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Dharmu Saboto and anr. Vs. Krushna Saboto and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeals Nos. 20 and 21 of 1950
Judge
Reported inAIR1956Ori24
ActsArbitration Act, 1940 - Sections 30
AppellantDharmu Saboto and anr.
RespondentKrushna Saboto and ors.
Appellant AdvocateK.S.R. Murthy, Adv.
Respondent AdvocateH. Mohapatra, ;R.N. Misra and ;H.G. Panda, Advs.
DispositionAppeals dismissed
Cases ReferredHaigh v. Haigh
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....p.v.b. rao, j.1. these two miscellaneous appeals are directed against the orders of the learned subordinate judge of berhampur in two misc. oases nos. 23 of 1949 and 44 of 1949. misc. case no. 23 of 1949 arises out of an application bled on 28-3-49 by the five arbitrators to whom the matters in dispute between one dharmu, saboto and his three sons krushna. baurl and dasrathi had been referred for decision under a muchalika executed by the latter on 23-1-48 in which the opposite parties are the parties to the reference, namely, dharmu saboto and his three sons, along with the award passed by them, praying that action may be taken by the court according to law.2. after notice of the filing of the award was issued to the opposite parties, krushna saboto filed a petition under section 30,.....
Judgment:

P.V.B. Rao, J.

1. These two miscellaneous appeals are directed against the orders of the learned Subordinate Judge of Berhampur in two Misc. Oases Nos. 23 of 1949 and 44 of 1949. Misc. Case No. 23 of 1949 arises out of an application Bled On 28-3-49 by the five arbitrators to whom the matters in dispute between one Dharmu, Saboto and his three sons Krushna. Baurl and Dasrathi had been referred for decision under a Muchalika executed by the latter on 23-1-48 in which the opposite parties are the parties to the reference, namely, Dharmu Saboto and his three sons, along with the award passed by them, praying that action may be taken by the Court according to law.

2. After notice of the filing of the award was issued to the opposite parties, Krushna Saboto filed a petition under Section 30, Arbitration Act praying that the award should either be set aside as invalid or remitted to the arbitrators for reconsideration and rectification for the various reasons mentioned in the petition which was numbered as Misc. Case N. 44 of 1949.

Dasrathl Saboto filed a counter contending that the award was invalid and inoperative and should therefore be set aside. Dharmu Saboto and Bauri Saboto filed a counter contending that the objections raised to the award were not tenable and that therefore it should be upheld and a decree passed in terms thereof.

3. The learned Subordinate Judge held after enquiry that the award was vitiated by the legal misconduct of the arbitrators and as such it wad invalid. He also held that the award was not the result of the joint deliberation of all the arbitrators as all of them were not present at all the sittings. He allowed Misc. Case No. 44 of 1949 filed by Krushna Saboto and dismissed Misc. Case No. 23 of 1949.

4. Dharmu Saboto and his three sons Krushna, Bauri and Dasarathi made a private reference to arbitration consisting of five arbitrators asking them to settle the matters in dispute between them with regard to the partition of the family property by a Muchalika executed by them on 23-1-48.

In the application filed by the arbitrators, the arbitrators alleged that under the Muchalika they were empowered to divide all the properties of the parties to the reference and made an award on 19-1-49 after a full enquiry, and thatthe award was pronounced in 20-1-49 and was registered on 21-1-49.

5. Krushna Saboto raised various objections to the filing of the award, but we are concerned only with two objections as they were the only points raised before us by the learned counsel for the appellants. The first objection of Krushna Saboto was that all the five arbitrators were never present at any sitting and only some four of them were present and that consequently the award was not the result of the joint deliberation of all the arbitrators.

The second: objection was of legal misconduct of the arbitrators inasmuch as they examined one Somanath Sanmatara of Ramchandrapur, a stranger to the arbitration proceedings and allowed themselves to be influenced by his advice and statements on certain particulars and refused permission to the parties to cross-examine him.

