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Chaturbhuj Bhawanidas Vs. Deokaran Nanji - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 46 of 1923
Judge
Reported inAIR1924Bom370; (1924)26BOMLR84; 79Ind.Cas.769
AppellantChaturbhuj Bhawanidas
RespondentDeokaran Nanji
DispositionAppeal allowed
Excerpt:
east india cotton association rules, rule 43--contract under association rules--reference of disputes to arbitration--chairman's power to appoint arbitrators --nomination of umpire--award by umpire--award delivered beyond time-validity of the award--waiver.;the applicant who was not, and the respondent who was, a member of the east india cotton association, ltd., entered into a contract for sale of cotton. the contract was made subject to the rules and regulations of the association. one of those rules provided: 'all questions in dispute . . . shall be referred to the arbitration of two disinterested members, one to be chosen by each disputant, the arbitrators having power to call in an umpire who must also be a member.' the rule further provided: 'the chairman...shall nominate two.....lallubhai shah, acting c.j.1. this is an appeal from the decision of mr. justice mulla on a petition to set aside an award. the facts which gave rise to the petition were these:--the petitioner purchased 600 bales of oomra cotton from the firm of devkaran nanji on september 11, 1922, for september delivery. the petitioner was not a member of the east india cotton association, ltd., but the respondents, the firm of devkaran nanji, were members of that association. the contract was expressly subject to the rules and regulations of the east india cotton association, ltd. apparently the petitioner sold these bales to the firm of n.v. dossa & co. and they sold to sangidas jesiram. the respondents gave delivery orders for 500 bales, but did not deliver 100 bales. these delivery orders were.....
Judgment:

Lallubhai Shah, Acting C.J.

1. This is an appeal from the decision of Mr. Justice Mulla on a petition to set aside an award. The facts which gave rise to the petition were these:--The petitioner purchased 600 bales of Oomra Cotton from the firm of Devkaran Nanji on September 11, 1922, for September delivery. The petitioner was not a member of the East India Cotton Association, Ltd., but the respondents, the firm of Devkaran Nanji, were members of that Association. The contract was expressly subject to the rules and regulations of the East India Cotton Association, Ltd. Apparently the petitioner sold these bales to the firm of N.V. Dossa & Co. and they sold to Sangidas Jesiram. The respondents gave delivery orders for 500 bales, but did not deliver 100 bales. These delivery orders were gassed on to N.V. Dossa and Co., and tendered to Sangidas, out of which he failed to take delivery of 400 bales and objected to 100 bales as not being of the contract quality. On October 5, 1922, Sangidas was declared a defaulter and subsequently N.V. Dossa Co. became defaulters in their turn. The respondents sought to hold the present appellant responsible in respect of the 400 bales. Anyhow there were differences between the parties with reference to the said contract of 600 bales; and in pursuance of the provisions relating to arbitration in the rules of the East India Cotton Association, the respondents wrote to the petitioner on October 26, 1922, informing him that they had appointed Mr. Cedraschi their arbitrator and asked him to nominate his arbitrator. The petitioner did not reply before November 1. According to the rules the Chairman of the Association nominated, on October 31, 1922, two arbitrators, Mr. Cedrashi and Mr. Mulji Luxmidas. On November 1, the appellant wrote to the Chairman of the East India Cotton Association, Ltd., stating that he could not appoint his arbitrator as he was not a member of the Clearing House, and that with a view to bring the dispute to an end he had appointed from his side Mr. Haridas Madhavdas of Messrs. Umersey Damodar & Co. as an arbitrator. This letter, however, was of no effect, as by that time the Chairman of the Association had appointed two arbitrators in accordance with the rules of the Association.

2. On November 8, 1922, Mr. Cedraschi wrote to the Manager of the Association declining to act as an arbitrator and requesting him to appoint somebody else in his place. On the same day the Vice-Chairman appointed Mr. H.E. Brandon in place of Mr. Cedraschi. Thereafter the petitioner and the respondents appeared before the arbitrators. At the request of the arbitrators the Chairman of the Association extended the time for making the award up to December 27, 1922. The two arbitrators, however, did not agree, and they appointed Mr. Fleming as an umpire between December 14 and 21. The two arbitrators prepared their notes, each stating his opinion and grounds thereof and the notes were handed over to Mr. Fleming.

