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Vishwas Balwant Davare Vs. Bhalohandra Ganesh Thakar - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case NumberCivil Revision Application No. 284 of 1929
Judge
Reported in(1931)33BOMLR1022
AppellantVishwas Balwant Davare
RespondentBhalohandra Ganesh Thakar
Excerpt:
.....clause are wide enough to cover a case like the present. that is to say the power of the court to appoint an arbitrator in place of one who refuses to act arises, not on the refusal, but on the failure of one of the parties to appoint a new arbitrator after formal notice to do bo, bala v. 9. these being the principles to be applied, let us see what explanation the plaintiff, who was in the position of claimant, has to offer for his failure to take any steps in connection with the arbitration between april 1923 and march 1926. it appears that the defendant's arbitrator sathe was ill for three or four months after the signing of the agreement, and as the plaintiff's brother was a pleader practising in the berars and only came to poona in the may vacation, the assistant judge thinks it was..........it seems that the appointment could only be made either under para. 17, clause (4), or under para, 5, clause (1)(b). para. 17, clause (4), is as follows:-where no sufficient cause is shown, the court shall order the aggrement to be filed, and shall make an order of reference to the arbitrator appointed in accordance with the provisions of the agreement or, if there is no such provision and the parties cannot agree, the court may appoint an arbitrator. 4. prima facie this clause has no application. the agreement to refer named two arbitrators and an umpire to decide in case of a difference of opinion. the court's order appointing mr. kelkar sole arbitrator and referring the dispute to him could not possibly be described as an order of reference to the arbitrator appointed in.....
Judgment:

Broomfield, J.

1. The applicant V. B. Davare was a gumasta in a shop belonging to the opponent B. G. Thakar, They had a dispute about account, and on April 13, 1923, they both signed a submission paper referring the dispute to the arbitration of two persons, M. G. Thakar, the opponent's brother, and M. G. Sathe, a friend of the applicant. The submission paper provided that in the event of difference of opinion between the arbitrators the final decision was to be given by Mr. N. C. Kelkar. It appears that the arbitrators never met and no steps were taken to carry out the arbitration, until on March 18, 1926, Thakar made an application to the First Class Subordinate Judge Poona under para 17 of Schedule II of the Civil Procedure Code to have the agreement to refer filed in Court. Davare opposed this on various grounds, alleging inter alia that the reference had lapsed owing to Thakar's laches in not acting upon it, and that the arbitrators had informed the parties of their unwillingness to act. The Subordinate Judge disallowed the objections and decided that the reference should be filed. As M. G. Sathe, one of the arbitrators named in the agreement, stated that he was unwilling to act and the other was the plaintiff's brother the Court appointed Mr. Kelkar (the umpire named in the agreement) sole arbitrator to decide the dispute. This order was confirmed on appeal by the Assistant Judge. The defendant Davare has applied to this Court in revision.

2. Mr. Desai who appears for him contends that the Subordinate Judge acted without jurisdiction in two respects, firstly, in appointing Mr. Kelkar sole arbitrator, and, secondly, in ordering the agreement to refer to be filed when it was no longer subsisting.

3. Neither the judgment of the trial Court nor that of the Assistant Judge make it clear under what provision of Schedule II of the Code the appointment of Mr. Kelkar purports to have been made. The Assistant Judge has referred to para 9, which states the circumstances in which an umpire may arbitrate in lieu of the arbitrators, and he appears to have thought that it would have been open to Mr. Kelkar to settle the dispute without any order from the Court. That is very doubtful, however, because the agreement to refer did not fix any time for making the award, and the arbitrators had not given the notice referred to in para 9. Anyhow this paragraph has nothing to do with the powers of the Court to appoint an arbitrator. It seems that the appointment could only be made either under para. 17, Clause (4), or under para, 5, Clause (1)(b). Para. 17, Clause (4), is as follows:-

Where no sufficient cause is shown, the Court shall order the aggrement to be filed, and shall make an order of reference to the arbitrator appointed in accordance with the provisions of the agreement or, if there is no such provision and the parties cannot agree, the Court may appoint an arbitrator.

