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Mahadeo Prasad and ors. Vs. Badri Das Ramsarup and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1928All740; 110Ind.Cas.881
AppellantMahadeo Prasad and ors.
RespondentBadri Das Ramsarup and ors.
Excerpt:
.....shall be set aside except on one of the grounds mentioned in sub-clauses (a) to (c). the question whether the ground of objection to an award that it is bad on account of a bad reference comes within the words 'or being otherwise invalid' has been sometimes debated in this court. we are of opinion that on principle and on authority, the four words quoted do not and cannot cover an award where the reference itself is bad. if a reference to arbitration is bad, it is so because the judge's order was not justified in the circumstances of the case. if a court has to pronounce an opinion as to whether its own act, in making the reference, was justified or not, it is hot to be excepted, ordinarily speaking, that its own opinion on its own conduct should be allowed to have that finality which,..........to persuade the arbitrators to accept the reference.14. the position therefore is this. at one time the arbitrators thought that they should induce the parties to come to terms and thereby save themselves the trouble of enquiring into the merits of the case. this was probably a natural desire. in this country nobody wants to decide a case as an arbitrator with the prospect of making the losing party his enemy. there is nothing on the record to indicate that previous consent of the arbitrators had been obtained before the reference to arbitration was made. the arbitrators, therefore, at one time were unwilling to devote time to enquire into the merits of the case. later on, without any improper inducement, they were persuaded to accept the reference and to make an award. there was,.....
Judgment:

Mukerji, J.

1. This is an application on the revisional side of the High Court by the plaintiffs of a certain suit against a decree made on 14th June 1927 by the Subordinate Judge of Basti.

2. It appears that two plaintiffs, one of whom is an applicant in this Court and the other of whom having died, is now represented by the remaining two applicants in this Court, instituted the suit out of which these proceedings have arisen, for recovery of a large sum of money amounting to nearly Rs. 20,000 from the defendants. After the trial began, the parties agreed to refer their difference to the arbitration of three gentlemen, namely, Jokhai Ram, Jainarayan Ram and Ram Kumar Marwari (the latter being the President of the Board of Arbitrators). An order of reference to the arbitrators was made by the learned Subordinate Judge on the day the petition was filed, namely, 28th January 1927. 26th February 1927 was fixed by the Judge for the submission of the award. By a petition dated 23rd February 1927, and signed by the President, Ram Kumar Marwari, the arbitrators sent back the order of reference and the papers sent with it to them, to the Court. In this petition they said that the parties had been summoned and asked to compromise the case, but they did not agree to do so and that as the arbitrators had no time to devote to the arbitration, the papers were being returned. On 24th February 1927, the Subordinate Judge ordered the report to be put up on the date fixed, namely, 26th February 1927. On the latter date the Court took down the statements of the prominent parties, one on each side. It recorded, in the proceedings of the day, that, according to the plaintiff, the arbitrators had returned the papers as they had no time to spare for arbitration and as the parties had failed to come to terms. The proceedings proceeded to note that the defendants version was that the plaintiff had prevented the arbitrators from deciding the case and had forced them to return the papers. The defendants suggested that the Court should summon the arbitrators and enquire from them whether they were really willing to arbitrate. The Court accordingly ordered that the arbitrators should be summoned to appear personally before it on 12th March.

3. On 12th March the arbitrators appeared and on being questioned by the Court, they stated that they were willing to arbitrate. On the same day one of the plaintiffs, viz., Tribeni Ram, made two applications before the Court. By the first he said that as the arbitrators had definitely refused to arbitrate there was nothing about which an enquiry could be made from the arbitrators themselves. On this, the Court made the remark that he had already given the reasons in his order dated 26th February 1927 as to why he had summoned the arbitrators it noted further that on the said 26th February 1927 the applicant Tribeni did not object to the course adopted by the Court and that because the arbitrators were present, it was desirable to enquire whether they were willing to arbitrate. Evidently it was after the disposal of this application the questions were put to the arbitrators and they expressed their willingness to arbitrate. By the second application Tribeni, one of the plaintiffs, made various allegations against the arbitrators. The Judge recorded an order stating that there was no sufficient Jeason for superseding the arbitration and if there were any other sufficient grounds for impeaching the award, the plaintiff would he heard in due time, i.e., after the award had been made,

4. The arbitrators, thereafter, made an award. The plaintiffs filed objection to the award. The learned Judge heard the objections and dismissed them. Thereupon he ordered that a decree should follow the award. It is against this decree that the present application in revision has been filed.

5. The only ground on which exception has been taken to the award is that the learned Subordinate Judge could not, in law, send back the case to the arbitrators after they had, by their report dated 23rd February 1927, returned the papers and that, therefore, the whole award was vitiated. The first six grounds of the petition of revision are concerned with this point. The seventh ground which related to the misconduct of the arbitrators and certain-irregularities said to have been committed by the Court below,, was not pressed.