3. On December 27, Mr. Brandon, one of the arbitrators, wrote to the Secretary of the Association to extend the time for the umpire to make his award. The Deputy Chairman extended the time to January 10, 1923. This was done apparently on the same day, i.e., December 27. Mr. Fleming made his award on January 5, 1923, without giving any notice to the parties and without hearing them.

4. In accordance with the rules of the Association the petitioner (the appellant) appealed from this award to the Appeal Committee on January 25. The Appeal Committee decided the matter on February 9 as follows:--

Having gone though the papers and having heard both the parties the Board confirmed the award of the umpire, with the modification that the claim of Messrs. Devkaran Nanji is reduced to Rs. 17,700.

5. Apparently the award was filed by the respondents on March 14, 1923, and the present petition was made on April 5, 1923, for a declaration that the award filed was void, inoperative and not capable of execution. Several objections were taken to the validity of the award, and in view of the doubt felt as to whether all the objections were such as would fall' within the scope of Section 14 of the Indian Arbitration Act, the Court made the following note on June 25, 1923, in the course of the hearing of the petition:--

Devkaran Nanji and Tulsidas Morarji consent to the question of jurisdiction to be tried on the petition. Either party to be at liberty to call such evidence as he thinks proper as if the matter was tried in a suit. Parties to give intimation to each other in writing as to what evidence they propose to lead. Petition adjourned into Court.

6. The petition was heard and six objections were urged against the award, which have been set forth in detail at page 33 of Part I of the Paper Book. The learned Judge after considering these objections came to the conclusion that they were not sustainable. He accordingly dismissed the petition with costs.

7. The original petitioner has appealed to this Court and before us all the objections except No. 1 have been pressed in support of the appeal. At the outset I may mention that no point has been made as to the procedure to be followed for setting aside an award either under Section 14 of the Indian Arbitration Act, or by way of suit. A reference was made to the decision in E.D. Sasnoon and Go. v. Ramdutt Ramkissen Das . but in the present case there is really no point as to the procedure to be adopted in the case.

8. The first objection raised in the trial Court was in these terms:

That the relation between the petitioner and the respondents being that of agent and constituent within the meaning of rule 88, the contract ought to have been made in the 'official clients contract form,' being the form given on pages 84 to 86 of the Rule Book and not in the 'official form for forward. contracts' being the form given on page 88 of the Book.

9. This objection, as I have already indicated, has not been pressed before us, and was rightly overruled by the trial Court. The form used makes no difference so long as it is clear that the contract in question was made subject to the rules of the Association. Objections 2 and 3 are connected and may be dealt with together. The objections are these:--

(1). That Mr. Cedraschi having refused to act the Chairman had no power under the rules to appoint Mr Brandon or any other person as arbitrator in his place.

(2). That Mr. Brandon's appointment as arbitrator being illegal, he could not validly appoint Mr. Fleming or any other person in his place.

