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Shivchandrai Jhunjhunwalla Vs. Mussamat Panno Bibi - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case NumberO.C.J. Arbitration No. 95 of 1941
Judge
Reported inAIR1943Bom197; (1943)45BOMLR392
AppellantShivchandrai Jhunjhunwalla
RespondentMussamat Panno Bibi
DispositionPetition dismissed
Excerpt:
bombay cotton contracts act (bom. iv of 1932), sections 4(1), 5, 6-statutory bylaws-east india cotton association by-laws, by-law 38a-valid by-law-power of chairman to extend time of reference-legal representative of contracting party seeking arbitration-award-validity of.;the by-laws framed under the bombay cotton contracts act, 1932, by virtue of section 4(1) read with sections 5 and 6, are statutory by-laws, and are therefore excepted from the operation of the indian arbitration act, 1940.;accordingly, the last para. of by-law 38a of the east india cotton association by-laws, empowering the chairman of the association to extend the time for making an award, is valid.;fazalally v. khimji (1933) 36 bom. l.r. 1005 followed.;when a reference comes before the arbitrators and a party who is..........a reference to him, in respect of a transaction in cotton made under the rules of the east india cotton association, ltd. in the petition three grounds are put forth to set aside the award. the first is that the reference to arbitration was beyond the period of limitation. secondly, that without the consent of the parties neither the chairman of the association nor the umpire had jurisdiction to extend time for the umpire to make his award. lastly, that the respondent not having obtained representation to the estate of her husband was not entitled to conduct arbitration proceedings or refer the disputes to arbitration and was not entitled to apply to this court for a decree in terms of the award.2. in support of the first contention it is alleged in the petition that the contract was.....
Judgment:

Kania, J.

1. This is a petition to set aside an award made by the umpire, on a reference to him, in respect of a transaction in cotton made under the rules of the East India Cotton Association, Ltd. In the petition three grounds are put forth to set aside the award. The first is that the reference to arbitration was beyond the period of limitation. Secondly, that without the consent of the parties neither the Chairman of the Association nor the umpire had jurisdiction to extend time for the umpire to make his award. Lastly, that the respondent not having obtained representation to the estate of her husband was not entitled to conduct arbitration proceedings or refer the disputes to arbitration and was not entitled to apply to this Court for a decree in terms of the award.

2. In support of the first contention it is alleged in the petition that the contract was in respect of May, 1938, settlement of which the due date was May 25, 1938. The application for a reference should be made within three years of that day and in this case the advocate's telegram intimating that the respondent had appointed her arbitrator and calling upon the petitioner to appoint his was dated May 26, 1941. No other facts are alleged in respect of this contention. It is pointed out for the respondent that the time would expire on May 25, 1941. That day was a Sunday and therefore the step taken on May 26, 1941, was within time. I therefore hold that the first ground fails.

3. In support of the second ground it was argued that Section 28 of the Indian Arbitration Act (X of 1940) will be applicable and any provision in the arbitration agreement giving power to the arbitrator or umpire, except with the consent of the parties, to enlarge time for making the award, is void. By the first part of that section the Court is empowered to enlarge the time for making the award, whether the time originally fixed had expired or not. It is pointed out that in this case time was not extended by the Court and the application of the umpire to the Chairman of the Association to extend time was without jurisdiction. On the other hand s, 46 of the Indian Arbitration Act is relevant. Under that section provisions of the Arbitration Act, in so far as they are inconsistent with another Act or with rules made thereunder are considered inapplicable. Having regard to this section it is necessary to consider the effect of the by-laws of the Association and the Bombay Cotton Contracts Act under which the by-laws have been framed. Under Section 4 of that Act (Bom. IV of 1932) a cotton association will be recognised provided it complies with certain regulations. Sub-section (7) of that section provides that the East India Cotton Association, Ltd., is a recognised cotton association and the articles and by-laws of the said association shall so far as they relate to matters for which by-laws may be made under the provisions of Sections 5 and 6 be deemed to be by-laws of a recognised cotton association. Under Section 6 the Board of Directors, subject to the sanction of the Governor-in-Council, is authorised to make from time to time by-laws for the regulation and control of transactions in cotton, and without prejudice to the generality of that principle, Sub-section (2), Clause (g), empowers the Board to frame by-laws providing for the terms, conditions and incidents of contracts and the forms of such contracts as are in writing.

