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1957 Supreme(All) 292

IN THE HIGH COURT OF ALLAHABAD
D. N. Roy and J. N. Takru, JJ.
INDIAN MINERALS CO. - Appellant
Versus
NORTHERN INDIA LIME MARKETING ASSOCIATION - Respondents
F. A. F. O. 199 Of 1951
Decided On : 11/28/1957

Advocates Appeared:
Amarnath Kaul, D.P.UMYAL, R.S.PATHAK

An arbitrator is not justified in ignoring the points formulated by the court for his decision and in framing points not really required to be determined by him, or which have already been determined by the court in the manner provided by law before the reference was made.

Headnote:

ARBITRATION - Agreement to refer to arbitration - Amendment of petition - Formulation of points of difference - Jurisdiction of court - Misconduct of arbitrator - Setting aside of award - Appeal.

Fact of the Case:

The plaintiff, Brij Lal Suri and Sons, Proprietors of Northern India Lime Marketing Association, Dehra Dun, filed an application under Section 20 of the Arbitration Act of 1940 for the agreement to be filed in Court and the arbitration proceedings to be taken in pursuance of it. The defendant, Indian Minerals Company, contested the application. The Civil Judge rejected the application on the ground that it was not proved that there was any cause of action for the application within his jurisdiction. On appeal, this Court held that the contract took place at Dehra Dun and that at any rate it was to be performed partly at Dehra Dun and consequently the Court at Dehra Dun had jurisdiction to entertain the application. The case was remanded to the Civil Judge for trial according to law.

Finding of the Court:

The Civil Judge, after formulating the issues for decision, directed that the agreement of reference to arbitration be filed. The Civil Judge also made an order of reference to an arbitrator appointed by the court because the parties could not agree to a common name. The arbitrator refused to recognise the points formulated by the court for his decision and proceeded to frame his own issues. The plaintiff objected to the arbitrator's action, but the arbitrator overruled the objection. The arbitrator made an award in favour of the defendant. The plaintiff filed an application to set aside the award, which was dismissed by the Civil Judge. The plaintiff appealed to the High Court.

Issues: 1. Whether the Civil Judge had the power to amend the petition that was made under Section 20 of the Arbitration Act and to formulate points of dispute which the arbitrator was called upon to decide. 2. Whether the arbitrator was justified in ignoring the points formulated by the court for his decision and in framing points not really required to be determined by him, or which have already been determined by the court in the manner provided by law before the reference was made. 3. Whether the award was vitiated by the arbitrator's misconduct.

Ratio Decidendi: 1. The Civil Judge had the power to amend the petition under Section 20 of the Arbitration Act and to formulate points of dispute which the arbitrator was called upon to decide. 2. The arbitrator was not justified in ignoring the points formulated by the court for his decision and in framing points not really required to be determined by him, or which have already been determined by the court in the manner provided by law before the reference was made. 3. The award was vitiated by the arbitrator's misconduct.

Final Decision: The appeal was allowed, the award was set aside, and the case was remanded to the Civil Judge for trial according to law.

D. N. ROY, J.


( 1 ) THESE are two connected appeals by rival parties to certain arbitration proceedings under section 20 of the Arbitration Act (No. X) of 1940. Appeal No. 199 of 1951 is by the Indian minerals Company. It has been made under Section 39 (1) (iv) of the Arbitration Act and is directed against an order dated 14-6-1951 by which the agreement of a reference to arbitration was ordered to be filed. Appeal No. 257 of 1953 is by the other side, namely by Brij Lal Suri and sons, Proprietors of Northern India Lime Marketing Association, Dehara Dun. It has been made under Section 39 (1) (vi) of the same Act and it is directed against an order dated 30-7-1953, by which an application to set aside the award dated 14-2-1953, was dismissed by trie Civil Judge and the suit was dismissed in terms of the award.

( 2 ) THE facts may be briefly stated. An application under Section 20 of the Arbitration Act of 1940 was filed by Brij Lal Suri and Sons, Proprietors of Northern India Lime Marketing association, Dehra Dun, through Brij Lal Suri and against the Indian Minerals Company, a firm carrying on business at Maihar in Central India, now Madhya Pradesh. It was contended that the parties had entered into a contract. The conract was that the Indian Minerals Company would supply certain amount of Hind-awn soap-stone lumps every month for certain territories including Dehra Dun on certain conditions. There was no formal contract, but the parties exchanged letters which proved the contract On 20-9-1942, a letter was written by the plaintiff to the defendant setting out the terms upon which he would be prepared to take tha goods from the defendant. Along with the letter he sent a cheque of Rs. 500/ -. On the next day,. e. on 21-9-1942 the defendant wrote a letter to the plaintiff. In this letter reference was made to the plaintiffs letter on the 20th September and a new condition was put forward, namely, that if the plaintiff did not take up 30 wagons of the goods contracted for within six months, the deposited amount of Rs. 500/- would be forfeited. The defendant required confirmation of this letter from the plaintiff. On 24-9-1942, a letter was written by the plaintiff to the defendant confirming the terms offered by the defendant in their letter of the 21st September. The contract was therefore completed by means of the plaintiffs letter of 24-9-1942. One of the terms agreed to between the parties by means of this correspondence was that disputes arising between the parties in the matter of the contract shall be referred to mutual arbitration. The plaintiff alleged that the defendant was guilty of breach of contract and that therefore according to the arbitration Clause the matter Was liable to be referred to arbitration. He therefore made the application under Section 20 of the Arbitration Act for the agreement being filed in Court and the arbitration proceedings being taken in pursuance of it. An affidavit was filed by the plaintiff in support of his allegations. There was no counter-affidavit from the other side. The learned Civil Judge of Dehra Dun rejected the application on the ground that it was not proved that there was any cause of action for the application within his jurisdiction. The learned judge held that the only evidence to prove that the contract was made at Dehra Dun was the affidavit filed on behalf of the plaintiff and because, in his opinion, this matter could not be proved by an affidavit, the learned Judge ordered that the application be returned for presentation to proper court. Against that decision F. A. F. O. No. 186 of 1948 was filed in this Court and two points were urged at the hearing of that appeal. Firstly, that the letters themselves which were admitted by the defendant clearly showed that the contract was made at Dehra Dun, and that, at any rate, it was to be performed partly at Dehra Dun. Secondly, that an affidavit under Section 33 of the arbitration Act could be filed in proceedings under Section































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