6. The learned subordinate Judge relying on the evidence of the arbitrator Bhaglrathi Sahu held that all the arbitrators were not present at each sitting during the course of the arbitration proceedings.

7. With regard to the second objection in examining Somanath Samantara suo motu by the arbitrators without giving an opportunity to the parties to cross-examine him, the learned Subordinate Judge came to the conclusion that the omission by the arbitrators to give the parties the opportunity of cross-examining this witness did amount to legal misconduct.

8. Mr. K.S.B. Murty, the learned counsel for the appellants contends, firstly that the learned Subordinate Judge erred in holding that the award was illegal as all the arbitrators were not present at every stage of the proceedings inasmuch as the evidence adduced in the case and the award make it clear that the award was the result of the joint deliberation of all the arbitrators and that the mere fact that some of the arbitrators were not present at some of the sit tings was not sufficient in law to vitiate the award if the absentee arbitrators were aware of the proceedings held on those dates and ultimate decisions were made as a result of the joint deliberation of all the arbitrators.

Secondly, he contends that in the circumstances of the case the arbitrators were justifiedin relying upon the statement of Somanath Samantra and that the Court below having heldthat the arbitrators were justified in examiningSomanath Samantara erred in holding that theomission of the arbitrators to give the parties anopportunity to cross-examine the said witnessamounted to legal misconduct, inasmuch as Somanath Samantara was a close relation of all theparties and had once been requested by DharmuSaboto for discussing the affairs of the family,and that he actually suggested a mode of divisionwhich had been accepted by all the parties including Krushna Saboto.

The learned counsel finally contends that even on the assumption that these are valid objections to the validity of the award, yet Krushna Saboto and the other parties waived all objections to these irregularities, appeared before the arbitrators on all the subsequent dates and took part in the deliberations of the arbitrators and consequently the award could not be set aside.

9. With regard to the first objection that all the arbitrators were not present at each sitting during the course of the arbitration proceedings, Bhagirathi Sahu one of the arbitrators and practically the chief person who was responsible for the award and who is a very respectable person being a retired District Sub Registrar stated in his examination in chief that all the five arbitrators including himself took part in the deliberations jointly at all stages and the decision was arrived at by all of them unanimously, but in his cross-examination he stated.

'We recorded the evidence of the witnesses Including the parties during 3 or 4 days. All the arbitrators were not present on each day at the time of recording evidence. There were however at least three arbitrators at each sitting. The same three persons were not present at each sitting, but I was present at all sittings. The entire work fell on my shoulders during the proceedings. ...... Krushna Saboto objected to theproceedings being held by some of the arbitrators only and not all at each sitting....

We proceeded even in the absence of some of the arbitrators as we proceeded on the basis that the majority of them might continue to do the work. It is not always convenient for all the five arbitrators to meet on any date. Written, arguments were filed before us by the parties: I read over and explained the contents of the arguments to the other arbitrators. At least three arbitrators were present when the arguments were discussed.'

10. From tills evidence of this arbitrator it is clear that the award was not the result of the joint deliberation of all the arbitrators. When a matter is referred to the arbitration of more than one arbitrator, all the arbitrators must act together in every stage in order that the parties to the reference may have the benefit of the considered judgment of every one of the arbitrators in the matter of the reference.

Under the terms of the Muchalika Ex. 1 the parties to the reference no doubt agreed to be bound by the decision of the majority of the arbitrators. From this it does not follow, that the parties agreed that the deliberation of the arbitrators also might be held at their sweet will by only a majority of them consisting of any three persons who found it convenient to meet together on any date.

It contemplates a deliberation jointly of all the five arbitrators though after this joint deliberation and Joint part-taking in all the proceedings by all the arbitrators there might be a difference of opinion when a majority decision would be final, and this is the effect of the clause in the reference and not that any three can take part in the proceedings of the arbitration.