4. In the present case the original contracting parties were both members of the Association. It is clear that the by-laws framed under Section 6 would be statutory by-laws by reason of the provisions of Section 4 (7) of the said Act. One of the conditions of the contracts, which is settled by the Board of Directors with the sanction of the Governor-in-Council as required by Section 6, is that there shall be compulsory arbitration. If so, it seems to me that within the meaning of Section 46 of the Indian Arbitration Act such special provisions as are contained in the by-laws framed by the East India Cotton Association, Ltd., are operative, in spite of the provisions of the Arbitration Act. It is not disputed that the action of the umpire in requesting the Chairman to extend time was according to the by-laws. By-law 38A (last paragraph) provides as follows :-

The umpire shall make his award within ten days from the date of his appointment unless the time is extended by the chairman.

It may be noted that if this by-law is inapplicable it must be conceded also that the by-law which limits the time within which the arbitrators and the umpire had to make the award should also be considered inapplicable, and if the time fixed by the Arbitration Act alone was taken into consideration, for deciding whether the award of the umpire was within time, it seems that the award is still within time. On the second point therefore it seems that the by-laws framed under the Cotton Contracts Act by virtue of Section 4(7) read with Sections 5 and 6 are statutory by-laws and therefore are excepted from the operation of the Arbitration Act. In this connection my attention has been drawn to the following observations of Rangnekar J. in Fazalally v.Khimji (1933) 36 Bom. L.R. 1005:-

The by-laws in this case are statutory.... The by-laws being valid and the contract being subject to the by-laws, the scheme of the arbitration provided by the by-laws is binding on the parties, and the final decision of the domestic tribunal agreed upon would be an award, and, in my opinion, could be filed under Section 11 of the Act.

The second contention of the petitioner therefore fails.

5. In respect of the third ground, it was the respondent who sent the notice to proceed with the arbitration. She was not one of the contracting parties. Under Section 6 of the Indian Arbitration Act, however, the arbitration agreement is not discharged by the death of a party, but could be enforced by or against the legal representative of the deceased. Section 2(d) states that a legal representative means a person who in law represents the estate of a deceased person and includes any person who intermeddles with the estate of the deceased. In the present case I am told that the petitioner appeared under protest before the arbitrators but he nowhere contended that the respondent was not the legal representative of the deceased and therefore not entitled to enforce the agreement under Section 6 of the Indian Arbitration Act. Be that as it may, it seems to me that this is a question which has to be determined by the arbitrators. When a reference comes before the arbitrators, and a party who is not the original contracting party seeks to enforce the arbitration agreement, the arbitrators have to inquire whether the party is entitled to enforce the agreement. The award describes the respondent as the widow and sole successor to the estate of the deceased Chunilal Maheshwar. The petitioner urges that the deceased died leaving a will and the respondent as his widow and a son Purshottam. It is argued that therefore there is an illegality on the face of the award. In my opinion this argument is unsound. It was within the competence of the arbitrators to determine whether the respondent was entitled to enforce the agreement and the petitioner's argument in substance is that the umpire came to the decision on insufficient or inadequate materials. It is unnecessary to state that an award cannot be challenged on the ground that the arbitrator had made the award without adequate materials, i.e. materials on which a Court of law would not have decided to that effect. That would amount to going behind the award which is not within the jurisdiction of the Court. Reading the petitioner's statement about the will and about two persons being left behind the deceased, and reading the award as framed, I see not illegality on the face of the award. The arbitrators have decided and must have been satisfied on the facts placed before them or the umpire that the respondent was the widow and sole successor to the estate of the deceased and as such entitled to proceed with the reference.

6. The last part of the third ground mentions that the respondent is not entitled to apply to this Court for a decree in terms of the award. Having regard to the contentions urged and having regard to the provisions of the Indian Succession Act (which enjoins certain proof being given in Court before the Court passes a decree), I have no doubt that the respondent will satisfy the Court at the time of passing the decree that the requirements of law have been satisfied, and that the petitioner herein gets a valid discharge, if he satisfies the decree which the Court passes. I am not concerned with that part of the contention at this stage.

7. The petition therefore fails and is dismissed with costs. Costs are fixed at Rs. 250.


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