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Firm, Kapur and Sons, Amritsar Vs. Raj Kumar Khanna and anr. - Court Judgment

LegalCrystal Citation
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 36 of 1953
Reported inAIR1955P& H235
ActsArbitration Act, 1940 - Sections 2, 14(2), 20, 20(4), 31, 31(4) and 42
AppellantFirm, Kapur and Sons, Amritsar
RespondentRaj Kumar Khanna and anr.
Appellant Advocate D.K. Mahajan and; K.L. Kapur, Advs.
Respondent Advocate I.D. Dua and; P.L. Baha, Advs.
DispositionAppeal dismissed
Cases ReferredToyo Monica Kaisha Ltd. v. Sohansingh Hamamsingh
.....kumar to appear before him on the 10-11-1951 at 3 p. 12,160/-with interest was made against kapur & sons on 8-1-1952 and a copy of the award was sent to kapur and sons which was served on them at their cooper road address on the 22-1-1952 and a copy was also received by abnashi ram advocate on 15-1-1952. 7. raj kumar-ragindar kumar made an application under section 14 for filing of the award on 20-2-1952. the award was put into court on 4-4-1952 and notice was issued on 10-4-1952 to the parties to file objections by 25-4-1952. 8. on 19-4-1952 an application was made under section 9 by kapur and sons that shiv narain arora could not act as the sole arbitrator and the reference was bad as raj kumar was a minor. (2) that the arbitrator had no jurisdiction because his appointment was..........except as to the question of interest the findings of the learned judge were against the opposite-party, kapur & sons. a judgment was passed on the award and a decree followed and the opposite-party has come up in appeal to this court.9. the first question raised is that a notice to abnashi ram advocate was not a proper notice to the party because by the terms of his power-of attorney his engagement was limited to proceedings under section 20 of the act. the notice to the advocate in the present proceedings is not such an important matter, but it is clear that this gentleman appeared for kapur and sons when an application was made under section 8 for the appointment of sardar bahadur sampuran singh and therefore it cannot be said that his engagement was confined to the proceedings under.....

Kapur, J.

1. This is an original opposite-party's appeal against an order of a learned Subordinate Judge of Amritsar dated 14-6-1953 dismissing the objections of the original opposite party against an award and passing a judgment and decree in accordance with the award. The matter was placed before me on 5-7-1954 sitting singly and I referred it to a Division Bench.

2. The dispute relates to an arbitration award. The present appellants Kapur and Sons, are the Original opposite-party. They entered into an agreement with Messrs. Raj Kumar--Rajendra Kumar agreeing to sell Parachutes at 9 O. F. O. B. New York per parachute and 5 per cent, commission. On 6-1-1947 Rs. 3,000/- were paid as advance to Kapur and Sons and 100 parachutes were delivered by them.

As the contract was not fulfilled Raj Kumar-Rajinder Kumar under the terms of the sale contained in Ex. R. 1 invoked the arbitration clause on 25-6-1947. On 19-1-1950 they made an application under Section 20, Arbitration Act for filing the arbitration agreement which was allowed ex parte on 20-7-1950, but the ex parte proceedings were set aside, and on 31-10-1950 this application was again allowed and on appeal was upheld by the High Court.

3. On 1-12-1950 the original applicant Raj Kumar-Rajinder Kumur appointed Shiv Narain Arora as their arbitrator under the arbitration clause and on the same day the original opposite party, the present appellants appointed the Manager of the Lloyds Bank as their arbitrator. On 14-12-1950 he expressed his refusal to act and on 21-12-1950 Kapur and Sons applied to the Court for the appointment of Sardar Bahadur Sampuran Singh. On 25-12-1950 this application was allowed on payment of Rs. 10 as costs. Why these costs, has not been explained

4. On 21-1-1951 the Court gave notice to the arbitrators to enter on arbitration and make the award. On a notice being sent to Sardar Bahadur Sampuran, Singh, he indicated that he was ill and could not act as arbitrator. On 21-3-1951 another notice was sent to the arbitrators to enter an arbitration. A notice was also sent to Mr. Abnashi Hum, Advocate who had been engaged in Section 20 proceedings indicating to him the charge of some date of proceedings and he was called upon to appear.

