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1930 Supreme(Mad) 174

Madras High Court
A Aiyar
Muthyala Narayanappa
Versus
Muthyala Ramachandrappa
Decided On : 28 August, 1930

Headnote:

Arbitration - Construction of Agreement - Second Schedule of the Civil Procedure Code - Paras. 17 to 19 - The Court's power to appoint a substitute arbitrator in case of death - The Court's jurisdiction to order a reference to arbitration derived from the agreement of the parties - The Court's inability to order the agreement to be filed and make an order of reference under Clause (4) of para. 17 - The preponderance of authority in favor of the respondent's contention

Fact of the Case:

The parties, who are brothers, entered into an agreement to settle their disputes relating to partition by three specified arbitrators. One of the arbitrators died during the arbitration proceedings. Subsequently, one of the brothers filed a suit for partition, and the other brother applied for a stay of the suit under para. 18 of the Second Schedule of the Civil Procedure Code. The Court held that the arbitration could go on with a fresh arbitrator appointed by the Court. The plaintiff appealed against this decision, and the learned District Judge set aside the order, holding that the arbitration agreed to between the parties could not go on due to the death of one of the arbitrators and the absence of a provision for a substitute in the agreement. The 1st defendant subsequently filed another suit for enforcing the arbitration after the appointment of a fresh arbitrator, but the suit was dismissed. The substantial question for decision in both cases was the same and was heard together in the Court.

Finding of the Court:

The Court found that the agreement between the parties did not provide for the appointment of a substitute arbitrator in case of the death of one of the arbitrators. The Court also held that the provisions of paras. 17 to 19 of the Second Schedule of the Civil Procedure Code had to be strictly complied with, and the Court's inability to order the agreement to be filed and make an order of reference under Clause (4) of para. 17 led to the dismissal of the application made under this paragraph.

Issues: The main issue was whether the Court had the power to appoint a substitute arbitrator in case of the death of one of the arbitrators, and whether the agreement between the parties allowed for such an appointment.

Ratio Decidendi: The Court's jurisdiction to order a reference to arbitration is derived from the agreement of the parties, and an order of reference has to be made by the Court in accordance with the provisions of the agreement. The Court's inability to order the agreement to be filed and make an order of reference under Clause (4) of para. 17 led to the dismissal of the application made under this paragraph. The preponderance of authority was in favor of the respondent's contention.

Final Decision: The Court upheld the order of the Lower Court and dismissed the Revision Petition and the Miscellaneous Appeal. No order was made as to costs in these cases.

JUDGMENT

Anantakrishna Aiyar, J.

1. The parties to these cases before us are brothers. By an agreement, dated 31st October, 1926, the parties agreed to have their disputes relating to partition settled by three specified arbitrators. During the course of the arbitration proceedings one of the arbitrators died. One of the brothers filed O.S. No. 8 of 1929 on 22nd March, 1929, against his brother. The 1st defendant in O.S. No. 8 of 1929 applied under para. 18 of the second Schedule of the Code of Civil Procedure to have the suit stayed. The Court held that the arbitration could go on with a fresh arbitrator that may be appointed by the Court. The plaintiff in O.S. No. 8 of 1929 preferred an appeal against that order, and the learned District Judge set aside that order, holding that the arbitration agreed to between the parties could not go on, as one of the arbitrators was dead, and as there was no provision in the agreement regarding the appointment of a substitute in the place of the arbitrator who is dead. Against the decision of the learned District Judge directing the suit to proceed, the 1st defendant has preferred Civil Revision Petition No. 1034 of 1930.

2. The 1st defendant in O.S. No. 8 of 1929 subsequently filed O.S. No. 27 of 1929 in August, 1929, for enforcing the arbitration after the appointment of a fresh arbitrator in the place of the deceased one. Having regard to the view taken by the learned District Judge in Civil Miscellaneous Appeal No. 19 of 1929 (which is the subject-matter of the revision petition before us already referred to), the learned Subordinate Judge dismissed the suit. Civil Miscellaneous Appeal No. 272 of 1930 has been filed by the plaintiff in O.S. No. 27 of 1929 against the decision of the learned Subordinate Judge in O.S. No. 27 of 1929.

3. The substantial question for decision in the two cases being the same, they were heard together in this Court.

4. The decision of the dispute between the parties turns on the construction of the particular agreement, dated 31st October, 1926, entered into by them, and on the proper meaning to be attached to paras. 17 to 19 of the second Schedule of the Civil Procedure Code.

5. From a perusal of the provisions contained in the second Schedule of the Civil Procedure Code, it seems to me, that when a suit is referred to arbitration when all parties interested agree to the same, the Court has got larger powers, in some respects, in order to complete and effectuate the matter of arbitration. Paragraph 1 of Schedule II enacts that where in a suit all the parties interested agree that any matter in difference between them shall be referred to arbitration they may at any time before the judgment is pronounced apply to the Court for an order of reference. The underlying idea conveyed by paragraph I of Schedule II is that the parties interested are anxious to have the suit settled by arbitration, and not by Court. The details regarding the personnel, etc., of the arbitration in such a case are all taken to be merely secondary and incidental to the matter, the main intention being settlement by arbitrators and not by Court. Seeing that the parties are entitled to apply, at any time in the course of the suit, even after the trial has been closed and the matter is pending judgment, to have the suit referred to arbitration, it seems reasonable that the attempt at arbitration should not prove futile and abortive simply because one of the arbitrators declined to act or one of the parties declined to appoint the arbitrator, or to proceed with the same. Settlement by arbitration being taken to be the dominant idea of the parties, the matter of details regarding appointment of arbitrators, etc., are left to be worked out by the Court in case parties do not agree. Of course if the parties agree as to the manner in which the arbitrators are to be appointed, the Court is bound to adopt that procedure (para. 2). The Court is entitled to make provisions for various matters referred t
































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