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1950 Supreme(Cal) 57

HIGH COURT OF CALCUTTA
BANERJEE, J.
Bhuwalka Bros.
Versus
Fatehch and Murlidhar
Ordinary Original Civil Jurisdiction No. 2 of 1950
Decided On : 20-03-1950

Advocates:
H.N. Sanyal with Mr. G.S. Kar, for Applicant; R.C. De, for Respondent.

Headnote:

ORDER :-This is an application for leave of the Court to revoke the authority of an arbitrator. The petitioner also challenged the existence of the arbitration agreement and prayed for Courts decision on the question. This prayer, however, has been abandoned by Counsel.

Fact of the Case:

On 18-8-1949, the petitioner entered into a contract with the respondent to sell two lakhs yards of hessian cloth at Rs. 49/10/- per 100 yards, delivery September 1949. The contract is in the standard jute contract form of the Indian Jute Mills Association. In the contract there is an arbitration clause which is as follows: "All matters, questions, disputes, differences and or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligation of either or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted."

Finding of the Court:

The Court found that the petitioner had not revoked the authority of the arbitrator and that there was no evidence before the Court to support the prayer for revocation of the submission.

Issues: 1. Whether the Court should grant leave to revoke the authority of the arbitrator? 2. Whether the arbitration agreement existed? 3. Whether the Court should decide the question of existence of the arbitration agreement?

Ratio Decidendi: The Court held that it had the discretion to grant leave to revoke the authority of an arbitrator, but that it would only do so in exceptional circumstances. The Court found that the circumstances of this case were not exceptional and that there was no evidence to suggest that the arbitrator would be biased. The Court also held that the arbitration agreement existed and that it was not for the Court to decide the question of its existence.

Final Decision: The Court dismissed the petition and refused to grant leave to revoke the authority of the arbitrator.

ORDER :-This is an application for leave of the Court to revoke the authority of an arbitrator. The petitioner also challenged the existence of the arbitration agreement and prayed for Courts decision on the question. This prayer, however, has been abandoned by Counsel.

2. In this application the only point I have to consider is whether I should grant the leave. The Court has power to grant leave if it thinks fit.

S. 5, Arbitration Act is as follows :

"The authority of an appointed arbitrator.....shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement." This section corresponds to S. 5 of the Indian Arbitration Act, 1899, and S. 1, English Arbitration Act of 1889, S. 5 read :

"A submission, unless a different intention is expressed therein, shall be irrevocable except, by leave of the Court."

The English section was also in the same words in substance.

3. Referring to the English section Bowen, L.J., said, In Re. Smith and Service and Nelson and Sons, (1890) 25 QBD 545 at p. 553 :

"The language of S. 1, a submission shall be irrevocable is ambiguous; it is applicable, not to the agreement to refer but to the authority of the arbitrator."

In Doleman v. Ossett Corporation, (1912) 3 KB 257, at p. 270, Fletcher-Moulton, L.J., said :

"By common law a submission to a particular arbitrator was revocable at the will of either party, unless it had been made a rule of Court, in which case the leave of the Court must be previously obtained. But this was of the nature of a rescission. Such a revocation involved the breach of no contract, and gave rise to no right of damages. It was merely an exercise of a legal power to revoke which was implied in a submission. On the other hand (as was pointed out by Bowen, L.J., in Re. Smith and Service and Nelson and Sons), an arbitration clause could no more be revoked than could any other clause of a contract Like any other contractual obligation it could be broken, and thereby a claim to damages would arise. But there was no right to rescind such a contract or contractual obligation. S. 1, Arbitration Act, 1889, relates merely to the right to revoke a submission."

4. Lord Esher, in Re. Smith and Service and Nelson and Sons said, at p. 550 :

"The phrase is used which had always been used, a submission shall be irrevocable; that la to say the power of the arbitrator cannot be revoked when he has once been appointed. It does not mean that the agreement to refer is irrevocable, because that always was in the true sense of the word irrevocable."

A distinction has been made in England between agreement to refer and submission. This distinction has been maintained in our Act of 1940. S. 12 (2) (b) provides :

"Where the authority of an arbitrator is revoked ........the Court may, on the application of any party to the arbitration agreement, order that the arbitration agreement shall cease to have effect with respect to the difference referred."

5. In this case counsel for the petitioner has told me definitely that he does not ask for an order under S. 12 (2) (b). He asks for leave only under S. 5. In granting leave, the Court exercises its discretion,

"which ought to be exercised in the most sparing and cautious manner, lest an agreement to refer, from which all might reasonably hope for a speedy end of strife, should only open the floodgates for multiplied expenses and interminable delays." (Per Lord Denman, C.J., in Scott v. Van Sandau, (1841) 1 QB 102 at p. 110.)

6. In James v. James, (1889) 22 QBD 669 at p. 674, Stephen, J., observed :

"I entirely concur with the judgment of my brother Denman. In this case of Kirk and Randall v. East and West India Docks Co., (1887) 55 LT (NS) 245, I expressed an unqualified agreement with the opinion of my brother Grove, that before the Court exercises its discretion in giving leave to revoke a submission it should be satisfied that a substantial miscarriage of justice will take place in the event of its re







































































































































































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