10. I have already stated the facts with regard to the second objection. The respondents had appointed Mr. Cedraschi.

11. Under Rule 43 B (i) the Chairman nominated two arbitrators on October 31, one of whom was Mr. Cedraschi. He intimated his unwillingness to act on November 8 and on the same day Mr. Brandon was appointed in his place. The objection is based upon the wording of Clause B of rule 43. The expression there used is 'shall nominate the two arbitrators'. It is urged that the Chairman having once nominated Mr. Cedraschi, his power was exhausted, and that under Sub-clause (iii) of Clause B as one of the arbitrators after the appointment refused to act, the other arbitrator was bound to give notice to the parties provided in the last sub-clause of Clause B of rule 43. This objection is based upon the meaning to be given to the word 'nominate'. It is urged that 'nomination' is to be distinguished from 'appointment'. It is doubtful, however, whether the rules have uniformly used the words 'nominate' and 'appoint' in really different senses. For instance, in Clause D of the same rule in the third paragraph the word used is 'appoint' with reference to arbitrators. Similarly in Clause (a) of 'Instruction to Arbitrators' page 25 of the Rule Book the word used is 'appointed'. It appears to me that the word 'nominate' in Clause B would mean there 'finally appoint' i. e. when the arbitrator has accepted the appointment. Assuming, however, that the word 'nominate' has a more restricted meaning than these rules apparently appear to give to it, I am of opinion that there was no effective nomination of Mr. Cedraschi until he agreed to act as an arbitrator. Until he ay-reed to act, there would be no effective nomination, and the nomination of Mr. Brandon on November 8 appears to me to have been made in accordance with the rules.

12. Even assuming that the nomination of Mr. Brandon was open to the objection urged, it is clear that when the parties appeared before the arbitrators in pursuance of the notice of the hearing, which they received from the arbitrators and when they failed to raise any objection to the nomination of Mr. Brandon by the Chairman, the parties must be taken to have accepted his nomination, and to have waived the objection. On both these grounds the trial Judge has overruled the objection, and I agree with the learned trial Judge in disallowing this objection.

13. The third objection is dependent upon the second objection, for, if Mr. Brandon's appointment is not open to any objection, it would be open to the arbitrators to appoint Mr. Fleming as an umpire, and there would be no objection on the score of the umpire having been appointed by the two arbitrators, one of whom was Mr. Brandon.

14. The third objection must also be disallowed. The fourth objection is that Mr. Fleming was not a member of the Association and that no person other than a member could act as an umpire.

15. This objection is based upon Rule 43, Clause A, which provides that 'the arbitrators will have power to call in an umpire who must also be a member' (of the Association). The objection in effect is that Mr. Fleming is not personally a member of the Association. But the firm of Prier de Saone and Co. is a member of the Association, and Mr. Fleming is a partner in that firm. In accordance with the rules of the Association this firm appointed two persons as their representatives for the purposes of arbitration and one person as their authorised representative. It is admitted that Mr. Fleming was a partner of this firm, and that he was elected as one of the representatives 'for purposes of arbitration.'

16. It is urged that as Mr. Fleming himself is not a member of the Association he was not qualified to be an umpire. This objection has been pressed before us with some force; but I am unable to see any substance in the objection. Under the rules of this Association, it is clear that individuals as well as any firm or company engaged in cotton trade in Bombay can be members of the Association, as provided in Rule 2; and it as provided that for the purposes of arbitration in the case of a firm or company which is a member, only two representatives of the firm or company shall be eligible to act as arbitrators. The said firm or company shall, from time to time, notify to the Secretary the names of the representatives whom it desires to nominate. This is provided in the second paragraph of Clause (a) of rule 42. It is not disputed before us that Mr. Fleming was qualified, to act as an arbitrator. But it is urged that unless he was a member in his own personal capacity, he could not act as an umpire. This contention does not appear to me to derive any support from the rules. It seems to me that the expression 'purposes of arbitration' is comprehensive enough to include acting as an arbitrator or as an umpire. He was one of the persons elected by the firm for the purposes of arbitration.

17. It is needless to consider further the rules in detail on this point. I may, however, mention the fact, which has been proved by the evidence of the Chairman of the Association, that most of the members of the Association are firms, and that the individual members are comparatively very few. If the interpretation contended for by the appellant is accepted as regards the qualification of an umpire, it would follow that the working of the scheme of arbitration contemplated by the rules would be rendered practically nugatory. Taking the form provided in the rules with the rules, the meaning seems to me to be fairly clear that for all the purposes of arbitration Mr. Fleming was a member of the Association. For these reasons, I overrule this objection.

18. I shall next take up the last objection, No. 6, that the petitioner had no notice of the appointment of Mr. Fleming and that Mr. Fleming made his award without giving any opportunity to the petitioner of being heard.