11. Russell on Arbitration, Edn. 11 at p. 124 observes:

'On a reference to more than one arbitrator, when there is no provision for an award made by less than all being valid, each of them must act personally in performance of the duties of his office, as if he were sole arbitrator, for, as the office is joint, if one refuses or omits to act, the others can make no valid award.' -- 'Little v. Newton, (1841) 2 M and G 351 (A), and -- Stalworth v. Inns (1844) 13 M and W 466 (B). and at page 125 he observes: 'As they must all act, so they must all act together. They must each be present at every meeting; and the witnesses and the parties must be examined in the presence of them all.' In re, Plews', (1845) 6 QB 845 (O) and -- 'British Metal Corporation Ltd. v. Ludlow Bros. (1913); Ltd.,' (1938) 1 All EB 135 (D).

In the last mentioned case, Justice Sir Wilfrid Greene M. B. observed at page 140, in repellingthe arguments ot the appellant's counsel that the signature of the third arbitrator might be ignored because the rules provide that where there are three arbitrators, the award of two is sufficient,

'But the vice of this matter goes very much deeper than that. It goes, not to the form of the award, or the signature to the award, or anything of that kind, but to the necessity for a hearing before a valid award can be made at all Once it is ascertained that the tribunal in a tribunal of three, and once it is decided that the rules provide that that tribunal shall hear the case, it is quite impossible to treat this award as an award of two, because the award has been arrived at otherwise than hi the manner contemplated by the rules, since the parties are entitled under these rules to have the matter heard by all members of the arbitral Court, who can then consult together.

That has never been done in this case, and is. to my mind, very far from being a matter of mere formality........ As I have said, the matteris, to my mind, a matter simply and solely of the construction of these rules, and, once it is decided that upon the true construction of these rules, the hearing must be before three, where there are three, the matter comes to an end. As I have said before, I regard that as a matter of substance, and not as a matter of mere irregularity. Therefore the appeal must be dismissed.'

Romer L. J. observed;

'From the moment that Mr. Davey and Mr. Smith made up their minds that the appointment of a third arbitrator was necessary, and appointed Mr. Woolf as such third arbitrator, the reference became a reference to three named arbitrators, and the arbitration had to be conducted on that footing.

It follows, in accordance with the rules to which our attention has been called, that the three arbitrators should then have appointed a day for hearing, and given notice in writing to the parties, who would then have been at liberty to attend before the arbitrators, to bring their witnesses and their documents and so on. That wa9 not done, and, that being so, it appears to me that this award is necessarily bad, and that the Judge was quite right in setting it aside.'

It is clear from this case that if there are three arbitrators, one of whom has been absent from hearing and all three execute the award, it will be incurably invalid notwithstanding that it would have been good if signed by two only of the three and the absence of an arbitrator from the hearing is a matter not of mere irregularity but of substance.

12. In the case of -- 'Thammlraju v. Bapiraju,' 12 Mad 113 (E), it was held that;

'Where a suit was referred to arbitration, and objection was taken to the award on the ground that one of the arbitrators had not attended ft meeting when witness as were examined by the other arbitrators, the award was invalid by reason of misconduct on the part of the arbitrators within the meaning of Section 521 (a), Civil P. C.'

In the course of the judgment, Wilkinson J. observed;

'One of the arbitrators having been guilty of misconduct in absenting himself from the meetings and the other two arbitrators having been guilty of misconduct in examining witnesses in the absence of the third arbitrator,the award should, on the application of the defendants, have been set aside.'

13. In the case of -- 'Amir Begam v. Badruddin Hussain,' AIR 1914 PC 105 (F), the Judicial Committee observed,

'If irregularities in procedure can be proved which would amount to no proper hearing of the matters in dispute, there would be misconduct sufficient to vitiate the award without any imputation on the honesty or impartiality of the arbitrator'.

