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Hanuman Chamber of Commerce Ltd. Vs. Jassa Ram Hiranand - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana
Decided On
Reported inAIR1949P& H46
AppellantHanuman Chamber of Commerce Ltd.
RespondentJassa Ram Hiranand
Excerpt:
.....misconduct for any of these reasons. in the plaint there was a detailed description of the part played by the defendants in the transaction which formed the subject-matter of the dispute and the grounds of their liability were clearly stated. as regards the previous award, the arbitrator has clearly expressed the view that it, was not binding on the plaintiff. the arbitrator is a judge of law as well as of facts and a mere erroneous decision by him on a question of law cannot be held to vitiate the award......to adduce any evidence in support of their contentions. in the result declining to set aside the award the learned subordinate judge passed a decree in the plaintiff's favour against the defendants in the terms of that award.5. in this appeal mr. r.c. soni, the learned counsel for the defendant-appellants, has again stressed the point, that the reference to the arbitration having been made by only one of the partners of the plaintiff firm was invalid. he urges that the evidence given by p.w. 1 is not worthy of belief and that the statement made by him as to his having consulted his other partners before entering into the agreement of reference to arbitration was merely an after-thought. in support of this argument, reliance has been placed on the absence of any reference to the alleged.....
Judgment:

Achhru Ram, J.

1. This is an appeal from the order; of a learned Subordinate Judge of Delhi, refusing to set aside an award. A suit was brought by Messers R.B. Seth Jassa Ram Hira Nand, a. firm carrying on business at Naya Bazaar, Delhi, against the Hanuman Chamber of Commerce, limited, having its registered Office at Katra Tobacco, Delhi, for recovery of a sum o Rs. 49,481-7-9. After some proceedings had been taken in Court, on 4th November 1947, both the parties presented a joint application to the Court, for reference of the whole suit to the arbitration of Mr. Bishamber Dyal, advocate.

2. It was recited in the application that the aforesaid Mr. Bishamber Dyal had been appointed an arbitrator by both the parties and that the arbitrator was to have the authority to decide the case either with reference, or without references, to the issues framed in the suit. The arbitrator in due course gave an award for a sum of Rs. 18.187-13-9 in favour of the plaintiff against, the defendants. The plaintiff accepted the award, but the defendants objected to it on various grounds.

3. One of the grounds on which the award was attacked by the defendants was that all the partners in the plaintiff firm had not joined in the reference and that the reference was accordingly invalid. On the pleadings of the parties, the learned Subordinate Judge framed the following issues:

(1) Is the arbitration agreement invalid for want of signature of all the partners of plaintiff firm?

(2) Has the arbitrator misconducted himself in the proceedings and, as such, is the award liable to be set aside?

(3) Is the award perverse and liable to be vitiated on that score 1

(4) Relief.

4. On issue 1, the learned Subordinate Judge, believing the evidence of Jhaman Lal, the referring partner, P.W. 1 held that the aforesaid Jhaman Lal had consulted his other partners before making the reference and therefore had made the reference under their express authority. The learned Judge in dealing with this view pointed out that the parties had agreed before him on 27th October 1947, to refer the matter to the arbitration of Mr. Bishambar Dyal, advocate, but that the application for the case being referred to the aforesaid arbitrator could not be filed on that day, because the plaintiff's counsel represented that he had to consult the remaining partners and that it was for this reason that the application was actually filed on 11th November 1947. The issue on this view of the case was decided in the plaintiff's favour. Issues 2 and 3 were decided against the defendants on the ground that they had failed to adduce any evidence in support of their contentions. In the result declining to set aside the award the learned Subordinate Judge passed a decree in the plaintiff's favour against the defendants in the terms of that award.

5. In this appeal Mr. R.C. Soni, the learned Counsel for the defendant-appellants, has again stressed the point, that the reference to the arbitration having been made by only one of the partners of the plaintiff firm was invalid. He urges that the evidence given by P.W. 1 is not worthy of belief and that the statement made by him as to his having consulted his other partners before entering into the agreement of reference to arbitration was merely an after-thought. In support of this argument, reliance has been placed on the absence of any reference to the alleged consultation with the other partners in the application for reference of the case to arbitration.

6. I do not consider it necessary to express any opinion as to the soundness or otherwise of this argument or as to the credibility or otherwise of the evidence given by P.W. 1 because in my view, this part of the case can be disposed of on a much shorter ground.

7. According to Section 18, Partnership Act, a partner is the agent of the firm for the purposes of the business of the firm. Section 19 provides that in the absence of any usages or custom of trade to the contrary, the implied authority of apart nor or such agent is not to be deemed to empower him to submit a dispute relating to the business of the firm to arbitration. Section 196, Contract Act provides that where an act is done by one person on behalf of another without that other's knowledge or authority the latter can ratify that act and on such ratification, the same effects will follow as if the act had been-performed by his authority. Assuming that the: initial reference of the dispute in the present case was made by the referring partner without any express or implied authority from his other partners, there was nothing to prevent such partners from ratifying his act which was unauthorised at its inception. Ratification need not be by any express act or declaration and may be implied from conduct (vide Section 193, Contract Act). It has quite frequently been inferred from mere; acquiescence or silence or inaction on the part of the party concerned. In Bowstad's Law of Agency' (7th Edn.) at P. 59, we have the following passage:

The ratification of an act or transaction may be express or implied. A ratification will be implied whenever the conduct of the person, in whose name or on whose behalf the act or transaction is done or entered into is such as to show that he intends to adopt or recognize such act or transaction in whole or in part, and in the case of an agent exceeding his authority, may be implied from the mere silence or acquiescence of the principal.

8. In Katiar's Law of Agency, we have the following passage at P. 319.

So also although silence per se is no evidence of ratification yet it may be accompanied by such circumstances as to lead a reasonable man to an inference that it is due to the principal consenting to the validity of the unauthorised act or contract.

9. In the present case, the suit was referred to arbitration on 4th November 1947 and the award was delivered on 30th January 1948. During the course of a period of well-nigh three months no objection was taken by the other partners to the reference of the suit to arbitration^ nor did any one of them object to the reference at any time subsequent, although their claim was very considerably reduced by the arbitrator. No evidence was led by the defendants to show that those partners did not accept the act of referring partners in referring the dispute to arbitration and the circumstance of their not having, taken any steps to avoid the award which substantially reduced their claim is clearly indicative of their having acquiesced in the reference even if the same had initially been made without their authority.

10. The next contention of the learned Counsel for the appellants was that the arbitrator must be deemed to have been guilty of judicial misconduct inasmuch as in giving his award, he did not take into consideration the statement contained in the plaint as to the defendants being merely clearing parties and also the previous award which had been pleaded by the defendants in bar of the suit. I am however clearly of the opinion that the award cannot be said to be vitiated on any of these grounds and the arbitrator cannot be held to have committed judicial misconduct for any of these reasons. In the plaint there was a detailed description of the part played by the defendants in the transaction which formed the subject-matter of the dispute and the grounds of their liability were clearly stated. It is not the case of the learned Counsel for the appellants that the defendants could not be held liable even if all the statements contained in the plaint as to the grounds of their liability were accepted as correct. In the circumstances it cannot be said that the arbitrator gave his award in disregard of the plaintiffs' own averments. As regards the previous award, the arbitrator has clearly expressed the view that it, was not binding on the plaintiff. The arbitrator is a Judge of law as well as of facts and a mere erroneous decision by him on a question of law cannot be held to vitiate the award.

11. For the reasons given above, I see no force in this appeal which is dismissed with costs.


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