19. As a fact Mr. Fleming gave no notice and did not hear the parties. It is urged that this is sufficient to vitiate the award. It is not contended before us on behalf of the respondents that an umpire can make his award without giving the parties an opportunity of being heard. But undoubtedly when the present appellant appealed to the Appeal Committee under the rules, he did not raise any objection to the award made by Mr. Fleming on the ground that he did not give him any opportunity of being heard. The learned trial Judge has drawn the inference that the present petitioner must be taken to have waived* the objection. I have read the grounds of appeal to the Appeal Committee carefully, and I am unable to find any indication therein of the objection now raised. I think it was open to the Court to draw the inference that the present appellant had waived this particular objection to the award.

20. It is quite true that for the purposes of waiver knowledge of the essential facts is necessary. But, in the present case, when the petitioner appealed to the Appeal Committee, it could not possibly be said that he had not the necessary knowledge of the essential fact, namely, that he was not heard and that he was given no notice. I agree, therefore, with the trial Court that this objection should be disallowed.

21. I now come to the remaining objection, No. 5, namely, that, Mr. Fleming's award was not made within ten days from the date of his appointment as required by Rule 43, Clause (iv). The contention of the appellant is that though there is no direct provision requiring the umpire to make his award within a particular period, it is a necessary implication of Sub-clause (iv) of Clause B of Rule 43 that the umpire has to make his award within ten days from the date of his appointment. It is further urged that it is a substantial right inasmuch as it is provided by Clause B of Rule 43 that, where the award is not made within ten days, the arbitrators have to give notice of the fact to the parties, and the result is that under those conditions the Chairman, Deputy Chairman or General Manager can nominate the two arbitrators having power to appoint an umpire. The contention of the appellant goes further. He contends that when notice is given by the arbitrators, in consequence of the umpire having failed to give his award within ten days, the parties practically get the right of nominating their arbitrators again, and that in the event of failure on their part the Chairman would get the right to nominate the two arbitrators as contemplated by Clause B of rule 43. But in any case the contention is that, where an umpire fails to make his award within ten days, the parties are entitled to notice of the fact, and the procedure to be followed then is such as would affect the rights of the parties substantially. It is urged on these grounds that as Mr. Fleming failed to make his award within ten days from the date of his appointment and as there is no provision in the rules for extending the time, his award is invalid.

22. On the other hand, it is urged that the provisions which relate to the extension of time, so far as the arbitrators are concerned, should be held to apply to an umpire also, and that according to those provisions, which are to be found in Clause A of rule 43, it would be open to the Chairman, Vice-Chairman or the General Manager to extend the time even in the case of an umpire.

23. Further, it is urged that even if there was no power to extend the time, and if the award is open to the objection that it was made more than ten days after the date of the appointment of the umpire, the objection must be deemed to have been waived.

24. Apart from the question of waiver' the learned trial Judge has found in favour of the appellant on this part of the case; and I agree with the view that under the rules the umpire is bound to make his award within ten days from the date of his appointment, and that the provisions as to the extension of time under Rule 43, Clause A, apply only to arbitrators, and hot to umpires. This is a matter which depends upon the construction of the rule. The rule is a very long one. It is not necessary to quote the whole of it. It has been quoted in the judgment of the trial Court, and while there is a certain amount of difficulty in interpreting this rule as a whole, taking Sub-clause (iv) of cl. B of rule 43, it is quite clear to my mind that an umpire has to make his award within ten days from the date of his appointment. If he fails to do so 'from any cause', it is provided that the arbitrators are at once to give notice of the fact to the parties, and then under Clause B the two arbitrators may have to be re-nominated. I express no opinion on the question whether the appellant is right in his contention that the parties would get the right of appointing the arbitrators in the first instance if such a contingency arises. But it is clear that there is an obligation on the umpire to make his award within ten days. I entirely agree with the learned trial Judge that it is to be regretted that there should be no record of the date of the appointment, which is so important. It is not recorded anywhere, and it is clear from the present record that the fact came to be known when Mr. Brandon was examined as a witness. His statement on this point is as follows:--?

