IN THE HIGH COURT OF ALLAHABAD
Sapru and Chandiramani, JJ.
JAWALA PRASAD - Appellant
Versus
AMAR NATH - Respondents
Application 205 Of 1947
Decided On : 07/31/1950
ARBITRATION - APPOINTMENT OF UMPIRE - MANDATORY - ARBITRATION ACT, 1940, SEC. 3, SCHEDULE I, PARA. 2 - EXPRESS WAIVER REQUIRED - ABSENCE OF EXPRESS WAIVER RENDERS AWARD INVALID.
Fact of the Case:
In a suit for recovery of money, the parties agreed to refer the matter to arbitration by two arbitrators. The arbitrators failed to appoint an umpire within one month of their appointment. The defendant objected to the arbitration and sought to revoke the reference, but the court rejected his applications. The arbitrators made an award in favor of the plaintiff, and the court upheld the award. The defendant appealed to the district judge, who also upheld the award.
Finding of the Court:
The court held that the arbitrators were under a statutory obligation to appoint an umpire within one month of their appointment, as per Section 3 and Schedule I, Paragraph 2 of the Arbitration Act, 1940. The court found that there was no express provision in the arbitration agreement waiving the appointment of an umpire, and therefore, the award was invalid.
Issues: Whether the arbitrators were required to appoint an umpire within one month of their appointment, and whether the absence of an express waiver of this requirement rendered the award invalid.
Ratio Decidendi: The court held that Section 3 of the Arbitration Act, 1940, makes the provisions of Schedule I applicable to arbitration in suits. Paragraph 2 of Schedule I mandates the arbitrators to appoint an umpire within one month of their appointment unless there is an express provision to the contrary in the agreement. In this case, there was no such express provision, and therefore, the arbitrators were under a statutory obligation to appoint an umpire.
Final Decision: The court allowed the revision application, set aside the judgments and decrees of the lower courts, and declared the award to be invalid. The applicant was awarded costs in all the courts.
( 1 ) THIS application in revision has been presented to this Court by the defendant. On 12-12-1946 the plaintiff opposite-party, Lala Amar Nath, filed a suit for recovery of a sum of RS. 4,000 from the present applicant in the Court of the civil Judge of Hardoi. On 25-3-1947 the suit was, by mutual agreement, refer red to the arbitration of the persons, namely, Shri Sundar Lal Gupta and shri Shiva Govind Mehrotra. The first of these two persons was counsel for the plaintiff and the second was counsel for the defendant. Three days later, i. e. , on 28-3-1947, the defendant intimated to both the arbitrators that it was his desire that they should not proceed with the case because he had, subsequent to their appointment, gathered some information to the effect that his own counsel was related to the plaintiff and that the plaintiffs counsel was a friend of the plaintiff and had had money dealings with him. The defendant followed up this notice to the arbitrators by an application to the Court on 30-3-1947. In that application he prayed that the court might be pleased to recall the reference. He intimated that he had strong objection to the arbitrators, proceeding with the arbitration.
( 2 ) THIS application was rejected by the Court on 1-4-1947 on the ground that it was not competent for it, after having referred the matter to arbitrators, to revoke the arbitration order.
( 3 ) THE second application was presented by the defendant on 9-4-1947, praying that the authority granted to the arbitrators to enter upon the arbitration be revoked. This application too was rejected by the Court.
( 4 ) ON 25-4-1947 the arbitrators announced their award. They decreed the plaintiffs claim for a sum of Rs. 2,070 and awarded his proportionate costs and future interest at 3 per cent. per annum.
( 5 ) SUBSEQUENT to this award, objections were filed by the defendant before the civil Judge who had referred the matter to arbitration. Those objections were disposed of by an order of 7-7-1947. The learned civil Judge was satisfied that there was no substance in those objections and a decree was directed to be prepared in accordance with the award.
( 6 ) FROM this judgment and decree, of the learned civil Judge, the defendant went in appeal to the district Judge under Section 39 (l) (vi), Arbitration Act. On 22-9-1947, the learned District judge came to the conclusion that there was no force in the appeal. He upheld the order of the learned civil Judge directing that the award be made a rule of the Court. It is against that order of the learned District Judge that the present application in revision has been filed.
( 7 ) FAR the most important question which this application raised is as to whether, the reference being to an even number of arbitrators, it was obligatory on the arbitrators to appoint an umpire within one month of their appointment. It was urged that inasmuch as the arbitrators had either failed or had not cared to appoint an umpire, the arbitration was invalid.
( 8 ) SECTION 3, Arbitration Act (x [10] of 1940), is to be found in chap. II of that Act. Chapter II deals with arbitration without intervention of a Court. Section 3 is in the following terms: "an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference. " the reference to arbitration in this case was made Under section 21 of the Act. Section 21 is to be found in chap. IV of the Act which deals with arbitration in suits. Section 25 is also to be found in chap. IV. The first part of that section lays down that "the provisions of the other chapters shall, so far as they can be made applicable, apply to arbitrations under this chapter. " It is clear, therefore, that Section 3 is applicable to arbitration in suits also, This is not disputed by learned counsel for the opposite party.
( 9 ) WE come now to Sechedule I. This deals with im
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