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IN THE HIGH COURT OF ALLAHABAD
Sankar Saran and Bind Basni Prasad, JJ.
JAI DAYAL PEAREY LAL - Appellant
Versus
CHUNNI LAL PARSOTAM DASS - Respondents
Civil Revn. 607 Of 1945
Decided On : 08/04/1950
ARBITRATION - APPOINTMENT OF ARBITRATOR - REVOCATION OF AUTHORITY - SECTION 5, ARBITRATION ACT - SECTION 9, ARBITRATION ACT - BYE-LAW 60, KANPUR SUGAR MERCHANTS ASSOCIATION - BYE-LAW 63, KANPUR SUGAR MERCHANTS ASSOCIATION - SOLE ARBITRATOR - JURISDICTION - AWARD - VALIDITY.
Fact of the Case:
A dispute between two firms, members of the Kanpur Sugar Merchants Association, was referred to arbitration as per the Association's rules. The sole arbitrator appointed could not complete the arbitration, and the defendant firm nominated a new arbitrator. The plaintiff firm objected, and the Association Secretary gave them three days to nominate another arbitrator. The plaintiff firm nominated an arbitrator, but the Association Secretary informed them that he could not act as he no longer represented a member firm. The Association Secretary then appointed the defendant firm's nominee as the sole arbitrator, who gave an ex parte award. The trial court set aside the award, but the lower appellate court reversed this decision and ordered the award to be made a rule of the court.
Finding of the Court:
The High Court held that the sole arbitrator appointed by the Association Secretary did not have the authority to give an award. The court found that the arbitrator appointed by the plaintiff firm had not ceased to be an arbitrator merely because he ceased to be a representative of a member firm. The court also held that the notice sent by the Association Secretary to the defendant firm was valid and that the appointment of the sole arbitrator was proper.
Issues: 1. Whether the sole arbitrator appointed by the Association Secretary had the authority to give an award. 2. Whether the arbitrator appointed by the plaintiff firm had ceased to be an arbitrator merely because he ceased to be a representative of a member firm. 3. Whether the notice sent by the Association Secretary to the defendant firm was valid. 4. Whether the appointment of the sole arbitrator was proper.
Ratio Decidendi: 1. The court held that the sole arbitrator appointed by the Association Secretary did not have the authority to give an award because: - Section 5 of the Arbitration Act provides that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. - There was no contrary intention expressed in the arbitration agreement in this case. - No steps were taken to move the Court for the revocation of the authority given to the arbitrator appointed by the plaintiff firm. - Section 9 of the Arbitration Act provides for the parties to appoint fresh arbitrators in certain eventualities, but none of those contingencies arose in this case. 2. The court held that the arbitrator appointed by the plaintiff firm had not ceased to be an arbitrator merely because he ceased to be a representative of a member firm because: - Bye-law 60 of the Kanpur Sugar Merchants Association provides that if there is anything inconsistent between the bye-laws and the provisions of the Arbitration Act, the latter shall prevail. - Section 6 of the Arbitration Act provides that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. - There was no contrary intention expressed in the arbitration agreement in this case. - Section 9 of the Arbitration Act provides for the parties to appoint fresh arbitrators in certain eventualities, but none of those contingencies arose in this case. 3. The court held that the notice sent by the Association Secretary to the defendant firm was valid because: - The Secretary of the Association is the agent of all the members of the Association. - The notice sent by the Secretary should be regarded as a notice from the party concerned. 4. The court held that the appointment of the sole arbitrator was proper because: - The notice sent by the Association Secretary to the defendant firm was valid. - The plaintiff firm failed to nominate another arbitrator within the time specified in the notice.
Final Decision: The High Court allowed the revision petition, set aside the order of the lower appellate court, and restored the decree of the trial court.
( 1 ) THIS is a revision against an order by the Civil Judge of Kanpur reversing the decree of the trial Court and remanding the case to the Court below for ordering an award to be filed and for making it the rule of the Court.
( 2 ) THE plaintiff-applicant Jai Dayal Pearey Lal and the defendant opposite party Chunni Lal parsotam Das are two firms, members of the Kanpur Sugar Merchants Association here-after to be referred to as the Association. There was a dispute between the parties and according to the rules and bye-laws of the Association it was referred to arbitration. On 7th May 1941 one Ram sahai was appointed the sole arbitrator by the parties and he accepted that office. Earn Sahai could not, however, finish the work of arbitration. On 2nd September 1943, the firm Chunni Lal parsotam Das nominated one Charan Das as its arbitrator. On 3rd September 1943, the Secretary of the Association sent a notice to the applicant firm Jai Dayal Pearey Lal that Charan Das was appointed the sole arbitrator. The applicant protested against Charan Das being appointed the sole arbitrator. Thereupon, on 9th September 1943 the Secretary of Association gave three days time to the applicant to nominate another arbitrator. On 5th January 1944, the applicant protested telegraphically saying that Charan Das could not act as an arbitrator and that the arbitrator was ram Sahai. The applicant followed up this protest by applying under Section 33, Arbitration Act praying the Court to stay proceedings. Subsequently, there appears to have been a compromise between the parties and the applicant was allowed to appoint an arbitrator.
( 3 ) ON 12th April 1944, the applicant firm appointed one Man Singh as its arbitrator. According to the rules of the Association only a nominee of a firm which was on the list of members of the association could be appointed an arbitrator. On 20th April 1944, the Secretary of the association informed the applicant that Man Singh could not act as an arbitrator because the firm which he represented had withdrawn his name. In the circumstances the Secretary of the association asked the applicant to appoint another arbitrator. Upon this, the applicant protested saying that Man Singh was still competent to function as an arbitrator. On 16th May 1944, the secretary of the Association appointed Charan Das, who was the nominee of the defendant opposite party, as the sole arbitrator.
( 4 ) ON 26th May 1944, Charan Das gave his award ex parte. On 22nd August 1944, Charan Das made an application to the Court under Section 14. Arbitration Act, praying that a decree be passed in terms of his award. As has been mentioned above, this prayer of Charan Das was not accepted by the trial Court which set aside the award and the lower appellate Court reversed the decree of the first Court and ordered that the award be made a rule of the Court.
( 5 ) SHRI Gopi Nath Kunzru, learned counsel for the opposite party, raised a preliminary objection that this revision was incompetent. His contention was that the lower appellate Court exercised a jurisdiction vested in it by law and it acted in the exercise of that jurisdiction without illegality or material irregularity. He has placed reliance upon the well known case of Amir Hassan Khan v. Sheo Baksh Singh, 11 I. a. 237 : (11 Cal. 6 P. C.) and upon two other recent cases of their lordships of the Privy Council, Venkatagiri Ayyangar v. Hindu-Religious Endowments Board, madras,. 1949 A. L. J. 213 : (A. I. R. (36) 1949 P. C. 156) and Joy Chand Lal v. Kamalaksha chaudhry,. 1949 A. L. J. 278 : (A. I. R.) (36) 1949 P. C. 239 ). For the reasons to be detailed hereafter I am unable to accept this contention of the learned counsel.
( 6 ) THE question that has to be considered is-whether the award by Charan Das, the sole arbitrator, was within his jurisdiction. If the answer is in the affirmative, there would be an end to this application. I am, however, of the opinion that Charan Das, in the
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