I did not make any award. I presented notes to the umpire. They are dated December 14, 1922 and December 21, 1922. Mulji and I appointed Mr. Fleming as umpire. I could not really tell you the date on which I made the appointment. It was between December 14 and 21, 1922.

25. In the letter which Mr. Brandon wrote to the Secretary of the Association on December 27 for extension of time, he did not mention the date of Mr. Fleming's appointment, but he simply referred to the fact of his appointment. It must be taken as proved in this case that the appointment of Mr. Fleming was made somewhere between December 14 and 21, 1922. Assuming it to have been made on December 21, which is the date most favourable to the respondents, it would appear that Mr. Fleming did not make his award within ten days. The award was in fact made on January 5, 1923. The fact of the extension of time by the Deputy Chairman up to January 10 does not help the respondents, because I am satisfied on the provisions of rule 48 that there is no power in the Deputy Chairman or the Chairman to extend the time. The provisions material to this point in Clause A of Rule 43 are these:--

The arbitrators shall come to a decision within 15 days of the appointment, unless the Chairman, Vice-Chairman or General Manager shall when, nominating arbitrators (in the manner prescribed below) or upon subsequent application of the arbitrators, grant an extension of this period.

If the two arbitrators cannot agree upon an award they shall appoint an umpire within 15 days of the date on which the two arbitrators were originally appointed, or within such extended period as may be allowed by the Chairman, Deputy Chanman or General Manager.

26. These are all the provisions which relate to the power of the Chairman, Deputy Chairman or General Manager as to extension of time, and they clearly relate to the extension of time given to the arbitrators as distinguished from an umpire, and there is no provision whatever for extension of time under the Rules as regards the umpire. This conclusion derives further support from the language used in Sub-clause (ii) of Clause B of rule 43 with reference to arbitrators as compared with the language used with reference to an umpire in Sub-clause (iv) of the same clause. For the purposes of this objection I cannot read 'umpire' as meaning 'arbitrator' under this rule. It is true that in dealing with another objection, I have accepted the view that an umpire is to be included within the scope of the expression 'for the purposes of arbitration.' But the words in the two paragraphs in Clause A of rule 43 quoted above are very specific, and cannot possibly be read in their natural and plain meaning as having any application to the extension of time with reference to an umpire: and the language used in Sub-clauses (ii) and (iv) of Clause B is equally specific.

27. Clause B of rule 43 definitely provides that where the award is not made within ten days from the date of the appointment by the umpire, the arbitrators must give notice thereof to the parties, and it is also provided in terms that in that case the Chairman, Deputy Chairman or General Manager will have power to appoint two arbitrators having power to appoint an umpire. The implication to my mind is clear that when the award is not made within ten days, the result is that that arbitration is completely superseded, and the arbitrators have to be appointed afresh and the arbitration must commence de novo.

28. It must be remembered that the appellant is not a member of the Association, and is not bound as such by the rules of the Association. The rules are made applicable by the contract between the parties, and to read anything more than what the words of the rules plainly mean or necessarily imply, would be incorporating a term in the contract which is not agreed to by the parties. I mention this for the purpose of making it clear that there is no scope in the present case for the argument which has been urged on behalf of the respondents that the evidence of T, the Chairman of the Association should be considered on this point as helping them. The evidence is to the effect that in practice the powers which are given for extension of time with reference to arbitrators are used also with reference to umpires. I am quite willing to accept the fact that the practice is to that effect. But I do not think that that practice is relevant to the present point where the language of the rule is unambiguous, nor do I think that the rules could be construed in the light of this practice contrary to the plain meaning of the words, which would involve the incorporating of a new term in the contract which cannot be reasonably implied. I, therefore, agree with the learned trial Judge that the award made by the umpire is open to the objection that it was made after the time limit fixed for making the award.

