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Shankar Das Rup Lal Vs. Governor-general in Council (Now Dominion of India) - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 85 of 1949
Judge
Reported inAIR1952P& H234
ActsPartnership Act, 1932 - Sections 19; Contract Act, 1872 - Sections 73, 196 and 197; Arbitration Act, 1940 - Sections 21
AppellantShankar Das Rup Lal
RespondentGovernor-general in Council (Now Dominion of India)
Appellant Advocate M.L. Puri,; J.L. Bhatia and; Sardari Lal, Advs.
Respondent Advocate K.L. Gosain and; S.D. Bahri, Advs.
DispositionAppeal dismissed
Cases ReferredTularam Nathmal v. Bilasory
Excerpt:
.....if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - at no stage did any of the other partners come forward to say that the appointment of the sole arbitrator was bad. where there is no available market and there are difficulties in assessing the damages on the ordinary footing, the court must do its best to award such damages as will put the teller in the same position in which he would have been if the contract has been performed......on the same day brij lal, a partner of the appellant firm, wrote to the chief controller that mr. shiv charan singh be appointed as the sole arbitrator. on the 3rd of december 1948, this suggestion, on behalf of the firm, was accepted by the government through n. n. a. qureshi, assistant director of supplies. the contents of this letter are as follows; 'i am directed to acknowledge your letter dated 4-11-1946, addressed to the chief controller of purchase, department of supply, new delhi, stating that your arbitrator malik tara chand had resigned and that you were pleased to appoint bakhshi shiv charan singh. p.c.s., officer on special duty in the department of supply as sole arbitrator and that his decision would be binding upon you. you hoped that government would also agree to his.....
Judgment:

Kapur, J.

1. This is an appeal against an order passed by Mr. Chhaju Ram, Senior Subordinate Judge, Delhi, dismissing the objections filed by the appellant against an award given by Mr. Shiv Charan Singh arbitrator.

2. On the 12th of August 1942, the Government of India asked for tenders for eyelets and the tender of Messrs. Shankar Dass-Rup Lal was accepted. Deliveries were to be made by them in three instalments, i.e., on the 30th of September 1942, 31st of October 1942, and 30th of November 1942. The contract between the parties contained an arbitration clause which is given as paragraph 20 of the conditions attached to the invitation for tender, Exhibit P. 23, and ft was in the following terms :

'20. ARBITRATION: In the event of any question or dispute arising under these conditions or any special conditions if contract or in connection with this contract (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the Chief Controller and an arbitrator to be nominated by the contractor, or in the case of the said arbitrators not agreeing then to the award of an Umpire to be appointed by the arbitrators in writing before proceeding on the reference and the decision of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940, and of the Rules thereunder and any Statutory modification thereof shall be deemed to apply to and be incorporated in this contract.'

Due to the tenderers not being able to supply the goods the contract was cancelled on the 3rd of April 1943. In pursuance of arbitration clause matters in difference were referred to the arbitration of one P.D. Bhargava and Tara Chand Malik. It appears that Tara Chand Malik resigned on the 4th of November 1946, and on the same day Brij Lal, a partner of the appellant firm, wrote to the Chief Controller that Mr. Shiv Charan Singh be appointed as the sole arbitrator. On the 3rd of December 1948, this suggestion, on behalf of the firm, was accepted by the Government through N. N. A. Qureshi, Assistant Director of Supplies. The contents of this letter are as follows; 'I am directed to acknowledge your letter dated 4-11-1946, addressed to the Chief Controller of Purchase, Department of Supply, New Delhi, stating that your Arbitrator Malik Tara Chand had resigned and that you were pleased to appoint Bakhshi Shiv Charan Singh. P.C.S., Officer on Special Duty in the Department of Supply as sole Arbitrator and that his decision would be binding upon you. You hoped that Government would also agree to his being appointed as sole arbitrator. I am now directed to advise you that Government's arbitrator in the above-mentioned case. (Mr. P.D. Bhargava Advocate) has also resigned from the Arbitratorship and Government is therefore, pleased to accept your suggestion that Bakhsht Shiv Charan Singh, P.C.S., O.S.D., in the Director-General of Industries & Supplies may be accepted as the sole Arbitrator for the purposes of present arbitration proceedings. 2. Please acknowledge receipt.'

