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G.S. Jones Vs. H. Ledgard and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Judge
Reported in(1886)ILR8All340
AppellantG.S. Jones
RespondentH. Ledgard and ors.
Excerpt:
.....arise, the said dispute or difference shall, upon the request in writing of either of the said parties, be referred to the arbitration of disinterested or indifferent persons, to be chosen by each party in difference within fifteen days of such requisition in writing having been made and left at the place of business for the time being of the said partnership, or at the last known address of the said partner or representative of a deceased partner, and'-this is the most material passage--in case any of the said partners in difference, or their or his heirs, executors, and administrators, shall refuse, neglect or fail to nominate an arbitrator, then the arbitrator named by the other party shall nominate another arbitrator, and the two arbitrators to be appointed as a ' having given..........and an award having been obtained, any one of them may come to the civil court, and have the award filed in invited against the others, unless they can show that the award is open to objection on any of the grounds mentioned in section 520 or section 521. it is clear from the limitation mentioned in section 526, which specifically confines the objections that may be taken to those referred to in section 520 or section 521, that the court considering whether the award should be filed has no power to touch the terms of the award; and, if the ground of misconduct or other matters referred to in those sections are disclosed, the court must refuse to file the award. now, what is the effect of filing the award? the award, if filed, is to have the effect of an award under the provisions.....
Judgment:

Straight, Offg. C.J.

1. This is an application by Gavin Sibbald Jones, under Section 525 of the Civil Procedure Code, asking to file an award, dated the 30th March 1885. Notice was issued to the parties said to have been affected by the award, and who are also alleged to have been parties to the arbitration, to show cause why the award should not be filed; and they have now appeared and lodged verified petitions, setting forth the grounds on which they maintain that the application ought not to be granted. Before dealing more immediately with the application and the sections relating to it, namely, Sections 525 and 526 of the Code, I think it desirable, by way of preliminary, and for the purpose of explaining my views, to examine the provisions of Chapter XXXVII of the Code in which those sections are to be found. These provisions have been framed to provide for three things--first, a reference to arbitration by consent of the parties in the course of a suit; secondly, means for making an agreement to refer, or the submission to arbitration, a rule of Court, and so seizing the Court of the matter, and giving it jurisdiction over the award subsequently passed on the reference; and, thirdly, for an application by the parties who have entered into a private agreement under which an arbitration has been held, to file the award which is its outcome. These are three clear, distinct, and separate matters with which a Court has power to deal under Chapter XXXVII. As regards the first, I need say nothing, because its nature is well understood. With reference to the second, it appears to me that what was contemplated was, that the parties, having entered into an agreement to refer, could come to a Civil Court and ask it to make the agreement a rule of Court, and thus not only give the Court power to deal with any award made subsequently, but also jurisdiction over the arbitrators, so as to entitle it to exercise the powers which a Court, making a reference in a suit, would have under Sections 518, 520, and 521. That these provisions apply to this second class of matters, is shown by Section 524, which says: 'The foregoing provisions of this chapter, so far as they are consistent with any agreement so filed, shall be applicable to all proceedings under an order of reference made by the Court under Section 523, and to the award of arbitration, and to the enforcement of the decree founded thereupon.' But Sections 525 and 526, with which we are more particularly concerned, present a different state of things. The parties having by private agreement gone to arbitration, and an award having been obtained, any one of them may come to the Civil Court, and have the award filed in invited against the others, unless they can show that the award is open to objection on any of the grounds mentioned in Section 520 or Section 521. It is clear from the limitation mentioned in Section 526, which specifically confines the objections that may be taken to those referred to in Section 520 or Section 521, that the Court considering whether the award should be filed has no power to touch the terms of the award; and, if the ground of misconduct or other matters referred to in those sections are disclosed, the Court must refuse to file the award. Now, what is the effect of filing the award? The award, if filed, is to have the effect of an award under the provisions of this chapter. This means that when a Court resolves to file the award, having in this case determined beforehand whether any objections under Section 520 or Section 521 have been satisfactorily put forward, there must be a judgment and decree passed there and then, and the award must be turned into a decree in the manner contemplated by Section 522. Whereas, in the one case, in cases referred by the Court in a suit, or in case of reference by an agreement by parties, which has been made a rule of Court, objections are to be entertained after the award has come back to the Court; in the other, the objections are preliminary to the award being filed.

2. In the present case the defendants have made two main objections to the filing of the award. In the first place, it has been contended that Messrs. Wilson and Ledgard, as executors of the deceased Petman, were not parties to the arbitration proceedings, and therefore cannot be bound by them; in the second place, it has been contended that, assuming them to have been parties, still, they having filed verified statements, which, upon the face of them, disclose grounds of objection within the meaning of Section 520 or Section 521, I must at once stay my hand, and cannot proceed to inquire into the 'bond fides' or validity of those objections.