Although be could not be served in the beginning, he was personally served on 27-3-1951. On 28-3-1951 the endorsement on the notice sent to Sardar Bahadur Sampuran Singh was that he was too ill and could not act as arbitrator. On 26-4-1951 Mr. Balak Ram Khanna, Advocate, on behalf of the original applicants Raj Kumar-Rajindar Kumar sent a notice to both the arbitrators to proceed with the arbitration and to make the award.

5. On 29-9-1951 Mr. Balak Ram Khanna, Advocate acting on behalf of Raj Kumar-Rajindar Kumar sent a registered notice to Kapur and Sons, Cooper Road, Amritsar and to Mr. Alwiashi Ram, Advocate stating that Sardar Bahadur Sampura Singh appointed on behalf of Kapur and Sons had refused to act, that Kapur and Sons had not appointed an arbitrator in his place and it called upon Kapur & Sons.

'to appoint your arbitrator by way of substitution within fifteen days of the service of this notice, failing which Mr. Shiv Narain Arora, (the arbitrator already appointed by my client, i. e., the plaintiff) shall act as a sole arbitrator in the above matter and this award shall he binding on both tile parties. This notice is being given to the defendant as well as his counsel.'

This notice was served on Abnashi Ram, Advocate but the notice issued to Kapur and Sons although it was addressed to their address 'Cooper Road, Amritsar' was not delivered and was returned to the sender, but the endorsements on this registered letter are important and are as under:

'26-9-1951--Shambu Nath & Sons, K. College. 27-9-51--(in Urdu) To be kept in deposit,28-9-1951--(in Urdu) The addressee without anaddress has gone out of Amritsar and the lettershould be returned.'

In English on the last mentioned date there is anendorsement--

'The proprietor out of station without address.'

On the same day the endorsements of the Post Office is--

'Left without address. Returned to the sender.'

Then it was returned to the sender.

6. On 1-9-1951 Shiv Narain Arora purporting to act as the sole arbitrator sent a notice to Kapur and Sons as well as to Raj Kumar-Rajindar Kumar to appear before him on the 10-11-1951 at 3 p.m. for arbitration proceedings and called upon them to produce their witnesses and documents, and the notice ended--

'Take notice that in default of your appearance at the appointed time and place the matter in dispute will be heard and determined in your absence ex parte.'

Abnashi Ram received this notice on 9-11-1951. Why on that day, is not quite clear. But Kapur and Sons although the letter was addressed to their old address 'Cooper Road, Amritsar', could not be served. On the 9th November Abnashi Ram wrote a letter to the arbitrator stating that' he was no longer 'counsel for Messrs. Kapur and Sons of Cooper Road, Amritsar,' and he asked the arbitrator to inform 'the party direct.'

The notice to Kapur and Sons was returned with the endorsement that the firm had closed its business since some time. By way of precaution on 30-12-1951 the arbitrator issued an advertisement in the 'Vir Bharat' calling upon the parties to appear on 6-1-1932. As Kapur and Sons did not appear an ex parte award for Rs. 12,160/-with interest was made against Kapur & Sons on 8-1-1952 and a copy of the award was sent to Kapur and sons which was served on them at their Cooper Road address on the 22-1-1952 and a copy was also received by Abnashi Ram Advocate on 15-1-1952.

7. Raj Kumar-Ragindar Kumar made an application under section 14 for filing of the award on 20-2-1952. The award was put into Court on 4-4-1952 and notice was issued on 10-4-1952 to the parties to file objections by 25-4-1952.