14. In the case of -- 'Pazalally Jivajl v. Khimji Poonji and Co.,' AIR 1934 Bom 476 (G), Rangnekar J. observes at page 484;

'If there is one proposition which is firmly established by authorities more than any other in regard to arbitration, it is this that where there are several arbitrators, all must act together and each must act in the making of the award. ......Every stage of the proceedings must be inthe presence of all, and every Judicial act to be done by two or more must be completed in the presence of all who do it'.

15. Viewed in the light of these authoritiesit is clear from the evidence of the arbitrator Bhagirathi Sahu that the award was not the Joint act of all the arbitrators and the arbitrators were guilty of misconduct inasmuch as some of them absented themselves in the proceedings and the other continued the proceedings without the other arbitrators. Consequently, the award is vitiated on this ground and the finding of the learned Subordinate Judge is correct.

16. The next contention of the learned counsel for the appellants was that the learned Subordinate Judge erred in holding that the arbitrators were guilty of misconduct inasmuch as they did not allow Krushna Saboto to cross-examine the witness Somanath Somantara. Bhagirathi Sahu deposed in his cross-examination,

'We examined as a witness one Somanath Samantara at our instance and not at the instance of the parties. Only four arbitrators including myself were present at the time of taking the evidence of this witness Somanath Samantara. The parties were not permitted to cross-examine him. We did not serve any notice to the parties that we would examine Somanath, as all the parties were actually present at that time. The statement of Somanath was recorded by us on 5-12-48, a notice having been issued to him on 4-12-48.'

It is clear from this evidence that though Krushna Saboto wanted to cross-examine this witness, the arbitrators did not permit him to cross-examine. The learned counsel contends that Somanath Samantara was a relation of both parties and he was called to decide the dispute between the parties in the first instance and that that his examination did not in any way prejudice Krushna Saboto, but this contention cannot be accepted in view of the fact that he was a witness not asked by the parties to be examined but was a witness examined suo motu by the arbitrators and when the parties wanted to cross-examine him, the right of cross-examination was denied.

17. Russell en Arbitration, Edn. 15 at p 108, quotes from a decision in the case of -- 'Oswald V. Earl Grey', (1855), 24 LJQB 69 (H) to the effect.

'The principle of universal justice require that the person who is to be prejudiced by the evidence ought to be present to hear it taken, tosuggest cross-examination or himself to cross-examine, and to be able to find evidence, if he can, that shall meet and answer it; In short, to deal with it as in the ordinary course of legal proceedings'.

18. In the case of -- 'Bache v. Bitlingham,' (1894) 1 QB 107 (I), Lord Esher M. R. observed:

'They (the arbitrators) examined witnesses against him when he was not present, and did not give him the opportunity of cross-examining those witnesses. That Is a wrong procedure in the arbitration; but nevertheless they did that to come to a decision, and they came to a decision. ....... That does not make the decision void.It only gives ground for a Court to set it aside or for an appeal'.

19. At page 143 hi Russell on Arbitration, Edn., 15, it is stated;

'The Arbitrator would be guilty of a breach of duty if, contrary to the will of the parties, he called a witness to fact. The will of the parties may be expressed during the proceedings or in the submission, but, unless with the consent of the parties, an arbitrator has no right to call a witness himself.'

20. In the case of -- In re Enoch and Zare-tzky Bock and Co., (1910) 1 KB 327 (J), it was observed by Moultori L. J.:

'It is certainly not the law that a judge or any person in a judicial position, such as an arbitrator, has any power himself to call witnesses to fact against the will of either of the parties. There may in some cases be a person whom it would be desirable to have before the Court; but neither party wishes to take the responsibility of vouching his personal credibility or admitting that he is fit to be called as a witness. In such a case the Judge may relieve the parties by letting him go into the box as a witness of neither party; and of course if the answers are immaterial he may refuse to allow cross-examination.'