29. The other contention that remains to be considered with reference to this objection is whether the objection has been waived by the appellant. The burden of proving that there was a waiver on the part of the appellant would be on the respondents. There is no evidence in the present case that the present appellant had in fact any knowledge that the award was made more than ten days after the appointment of Mr. Fleming as an umpire. He had no means of knowing the fact for the simple reason that no notice of his appointment was given to him before the award was made, and I do not see how it could be stated on the present record that he could have obtained the information even if he had made any attempt to get that information from the record of the arbitration proceedings. The date of Mr. Fleming's appointment does not appear anywhere in writing. In fact the date was ascertained in the course of the hearing when Mr. Brandon gave his evidence. Under these circumstances, I do not see how it could reasonably be said that the present appellant waived this objection when he failed to urge it in his appeal to the Appeal Committee. As pointed out in the case of Earl of Darnley v. The Proprietors etc., of the London Chatham, and Dover Railway (1867) L.R. 2H.L. 43 it is essential that the waiver must be an intentional act and with knowledge of the necessary facts. I am unable to hold that the mere fact of the appellant having appealed to the Appeal Committee as provided by the rules can operate as a waiver of this objection. On this point I may refer to the observations in the case of Jungheim, Hopkins and Co. v. Foukelmann [1909] 2 K.B. 948:--

I wish to add that I do not think that the fact that the plaintiffs appealed to and appeared before the Committee of Appeal can make the award good when it was originally bad, of can alter the plaintiffs' legal rights in any way.

30. The appellant could not raise the objection before the Appeal Committee for the simple reason that he had no knowledge of the facts. I have carefully considered the reasons given by the learned Judge for holding that there was a waiver on the part of the appellant. The trial Judge seems to me to have dealt with the point as if the burden of proving the absence of knowledge lay upon the appellant. It is' really for the respondents to establish the plea of waiver, and in my opinion there is no evidence on the record to show that there was any waiver of this objection on the part of the appellant. In fact the evidence tends to show that he had no knowledge of the necessary facts and that there was no conscious giving up of the point on his part. It seems to me, therefore, that this objection must be disallowed.

31. It is urged on behalf of the respondents that rule V in Schedule I of the Indian Arbitration Act should be applied to this award so far as the power to extend the time is concerned. But I am unable to accept this contention, as the application of these rules is excluded by the terms of the contract under which the rules of the Association are made applicable to this contract by the parties.

32. So far I have dealt with the contentions as they were made at the hearing of the appeal when we took time to consider our judgment. Before we could deliver our judgment, an application was made on behalf of the respondents to allow them to argue a new point based upon rule 58. Accordingly we have heard the parties on this point.

33. The contention is that the umpire should be taken to have been appointed on December 21 and that if the holidays and Sundays between December 21 and January 5 be excluded, as they should be excluded under rule 58, the award is made just in ten days. For the purpose of this point it is common ground that including two Sundays there were five close holidays, viz., December 24, 25, 26 and 31 and January 1. If the date of the appointment be taken to be December 21 and if that be excluded, the award of the umpire would be just in time as made on January 5. By way of reply to this new point it is urged that the appointment must be taken to have been made some time before 21st and not on the 21st according to Mr. Brandon's evidence, that rule 58 has no application to the periods h'xed under Rule 43, and that the holidays and Sundays cannot be excluded.

34. This point is raised for the first time in appeal as stated above and there is no evidence in the case as to whether in practice the provisions of Rule 58 have been applied by the members of the Association to arbitrations under Rule 43. After considering the arguments I am satisfied that the appointment cannot be taken to have been mada on the 21st but some time before. Mr. Brandon's evidence is clear on this point. I have already referred to his statement in the examination-in-chief In cross-examination he says as follows:--

I am absolutely certain that Mr. Fleming was not appointed alter December 21. Mulji and I might have approached Fleming about a week or ten days before December 21 because it was very evident that Mulji anil myself could not agree.

35. This renders it highly probable that the appointment was made before the 21st: and in any case any date between the two dates would exclude the possibility of its having been made on December 21. Thus, even if the holidays including Sundays be excluded, the award cannot be taken to have been made in time. Further I am not satisfied that under Clause (b) of Rule 58 Sundays and holidays could be excluded. It is clear that, apart from this clause, they could not be excluded in computing the period of ten days under Rule 43. It is not suggested, or at any rate it is not supported by any principle or precedent, that Sundays and holidays should be excluded in computing the periods fixed under Rule 43, apart from any express provision to that effect under the rules.