8. On 19-4-1952 an application was made under Section 9 by Kapur and Sons that Shiv Narain Arora could not act as the sole arbitrator and the reference was bad as Raj Kumar was a minor. On the 25th April they filed objections to the award and pleaded--

'(1) that the arbitrator was guilty of misconduct because he served no notice on them;

(2) that the arbitrator had no jurisdiction because his appointment was bad in law:

(3) that the reference was void because of the minority of Raj Kumar

(4) that the award had not been filed within time;

and (5) that no interest could be allowed.'

On all these points except as to the question of interest the findings of the learned Judge were against the opposite-party, Kapur & Sons. A judgment was passed on the award and a decree followed and the opposite-party has come up in appeal to this Court.

9. The first question raised is that a notice to Abnashi Ram Advocate was not a proper notice to the party because by the terms of his power-of attorney his engagement was limited to proceedings under Section 20 of the Act. The notice to the Advocate in the present proceedings is not such an important matter, but it is clear that this gentleman appeared for Kapur and Sons when an application was made under Section 8 for the appointment of Sardar Bahadur Sampuran Singh and therefore it cannot be said that his engagement was confined to the proceedings under Section 14, it not having been shown that there was no other power of attorney under which he acted for Kapur and Sons.

But assuming though not deciding that Abnashi Ram, Advocate had not any instructions beyond what strictly came under Section 20, Arbitration Act, in this particular case there is sufficient proof of service on Kapur and Sons themselves.

10. Under Section 42, Indian Arbitration Act two modes of service of notice otherwise than through Court are provided for. This section runs as under:

'42. Any notice required by this Act to be served otherwise than through the Court by a party to an arbitration agreement or by an arbitrator or umpire shall be served in the manner provided in the arbitration agreement, or if there is no such provision, either--

(a) by delivering to the person on whom it is to be served, or

(b) by sending it by post in a letter addressed to that person at his usual or last known place of abode or business in India and registered under Chap. VI, Indian Post Offices Act, 1898.'

In this particular case the arbitration agreement does not lay down any particular made of serving a notice. The terms of the agreement are contained in el. 2 of the contract between the parties and the relevant part is--

'* * *and other disputes includingclaims for non-payment, non-delivery or damages,shall be referred to the arbitration of two similarMerchants at Amritsar always one to be appointedby each party. It shall be obligatory on the partyraising a dispute to nominate their arbitrator first,and should the other party fail to appoint their arbitrator within fifteen days after being requested inwriting to do so, the arbitrator appointed in thefirst instance shall have power to determine anddecide the disputes as sole arbitrator.

In case of two arbitrators acting, should they disagree they will have the power to appoint an Umpire. The decision of arbitrators, sole arbitrator or of the umpire shall be binding on both parties. In all other respects the Indian Arbitration Act 10 of 1940 and its amendments, if any, shall apply. The losing party to bear all costs. The submission clause shall remain in force notwithstanding any determination.'

Thus the party was to be served in the manner provided by Section 42. The notice was not delivered to Kapur and Sons or to its proprietor D- C. Kapur. The first notice which was sent on behalf of Raj Kumar-Rajindar Kumar through Mr. Balak Ram, Advocate was sent to the address of Kapur and. Sons at Cooper Road, Amritsar.

It is surprising that at the relevant time all kinds of endorsements were written on this letter showing that the address or this firm was unknown, that he had gone out of station without 'leaving any address and then Shambu Math & Sons, K. College, which in my opinion was nothing more than an attempt to refuse accepting notice, a copy of which had been served on Abnashi Ram, Advocate who was also the legal adviser of Shamba Nath & Sons, where it is alleged that D.C. Kapur was working at that time as the Manager. Abnashi Ram when examined in Court as D. W. 2 stated that he did not inform Kapur and Sons because he did not think it necessary.