This clearly shows that where the witness speaks to material facts and is examined by the arbitrators suo motu, there must be an opportunity given to the parties to cross-examine him.

21. It is also to be noted that the arbitrators are bound by the same rules of evidence as the Courts of law. In the case of -- 'Attorney General v. Davison', (1825) M'CI and Y 160 (K), it was observed:

'A general statement has been made that arbitrators may proceed in receiving evidence without reference to principles of law or equity. Now we know that position to be contrary to law and the practice of the Courts'.

22. In the case already quoted 'Re Enoch and Zaretzky, Bock and Co., (J) Moulton L. J. observes:

'I never understood that arbitrators were at liberty to deviate from those rules which govern the Superior Courts........ I agree...... thatthis is not legal evidence, and, if it is not legal evidence, that It ought not to be received.'

Consequently, in my opinion, the arbitrators are guilty of misconduct in examining Somanath Samantara without the consent of the parties and. refusing to permit the parties to cross-examine him.

23. Lastly, Mt K.S.R. Murty contends that even if the award is vitiated on account of the legal misconduct of the arbitrators on the two grounds discussed above, the objectors must be deemed to have waived their objection with regard to these illegalities and acquiesced in the proceedings inasmuch as they took part in theproceedings at different subsequent stages notwithstanding the fact that the arbitrators examined Somanath suo motu and refused permission to cross-examine him and that all the arbitrators were not present at each sitting.

In support of his contention the learned counsel Cited the case of -- 'Murtaza Hossein v. Mt. Bibi Bechunissa,' 3 Ind App 209 (PC) (L). In this case the award which determined the succession to a talookdary was based upon a certain will produced, which In terms referred to another will of the same testator not produced. It was contended that 'there was miscarriage on the part of the arbitrators in making then award; the whole of the will, in the absence of the last mentioned document, not having been before them.

The defendant in the proceedings before the arbitrators, notwithstanding the knowledge that this document was withheld, submitted, nevertheless, to take his chances of the arbitration, Buggesting in fact favourable presumptions to himself in construing the will produced, or that the whole will not having been produced it should be declared not to be operative, and that consequently the dispute should be determined according to the British law of succession as laid down by Act 1 of 1869, or according to custom, or according to the Mahomedan law of succession.

It was held by the Judicial Committee that on these facts the award could not be set aside on the ground of the objection taken. It was found by the Judicial Committee from the proceedings before the arbitrators that it would appear that both parties agreed that the missing document had been in existence. They observed:

'Their Lordships have felt considerable difficulty upon this point. They are sensible, on the one hand, of the extreme impolicy of allowing parties to get out of awards upon objections which really do not affect the substantial Justice of the case; and, on the other hand, they feel the necessity of not allowing arbitrators to act without jurisdiction by doing that which the terms of the submission to arbitration do not entitle them to do.

Upon the whole, however, their Lordships have come to the conclusion that the objection is not fatal to the filing of this award. They may observe that, looking at the whole will, they are disposed to believe that this missing document was really confined to some question relating to the marriage of the eldest grand-daughter, which is the substance of para 9; if that be treated as ending with the word 'followed'.

........It is, however, possible that the missing document may be something more than their Lordships suppose; and if there had been a clear contest that the defendant objected on this ground to the arbitrators proceeding to make an award, and that they had nevertheless gone on to make their award upon the terms of the will before them, their Lordships might have thought the objection sufficient.

Looking, however, to the proceedings before the arbitrators, and particularly to the document which is called the rejoinder, they think that, notwithstanding the knowledge that this document was withheld, the defendant did submit to take his chances of the arbitration, and that he cannot now, on the general rule upon which all Courts act with respect to awards, be allowed, having taken his chances of the arbitration, to set aside the award upon the ground of the objection taken.'

