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HIGH COURT OF CALCUTTA
P. B. Mukharji
KANHAYALAL DUGAR - Appellant
Versus
ASHKARAN KISHANLAL - Respondent
Award Case 261 Of 1955
Decided On : APRIL 26, 1956
ARBITRATION - EXTENSION OF TIME - SECTION 28 ARBITRATION ACT - DISCRETIONARY POWER OF COURT - GROUNDS FOR EXTENSION - STAY ORDER BY COURT - APPEARANCE OF RESPONDENT BEFORE ARBITRATORS AFTER EXPIRY OF TIME - NO OBJECTION TO MERITS OF AWARD.
Fact of the Case:
An application was filed for extending the time for making the award of the Tribunal of Arbitration of the Bengal Chamber of Commerce in Case No. 1001 of 1954 made on the 11th August, 1955 after the expiry of the time for making the same under Clause (3) of the First Schedule of Arbitration Act, 1940. The dispute related to a contract for sale of 2000 maunds of jute on the 23rd April, 1952. There were quarrels between the parties about the manner of delivery and the dispute was referred to the Bengal Chamber of Commerce who made an award on the 10th February, 1953. Thereafter an application was made by the respondent for setting aside that award and the award was ultimately declared a nullity on the 16th August, 1953. The matter was again referred to the Arbitration of the Bengal Chamber of Commerce. The Court was constituted at first on the 29th September, 1954 with Mr. Cornish and Mr. Kedarnath Bajoria as arbitrators. This Court of the Arbitrators entered on the reference on the 15th October, 1954. The buyer respondent filed his counter-statement objecting that the reference was bad and there was no proper reference and that an award should be made. On the 7th February, 1955 Mr. Cornish having gone out of India. Mr. Adamson was appointed in his place under the Rules of the Bengal Chamber of Commerce. On the 15th February, 1955 the re-constituted Court entered on the reference. Thereafter a meeting was held of the parties before the Arbitrators on the 11h March, 1955 and the arbitration proceeded. But soon thereafter on the 28th March, 1955 the respondent applied to revoke the authority of the Chamber and obtained an interim order for stay from this Court. The arbitration was thereafter stayed until the 13th June, 1955 when the respondent's application for revocation of authority of the Chamber of Commerce was dismissed. The result was that the time to make the award expired on the 15th June, 1955 if four months is taken from 15th February. 1955 when the Court of Arbitrators was re-constituted. In fact, the award was thereafter made on the 11th August. 1955.
Finding of the Court:
The court found that the arbitrators were prevented from making the award within four months by an order of stay from the court. The court also found that the respondent appeared before the arbitrators after the expiry of time, without taking any objection as to time. Further, the court found that there was no objection to the merits of the award.
Issues: Whether the court should extend the time for making the award under Section 28 of the Arbitration Act, 1940.
Ratio Decidendi: The court held that it had the discretion to extend the time for making the award under Section 28 of the Arbitration Act, 1940. The court further held that the following factors were relevant in exercising its discretion: (i) the arbitrators were prevented from making the award within four months by an order of stay from the court; (ii) the respondent appeared before the arbitrators after the expiry of time, without taking any objection as to time; (iii) there was no objection to the merits of the award.
Final Decision: The court enlarged the time for making the award until the 11th August, 1955, the date on which the award was made.
( 1 ) THIS is an application by Kannayyalal Dugar for extending the time for making the award of the Tribunal of Arbitration of the Bengal Chamber of Commerce in Case No. 1001 of 1954 made on the 11th August, 1955 after the expiry of the time for making the same under Clause (3) of the First Schedule of Arbitration Act, 1940.
( 2 ) THE dispute has a rather chequered history. It relates to a contract for sale of 2000 maunds of jute on the 23rd April, 1952. There were quarrels between the parties about the manner of delivery and the dispute was referred to the Bengal Chamber of Commerce who made an award on the 10th February, 1953. Thereafter an application was made by the respondent for setting aside that award and the award was ultimately declared a nullity on the 16th August, 1953. That was the fate of the first award. The matter was again referred to the Arbitration of the Bengal Chamber of Commerce. The Court was constituted at first on the 29th September, 1954 with Mr. Cornish and Mr. Kedarnath Bajoria as arbitrators. This Court of the Arbitrators entered on the reference on the 15th October, 1954. The buyer respondent filed his counter-statement objecting that the reference was bad and there was no proper reference and that an award should be made. On the 7th February, 1955 Mr. Cornish having gone out of India. Mr. Adamson was appointed in his place under the Rules of the Bengal Chamber of Commerce. On the 15th February, 1955 the re-constituted Court entered on the reference. Thereafter a meeting was held of the parties before the Arbitrators on the 11h March, 1955 and the arbitration proceeded. But soon thereafter on the 28th March, 1955 the respondent applied to revoke the authority of the Chamber and obtained an interim order for stay from this Court. The arbitration was thereafter stayed until the 13th June, 1955 when the respondent's application for revocation of authority of the Chamber of Commerce was dismissed. The result was that the time to make the award expired on the 15th June, 1955 if four months is taken from 15th February. 1955 when the Court of Arbitrators was re-constituted. In fact, the award was thereafter made on the 11th August. 1955. It is this award in respect of which extension of time is now sought on this application. Before the award was made there was a meeting on the 27th July, 1955 which was attended by the parties.
( 3 ) COURT's powers under Section 28 to extend time are entirely discretionary and are not limited. Section 28 of the Arbitration Act, 1940 provides :"the Court may if it thinks fit whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award. "the Court can enlarge the time for making the award either before or even after the time for making the award has expired. The Court can enlarge this time either before the award has actually been made or even after the award has been made. The Court can grant even more than one extension of time. What is necessary for this Court in its proper exercise of discretion is to consider a case to be fit before it enlarges time. The policy of the law should however be always a consideration and that policy is that arbitrations should not be unduly prolonged and for that purpose the First Schedule Clause (3) of the Arbitration Act provides a period of four months.
( 4 ) THE outstanding reason for which I shall extend the time in this case is that the Arbitrators were here prevented from making the award within four months by an order of stay from this Court. If the period of stay order at this Court for two months and a half from 28th March, 1955 to 13th June, 1955 is excluded, then the four months would expire by the end of August, 1955. The award, however, was made before then, having been made on the 11th August, 1955. I should, therefore, think that this is a fit and proper case where the time certainly should be extended at
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