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HIGH COURT OF CALCUTTA
P. B. Mukharji
UNITED PRINTING AND BINDING WORKS LTD. - Appellant
Versus
KISHORI LAL - Respondent
Award Case 67 Of 1956
Decided On : JUNE 05, 1956
ARBITRATION - AWARD - VALIDITY - APPOINTMENT OF UMPIRE - FAILURE TO APPOINT - WHETHER MANDATORY OR DIRECTORY - WAIVER - ARBITRATION ACT, 1940, SCH. I, CL. 2, S. 8(1)(C).
Fact of the Case:
The applicant, United Printing and Binding Works Ltd., challenged an award made by two arbitrators, Bimal Chatterjee and Kishanlal Mohta, appointed under an arbitration clause in an agreement with the respondent, Kishori Lal Saraogi. The applicant raised several objections to the award, including that the arbitrators went beyond the matters referred to them, that they failed to appoint an umpire, that the award was out of time, that the applicant was not allowed inspection of the books of account, and that no meeting was held on 16-3-1956.
Finding of the Court:
The court found that the arbitrators did not go beyond the matters referred to them, that the failure to appoint an umpire was a breach of a regulatory provision but not mandatory, that the award was not out of time as an application for extension of time had been granted, that the applicant was not denied inspection of the books of account as it could have applied for a subpoena under Section 43 of the Arbitration Act, and that there was a meeting on 16-3-1956 as evidenced by minutes signed by the arbitrators and the applicant's nominee arbitrator.
Issues: 1. Whether the arbitrators went beyond the matters referred to them. 2. Whether the failure to appoint an umpire rendered the award invalid. 3. Whether the award was out of time. 4. Whether the applicant was denied inspection of the books of account. 5. Whether a meeting was held on 16-3-1956.
Ratio Decidendi: 1. The arbitration clause in the agreement between the parties referred to "all disputes" between them, which covered the disputes regarding accounts. The statements and counter-statements filed before the arbitrators also covered the exact point on which the award was made. Therefore, the award was not beyond the terms of reference. 2. The failure to appoint an umpire under Clause 2 of Schedule I of the Arbitration Act, 1940, is not mandatory in the sense that its breach will vitiate the entire arbitration proceeding and make the award illegal. It is directory and not mandatory. The word "shall" in Clause 2 does not make the provision mandatory. The failure to appoint an umpire can be waived by the conduct of the parties. 3. The award was not out of time as an application for extension of time had been granted by the court. 4. The applicant was not denied inspection of the books of account as it could have applied for a subpoena under Section 43 of the Arbitration Act. 5. There was a meeting on 16-3-1956 as evidenced by minutes signed by the arbitrators and the applicant's nominee arbitrator.
Final Decision: The court dismissed the application to set aside the award with costs. Judgment upon the award was to follow with interest and costs.
( 1 ) THIS is an application by United Printing and Binding Works Ltd. , a private limited Company, to set aside an Award made by two Arbitrators Bimal Chatterjee and Kishanlal Mohta being respectively the nominees of the petitioner and the respondent Kishori Lal Saraogi. By Clause 15 of an Agreement dated 30-3-1954 the petitioner and the respondent agreed to the following arbitration clause:--"all disputes and difference arising out of matters relating to the Agreement shall be decided by Arbitration under the Indian Arbitration Act by reference to a single Arbitrator if the parties to these presents so agree upon and in default two arbitrators one to be nominated by either of the parties and to be appointed. "the applicant's arbitrator Bimal Chatterjee was appointed on 17-10-1955 and the respondent's Arbitrator Kishanlal Mohta was appointed on 21-10-1955, Various statements and counterstatements were filed before the Arbitrators by the parties, The Arbitrators agreed on their award and published their joint award on or about 17th/19th March 1956.
( 2 ) ON behalf of the applicant the first objection taken to the award is that the Arbitrators went beyond the matters which were referred to them for decision. That objection is taken In para 2 of the petition. Paragraph 2 of the petition refers to a letter of 17-10-1955 and makes the allegation that the parties did not make any reference to the Arbitrators to terminate the agreement between the parties and come to any final accounting. A reference to the letter of 17-10-1955 written by the applicant to the respondent shows that "all disputes between them were referred to arbitration in terms of the agreement. In fact, in the letter of 17-10-1955 the applicant writes: -"we cannot allow our interest to be jeopardised in this manner any further and we have decided all disputes between us should be referred to arbitration in terms of the said agreement. We have accordingly appointed Sri Bimal Chatterjee of 9/3a, Arpuli Lane Calcutta as arbitrator"in fact, the last paragraph of that letter also ends with this statement:- "we reserve our right to put our other disputes and differences before the arbitrator or arbitrators. " Having said all that, it is now contended by the applicant that the award goes beyond the matters referred to the Arbitrators although "all disputes" between the parties were referred to Arbitrators according to the applicant himself. Obviously the disputes related to the agreement between the parties and the financial control mentioned there and the disputes certainly cover the disputes regarding accounts.
( 3 ) THE gist of the award of the Arbitrators is (a) that the applicant was to pay to Saraogi a sum of Rs. 66,800/- in full payment of the claim of the said Saraogi against the Company with interest thereon at the rate of 6 per cent per annum from the date of the award until payment, (b) the specified assets of the Company were charged for payment of the said amount.
( 4 ) LOOKING at the award it is clear to me that It did not travel at all beyond the matters referred to the Arbitrators. In fact, I find that the statements and counter-statements filed before the Arbitrators cover the exact point or which the award was made. In the statement of Kishori Lal Saraogi dated 27-1-1958 before the Arbitrators in para 8 (k) the respondent actually asked for an award for Rs. 66,200/- with interest and profits. In fact, this is what was asked in the respondent's statement: "award should be made directing the Company to make payment of the dues of the financier amounting to Rs. 67,200/- plus interest and profits in terms of the agreement. " That being so, it is clear to my mind that the award is not beyond the terms of the reference. In fact, I hold it is very much within the terms of reference constituted both by the letters appointing the Arbitrators as well as by the statements and counter-statements filed before them.
( 5 ) THE second objection u
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