24. The learned counsel also relied upon the case of -- 'Lakshmamma v. Gorle Appadu,' AIR 1932 Mad 157 (M). In this case one of the arbitrators was absent during the examination of one of the witnesses. The award was on this ground held by the High Court to be an illegal award, but they affirmed the decision of the learned Munsif who held that if there was any irregularity on account of that cause, the plaintiff had waived it. The matter came up before the High Court in revision and it was held that a Court should not interfere in revision unless it found not only illegality but some substantial harm resulting from that illegality.

In that case it should also be noted that the plaintiff's next friend was present on each occasion and admitted that he took no notice of the circumstances that one of the arbitrators was on one occasion absent. On the principle that

'having a clear knowledge of the circumstance on which he might have founded an objection to the arbitrators proceeding to make their award, he submitted' to the arbitration going on and allowed the arbitrators to deal with the case as it stood before them taking his chance of the decision being more or less favourable to himself, and it is too late for him, after the award has been made, and on the application to file the award, to insist on this objection to the filing of the award'.

the Court came to the conclusion that there might be a waiver by the objector.

25. The facts is these two cases are quite different to those in the present dispute. Prom the evidence of the arbitrator Bhagirathi Sahu it is clear that the parties were not permitted to cross-examine Samanath Samantara and that Krushna Saboto objected to the proceedings being held by some of the arbitrators only and not all at each sitting. Having these two objections recorded, Krushna Saboto attended the subsequent stages of the arbitration as otherwise he would not be in a position to know what the arbitrators were doing and actually did in order to question the validity of the award at a subsequent stage.

The mere presence at the subsequent sittings did not in any way show that he waived those objections. Mr. K.S.R. Murty referred us to the schedule of papers produced by the arbitrators to show that Krushna Saboto was filing petitions before the arbitrators which go to show that he waived those objections. No. 10 in that schedule was an application by Krushna Saboto for certified copies, No. 11 was an application for adjournment, No. 20 was a petition for adjournment and No. 29 was a petition of Krushna Saboto.

These, in my opinion, do not in any way make out a waiver of the objections to the award. Waiver' is a term loosely used and difficult to define when applied to irregularities in the proceedings before an arbitrator, or in the conduct of the arbitrator during those proceedings. In Wharton's Law Lexicon, 'waiver' is defined as the passing by of an occasion to enforce a legal right where by the right to enforce the same is lost'. It must be an intentional act with knowledge. The burden of proving a case of waiver and acquiescence is upon the person who suggests it.

26. Russell on Arbitration, Edn. 15 at p 150 observes:

'Where the irregularity is so serious as to amount to a denial of justice, a party does notwaive his objection by continuing to attend the proceedings after protest, or under the compulsion of the irregularities, and without any intention to'waive his objection.'

27. In -- 'Haigh v. Haigh', (1861) 31 LJ Ch 420 (N) where a party objected to an award on the ground that the arbitrator received evidence behind his back, and the other party claimed that. the objection had been waived by failure to withdraw from the proceedings, Turner L. J. observed:

'The irregularities to which these objections apply were of such a description and calculated so seriously to prejudice Mr. G.A. Haigh, and it is so clear upon the evidence that what he afterwards did was done by him under the compulsion of the irregularities and without any intention to waive his objection, that, with every disposition to support these awards, I think it would be going too far to hold that he was bound by waiver'.

28. If there are irregularities, the only thing that a party can do, is to protest against those irregularities and is not expected to withdraw from the proceedings. It may also be noted that it is not the case of the appellant that Krushna Saboto in any way acquiesced in the award. The moment the award was filed into Court by the arbitrators for making a rule of law, Krushna Saboto did raise the two objections which he raised before the arbitrators. Consequently, there is no waiver or acquiescence on the part of Krushna Saboto to the objections raised by him.

29. In conclusion, therefore, the learned Subordinate Judge is correct in dismissing the application filed by Krushna Saboto. Both the appeals are therefore dismissed with costs.

Panigrahi, C.J.

30. I agree.


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