He also said that D. C. Kapur, the proprietor of the appellant firm, was out of station on the 25th September, but he came 2 or 3 weeks later and he was meeting him, Abnashi Ram, he being employed in the same company where Abnashi Ram was working i.e., Shambu Nath & Sons. In my opinion the circumstances show that Kapur and Sons did come to know the contents of the notice and that it is wholly false that D. C. Kapur was away from Amritsar at the time and in my opinion he deliberately refused to accept the notice which had been sent by Raj Kumar-Rajindar Kumar.

But be that as it may, all that the section requires is that a notice has to be sent by post to his usual place of business and Cooper Road, Amritsar, was the last known place of abode and business as is clear from the applications which have been filed by Kapur and Sons from time to time and even in the memorandum of appeal filed in this Court the address is 'Cooper Road, Amritsar'. I hold therefore that the notice of 25-9-1951 was a good and proper notice to Kapur and Sons.

11. The next question that arises is whether the notice given by Shiv Narain Arora after he was appointed a sole arbitrator was a proper notice. For reasons which I have given already this notice was also a proper notice.

12. Appellants' counsel has relied on certain rulings which deal with endorsements on letters. The first is -- 'Jagannath y. J. E. Sassoon'. 18 Bom 606 (A). Summons in this case was sent by post but the packet was returned and an ex parte decree was passed. In the circumstances of that case it was remarked that there was nothing to show that the packet was refused by the defendant himself.

This case is really confined to the facts of that particular case. Reliance was then placed on --'Gobinda Chandra v. Dwarka Nath', AIR 1915 Cal 313 (B). In this case the endorsement on the cover was that it was tendered and refused and it was held that without the writer of the endorsement being called no presumption could be raised that it was as a matter or fact refused.

At p. 316 a large number of cases were referred to, but the case before us is distinguishable on facts. The letter went to the house where D. C. Kapur was residing. That was the usual place of residence as well as the business.

It was not sent once but three or four times and ultimately it was returned on the ground that the addressee had left the place without address, although before and since he was residing there, and it is significant that every time a notice has to be served on Kapur & Sons they cannot be served at Cooper Road, but when they want to be served the notice is received at the same place, and throughout the course of proceedings dealing with the arbitration their address is 'Cooper Road'. In these circumstances it cannot be said that the matter is merely one of presumptions.

Reference was then made to -- 'Vaman Vithal v. Khanderao Ram Rao', AIR 1935 Bom 247 (C). Really what this case lays down is that it cannot be assumed that because an addressee declines to accept a particular sealed envelope he has guessed correctly to its contents. It is interesting to see that even in this case the learned Chief justice in his judgment observes that there are authorities of the Bombay High Court which have taken the view that a notice served in the manner that the notice was served in the present case is sufficient to bring the contents of the letter to the notice of the, person to whom the letter is addressed. The next case relied upon is -- 'Rutto Kristo v. Gobindram', AIR 1939 Pat 540 (D), where it was held that if a letter is returned no presumption arises under Section 114, Illus. (f), Evidence Act that this letter was received by the addressee. The question before us is not whether it was received or not but whether it was a proper service. The Arbitration Act requires service by a registered letter being sent to the usual residence or place of business of the person to be served and that is what was done in the present case. In my opinion there is no question of presumption in the present case. The provisions of the law were complied with.

13. On behalf of the opposite party certain witnesses have appeared, D. W. 2 Charan Das is a Head Time Keeper in the firm Shambhu Nath and Sons. He has produced a copy of a register showing that D. C. Kapur was absent on leave on 25-9-1952. But it is of interest to see that no attendance register is kept in this firm.

I have already referred to the statement of Abnashi Ram Advocate D W. 1, and I cannot believe that although he was an Advocate for Kapur and Sons he would not tell D. C. Kapur as to the receipt of the notice by him in regard to the appointment of Shiv Narain Arora as a sole arbitrator or as to the date of the hearing fixed by the arbitrator, particularly when he had been appearing in Court on 1-12-1950 and on the 21-12-1950, i.e., after the proceedings under Section 20, Arbitration Act. I hold therefore that notices sent both by Raj Kumar-Rajinder Kumar and by the sole arbitrator were proper notices.