6. A preliminary point is taken on behalf of the defendants-respondents that a petition in revision is not competent and that the decree which has followed the award cannot be impeached.

7. On this preliminary point the latest cases in this Court seem to have held that where the award is impeached an the ground that the very reference was incompetent, this Court can revise the proceedings and, if necessary, set aside the order of reference with the necessary result that the award will fall through. An argument to the contrary is based on the last four words of the Clause (e), Sub-clause (i), para. 15, Sch 2, Civil P.C.,. viz., 'or being otherwise invalid.' Para. 15, Schedule 2, which deals with arbitration, lays down that no award shall be set aside except on one of the grounds mentioned in Sub-clauses (a) to (c). The question whether the ground of objection to an award that it is bad on account of a bad reference comes within the words 'or being otherwise invalid' has been sometimes debated in this Court. We are of opinion that on principle and on authority, the four words quoted do not and cannot cover an award where the reference itself is bad. The Court is required to consider whether an award is good or bad. The finding of the Judge on the point is final and cannot be impeached in appeal. The examination of the grounds on which an award may be set aside will show that they all relate to something which has been done either by the parties or by the arbitrators. There is nothing, if we omit the words 'or... invalid' for a moment, to suggest that the Court is called upon to examine its own procedure and to pronounce whether its own procedure was good or bad. If a reference to arbitration is bad, it is so because the Judge's order was not justified in the circumstances of the case. If a Court has to pronounce an opinion as to whether its own act, in making the reference, was justified or not, it is hot to be excepted, ordinarily speaking, that its own opinion on its own conduct should be allowed to have that finality which, for good reasons, are allowed to an award. On principle, therefore, the words 'or being otherwise invalid' should not be taken as including the question whether there was a valid reference to the arbitration.

8. Coming to authorities in this Court, while the case of Ajudhiya Prasad v. Badar-ul-Husain [1917J 39 All 489 per Piggott, J., and Hari Shankar v. Ram Pyari A.I.R. 1923 All. 502 support the view that the question of the validity of the reference is one of the matters to be enquired into by the Judge under para. 15, Clause (1), Sen. 2, Civil P. C, and his opinion should be final on the point, the following cases establish the contrary view: Kanhiya Lal v. Jagannath Pershad A.I.R. 1921 All. 16, Gopal Das v. Baij Nath : AIR1926All238 , Tej Singh v. Ghasi Ram : AIR1927All563 .

9. We are of opinion that a revision is competent.

10. On the merits the point to be decided is really very short.

11. The facts have been all given above. The argument for the applicant is that when the arbitrators refused to act, the course that was open to the Court was indicated by para. 5, Clause (1), Schedule 2, Civil P.C. The course was not to 'coax' the arbitrators to reconsider their position and to persuade them to effect the arbitration. It is argued that the Court should have accepted the resignation sent in by the arbitrators by their report dated 23rd February 1927 and should have allowed the parties to nominate other arbitrators and, in their default to do so, the Court should either have itself appointed arbitrators or should have superseded the arbitration and proceeded with the case.

12. On the other hand, the argument for the respondents is that the refusal of the arbitrators to arbitrate was not a final decision arrived at by them, but it was open to them to reconsider their position and to agree to arbitrate in the matter referred to them. Two cases have been cited by the respondents's learned Counsel in support of their contention. Before we consider the authorities it will, be proper to examine the Code itself.

13. According to the provisions of the Civil Procedure Code, when an application is made to the Court stating that the parties have agreed to refer their difference to arbitration, the Court is bound to make a reference accordingly. Where a reference is made the Court's jurisdiction is temporarily ousted and the arbitrators, if they accept the arbitration, become seized of the subject-matter in dispute. But the arbitrators may not accept the position assigned to them, or may be incapacitated by death or other circumstances from acting. Provision therefore had to be made as to what was to be done in those circumstances. The law therefore says that in the case of death or refusal of the arbitrators to act, the Court has to give a chance to the parties to nominate fresh arbitrators and, in the case of their default, the Court may either itself nominate arbitrators for the purpose or may supersede the arbitration and, in the latter case, the Court is to decide the case itself. It must be reasonably clear, therefore, that the Court has to decide the question of fact whether a contingency mentioned above has occurred and whether it should give the parties a chance to appoint fresh arbitrators. In this particular case the arbitrators report was received a few days before the data fixed, and the only order proper was one to put it up before the parties on the date fixed in the case. When the report of the arbitrators was taken up, the plaintiff present stated that the arbitrators were not inclined to take the trouble of deciding the case. The defendant present stated that the arbitrators were quite willing to arbitrate but that the plaintiff present in Court had put obstructions and had induced them to give up the arbitration. The Court, therefore, had two versions before it as to why the proposed arbitration was going to fall through. It is clear that no party to a, reference to arbitration is entitled to resile from the arbitration or has a right to nullify the reference by doing some improper act. The Court was therefore not only entitled, but was bound, to enquire into the truth of the allegations of the parties. The Court accordingly sent for the arbitrators. 'When the arbitrators arrived, the plaintiff Tribeni put in a petition stating that the arbitrators should not be questioned. This application was properly disallowed. The arbitrators, on being questioned, expressed their willingness to proceed with the arbitration. The result was that the order of reference was held good and time extended to the arbitrators to enquire into the matter and to formulate 'their award. No suggestion has been made anywhere that the Court took up any improper attitude towards either of the parties or towards the arbitrators with regard to the reference. On plaintiffs' behalf our attention has been drawn to the statement of the President of the Board of Arbitrators, namely, Mr. Ram Kumar, as to what happened on 12th March 1927, when the arbitrators appeared. Mr, Ram Kumar was examined during the course of the investigation into the objections filed by the plaintiffs after the award was made. Mr, Ram Kumar stated that when the Court asked whether they were prepared to arbitrate, he said that he should have two hours' time to consider the matter. The time was granted. Ram Kumar conferred with his colleagues, Messrs. Jainarain and Jokhai Ram, as to whether they should really devote (the word actually used is 'waste') some of their time over the investigation of the affair. They all agreed that they might devote some time to the arbitration and, thereupon, they agreed to accept the reference. This gentleman was examined and cross examined at great length, but no suggestion whatsoever was made that anything improper was done to persuade the arbitrators to accept the reference.