4. Prima facie this clause has no application. The agreement to refer named two arbitrators and an umpire to decide in case of a difference of opinion. The Court's order appointing Mr. Kelkar sole arbitrator and referring the dispute to him could not possibly be described as an order of reference to the arbitrator appointed in accordance with the provisions of the agreement. Nor can it be said that the agreement contains ' no such provision ' if those words mean what they naturally would mean, namely .no provision as to the appointment of an arbitrator. Looking at the matter, apart from authority, one would certainly say that this clause was not intended to meet the case of an arbitrator named in the agreement refusing to act. Para. 5 is expressly framed to meet cases of that kind, and at the outset at any rate Mr. Abhyankar, who appears for the opponent, was quite prepared to admit that the Court must have acted under para. 5, Clause (1)(b) and not under para. 17, Clause (4). However, he referred to a decision of the Allahabad High Court in Fazal Ilahi v. Prag Narain I.L.R. (1922) All. 523 where an opinion has been expressed as to the meaning of para. 17 (4) which, if it be correct, would seem to indicate that the provisions of that clause are wide enough to cover a case like the present. The relevant passage in the judgment is (p. 524) :-

If it were necessary, we should be prepared to hold that the words in paragraph 17, Sub-clause (4), (which enables a Court to make an order of reference to a particular arbitrator at the time of filing the reference) 'If there is no such provision and the parties cannot agree, cover a case where there has been a provision for a particular arbitrator who is either dead or retired. If he has said or refused to act, it is as though there were no provisions.

5. It may be noted that in that case the arbitration had already begun and the difficulty arose at a late stage of the proceedings, so that the facts are not quite the same. But apart from that the opinion expressed is an obiter dictum, and with the greatest respect I feel great doubts as to its correctness. It seems to me that to interpret the clause in this way allows either no meaning at all or an unreasonably loose meaning to the words 'no such provision.' Moreover, the same High Court in Muhammad Abid v. Muhammad Asghar I.L.R. (1885) All. 64 and Ahmad Nur Khan v. Abdur Rahman Khan I.L.R. (1919) All. 191 has taken a view of the powers of the Court in such matters which it would be difficult to reconcile in principle with these remarks in Fazal Ilahi v. Prag Narain. I hold that the Court had no power to appoint Mr. Kelkar sole arbitrator under para. 17 (4).

6. The provisions of para. 5 primarily relate to arbitration in suits, but by para. 19 they are made applicable to proceedings under para. 17 so far as they are consistent with the agreement of reference. It has been held in Bala Paitabhirama Chetti v. Seetharama Chetti I.L.R. (1894) Mad. 498 that the words ' as far as they are consistent with any agreement so filed ' in Section 524 of the old Code of Civil Procedure do not mean that the agreement must contain in every case an express provision as to what ought to be done if any arbitrator is unwilling to act, and that the reasonable construction is that the action of the Judge under Section 510 should not be inconsistent with the agreement, if it contains any special provision on the subject. But, granting that it would have been open to the Court to appoint a new arbitrator in place of M. G. Sathe who refused to act, it by no means follows that it had the power to appoint a now sole arbitrator and thereby in effect substitute a new agreement altogether for the original one, which contemplated the hearing of the dispute by two arbitrators with a final reference to an umpire. Further, if the Court acts under para. 5 it must act according to the provisions of that paragraph, The case of an arbitrator refusing to act comes under para. 5, Clause (1)(b) (ii), and the consequence as stated at the end of Clause (1) is that any party may serve the other party with a written notice to appoint an arbitrator. Then under Clause (2) if within seven clear days after such notice has been served or such further time as the Court may allow, no arbitrator is appointed, the Court may on application by the party who gave the notice, and after giving the other party an opportunity of being heard, appoint an arbitrator. That is to say the power of the Court to appoint an arbitrator in place of one who refuses to act arises, not on the refusal, but on the failure of one of the parties to appoint a new arbitrator after formal notice to do BO, Bala v. Seetarama is no authority for holding that the mere refusal of an arbitrator to act empowers the Court to appoint a new one. That was a case under the old Code, Section 510, and though that section partly corresponds to para. 5 of the present Schedule II, it did not contain this provision about notice. Mr. Abhyankar argued that notice was not necessary, because both the parties were before the Court, and it was not until they came before the Court, that the arbitrator Sathe definitely refused to act. I cannot sea that that makes any difference. It is not suggested that the Court has any inherent power to appoint an arbitrator and force parties to abide by his decision without their consent. The appointment must be justified by the provisions of the Code. I hold that the appointment of Mr. Kelkar is not a valid appointment under para 5, the provisions of that paragraph not having been complied with. I have already held that the appointment is not valid under para. 17 (4). It is, therefore, not valid at all.

