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1972 Supreme(Cal) 220
HIGH COURT OF CALCUTTA
SANKAR PRASAD MITRA, S. C. GHOSH, SABYASACHI MUKHERJI, S. K. DUTTA, A. K. JANAH
RAMNATH AGARWALLA - Appellant
Versus
GOENKA AND CO. - Respondent
Full Bench Reference No.1 1964
Decided On : August 18, 1972
A.C.BABRA, B.L.VYAS, MANI MOHAN MUKHERJI, Rabindra Nath Mitra, RAJAT GHOSH, Ranen Mitra
Arbitrators must comply with the method prescribed in the arbitration agreement and cannot exceed their jurisdiction.
Headnote:
ARBITRATION - Entering on Reference - Arbitrator's Misconduct - Award Set Aside - Interpretation of Arbitration Act Provisions.
Fact of the Case:
Arbitrators were appointed to resolve disputes between parties based on an agreement that required them to examine specific account books to determine amounts payable. The Arbitrators made an award without examining the books, relying on statements of accounts filed by the parties.
Finding of the Court:
The Arbitrators misconducted themselves by failing to comply with the method prescribed in the arbitration agreement, thereby exceeding their jurisdiction. The award was set aside as invalid.
Issues: 1. When does an arbitrator enter on a reference? 2. Whether the decision in Bajranglal's case, holding that arbitrators enter on the reference upon accepting their appointment, was correct.
Ratio Decidendi: 1. An arbitrator enters on a reference when they first apply their mind to the dispute or controversy before them, depending on the facts and circumstances of each case. 2. The court declined to answer the second question in light of its response to the first.
Final Decision: The appeals were dismissed, and no order was made as to costs.
( 1 ) THESE appeals were first heard by a Division Bench consisting of K. C. Das Gupta, J. and B. K. Guha, J. on the 18th September, 1958, the Division Bench referred certain questions of law to a Full Bench for determination. When the matter came up before the Full Bench, the reference was found to be incompetent on the ground that the whole case had not been referred. The Full Bench sent the case back to the Division Bench by its order of the 30th April, 1962. The appeals then came up before another Division Bench presided over by Banerjee, J. sitting with D. Basu, J. The second Division Bench has referred the entire case in the three appeals to the Full Bench under Chapter VII, rule 2 of the Appellate Side Rules including the questions of law that were referred by the previous Division Bench.
( 2 ) THE facts are that on October 4, 1953, Jwala Prosad Sharma and J. N. Minda, Arbitrators in the matter of Goenka and Co. (Sales) Ltd. , Messrs Goenka and Co. and Ramnath Agarwala filed an award before the Court of the Subordinate Judge at Darjeeling along with an application praying for a decree in terms of the award. The application was registered as O. C. Suit No. 81 of 1953. It is stated in the application that Messrs Goenka and Co. , Goenka and Co. (Sales) Ltd. and Sm. Ramasundari Devi, Administratrix to the estate of N. C. Goenka and Messrs Goenka and Co. on the one hand, and Ramnath Agarwalla, on the other hand, had by a written agreement dated the 8th October, 1951, appointed the two applicants, namely, Jwala Prosad Sharma and J. N. Minda as Arbitrators to make an award on disputes between the parties relating to their mutual accounts and ?their respective rights and liabilities regarding the business of Messrs Goenka and Co. and Messrs Goenka and Co. (Sales) Ltd. ?
( 3 ) IT would be convenient at this stage to set out the terms of the agreement dated the 8th October, 1951. the agreement is as follows: ?we hereby appoint Sri Jwala Prosad Sharma and Sri Jagannath Minda, both of Darjeeling, as arbitrators to look into the account books of Messrs Goenka and Co. and Messrs Goenka and Co. (Sales) Ltd. and to find out as to what amount is payable by both these companies to Sri Ramnath Agarwala or by Sri Ramnath Agarwala to both these companies and we agree to abide by the award of the arbitrators. We agree that either party will make payment due to one other party within seven days from the date of award. The books of account to be produced before the arbitrators duly adjusted for the purpose before 30th November, 1951. Sd. Dhanoolall chirimar. Sd. R. N. Agarwalla. 10. 10. 51 8. 10. 51. ? it is to be observed that by the terms of the agreement the Arbitrators were to look into certain account books and to find out what amount were payable by one of the parties to the agreement to the other party or parties. We may now set out the minutes before the Arbitrators: ?1. 8. 10. 51. We Jagannath Minda and Jwala Prasad Sharma accepted to arbitrate in the above case. Sd/- J. N. Minda 8. 10. 51 sd. J. P. Sharma. 8. 10. 51 2. 10. 10. 51. In the Arbitration Agreement signature of Dhanoolall has been obtained. Sd/- J. N. Minda 10. 10. 51 sd. J. P. Sharma. 10. 10. 51 3. 12. 10. 51. On our joint consent Sri Sukhlal Minda has been appointed umpire in this case. We obtianed his acceptance so that if we differ in our decision then the umpire will decide finally. Sd/- J. N. Minda 12. 10. 51 sd. J. P. Sharma. 12. 10. 51 4. 12. 5. 52. Received letter No. P/1/796/52 dated 2nd April, 1952 from Sri Ramnath Agarwala. Considered that all parties be written so that case be settled early. Sd/- J. N. Minda 12. 05. 52 sd. J. P. Sharma. 12. 05. 52 5. 28. 5. 52. Received letter No. GS/43/52/141 dated 21st May, 1952 from Sri Dhanoolall Chirimar. Considered to send copy of this letter to Sri Ramnath Agarwalla. Sd/- J. N. Minda 28. 05. 52 sd. J. P. Sharma. 28. 05. 52 6. 20. 8. 52. Received letter No. P/1/125/52 dated 20th August 1952 f