14. The position therefore is this. At one time the arbitrators thought that they should induce the parties to come to terms and thereby save themselves the trouble of enquiring into the merits of the case. This was probably a natural desire. In this country nobody wants to decide a case as an arbitrator with the prospect of making the losing party his enemy. There is nothing on the record to indicate that previous consent of the arbitrators had been obtained before the reference to arbitration was made. The arbitrators, therefore, at one time were unwilling to devote time to enquire into the merits of the case. Later on, without any improper inducement, they were persuaded to accept the reference and to make an award. There was, therefore, no case in which a definite refusal to arbitrate was made. If there had been such a refusal the Court had no alternative left but to allow time to the parties to nominate fresh arbitrators and in the case of such nomination to make a reference afresh. In default of such fresh nomination of arbitrators, the Court could either nominate arbitrators of its own or could proceed with the case, after formally recording an order of supersession. No such thing happened. Therefore we must take it that this is not a case in which the arbitrators can be said to have 'refused to act.'

15. Coming to the authorities, only two have been cited before us. The case of Joy Mungal Singh v. Mohun Ram 23 W.R. 429 (P.C.) is a Privy Council decision. It appears that a reference to arbitration was made and there were two arbitrators appointed. The arbitrators made an award but it was signed by the arbitrators on different dates. From the decree that followed the award, an appeal was taken to the High Court. By reason of the fact that no ten days time had been allowed to take exception to the award and by reason of the fact that the arbitrators had signed the award at different times and not in the presence of each other, the case was remanded by the High Court and a direction was given that the arbitrators should come together and sign the award. When the case went back before the District Judge, one of the arbitrators, Mr. Sandys, took exception to something (we do not know what) and sent in a resignation to the District Judge in the following language:. I can discover no other alternative to be left me than herewith to submit my resignation.

16. The learned District Judge was very unwilling to accept the resignation and induced Mr. Sandys to withdraw it. Mr. Sandys did withdraw and the two arbitrators then signed the award before the District Judge. Their Lordships of the Privy Council expressed the opinion that, in the circumstances of the case, Mr. Sandys was not functus officio and he had 'never formally divested himself of his character of arbitrator'. The case before us is parallel in principle to the case before the Judicial Committee. The arbitrators, in this present case, sent in their resignation, ostensibly on the ground that the parties did not compromise the case. If the parties were going to compromise the case, there was hardly anything about which the three gentlemen could arbitrate. In view of the conflicting reasons given by the parties before the Judges, as to the motive which persuaded the arbitrators to send in their resignation, the learned Judge made an enquiry and found that the arbitrators were willing to take up the responsibility which had been thrown on them. In the words of the Privy Council judgment:

the Judge was very unwilling to accept that resignation and induced... to withdraw it.

17. The action of the District Judge in the case before the Privy Council was not adversely commented upon by their Lord ships of the Privy Council and we do not see why we should regard the conduct of the learned Subordinate Judge in the case before us as in any way reprehensible.

18. The other case is that of Harnarain Singh v. Bhagwant Kunwar [1888] 10 All. 137. In this case Janki Prasad, one of the arbitrators, had, at one stage of the case, sent in his resignation but it was found that as a matter of fact he had all along been taking part in the arbitration proceedings. It was held that the proceedings were not in any way vitiated because of the resignation. The learned Judges referred to the case decided by the Privy Council and reported in 23 Weekly Reporter, and upheld the award. On authorities, therefore, the reference to arbitration continued to be valid in spite of the 'resignation' dated 23rd February 1927, sent in by the arbitrators. The result is that the application fails on the merits and is hereby dismissed with costs.

Banerji, J.

19. I concur.


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