3. On the 9th of December 1946, the appellantswrote to the Assistant Director of Supplies acknowledging the receipt of the letter of the 3rdof December in regard to the approval of theGovernment to the suggestion of appointing Mr.Shiv Charan Singh as the sole arbitrator. On the13th of December 1946, N. N. A. Qureshi wrote tothe appellants:

'Reference your letter dated 9/12/1946. Withreference to your above letter please contactBakhshi Shiv Charan Singh, P.C.S., the solearbitrator, for the date of hearing in the abovecase.'

Copies of this letter were sent to Mr. Shiv Charan Singh and to Mr. Mohammad Sadiq. It may here be 'remarked that on the 29th of November 1946, P.D. Bhargava had also resigned.

4. On the 7th of December 1946, Mr. Shiv Charan Singh sent a notice to the appellant firm stating that he had been appointed sole arbitrator in the case and had fixed the arbitration proceedings on the 19th of December 1946; at 3 p.m. Acknowledgment of the receipt of this notice is on the file and is signed on behalf of the appellant firm, and as it is through post it must have been served on the appellant firm. On the 24th of April 1947. Mr. Shiv Charan Singh gave an award in favour of the Government for Rs. 14,120/-against the appellant with costs, which he assessed at Rs. 250/- only.

5. On the 23rd of March 1948, objections were filed on behalf of the appellant firm through Ram Lal, a partner, to the effect that: (1) the appointment of the sole arbitrator was not made by the firm or by its partners and one partner alone had no authority to make the appointment and (2) the arbitrator was guilty of judicial misconduct, because (a) the Government sustained no loss and the arbitrator had not applied his mind to the conditions of the contract; (b) the award was not supported by any evidence the arbitrator had taken the 3rd of April 1943, to be the date of the breach and had assessed damages as on that date without there being any proof as to the rates prevailing on that date and (c) the award was vitiated by a patent error of Law. Three issues were stated which were:

(1) Whether the appointment of Bakhshi Shiv Charan Singh as sole arbitrator to decide the dispute between the parties is illegal and 'ultra vires' for the reasons given in the grounds of objections?

(2) Whether the respondent is estopped by his acts and conduct from raising this objection?

(3) Whether the arbitrator has misconducted himself or the proceedings?

The learned Judge held that the appointment of Mr. Shiv Charan Singh was not illegal; at any rate, because the partners of the firm had not taken any objection to the proceedings and their Advocate had been appearing before the arbitrator, they should be taken to have given their consent to the arbitration proceedings; that even if the initial reference was without authority of the other partners their conduct showed that they had acquiesced in the reference and that no misconduct had been proved. Against this order the firm has come up in appeal to this Court.

6. The first objection raised by Mr. Puri was that there was no valid submission, and this he based on two grounds, firstly, that there was no reference, because that could only be done under Section 175 of the Government of India Act of 1935, expressly in the name of the Governor-General and secondly, that all the partners of the firm had not agreed to the reference, which was on that ground illegal.

7. Taking the first part of the objection, there is I find a specific acceptance of the sole arbitra-torship of Mr. Shiv Charan Singh by the Assistant Director of Supplies on behalf of the Director-General of Industries and Supplies. It may here be remarked that the original reference to arbitration was to two persons made on the 3rd of June 1944--P.D. Bhargava and Tara Chand Malik--and in supersession Of that reference at the suggestion of the firm a, reference was made to the sole arbitration of Mr. Shiv Charan Singh. The Idea originated with Brij Lal, a partner of the firm, and this suggestion was accepted by the Assistant Director of Supplies. Both parties were appearing before the two arbitrators right up to the time when Mr. Shiv Charan Singh was appointed and even before Mr. Shiv Charan Singh, from the 19th of December 1946, up to the end of the proceedings, both parties went on appearing without any objection being taken. Even in the lengthy grounds which were raised in the trial Court no such objection was taken on behalf of the firm, and I do not think this objection is now open to the appellants.

