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HIGH COURT OF CALCUTTA
P. C. Mallick
GHASILAL TODI - Appellant
Versus
BISWANATH KERWAL - Respondent
Award Case 86 Of 1963
Decided On : APRIL 22, 1964
ARBITRATION - Validity of Arbitration Proceeding and Award - Appointment of Sole Arbitrator - Interpretation of Arbitration Clause - Effect of Section 10(1) of the Arbitration Act - Venue of Arbitration - Timeliness of Award - Extension of Time under Section 28 of the Arbitration Act.
Fact of the Case:
A partnership agreement between the petitioners and the respondent contained an arbitration clause providing for the appointment of three arbitrators, one by each party and the third by the two appointed arbitrators. The respondent appointed Madanlal Dalmia as the sole arbitrator under Section 9 of the Arbitration Act after the petitioners failed to appoint an arbitrator. The petitioners challenged the validity of the arbitration proceeding and the award made thereunder, contending that the appointment of Madanlal Dalmia as the sole arbitrator was invalid and that the award was made beyond the time limit prescribed in the Arbitration Act.
Finding of the Court:
The court held that the arbitration clause, when read in light of Section 10(1) of the Arbitration Act, effectively provided for the appointment of two arbitrators, one by each party, and an umpire to be appointed by the two arbitrators. The court found that Madanlal Dalmia was validly appointed as the sole arbitrator under Section 9 of the Act since the petitioners failed to appoint an arbitrator within the statutory period. The court also held that the petitioners' objection to the venue of the arbitration proceeding at the arbitrator's residence was not bona fide and did not vitiate the proceedings. However, the court found that the award was made beyond the time limit prescribed in the Arbitration Act. Nevertheless, the court granted an extension of time under Section 28 of the Act, considering the facts and circumstances of the case, including the petitioners' conduct and the delay attributable to them.
Issues: 1. Whether the appointment of Madanlal Dalmia as the sole arbitrator was valid under the arbitration clause and Section 9 of the Arbitration Act. 2. Whether the arbitration proceeding was vitiated due to the venue being held at the arbitrator's residence. 3. Whether the award was made beyond the time limit prescribed in the Arbitration Act and whether an extension of time could be granted under Section 28 of the Act.
Ratio Decidendi: 1. The court interpreted the arbitration clause in conjunction with Section 10(1) of the Arbitration Act and concluded that the clause effectively provided for the appointment of two arbitrators and an umpire. The court held that Madanlal Dalmia was validly appointed as the sole arbitrator under Section 9 of the Act due to the petitioners' failure to appoint an arbitrator within the statutory period. 2. The court found that the petitioners' objection to the venue of the arbitration proceeding at the arbitrator's residence was not bona fide and did not result in any inconvenience or failure of justice. Therefore, the court held that the venue did not vitiate the proceedings. 3. The court acknowledged that the award was made beyond the time limit prescribed in the Arbitration Act. However, considering the facts and circumstances of the case, including the petitioners' conduct and the delay attributable to them, the court granted an extension of time under Section 28 of the Act.
Final Decision: The court dismissed the petitioners' application to set aside the award. The court also granted an extension of time for filing the award under Section 28 of the Arbitration Act. Each party was ordered to bear its own costs.
( 1 ) THIS is an application challenging the validity of an arbitration proceeding and the award made thereunder. It is prayed that the award made on May 23, 1962 in the said arbitration proceeding be set aside. It is prayed in the alternative that the appointment of Madanlal Dalmia as sole arbitrator be set aside. There is a third alternative prayer for remitting the award for reconsideration.
( 2 ) SHORTLY the facts relevant for the purpose of this application may now be stated. The petitioners are owners of a rice mill situate at Beliatore in the district of Bankura. On November 16, 1960, they entered into a partnership, agreement with the respondent for carrying on the said business. The respondent under the agreement was required to advance money both by way of capital and loan to the partnership. It is not necessary to set out and consider the other terms of the partnership except Clause 29 which is the arbitration clause. Disputes arose between the parties --each charging the other of having committed breach of the partnership agreement. Thereupon the respondent by his solicitor invoked the arbitration clause, appointed Madanlal Dalmia as the respondent's arbitrator and called upon the petitioners to appoint their arbitrator in terms of the arbitration clause in the agreement. This is evidenced by the letter dated May 17, 1961, addressed by Messrs, L- P. Agarwalla and Co. , on behalf of the respondent to Satipati Banerjee, pleader of the petitioners. In reply Sri Satipati Banerjce informed the respondent's solicitors to keep the matter pending inasmuch as his clients and the agent in charge dealing with the matter were out of station and in their absence the writer was not in a position to give his clients' view in the matter. I apprehend that the tactics adopted by the petitioners were the usual dilatory tactics without realising the serious consequences. No arbitrator having been appointed by the petitioners, the respondents appointed Madanlal Dalmia as the sole arbitrator under Section 9 of the Arbitration Act and requested him to enter upon the reference. This happened on or about July 24, 1961. On November 29, 1961, long after the expiry of the period, the petitioners' pleader informed the respondent's solicitor that they have appointed Ram Avatar Dhaniwalla to act as their arbitrator. The solicitor was requested to inform Madanlal Dalmia of this appointment so that the arbitration might proceed. In reply the solicitor informed Banerjee on January 8, 1962 that the petitioners were not entitled to appoint an arbitrator after such a long period and, moreover, the said Madanlal had already been requested to act as the sole arbitrator. The petitioners oven then did not come to Court for setting aside the appointment of Madanlal Dalmia as the sole arbitrator. Useless correspondence was carried on by and on behalf of the petitioners relating to the arbitration proceeding. On or about March 17, 1962, Madanlal Dalmia entered on the reference and gave notice of holding a meeting on March 31, 1962, at his residence. As the petitioners were not present, the meeting was adjourned, and the arbitrator gave notice on Aprit 2, 1962 that a meeting will be held on April 18, 1962. The parties were informed that if any party failed to attend, the arbitrator would proceed ex parte. On April 3, 1962, the petitioners' pleader wrote to the arbitrator asking him not to proceed in the matter as his clients were taking steps in the proper Court for condoning the delay. On April 18, 1962, the arbitrator sent a copy of the respondent's statement to the petitioners with a request to file theirs by April 26, 1962 and also gave notice that a meeting has been fixed (or May 1, 1962. On April 25, 1962, S. C. Palit, solicitor, purporting to act for the petitioners wrote a long letter to Madanlal. In his said letter it is contended that his clients never received certain letters and he asked for copies. He asked for five weeks time
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