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Moreshwar Damodar Urhekar Vs. Mahadeo Raghunath Tikekar - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai High Court
Decided On
Case Number Civil Revision Application No. 327 of 1959
Judge
Reported in(1961)63BOMLR37
AppellantMoreshwar Damodar Urhekar
RespondentMahadeo Raghunath Tikekar
DispositionAppeal Allowed
Excerpt:
.....and having regard to their special qualifications and the special confidence which they commanded, and that, therefore, upon the death of any one of them, there could be no substitution and the arbitration clause would, therefore, fail. 5. in appeal, the learned district judge, amravati, set aside the decision of the trial judge and held that upon a construction of the relevant clause the arbitration agreement contained no bar to the supplying of vacancies, that the parties failed to supply the vacancies and that, therefore, the court had to supply them. the arbitration clause was, therefore, rightly held to have failed of its purpose by the trial court......and the arbitration clause would, therefore, fail. this contention was upheld by the learned trial judge who held that in the instant case the deceased arbitrator was chosen by the parties because of qualifications peculiar to himself and, therefore, the court could not appoint a substitute because of his death. the trial judge further went on to state that shri d. l. limaye was an eminent lawyer and was known for his high integrity and character; and if his choice was made because of these qualifications, it was indeed difficult to say whether the parties could be called upon against the wishes of one of them to name another arbitrator or whether in the event of their not agreeing, the court could appoint one to fill the vacancy.4. before the learned trial judge another objection.....
Judgment:

Kotval, J.

1. On November 25, 1947, the plaintiff-applicant and the defendant-opponent entered into an agreement of partnership of which the eleventh clause provided for reference to arbitration in the event of a dispute arising under the deed. The eleventh clause Was in the following terms:

ikVhZ ua- 1 o ikVhZ ua- 2 ;kapse/;sa dksgh okn mifLFkr >kY;kl R;kpk fudky ikVhZ ua- 1 o 2 ;kauh [kkyhy iapkpsdMwu djowu ?;kok o R;kauh fnysyk fudky ikVhZ ua- 1 o 2 oj ca/kudkjd jkfgy-

1 nknlkgsc mQZ Mh- ,y- fyHk;s odhy] fVGduxj] vejkorh ljiap

2 xksikGjko egknsojko Mksjy] vack njokT;kP;k vkar iap

3 nRrk=; oklqnso osnd. EkLrj ]] ]] ]]

A dispute did arise between the parties when a suit for dissolution of partnership and accounts was filed by the plaintiff on January 7, 1958, in the Court of the Civil Judge, Senior Division, Amravati. The defendant inter alia met the suit by taking recourse to the provisions of Clause 11. According to the defendant, the clause precluded the further trial of the suit which ought to be stayed pending reference to arbitration under the provisions of Section 34 of the Arbitration Act. This objection was raised by the defendant by his application dated January 29, 1958.

2. It remains to be stated that of the three arbitrators mentioned in Clause 11, Shri D. L. Limaye, Advocate, passed away in 1952. Thereafter, the defendant gave a notice to the plaintiff on November 28, 1956, to appoint his successor but the plaintiff declined to nominate any successor. In answer to the defendant's application under Section 34, it was the contention of the plaintiff that the parties had appointed the three arbitrators by name and having regard to their special qualifications and the special confidence which they commanded, and that, therefore, upon the death of any one of them, there could be no substitution and the arbitration clause would, therefore, fail. This contention was upheld by the learned trial Judge who held that in the instant case the deceased arbitrator was chosen by the parties because of qualifications peculiar to himself and, therefore, the Court could not appoint a substitute because of his death. The trial Judge further went on to state that Shri D. L. Limaye was an eminent lawyer and was known for his high integrity and character; and if his choice was made because of these qualifications, it was indeed difficult to say whether the parties could be called upon against the wishes of one of them to name another arbitrator or whether in the event of their not agreeing, the Court could appoint one to fill the vacancy.

4. Before the learned trial Judge another objection was also put forward. It was that the second arbitrator named in Clause 11, Gopalrao Mahadeorao Dorle, was a man who was very aged (it was alleged that he was 90 years of age) and his eye-sight and powers of hearing had been failing due to age, and that, therefore, he was incapable of acting. The learned trial Judge negatived this objection. But unfortunately since his decision the other arbitrator, Mr. Dorle has also passed away on October 3, 1958. It was urged and it seems to me that in revision I must take account of this subsequent event which further affects the issue between the parties.

5. In appeal, the learned District Judge, Amravati, set aside the decision of the trial Judge and held that upon a construction of the relevant clause the arbitration agreement contained no bar to the supplying of vacancies, that the parties failed to supply the vacancies and that, therefore, the Court had to supply them. Be, therefore, remitted the matter to the trial Judge for appointment of two arbitrators in place of the deceased arbitrators.