36. The clause in Rule 58 bearing on this point is in these terms:--

Sundays and holidays shall not be computed as funning portion of the time allowed for any purpose under these rules except the calculation of interest.

37. I am not satisfied that this provision applies to periods fixed under Rule 43. In the first place Rules 56 to 172 are to be known as Trading Rules and are in their nature applicable to members of the Association There are various rules in this set of rules relating to particular arbitrations, as, for example, Rules 65 and 66, 78 and 79, and 128, under which short periods are fixed to which the clause in question can appropriately apply. The expression 'time allowed for any purposes under these Rules' in the said clause in Rule 58 appears to me to refer to any purpose under the Trading Rules and not under all the rules of the Association generally. Rule 43 in terms contemplates arbitrations between members and non-members also and I find it difficult to hold that the clause in question applies to Rule 43 in computing the period of ten days. The point raised by the respondents most be disallowed.

38. It is rather unfortunate that the award should fall through on such a ground. But however willing we may be to see that an award of the arbitrators or the umpire is upheld as far as possible, we cannot ignore an objection which is clear and effective.

39. I would, therefore, allow the appeal and declare the award to be void and inoperative. The appellant to have his costs throughout.

Crump, J.

40. The facts of this matter are set out fully and clearly in the judgment of the learned trial Judge. It may, however, be stated that in both these cases the matter originally came before the Court in the shape of a petition under the Indian Arbitration Act, Section 14, to set aside an award. In both by consent of parties, in order to avoid technical objections as to the procedure followed, the objections being not on the ground of misconduct only but also on the ground of jurisdiction, it was agreed that the petition should pro tanto be treated as a suit.

41. The only objections now raised to the award are the same six objections which are clearly and categorically stated in the judgment under appeal and therefore those six objections alone fall to be considered. The difficulty, such as it is, in the case, arises from the extremely loose manner in which the Rules of the East India Cotton Association have been drafted, more especially as to arbitration, and it is a matter for surprise that businessmen have not perceived the advantage which would be gained by having these rules re-drafted by a competent legal adviser. They would no doubt save much litigation with its attendant expense and uncertainty were they to follow that obvious course.

42. The first objection has not been pressed. The learned counsel for the appellants while not relying on it did not specifically abandon it. It is enough to say that the contract between the parties clearly incorporates by reference the Rules and Regulations of the Association which must be read as terms of the contract. As to this objection, and indeed as to the other objections with the exception of No. 5 it would perhaps be sufficient to rely on the grounds stated by the learned trial Judge but I will state briefly as to each my reasons for holding that it is not sustainable.

43. As to the second objection it was argued Defore us that when Mr. Cedraschi intimated, on November 8, 1922, that he declined to act as arbitrator the Chairman had no power to appoint Mr. Brandon in his place. It is urged that Rule 43 B (i) covers the case. The respondent appointed an arbitrator (Mr. Cedraschi): the petitioner failed to appoint an arbitrator within 24 hours: the Chaiman had therefore power to 'nominate' two arbitrators and he accordingly 'nominated' Mr. Cedraschi and Mr. Mulji Lakhmidas. It is urged that the Chairman's power to 'nominate' was then exhausted. It my opinion the Rules make no real distinction between 'nomination' and 'appointment'. This is clear from para 3 of Rule 43 D and therefore no argument can be validly based on any supposed distinction between these two terms. Whether the process be called 'nomination' or 'appointment' it is not complete until the person selected has agreed to undertake the office. Therefore the power was not exhausted. Further, the waiver of any objection on this score is too clear to need discussion.

44. The third objection falls to the ground with the second. The arbitrators being validly appointed had power to appoint an umpire, and they did appoint Mr. Fleming.

