PUNJAB & HARYANA HIGH COURT
Kapur, J.
Shankar Das Rup Lal
Versus
Governor General In Council (Now Dominion Of India)
First Appeal No. 85 of 1949,
Decided On : APRIL 11, 1951
ARBITRATION - APPOINTMENT OF SOLE ARBITRATOR - VALIDITY - PARTNERSHIP - AUTHORITY OF PARTNER TO REFER DISPUTE TO ARBITRATION - RATIFICATION - ERROR OF LAW APPARENT ON THE FACE OF THE AWARD - DAMAGES - ASSESSMENT.
Fact of the Case:
The appellant firm, Messrs. Shankar Dass-Rup Lal, entered into a contract with the Government of India to supply eyelets in three installments. Due to the firm's inability to supply the goods, the contract was canceled. The dispute was referred to arbitration, and Mr. Shiv Charan Singh was appointed as the sole arbitrator. The arbitrator awarded Rs. 14,120/- in favor of the Government against the appellant firm. The appellant firm filed objections to the award, which were dismissed by the trial court.
Finding of the Court:
The court held that the appointment of Mr. Shiv Charan Singh as the sole arbitrator was valid, as the partners of the firm had not taken any objection to the proceedings and their Advocate had been appearing before the arbitrator. The court also held that even if the initial reference was without authority of the other partners, their conduct showed that they had acquiesced in the reference. The court further held that no misconduct had been proved against the arbitrator.
Issues: 1. Whether the appointment of Bakhshi Shiv Charan Singh as sole arbitrator to decide the dispute between the parties is illegal and ultra vires for the reasons given in the grounds of objections? 2. Whether the respondent is estopped by his acts and conduct from raising this objection? 3. Whether the arbitrator has misconducted himself or the proceedings?
Ratio Decidendi: 1. A partner has implied authority to submit a dispute relating to the business of the firm to arbitration in the absence of a usage or custom to the contrary. 2. The conduct of the partners of the firm showed that they had ratified the reference to arbitration, even if it was initially made without their authority. 3. An error of law apparent on the face of the award is one that can be discovered without going into the evidence.
Final Decision: The court dismissed the appeal and confirmed the order of the trial court.
Kapur, J.
1. This is an appeal against an order passed by Mr. Chhaju Ram, Senior Subordinate Judge, Delhi, dismissing the objections filed by the appellant against an award given by Mr. Shiv Charan Singh arbitrator.
2. On the 12th of August 1942, the Government of India asked for tenders for eyelets and the tender of Messrs. Shankar Dass-Rup Lal was accepted. Deliveries were to be made by them in three instalments, i.e., on the 30th of September 1942, 31st of October 1942, and 30th of November 1942. The contract between the parties contained an arbitration clause which is given as paragraph 20 of the conditions attached to the invitation for tender, Exhibit P. 23, and ft was in the following terms : "20. ARBITRATION: In the event of any question or dispute arising under these conditions or any special conditions if contract or in connection with this contract (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the Chief Controller and an arbitrator to be nominated by the contractor, or in the case of the said arbitrators not agreeing then to the award of an Umpire to be appointed by the arbitrators in writing before proceeding on the reference and the decision of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940 , and of the Rules thereunder and any Statutory modification thereof shall be deemed to apply to and be incorporated in this contract." Due to the tenderers not being able to supply the goods the contract was cancelled on the 3rd of April 1943. In pursuance of arbitration clause matters in difference were referred to the arbitration of one P.D. Bhargava and Tara Chand Malik. It appears that Tara Chand Malik resigned on the 4th of November 1946, and on the same day Brij Lal, a partner of the appellant firm, wrote to the Chief Controller that Mr. Shiv Charan Singh be appointed as the sole arbitrator. On the 3rd of December 1948, this suggestion, on behalf of the firm, was accepted by the Government through N. N. A. Qureshi, Assistant Director of Supplies. The contents of this letter are as follows; "I am directed to acknowledge your letter dated 4-11-1946, addressed to the Chief Controller of Purchase, Department of Supply, New Delhi, stating that your Arbitrator Malik Tara Chand had resigned and that you were pleased to appoint Bakhshi Shiv Charan Singh. P.C.S., Officer on Special Duty in the Department of Supply as sole Arbitrator and that his decision would be binding upon you. You hoped that Government would also agree to his being appointed as sole arbitrator. I am now directed to advise you that Governments arbitrator in the above-mentioned case. (Mr. P.D. Bhargava Advocate) has also resigned from the Arbitratorship and Government is therefore, pleased to accept your suggestion that Bakhsht Shiv Charan Singh, P.C.S., O.S.D., in the Director-General of Industries & Supplies may be accepted as the sole Arbitrator for the purposes of present arbitration proceedings. 2. Please acknowledge receipt."
3. On the 9th of December 1946, the appellants wrote to the Assistant Director of Supplies acknowledging the receipt of the letter of the 3rd of December in regard to the approval of the Government to the suggestion of appointing Mr. Shiv Charan Singh as the sole arbitrator. On the 13th of December 1946, N. N. A. Qureshi wrote to the appellants:
"Reference your letter dated 9/12/1946. With reference to your above letter please contact Bakhshi Shiv Charan Singh, P.C.S., the sole arbitrator, for the date of hearing in the above case."
Copies of this letter were sent to Mr. Shiv Charan Singh and to Mr. Mohammad Sadiq. It may here be "remarked that on the 29th of November 1946, P.D. Bhargava had also resigned.
4 On the 7th of December 1946, Mr. Shiv Charan Singh sent a notice to the
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