JUDGMENT - (1) This appeal arises from an order of the Bombay City Civil Court refusing to set aside an award made on a Court reference.

(2) The appellants before us were the original plaintiffs. They had filled a suit in the Bombay City Civil Court for the recovery of Rs. 14, 900 and odd from the defendant. When the suit reached hearing on 6th April, 1963, the matter in dispute was by consent of the parties referred to the arbitration of two arbitrators, who were the two Advocates of the parties. One of the terms in the order of reference provided that the two arbitrators "shall nominate an umpire". The arbitrators did not appoint an umpire but heard the parties and received their evidence in three meetings held on the 13th the 16th and the 17th of May,. 1963. The time for making the award was enlarged by the Court by consent of parties. The arbitrators made an award on 28th November, 1964. by which they directed that the defendant shall pay to the plaintiffs Rs. 8,500 with interest and costs. being dissatisfied with the award the plaintiffs applied to the City Civil Court for setting it aside. The main ground advanced on their behalf was that the provision contained in Clause 2 of the First Schedule of the Arbitration Act, 1940, which required the arbitrators to appoint an umpire was a mandatory provision and that the breach of that provision by the arbitrators rendered the award invalid. The learned trial Judge held that the award was not invalid, that the provision in clause 2 of the First Schedule was not mandatory and that in any case the plaintiffs had by their conduct waived the non-compliance with that provision. This decision has been challenged by the plaintiffs in this appeal.

(3) Although the order of reference made by the trial Court by consent of parties contained a clause that the two arbitrators "shall nominate an umpire" the clause did not provide the time within which the nomination was to be made. Section 3 of the Arbitration Act, 1940, which relates to an arbitration without the intervention of a Court lays down that-

"An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference."

By Section 25 the provision of Section 3 has been made applicable to arbitration in suits. Clause 2 of the First Schedule on which the plaintiffs rely is in the following terms:

"If the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire not later than one month from the latest date of their respective appointments."

Since a different intention has not been expressed in the decretal order of reference this clause must be deemed to have been included in that order by virtue of Section 3 read with Section 25 of the Act.

(4) On behalf of the plaintiffs Mr. Dhanuka urged before us that Clause 2 of the First Schedule is mandatory and that the failure of the arbitrators to appoint an Umpire as required by that clause must render their award invalid. Judicial opinion does not appear to be uniform on whether that clause is mandatory. It will be convenient if we first deal with that question on principle before referring to authorities.

(5) In considering whether Clause 2 of the First Schedule is mandatory or directory, it is material to notice what function an Umpire is expected to perform. An Umpire is not an arbitrator ab initio. He does not act as a third arbitrator. He has no function to perform if the two arbitrators do not disagree with each other and proceed to make an award within the agreed time or within such extended time. as the Court may allow. The functions of an Umpire have been specified in Clauses 4 and 5 of the First Schedule. clause 4 provides that if the arbitrators have allowed their time to expire without making an award or if they have delivered to any party or to the Umpire a notice in writing stating that they cannot agree. "the umpire shall forthwith

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