3. As regards the first point, it seems to me the answer is to be found in the language of Clause 32 of the partnership-deed. That partners may, in a partnership-deed, contract that future disputes shall be settled in a particular manner which ousts the jurisdiction of the ordinary tribunals, is undoubted, and is a condition which is recognized by the Courts. In saying this, I may refer to Willcox v. Storkey L.R. 1 C.P. 671. In the argument in that case, EELK, C.J., referred to Be Newton and Hetherington 19 C.B. (N.S.) 342, the effect of which is, that where the parties have agreed to refer matters of difference arising between them with regard to partnership matters to arbitration, they are bound by such agreement and by any proceedings that may be adopted thereunder. Moreover, it is laid down at p. 63 of Russell's work on Arbitration that 'when the agreement, though not naming the referees, provides for their appointment in a particular manner, and they are afterwards so appointed in writing, though contrary to the will of one of the disputing parties, this has the same effect as if the referees were named in the clause itself.' In my opinion, by Clause 32 of the partnership-deed now before me, the parties to it did agree that they would submit their partnership disagreements to arbitration, for they said in terms that if any difference should arise, 'the said dispute or difference shall, upon the request in writing of either of the said parties, be referred to the arbitration of disinterested or indifferent persons, to be chosen by each party in difference within fifteen days of such requisition in writing having been made and left at the place of business for the time being of the said partnership, or at the last known address of the said partner or representative of a deceased partner, and'--this is the most material passage--'in case any of the said partners in difference, or their or his heirs, executors, and administrators, shall refuse, neglect or fail to nominate an arbitrator, then the arbitrator named by the other party shall nominate another arbitrator, and the two arbitrators to be appointed as aforesaid shall, before proceeding in the said reference, nominate another indifferent person to be umpire.' Now, on the 24th January 1885, Mr. Ingram as representing the present applicant, wrote to Messrs. Wilson and Ledgard, stating as follows: 'My clients purpose referring their claim to arbitration under the terms of the deed of partnership, but have no desire to avail themselves of the power to force on an arbitration without you. I shall therefore be glad if you will inform me at your convenience whether it is your wish to join in the arbitration or not.' That letter was not directly answered till the 25th March, when Mr. Ledgard replied to it in these terms: 'We have taken the opinion of the late Mr. Petman's legal advisers and of independent counsel on the subject of the claim you make against the estate on behalf of Messrs. G.S. Jones and Dr. Condon, and which you desire to refer to arbitration. In reply thereto, I beg to invite your attention to Mr. Hoivard's (the late Mr. Petman's counsel) letter to you of the 26th January 1884, which was written during Mr. Petman's lifetime, and to state that we do not feel justified in departing from the course he then adopted, and that we therefore protest against any resort to arbitration in the matter, and further that we deny the liability in respect of the claim put forward by Messrs. G. Section Jones and Dr. Condon.' Having given this matter my best attention, and having put the best construction upon this letter that I can, I am of opinion that it amounts to a distinct refusal on the part of Mr. Howard's clients to the nomination of an arbitrator, or to do anything in connection with arbitration proceedings. In consequence of the letter, Mr. Jones and Dr. Condon, by an agreement dated the 27th March 1885, reciting all the matters concerned in the submission, agreed to refer the matters in difference to the arbitration of one Samuel Maurice Johnson. This agreement purported to be drawn up in accordance with Clause 32 of the partnership-deed. Mr. Johnson, in his turn, in conformity with the terms of the clause, nominated one George McGrew, and on the 30th March, a third person, Samuel Burton Newton, was formally appointed umpire. All that I need say is that it appears to me there is sufficient reason to show that Messrs. Wilson and Ledgard are 'primefacie' bound by the arbitration proceedings so as to bring them within the terms of Section 525 of the Civil Procedure Code, as parties to the arbitration who should be called on to show cause why the award should not be filed. Mr. Hill has contended that the word 'parties,' as used in Section 525, applies only to persons who are actually before the arbitrators. But I do not think I ought to place so narrow a construction upon the terms of the section. If parties, by an agreement, have undertaken between themselves that, in the event of a certain state of things happening, a particular procedure shall be followed which, under one state of circumstances, may be adopted in invitum, it appears to me that for the purposes of Section 525 they should be regarded as parties to that arbitration. Were I to hold otherwise, they would have no power to appear before