45. The fourth objection is that Mr. Fleming was not qualified under the Rules to act as umpire. In construing these Rules we should, I think, bear in mind the maxim ut magis res valeat quam pereat. The Association consists of members who are (1) firms, (2) individuals. It is in evidence that of the latter there are two only. Rule 43 A lays down in para (1) that the arbitrators must be members and that 'the umpire must also be a member.' Rule 43C(ii) (last paragraph) is as follows: 'The arbitrators must in all cases be members or authorized representatives of members' but this provision does not in terms extend to 'umpires'. Therefore, it is argued that Mr. Fleming not being a 'member' cannot be qualified to act as an umpire Mr. Fleming's position is as follows: The firm of Prier de Saone & Co. is a member and in their application for member ship the firm appointed him as their 'representative for purposes of arbitration' and also as their 'authorised representative.' An 'authorized representative,' under Rule 1, has full authority to conduct or mananaga the cotton business of his principal, i. e., the firm which he represents. A firm must of necessity in all matters act through an individual, and if the strict literal construction contended for on behalf of the appellants were allowed to prevail, the intention of the rules would be entirely frustrated. There would be only two individuals qualified to act as umpire, viz., the two persons who are members in their individual capacity. In this connection reference may be made to Rule 51(b) which clearly contemplates that an 'authorized representative' may act as umpire if he is a member of the Appeal Committee. This would be repugnant to the construction for which the appellants contend. In my opinion the word 'arbitrator' is loosely used in Rule 43 C (last para) as including also an 'umpire' and in the absence of any provision directly excluding an 'authorized representative' from acting as an umpire I am not prepared to hold that Mr. Fleming can be held to be disqualified by the inferential process of reasoning relied upon. Whether Mr. Fleming is a member of the Appeal Committee or not is a point on which the record is silent.

46. I reserve the fifth objection for the moment.

47. The sixth objection. Upon this point I have nothing to add to the reasons given by the learned trial Judge. In my opinion the objection fails on the ground so stated.

48. The fifth objection is more serious. I am most unwilling to supersede an arbitration if that course can reasonably be avoided, but if an objection is good it must be allowed to prevail. The rules as to arbitration form part of the contract and either party is entitled to insist on substantial compliance with those rules. Mr. Fleming's award was made on January 5, 1923. It was made more than ten days after his appointment. Precisely when that appointment was made was not known until Mr. Brandon gave evidence before the trial Judge, and even now it can only be said that it was some time between December 14 and 21, 1922. Whatever the exact date more than ten days had expired before Mr. Fleming's award was made. Under Rule 43 B (iv) the intention plainly is that the umpire shall make his award within ten days. If he does not, the first paragraph of the Rule comes into operation and new arbitrators have to be appointed. There is no power to extend the time in the case of an umpire such as given by Clause (ii) in the case of arbitrators. On December 27, the Chairman extended the time, but I agree with the learned trial Judge that he could not do so, and that on this ground the award is bad. But the learned trial Judge has held that the appellants must be held to have waived this objection. The difficulty in supporting this view is that the defect was not known, and I am unable to hold that the doctrine of constructive notice can be applied to make out a case of waiver. The argument is that had appellants made such enquiries as were open to them they might have discovered that the time had been extended, and from this they might have deduced the fact that the umpire's award was out of time. Having done so they could and ought to have taken this point in their appeal. But there can be no waiver without full knowledge. It is to be noted that no notice of the appointment of the umpire was given, and that the parties were not heard by him. Those irregularities can be waived for appellants must have been aware of them. But it is fairly clear that no one knew for certain that the umpire's award was beyond time until Mr. Brandon was examined before the trial Judge. In my opinion this objection must prevail and the award is therefore bad.

49. Finally as regards Rule 58 I am of opinion that in all probability the umpire was appointed before December 21. If that is so the exclusion of Sundays and holidays enjoined by the last sentence of para (b) of this Rule would not bring the award within the ten days' time allowed by Rule 43 B. Further I do not think that the former Rule controls the latter.

50. I agree, therefore, that the appeal must be allowed.


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