages ; but as the material question on appeal was narrowed to a single point, namely, whether it was competent to the Court under the Civil Procedure Act, which is in force in Oude, to refer one of the questions at issue to Arbitrators nominated by the Court, against the protest of the Defendant, it is not necessary further to state the proceedings, which are fully detailed in their Lordships judgment.
The Civil Procedure Act of the Legislative Council of India, No. VIII. of 1859, entitled "An Act for simplifying the Procedure of the Court of Civil Judicature not established by Royal Charter," secs. 312 and 314, upon which this question was decided, provide as follows—
By section 312, it is enacted, that " If the parties to a suit are desirous that the matters in difference between them in the suit, or any of such matters, shall be referred to the final decision of one or more Arbitrator or Arbitrators, they may apply to the Court at any time before final judgment for an order of reference," and
Section 314 , declares that "The Arbitrator or Arbitrators shall be nominated by the parties in such manner as may be agreed upon between them. If the parties cannot agree with respect to the nomination of the Arbitrator or Arbitrators, or if the person or persons nominated by them shall refuse to accept the arbitration, and the parties are desirous that the nomination shall be made by the Court, the Court shall appoint the Arbitrator or Arbitrators."
The Respondent put in no appearance to the appeal, which was, consequently, heard ex parte.
The Attorney-General (Sir R. Palmer, Q.C.),.and Mr. Leith for the Appellant.
As the Appellant refused to agree to the persons nominated by the Judge of the Civil Court as Arbitrators, upon the issue referred to them, the Award is not binding on him. The Arbitrators were, in the absence of the Appellants consent, never legally appointed, so as to enable them to act as Arbitrators Code of Civil Procedure, Act, No. VIII. of 1859, secs. 312, 314. The Award, therefore, must be set aside and the case remitted to the Court below.
Judgment was reserved and now delivered by
The Right Hon. Sir James W. Colvile [22nd Dec., 1865] — The Appellant and Respondent are first cousins, and natives of Lucknow and were formerly jointly interested in certain ances tral property, and in the business of three Kothees, or firms, the styles of which were Hurjus Roy & Gungaram, Gungaram & Juggurnath, Sheonatk & Ramnath. Each appears to have been also possessed of separate property.
In 1859 they made a partition, as far as they then could of their joint property; and on the 16th of September of that year they interchanged Farighkhuttees, or instruments of mutual relea