14. The next question is as to whether Shiv Narain Arora could be appointed as the sole arbitrator. Under the provisions of Clause (2) of the original agreement which forms the arbitration agreement it a party did not appoint an arbitrator within 15 days of the notice sent to them by the other party in that behalf then the arbitrator appointed by the party raising the dispute shall become the sole arbitrator. Therefore the appointment of. Shiv Narain Arora was made in accordance with the provisions of the agreement and it cannot be assailed.

15. It was then submitted that the Court which passed the decree on the award had no jurisdiction because originally the application was made in the Court of Mr. K. S. Gambhir. It was then transferred by the District Judge to the Court of Mr. Hira Lal and ultimately Mr. Gambhir decided the case when he was appointed in place of Mr. Hira Lal, Subordinate Judge.

Reliance is placed on Section 31(4), Arbitration Act and it was contended that because a reference was made in the Court of Mr. K.S. Gambhir then that Court alone had jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference had to be made to that Court. I do not think that according to the facts as they arise in the present case the original Court of Mr. Gambhir alone had jurisdiction to decide and not the subsequent Court to which he was transferred.

In my opinion this must be confined to a question of territorial jurisdiction alone in that if an application under the Arbitration Act is made in a Court of competent jurisdiction at one place then all proceedings under the Act have to take place in the Court at that place & not in any other Court at any other place, & if such a restricted meaning were to be put as has been contended for then it means that if a Court is abolished at a particular place, proceedings under the Arbitration Act cannot go to any Other Court in the same place.

16. Counsel for the appellants relied on --'Kumbha Mawji v. Dominion of India', AIR 1953 SC 313 (E), but in that case the application bad once been made in a Court at Gauhati and therefore subsequently the proceedings could not be taken in the original side of the High Court. That Case has no application to the facts of the present case.

Counsel then referred to -- 'Moolchand Jothajee v. Rashid Jamshed Sons and Co.', AIR 1946 Mad 346 (P), in which at p. 347 there is a remark that by reason of Section 31, Arbitration Act no Court other than that in which the award has been or may be filed has jurisdiction to decide any question relating to validity, effect or existence of the award. This case is not of much assistance to decide the question now before us.

Reliance was then placed on a Division Bench judgment of the Allahabad High Court in -- 'Shukrullah v. Mt. Rahmat Bibi', AIR 1947 All 304 (G). In which when the matter was pending in appeal in the High Court a reference was made to arbitration and the final decree was passed at a later stage of the proceedings by a Court at Gorakhpur. It was held that reference could not be made by an appellate Court and that in view of Section 31(4) no Court other than the High Court could hear objections to the award.

But this case does not support the submission of the appellant because (1) the observations in regard to Section 31(4) were 'obiter', and (2) it was not a Court of co-ordinate jurisdiction in the same place but it were two different Courts in two different places. This objection of the appellants also is without force and I would repel it.'

17. It was finally contended that the respondent is a minor and therefore the arbitration agreement was void. This question should have been raised when the application under Section 20 was made and it is not open to the appellants to raise this question now. But even if they could raise it, in my opinion, they cannot do so successfully.

In -- 'Ramakoteswara Rao v. Kodali Suryanarayana', AIR 1940 Mad 905 (H), an arbitration in which the parties were a major and a minor was held not to be void. In -- 'Toyo Monica Kaisha Ltd. v. Sohansingh Hamamsingh', AIR 1944 Sind 51 (I), where the case was one of disability due to the war, it was held that this cannot be a ground available to the other party for attacking the legality of the reference.

In any case, as I have said, this was a point which could have been raised, if at all, at the time when application under Section 20 was made, and as it had not been raised it cannot be raised in this case.

18. I would therefore dismiss this appeal with costs.

Falshaw, J.

19. I agree.

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