me, as in the present case, to lodge objections, with the result that no alternative would be open to me than to order the award to be filed. I think therefore that the first objection fails, and it is to the defendants' interest that it should do so. With regard to the second objection, namely, that the defendants having filed a verified petition, which discloses grounds of objection within Section 520 or Section 521, I should at once and without inquiry stay my hand, and refuse to file the award, leaving the parties to a regular suit upon the award, in which all matters relating to their differences might be investigated. Mr. Howard and Mr. Hill have cited two rulings by two learned Judges, for whose opinions I entertain the very highest respect, and from whom I should hesitate in differing, unless I felt constrained to do so. The first of these is Sree Ram Chowdhry v. Denobundhoo Chowdhry I.L.R. 7 Cal. 490 in which Pontifex, J., if I may say so with [sic] impropriety, appears to have somewhat unnecessarily gone out of his way to place a construction upon the meaning of the words 'show cause' as mentioned in Section 525 and 'ground' in Section 526. In Ichamoyee Chowdhranee v. Prosunno Nath Chowdhry I.L.R. 9 Cal. 557 Wilson, J., dealt with the point, and decided in effect that the contention now urged by Mr. Howard and Mr. Hill is sound, and is a correct view of the statute. Before examining the terms of the sections, I think it right to mention that Field, J., who, with Pontifex. J., heard the appeal in Sree Ram Chowdhry v. Denobundhoo Chowdhry I.L.R. 7 Cal. 490 expressed no opinion upon the point, and that Macpherson, J., in the other case to which I have referred, observed that he would 'hesitate to say that when such grounds of objections are set forth in a verified petition or affidavit, the Court is to make no inquiry.' In Dutto Singh v. Dosad Bahadur Singh I.L.R. 9 Cal. 575 two learned Judges, Mitter and O'Kinealy, JJ., in terms expressed their dissent from the judgment of Wilson, J., in Ichamoyee Chowdhranee v. Prosunno Nath Chowdhry I.L.R. 9 Cal. 557. Now let us see what is the language of the section. Under Section 525, what is required is that the parties, other than those applying, must 'show cause.' As observed by Melvill J., in Dandekar v. Dandekars I.L.R. 6 Bom. 663 this is a perfectly well understood expression. I do not agree with Mr. Howard's suggestion that because the word 'ground' is used in Section 526, the meaning of the expression 'show cause' in Section 525 is cut down. It appears to me that if these sections are read together, they mean that the party coming forward must show cause, that is to say, must establish by argument, or proof, or both, reasonable ground for the conclusion that the award is open to any of the objections mentioned in Section 520 or Section 521. It is important to notice that Sections 525 and 526 in the present Code represent no novel principle. In Section 327 of Act VIII of 1859, the same provision occurred, except that the words there used were 'sufficient cause.' I find that their Lordships of the Privy Council, in dealing with an appeal relating to an award that had been filed under Section 327, went very elaborately into the grounds put forward by those who opposed the filing of the award in the Court below, and it seems to me that the remarks of their Lordships favour the view I take of the provisions of the existing Code. I do not think that because the words 'sufficient cause' in Section 327 of the Code of 1859 have been altered to 'ground such as is mentioned or referred to in Section 520 or Section 521' in Section 526 of the present Code, the whole scope of the section has been altered, as the interpretation of Wilson and Pontifex, JJ., suggests. I think that Section 526 was so framed as to bring the provisions of the Code into harmony with the language used by Sir James Colvile in the Privy Council case to which I have referred--Chowdhry Murtaza Hossein v. Bechunnissa L.R. 3 Ind. Ap. 209.

4. In addition to the cases I have mentioned, I have the authority of Melvill, J. in Dandekar v. Dandekars I.L.R. 6 Bom. 663 and, under these circumstances, after giving the case my best consideration, I feel bound to hold that Wilson and Pontifex, JJ., placed an incorrect interpretation upon Section 525, and one which those who framed never intended it to bear. I need scarcely point out the mischief which would arise if, when parties had agreed to refer matters to arbitration, and an award had been passed, the defeated party were entitled, when it was sought to make the award a rule of Court, to come and merely say upon a verified petition that this or that ground referred to in Sections 520 and 521 existed against the filing. Something more than this was, I think, intended by the Legislature, and so, it seems to me, common sense should require. What I consider is required, is that such party should, by argument or evidence, or both, show substantial materials to warrant the Court in arriving at a conclusion that the reasons referred to in Section 520 or Section 521 exist in the particular case.

5. For these reasons, I am of opinion that both preliminary objections fail, and it will now be necessary to determine what the other issues in the matter ought to be.


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