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FayazuddIn and ors. Vs. AminuddIn and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad
Decided On
Judge
Reported in1Ind.Cas.354
AppellantFayazuddIn and ors.
RespondentAminuddIn and ors.
Excerpt:
civil procedure code, (act xiv of 1882), sections 507 and 510 - arbitrator's appointment--refusal by nominee of parties--court's power to appoint another arbitrator--subsequent acquiescence of parties. - - in order to perfect the appointment of an arbitrator, acceptance of the office is necessary. 'acceptance of the office by the arbitrator seems necessary to perfect the appointment. clearly, therefore, there was no appointment of an umpire at the midsummer sessions. 'the award made by arbitrators, two of whom were thus improperly appointed, must be held to be bad, and no decree could properly be passed upon it......an award, in which award he agreed in part with each of the other arbitrators, but mostly with the arbitrator nominated by the defendants. a decree was passed on this award, the court of first instance overruling an objection, which was preferred by the plaintiff, that sothi harbans lal had not been legally constituted an arbitrator. from its decision an appeal was preferred with the result that the decree of the court of first instance was affirmed. a second appeal was then filed and the learned judge of this court, before whom the appeal came, was of opinion that there was no force in the objection pressed before him in respect of the validity of the award. the present appeal under the letter's patent has been preferred and the grounds of appeal are, that the umpire originally named.....
Judgment:

John Stanley, C.J.

1. The suit which has given rise to this appeal was brought by the plaintiffs for joint possession of certain land and for the demolition of buildings constructed on property alleged to be joint property. The suit was referred to arbitration but the reference proved abortive inasmuch as the arbitrator refused to act. Subsequently, on the 30th of August 1906, the plaintiffs and 6 out of 19 defendants filed an application to have their differences referred to arbitration and in this application one Jairaj Singh was nominated one of the arbitrators by the plaintiffs, Muniruddin was nominated by the defendants and Hargobind was nominated by both parties as umpire. It is said that the defendants, who took no part in this application to the Court, had no interest in the subject matter of the disputes and were, therefore, not necessary parties to the arbitration proceedings. Whether this is so or not it is unnecessary to consider in the view which I take of the point involved in this appeal. The agreement to refer provided that the decision of majority should prevail. The Munsif on the same day, on which the application was made to him, passed an order referring the suit to the arbitration of the three parties whom I have mentioned. So far as appears on the record, the consent of those parties to act had not previously been obtained. Hargobind refused to act as arbitrator and thereupon the Court purporting to act under the provisions of Section 510 of the Code of Civil Procedure, 1.882, appointed one Sothi Harbans Lal to act as an arbitrator, in his place. The arbitrators, Jairaj Singh and Muniruddin, prepared separate awards and Sothi Harbans Lal also prepared an award, in which award he agreed in part with each of the other arbitrators, but mostly with the arbitrator nominated by the defendants. A decree was passed on this award, the Court of first instance overruling an objection, which was preferred by the plaintiff, that Sothi Harbans Lal had not been legally constituted an arbitrator. From its decision an appeal was preferred with the result that the decree of the Court of first instance was affirmed. A second appeal was then filed and the learned Judge of this court, before whom the appeal came, was of opinion that there was no force in the objection pressed before him in respect of the validity of the award. The present appeal under the Letter's Patent has been preferred and the grounds of appeal are, that the umpire originally named having refused to act from the first, the appointment by the Court of Sothi. Harbans Lal as an arbitrator without the consent of the parties was illegal; and on the further ground, that the illegality in the appointment of Sothi Harbans Lal as arbitrator could not be cured by the fact that the parties allowed the arbitration proceedings to continue without objection. It seems to me that the appeal must prevail, if the court had no jurisdiction to appoint an arbitrator under Section 510. Subsequent acquiescence in the proceedings of the arbitrators would not validate the reference, if it was made by the Court without jurisdiction. The question then is, whether the court had power tinder Section 510 to appoint an arbitrator in the place of Hargobind, who from the outset refused to act. It is contended on behalf of the appellants that Section 510 only empowers the court to appoint arbitrators in cases in which arbitrators have been nominated and have consented to act and afterwards die or refuse or neglect or become incapable to act &c.; and does not apply to a case in which an arbitrator was nominated but declined to act. This contention is in accord with the view taken by the Calcutta and Madras High Courts. The learned Judge of this Court declined to follow the decision of the Calcutta High Court in the case of Bepin Behari Chowdhry v. Annoda Prosad Mullick. 18 C. 324. The view of the law expressed in that decision did not commend itself to him. In order to perfect the appointment of an arbitrator, acceptance of the office is necessary. The learned authors of Russell on Arbitration and Award, 8th edition, page 79, say: 'acceptance of the office by the arbitrator seems necessary to perfect the appointment.' As an authority for this, the case of Ringland v. Lowndes 15 C.B.N.S. 173, is quoted. In that case, at p. 196 of the report, Byles, J., in dealing with the question as to the date upon which the appointment of an arbitrator has effect, observed as follows: 'If it (the appointment) is to be understood in the sense of a substantial appointment, there was none, because the party nominated had not intimated his acceptance of the appointment of umpire until the next sessions. Supposing an order could have been drawn up at the Midsummer Sessions, what would it have stated? Simply that Mr. Johnson was named umpire, subject to his acceptance of the appointment, and that he had not intimated his acceptance. Clearly, therefore, there was no appointment of an umpire at the Midsummer Sessions.' In this case at the Midsummer Sessions, Mr. Johnson had been nominated as an umpire, but at that time he had not intimated his acceptance of the office and willingness to act, and consequently, the learned Judge observes that there was no appointment of him at the Midsummer Sessions. An arbitration tribunal is ordinarily one chosen by the parties. Section 507 deals with the nomination of arbitrators by parties and provides that 'the arbitrator shall be nominated by the parties in such manner as may be agreed upon between them' and then follows this proviso: 'If the parties cannot agree with respect to such nomination, or if the person whom they nominate refuses to accept the arbitration and the parties desire that the nomination shall be made by the Court, the Court shall nominate the arbitrator.' It is apparent from the language of this section that the nomination of arbitrators by the Court is dependent on the desire of the parties. Without the consent of the parties, the Court cannot appoint an arbitrator and until arbitrators have been appointed there cannot be a valid order of reference. Now in the case before us, Hargobind was nominated by the parties but he refused to act and the parties did not consent to the nomination by the Court of an arbitrator in his place. The order of reference was passed on the same day on which the nomination of arbitrators was made by the parties and the reference was to three persons, one of whom was unwilling to accept the office of arbitrator and was not in fact an arbitrator. Was this a valid reference? It is said that the court was empowered by Section 510 to appoint Sothi Harbans Lal and that his appointment validated the reference. I cannot accede to this contention. Section 510 only, I think, applies to cases in which an arbitrator has not merely been nominated but has also consented to act in the arbitration and subsequently dies, or refuses to act or becomes incapable of acting &c.; This section presupposes the existence of a valid reference. This is the view, which was taken by the Madras High Court in the case of Pugardin Ravutan v. Moidinsa Ravutan 6 M. 414. In that case, it was held that where two out of five arbitrators, nominated by the parties to a suit and appointed by the Court, had not consented to act and after appointment declined to act, and the Court appointed two arbitrators in their place against the consent of one of the parties to the suit, the appointment of the new arbitrators was not warranted by the provisions of Section 510 of the Code of Civil Procedure, and that the order of reference to such arbitrators, the award made by them, and the decree passed upon the award, were illegal. In his judgment in that case, limes, J. observes: 'The appointment of arbitrators by the Judge was presumably made under Section 510. But that section presupposes that the arbitrators had first consented to act and had declined to act after the reference to arbitration' and then he observes: 'The award made by arbitrators, two of whom were thus improperly appointed, must be held to be bad, and no decree could properly be passed upon it.'