6. In coming to its decision, the appellate Court has observed in para. 4 of its judgment:

I think the learned Judge was wrong in Introducing his knowledge that Shri Limaye was appointed as one of the Panchas because he was known to be a pleader of around legal knowledge. The agreement does not show that it was this fact that weighed with the parties in naming him as a Panch.

7. It seems to me that the learned appellate Judge was partly wrong and partly right in making the above observations. Be was right in so far as he observed that the trial Judge should not have imported his own knowledge that Shri Limaye was known to be a person of sound legal knowledge. But it seems to me that he was in error in holding that the trial Judge could not take account of the fact that Shri Limaye was a pleader practising in his Court. Be was also incorrect in his observation that the agreement does not show that it was this fact which weighed with the parties in naming him as a Panch. In fact, the manner in which Clause 11 has been drawn up points to a contrary conclusion, in my opinion.

8. Normally, parties providing for arbitration leave the actual appointment of individuals who are to be arbitrators to a later stage in the event of a dispute arising. But the present clause is not a clause of that nature. It is a clause in which three persons are personally named as the persons who shall be the arbitrators. This is the first indication of the intention of the parties. They wanted certain identifiable and named persons alone to be arbitrators. This shows that they knew these persons and selected them for their personal qualifications. Furthermore, so far as the Sar Panch is concerned, not merely is his personal name mentioned but the name by which he was familiarly known to his friends as Dadasaheb is also mentioned. This is the second indication. Thirdly, after stating his name as Dadasaheb alias D. L. Limaye, there is added the qualification **odhy**. In the case of third Panch, similarly, there is added the qualification ** ekLrj-**. In the case of the third Panch, similarly, it is undoubtedly intended to convey by the use of those words that the qualifications of the said individual as a **odhy-** or as a ** ekLrj-** 'were being taken into account in appointing him as the Sar Panch or Panch. Otherwise, there was no necessity to expressly state that he was a **odhy** or a **ekLrj-**, unless that fact was the fact which weighed in his appointment. I may also * state here that in mentioning the second Panch by name, his occupation is omitted. It cannot, therefore, be urged, as was urged on behalf of the oppocent before me, that the words **odhy** or **ekLrj-** were mere surplusage or were added as a description. If it was merely a description that was intended to be added, one would expect a similar description to be added when the name of the second Panch was mentioned. The learned appellate Judge was, therefore, not correct in observing that the agreement did not show that it was the fact of Shri Limaye being a **odhy** that weighed with the parties in naming him as a Panch. In my opinion, the construction which the trial Judge put upon the clause was the correct construction and the appellate Judge was in error in reversing the decision of the trial Judge. The erroneous construction has undoubtedly resulted in affecting the jurisdiction of the Court in so far as the suit is now ordered to be stayed pending reference to an arbitration, whereas upon the correct construction the Court ought to have exercised its jurisdiction to proceed with the suit. I am entitled, therefore, to interfere with the order even though this is a revision.

9. This is so far as the construction of the clause in dispute is concerned. In my opinion, however, the order of the appellate Judge also errs upon another point which was not raised in the Court below. Section 8(1)(5) of the Arbitration Act, it has been held, will not be attracted where more than one arbitrator is appointed and one of them dies or becomes incapable of acting or neglects or refuses to act. The principle as laid down in the authorities appears to be that where more than one individual is appointed by name, the parties must have present to their minds the entire result of the combination of persons whom they appoint and their intention therefore must be to refer their disputes to the Tribunal comprised of the named individuals as a whole. Therefore, if one of those individuals is unable to undertake the task, the Tribunal as a whole fails to come up to the intention of the parties. In Gopalji Kuverji v. Morarji Jeram I.L.R. (1919) Bom. 809 Bom. Scott C.J. laid down the principle as follows:

In a case of submission to three named arbitrators all of whom after acting have declined to proceed any further, the Court has no jurisdiction to appoint fresh arbitrators in their place under the Indian Arbitration Act.

At page 830 the learned Chief Justice observed:.Section 8(1)(b) does not apply to the case of independent appointments of two arbitrators. In such case when a vacancy occurs it would ordinarily be filled by the original appointer as contemplated in 8. 9. Section 8(1)(b) only applies in terms to a single vacancy to be supplied by the parties. Section 8 nowhere seems to contemplate the case of two original arbitrators appointed jointly by the parties plus a third of the same class appointed by the two already jointly appointed or by the parties.

The principle of this decision was followed in Ramji Purshotam v. Hari Shamla A.I.R. [1939] Sind. 81 where the learned single Judge pointed out that any other construction of Section 8(1)(b) would result in a conflict with the provisions of Section 8(2): see remarks at page 82, col. 1. I am bound by the decision in (Gopalji Kuverji v. Morarji Jerom (cit. sup.), and following it it must be held that in the present case, the Court was not entitled to appoint arbitrators in place of the two deceased arbitrators. The arbitration clause was, therefore, rightly held to have failed of its purpose by the trial Court.

10. In the result, I allow the application for revision, set aside the order of the appellate Court and restore that of the trial Court. The suit shall now proceed. Costs shall be costs in the suit.


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