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1963 Supreme(MP) 110
High Court Of Madhya Pradesh
V. R. Newaskar and S. B. Sen, JJ.
MAGANLAL GANGARAM RATHOR - Appellant
Versus
RAMAJI BONDARJI - Respondents
Misc. Appeal 88 Of 1962
Decided On : 11/04/1963
R.G.WAGHMARE, S.L.GARG
Headnote:(1) Arbitration Act, 1940 - S.10 (3) - applicability of - one of the arbitrators refusing to act - this provision is not attracted.
Sub-section (3) of section 10 of the Arbitration Act presupposes the award of the majority. What it means is there must be an award. If the arbitrators do not agree, there will be two awards and in such a case the award of the majority shall prevail. But there one of the arbitrators expresses his unwillingness to continue the arbitration proceedings, there cannot be any question of any award by him. If there is no award either agreeing or disagreeing with the award of others, there cannot be application of section 10 (3) of the Act. [Para 8
But if an arbitrator takes part in the proceedings and disagrees with the final conclusion, then the absence of his signatures on the award would attract section 10 (3). [Para 74
(2) Arbitration Act, 1940 - Ss.8, 10 and 25 - one out of five arbitrators not participating and one refusing to participate - the Court may supersede the award as vitiated - proper course in such cases.
Once it is found that there is no award of the majority, as one of the arbitrators refused to participate, and another did not take part, the provisions of section 8 read with section 25 would apply. [Para 15
Even where either the agreement of reference expressly provides or it follows by implication by reason of section 10 sub-section (2) and (3) that the award of majority is binding it is all the same incumbent upon all the arbitrators to participate in the arbitration proceedings particularly where the reference is to named arbitrators and not to a fluctuating corporate body which is governed by its own rules under which it is constituted. [Para 57
Absence from and indifference to the proceedings by any one of the arbitrators has the effect of rendering the award invalid. It is essential that all the arbitrators must be present at each meeting of the arbitrators and must hear the parties and other evidence produced together. They must further all be present at final deliberation through all way not agree as to the final conclusion. It is only when they act together throughout the proceedings that the award of the majority would be a valid one. [Para 58
When one of the arbitrators refuse to participate, the other arbitrators should inform the Court of the fact. They should not proceed with the arbitration proceedings. In such cases the Court has full power under sections 8 and 25 to supersede the arbitration. AIR 1956 Raj. 129 relied on. [Paras 59, 61 & 62
(3) Arbitration Act, 1940 - S.9 – umpire - who is - cannot participate to mould the decision of the arbitrators - Sarpanch referred to as Umpire – reference invalid.
The term 'Umpire' truely means a third person who is to decide a controversy or question submitted to arbitrators in case of their disagreement. ILR 1947 Nag. 631 and AIR 1940 Sind 37 relied on. [Para 43
In the reference the parties agreed that the matter may be referred to four arbitrators and a fifth person was named as umpire. The award mentions that the conclusions were reached after there was deliberation between the three Panchas and the Sarpanch, and that the Sarpanch was a consenting party to the final conclusion. If his position was purely that of an umpire then his participation as indicated on the face of the award in order to mould the decision of the arbitrators would amount to an illegality and would vitiate the award. If his position was not that of an umpire but was that of a Sarpanch as the parties understood it, then the reference itself would be defective as it describes him as an 'Umpire'. Moreover even if the mistaken use of the word 'Umpire' is ignored and he is treated as Sarpanch then the award would be bad because he absented himself from several sittings and also when the award was prepared. AIR 1955 Nag. 126 relied on. [Para 53
( 1 ) A very short point is involved in this appeal and there is no doubt that the appeal must fail.
( 2 ) THE appellant Maganlal and Mishirlal brought a suit against the respondents ramaji and others for dissolution of partnership and rendition of accounts. While the proceedings were going on before the lower Court, an application was made on 7th November 1960 jointly by both the parties for referring the matter in dispute to arbitrators. The parties themselves mentioned the names of the following persons as arbitrators, 1 Chainsingh, 2 Laxrainarayan 3 Pannalal and 4 Bhurmal they also mentioned the name of the umpire.
( 3 ) THE Court allowed the application and the disputes were referred to the arbitrators on 7th November 1960. The arbitrators started proceedings but in the end one of the arbitrators Bhurmal gave a notice expressing his disapproval of the other arbitrators to act on the ground that there were money lending transactions between the other arbitrators and the plaintiff. Bhurmal, therefore, refused to join in the arbitration proceedings any further. He also asked them not to act in the arbitration proceedings and to inform the Court accordingly.
( 4 ) THE three arbitrators however, did not act according to this notice which was received by them on 24th October 1961. On 25th October 1961, these three arbitrators gave the award and filed the same before the Court. The respondents filed objections about the validity of the award. The Court after hearing the parties passed an order superseding the award. It is against this order that the plaintiffs have filed this appeal.
( 5 ) THE grounds on which the award has been superseded are, the incompetency of the remaining arbitrators to act and also on the ground of misconduct.
( 6 ) THE first contention raised by the counsel for the appellants is that the notice of bhurmal, one of the arbitrators only amounts to a note of dissent to the arbitration proceedings and, therefore, the award of the arbitrators should be considered to be an award of majority which is quite valid under Section 10 (3) of the Arbitration act.
( 7 ) WE are unable to agree with this contention. According to us Section 10 (3)does not at all apply. We reproduce below the said sub-section :-
"where an arbitration agreement provides for the appointment of more arbitrators than three, the award of the majority, or if the arbitrators are equally divided in their opinion, the award of the umpire shall, unless the arbitration agreement otherwise provides, prevail. "
( 8 ) THIS Sub-section presupposes the award of the majority. What it means is there must be an award. If the arbitrators do not agree, there will be two awards; and in such a case the award of the majority shall prevail. In the instant case there is no award of Bhurmal. Not only that, he has expressed his unwillingness to continue the arbitration proceedings. Therefore, there cannot be any question of any award by him. If there is no award either agreeing or disagreeing with the award of the others, there cannot be an application of Section 10 (3) of the Act.
( 9 ) THE contents of the notice Ex. D-7 does not support the contention of the appellants, that he is disagreeing with the conclusions of the rest of the arbitrators. The notice is clear. It says that he is not willing to act. It says that the other arbitrators also should not act. It also says that the matter should be brought to the notice of the Court. The notice, therefore, cannot be read as a note of dissent to the majority award which did not at all exist at the time the notice was issued.
( 10 ) NO doubt, the award given on 25th October 1961 as Ex. P-8 mentions that bhurmal was consulted and, therefore, it is argued that if he did not sign, it amounted to a note of dissent. But the facts and circumstances indicate that the award was not at all shown to him. On 24th all the three arbitrators received a notice with a definite request to approach the Court. On 25th without approa