2. The same question came before a Bench of the same High Court in the case of Bala Pattabhirama Chetti v. Seetharama Chetti 17 M. 498, and the earlier decision was followed.

3. The question was also considered by a Bench of the Calcutta High Court in the case of Bepin Behari Chowdhry v. Annoda Prosad Mullick 18 C. 324., to which I have already referred. It was held in that case by Norris and Beverly, JJ., that the Court has power under Section 510 of the Code of Civil Procedure to appoint a new arbitrator in the place of another only when the latter had consented to act as arbitrator. The learned Judges say:

We think that that proceeding on the part of the Munsif, that is the appointment by him of an arbitrator, was illegal, and that Section 510 of the Code of Civil Procedure, under which he purported to act, applies only in cases where a person has signified his assent to take upon himself the duty of an arbitrator and after so signifying this assent dies or refuses, or becomes incapable to act or leaves British India under the circumstances therein referred to.

4. I agree with the learned Judges who decided these cases. It appears to me, upon the true construction of the sections of the Code, to which I have referred, that the Court has no power under Section 510 to appoint an arbitrator in the place of a person nominated by the parties as arbitrator, but who never consented to act as arbitrator. It seems to me that before Section 510 can be applied, there must have been not merely a nomination of arbitrators by the parties but the nomination must have been accepted by the arbitrators so named, that, in other words, there must be arbitrators in the full sense of the word before an order of reference can be passed. Until the assent of an arbitrator to act has been obtained, he cannot be regarded as an arbitrator.

5. For these reasons, I would allow the appeal, set aside the decree of the learned Judge of this Court and also the decrees of the Courts below and remand the case to the Court of first instance to be tried on the merits.

Banerji, J.

6. Upon the question before us my mind is not free from doubt and this doubt arises in consequence of the language used in Section 510 of the Code of Civil Procedure, 1882. There is nothing in that section which requires that the arbitrator, who refuses to act, must have consented to act upon his being appointed arbitrator by the Court and on reference being made to him under the provisions of Section 508. In view, however, of the rulings to which the learned Chief Justice has referred in his judgment and his own opinion on the point, I do not feel that my doubts should justify me in dissenting from the judgment just now delivered. I, therefore, agree in the order proposed.

7. The order of the Court is that the appeal be allowed, the decrees of this Court and also of the lower Courts be set aside and the suit be remanded through the lower appellate Court to the Court of first instance, with directions that it be reinstated in the file of pending suits under its original number and be disposed of on the merits. Costs here and hitherto will abide the result.


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