8.The other part of the objection taken by Mr. Puri is that all the partners had not agreed to the arbitration and relies on Section 19(2)(a) of the Partnership Act which provides that in the absence of a usage or custom a partner has no implied authority to submit a dispute relating to the business of the firm to arbitration. The partners of the firm are Rup Lal and Ram Lal who are brothers, Gopal Singh, Brij Lal and Niranjan Dass. There is no dispute that the first reference to arbitration to two persons was on behalf of the firm, and although it is not quite clear as to who had entered into this agreement of arbitration, this much is clear from the record that Malik Brij Lal was appearing for the firm in all the proceedings of the arbitration and also that Mr. Iqbal Krishan, Advocate was appearing with him for the firm. The written statement before the arbitrators is signed by Malik Brij Lal and Mr. Iqbal Krishan, Advocate. It has not been suggested before me that the proceedings even before the two arbitrators were without, authority of the other partners. Even there the power of attorney on behalf of the firm to Mr. Iqbal Krishan was given by Malik Brij Lal and Mr. Iqbal Krishan was acting on behalf of the firm before the two arbitrators and the various applications filed before these two arbitrators are either by Brij Lal or by Mr. Iqbal Krishan. Some of these are dated the 18th of August 1944. If the authority of Brij Lal did exist on behalf of the firm to appear before the two arbitrators it has not been shown that that authority had been withdrawn when the matter went to one arbitrator. At any rate, when the proceedings were going on before Mr. Shiv Charan Singh no objection of any kind was raised as to the power of Brij Lal or the Advocate for the firm, Mr. Iqbal Krishan, to represent the firm before the arbitrator. On the 19th of December, 1946. Mr. Iqbal Krishan agreed on behalf of the firm that the proceedings before the previous two arbitrators be treated as evidence before Mr. Shiv Charan Singh. As a matter of fact, the contention of the appellants in the trial Court was that as Mr. Shiv Charan Singh had been appointed by Brij Lal and Ram Lal, the other partners of the firm were not bound and the reference was illegal. This Ram Lal is the person who filed objections on behalf of the firm and the appeal on behalf of the firm has also been filed by him which is clear from the power of attorney of Mr. Jagdish Lal Bhatia, Advocate.

9. After his appointment, Mr. shiv Charan Singh gave a notice to the firm to appear before him on the 19th of December and Brij Lal and Mr. Iqbal Krishan did appear on that date and have subsequently been appearing. At no stage did any of the other partners come forward to say that the appointment of the sole arbitrator was bad. Then conduct of the case shows that Brij Lal was the person who was in charge of litigation and he had authority to refer the matter to arbitration which he did. But even if it was to be held that Brij Lal had not this authority the conduct of the other partners appears to me to be clear and it, in my opinion, amounts to ratification. At no stage has any of the other partners come forward to raise any objection either to the authority of Mr. Shiv Charan Singh to arbitrate or to the authority of Brij Lal or Ram Lal to refer the matter to arbitration. As was remarked by the learned Judge, which has not been challenged before me, the reference to Mr. Shiv Charan Singh was by Brij Lal and Ram Lal. Even after the award the other partners have not come forward to raise any objection. The whole of the proceedings, beginning from the objections right uptil today, have been carried on by Ram Lal. This conduct of the partners, in my opinion, amounts to ratification, in somewhat similar circumstances Achhru Ram, J., in 'Hanuman Chamber of Commerce Limited, Delhi v. Jassa Ram-Hiranand'. AIR 1949 E P 46, held that ratification need not be by any express act or declaration and might be implied from conduct. It might be inferred from mere acquiescence or silence or inaction on the part of such other partners.