7. That is enough for the decision of this application, but I propose to deal briefly with the other question about the lapsing of the reference, because that is really the more important point of the two. The lower Courts have treated the matter as though everything depended upon the fact that the defendant never formally revoked the agreement to refer. That of course is an important circumstance to be considered in deciding whether the agreement was still subsisting at the date of the suit, but it is not the only one, nor is it conclusive. If one party to a submission has been guilty of such laches as to entitle the other party to repudiate the submission, the latter will not be deprived of his right to repudiate merely owing to the absence of formal legal notice of revocation: Bhogilal Purshottam v. Chimanlal Amritlal I.L.R. (1927) Bom. 116 30 Bom. L.R. 92 The principal question for the Court to consider in this case was, I think, whether the defendant was not entitled to repudiate the agreement which the plaintiff sought to file in Court nearly three years after its date, after having done nothing whatever in the meanwhile to get it carried into effect, No doubt the agreement did not fix any time limit for the arbitration, but a reasonable time limit is always to be presumed, and a delay of nearly three years calls for explanation. In Goley v. Dacosta I.L.R. (1889) Cal. 200 it was laid down that the claimant in a reference to arbitration is the person on whom, ceteris paribus, it is incumbent to promote the conduct of the proceedings ; and when, therefore, there is a long and unreasonable delay unexplained by any act of the other party either conducing to it or consenting to it or waiving it, the latter is prima facie entitled to decline to go on with the reference and to revoke the agreement for submission. At p. 207 of the judgment the Court observed:-

The powers conferred by the Code upon arbitrators are very great ; and we think that a party has a right, if he chooses, to insist upon it that, once an arbitration is decided upon, it shall be proceeded with with reasonable speed.

8. A reference was made in that case to certain observations of their Lordships of the Privy Council in Pestonjee Nussurwanjee v. Manockjee (1868) 12 M.I.A. 112 which tend to the same conclusion. Both these cases have been referred to and discussed in Bhogilal Purshottam v. Chimanlal Amritlal I.L.R. (1917) Bom. 116 30 Bom. L.R. 92 cited already in another connection.

9. These being the principles to be applied, let us see what explanation the plaintiff, who was in the position of claimant, has to offer for his failure to take any steps in connection with the arbitration between April 1923 and March 1926. It appears that the defendant's arbitrator Sathe was ill for three or four months after the signing of the agreement, and as the plaintiff's brother was a pleader practising in the Berars and only came to Poona in the May vacation, the Assistant Judge thinks it was not possible for the arbitrators to meet until the May vacation of 1924. That seems to me to be a doubtful proposition. Plaintiff could presumably have got his brother to come to Poona at other times, and, once it is recognised that it was his duty to promote the conduct of the proceedings, it becomes a question whether that duty would not include producing his arbitrator for the purpose within a reasonable time. However, the real reason for the arbitrator being shelved in 1924 seems to have been that the parties were litigating. On January 3, 1924, Thakar filed a Small Cause suit against Davave, who pleaded the agreement to refer as a bar. The suit was not decided till January 31, 1925. On April 6, 1925, Davare filed a suit against Thakar and his brother. Thakar contended that that suit was barred by the agreement to refer. Mr. Abhyankar has argued that this litigation affords an excuse for the plaintiff doing nothing in connection with the arbitration. I do not think so. It may be that as the defendant was relying on the agreement to refer in the first suit it is not open to him to say that while that suit lasted the agreement had lapsed. Certain papers in connection with the arbitration appear to have been in defendant's possession at the time. But the very fact that the defendant was then relying on the agreement strengthened the plaintiff's position if he was really in earnest about the arbitration. He could have gone straight ahead with it; and yet even after the date of the decision of that suit in January 1925 he did nothing for fourteen months, and then came direct to the Court for an order that the agreement should be filed. A fortnight after that he filed a Suit on the same cause of action. I can see no satisfactory excuse for this dilatory procedure. There was nothing to prevent the plaintiff from calling on the arbitrators to proceed to settle the dispute at any rate after defendant's written statement in the Small Cause suit. There was never any order of the Court staying the arbitration proceedings. If the defendant had raised any objection, plaintiff could have made his application for filing the agreement at once'. The fact is, as Mr. Abhyankar admitted, that no one bothered about the business. But the law is, as I have pointed out, that it was plaintiff's duty to avoid unreasonable delay. It seems to me to be a clear case of laches on his part, and the application to file the agreement ought to have been refused. It is not merely a cause of discretion. If the agreement had lapsed, and under the circumstances I consider it be considered to have lapsed, the Court had no power to make it a rule of Court.

10. The orders of the lower Courts must be set aside and the plaintiff's suit dismissed with costs. The applicant must get his costs from the opponent throughout.


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