10. I am in respectful agreement with this judgment and hold that (1) Brij Lal had authority on behalf of his co-partners to enter into arbitration which is clear from the fact that no objection has been taken to the arbitration of P.D. Bhargava and Tara Chand Malik, (2) even if there was no express authority implied authority is clear from the conduct of the parties and (3) at any rate, the conduct of the other partners shows that they have ratified what was done by Brij Lal.

11. 'The next submission of the counsel for the appellants was that there was an error of law apparent on the face of the award and under this head he submitted that although the arbitrator had found the date of breach to be the 3rd of April 1943, he had decreed damages on the statement of Murad P.W. 4 which showed that the price of eyelets No. 30 was Rs. 4/8/- and of No. 28 Rs. 2/10/- but these were the rates prevailing in October and November 1948.

12. Respondent's Advocate has taken me through the evidence which was produced before the arbitrators. Sallah-ud-Din P.W. 3 has produced comparative statements Exhibits P. 3 and P. 4. Exhibit P. 3 shows the rates of tenders between the 2nd of April 1943 and the 12th of April 1943, and the least rate for eyelets No. 28 is Rs. 2/10/- and for eyelets No. 30 the rates range from Rs. 4/6/-to Rs. 5/4/-. According to the evidence of Murad P.W. 4 tenders which were received in March 1943 are given in ranking statements Exhibits P. 9 and P. 10 and the rates there vary, but the least rates are Rs. 2/10/- for eyelets No. 28 and Rs. 4/8/- for eyelets No. 30. The arbitrator has taken this evidence into consideration and after considering it has accepted this to be the basis for his conclusions and has awarded Rs. 14,120/- as damages.

13. Mr. Gosain has submitted that in the first place he has proved what the rates prevailing on the date of the breach were and even if they were not proved it is the duty of the Court and therefore it was of the arbitrator to determine the amount of damages. He has relied on the observations of S.B. Sinha, J., in 'Tularam Nathmal v. Bilasory & Co., 85 Cal L J 164 at p. 173, where the learned Judge observed:

'It is true that ordinarily the measure of damages upon a breach of contract for sale of goods is the difference between the contract price and the market price on the date of breach. The market price on the date of breach is accepted as the basis because the buyer can go into the market and buy the goods at that rate and that is presumed to be true value of the goods. The defaulting party is bound however to place the other party in the same position in which he would have been if the contract was performed. Where there is no available market and there are difficulties in assessing the damages on the ordinary footing, the Court must do its best to award such damages as will put the teller in the same position in which he would have been if the contract has been performed. The arbitrators have found that these goods were not procurable in the market during the currency of the Jute Price Control Order. The ordinary measure of damages therefore would not apply to this case. It was for the arbitrators to find out and award what damages would put the respondents in the same position in which they would have been if the petitioner had performed the contract. Assuming they assessed such damages on the footing of the market rate prevailing on October 1, 1946, they may have been mistaken in their assessment. The error however does not appear on the face of the award and it is not open to this Court to interfere with the award on the ground that the arbitrators were mistaken in awarding damages on a wrong basis.'

With these observations I respectfully agree and even if the contention of the learned counsel for the appellants was correct that there was no evidence in support of the rates on the date of the breach the ordinary measure of damages would not apply to the present case and the arbitrator had to find out what damages would put the Government in the same position in which it would have been if the appellant firm had performed its part of the contract. And even if the arbitrator has gone wrong in the matter of assessing of damages it is not an error which is apparent on the face of the award and in order to discover what the error is, one has to go very carefully into the mass of evidence which has been produced.

14. In view of my findings I am of the opinion that the award cannot be challenged on the grounds taken up by the appellants and the objections have been rightly dismissed by the trial Court. I, therefore, dismiss the appeal and confirm the order of the trial Court. The appellantswill pay the costs of the respondent in this Court,


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