Skip to content


Shah Lalchand Moolchand Vs. R.S. JaIn and Sons - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai High Court
Decided On
Case NumberLetters Patent Appeal No. 96 of 1955
Judge
Reported inAIR1959Mad75; (1958)IIMLJ561
ActsMadras Kirana Merchants Association Rules - Rules 17 and 21; Code of Civil Procedure (CPC) , 1908
AppellantShah Lalchand Moolchand
RespondentR.S. JaIn and Sons
Appellant AdvocateM.A. Srinivasan, ;T.E. Gopalan and ;C. Sriraman, Advs.
Respondent AdvocateV. Seshadri and ;P. Chinnappa, Advs.
DispositionAppeal allowed
Excerpt:
.....between members--reference to tribunal of arbitration--rules 17-c and 21--secretary to e member of tribunal; under the rules of the madras kirana merchants' association, whenever disputes relating to or incidental to contracts and business arise either between (a) members, (b) members and brokers or in cases where either party to the contract is a member of the association, all such disputes shall be decided by a tribunal of arbitration, whose decision shall be binding on the members and brokers and all other parties to the reference. rule 17 (e) states: if any party fails to appoint an arbitrator or arbitrators either originally or by way of substitution as aforesaid for 15 clear days after the service by the other party of a notice in writing to make the appointment, such..........15 of the above rules referred the matter to the association for decision in accordance with the rules. rule 15 inter alia provides that all disputes relating to or incidental to contracts and business either between (a) members, (b) members and brokers or in cases where either party to the contract is a member of the association shall be decided by a tribunal of arbitration as hereinafter provided and not otherwise.rule 16 lays down that the decision of the tribunal of arbitration shall be binding on the members and brokers and all other parties to the reference. rule 17, so far as it is material to the present case, runs as follows :"the arbitration tribunal for a reference shall consist of not less than three members and not more than seven members (including the secretary who will.....
Judgment:
1. The decision of this appeal depends upon the construction of one of the rules of the Madras Kirana Merchants' Association, Madras, of which both the appellant and the respondent are members. A dispute arose between the plaintiff and the defendants regarding a contract for the supply of five jars of mercury. The plaintiff in accordance with Rule 15 of the above rules referred the matter to the Association for decision in accordance with the rules. Rule 15 inter alia provides that all disputes relating to or incidental to contracts and business either between (a) members, (b) members and brokers or in cases where either party to the contract is a member of the Association shall be decided by a Tribunal of arbitration as hereinafter provided and not otherwise.

Rule 16 lays down that the decision of the Tribunal of arbitration shall be binding on the members and brokers and all other parties to the reference. Rule 17, so far as it is material to the present case, runs as follows :

"The Arbitration Tribunal for a reference shall consist of not less than three members and not more than seven members (including the Secretary who will always be an ex-officio member of the Tribunal as hereinafter provided) to be selected from amongst the members of the Association ;

(a) Subject to Section 17, the decision of the Secretary as to the number of persons to arbitrate on a particular reference shall be binding on the parties to the reference provided always that either party be entitled to select an equal number to act as arbitrators on his side.

(c) If one party fails to appoint an arbitrator or arbitrators either originally or by way of substitution as aforesaid for 15 clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator or arbitrators may appoint that arbitrator to act as sole arbitrator or arbitrators in the reference and their award shall be binding on both parties as if they had been appointed by consent."

Rule 20 provides : that the Tribunal shall within seven days of the submission of the matter proceed with the enquiries referred to it.

2. Rule 21 specially provides that the Secretary of the Association will always be an ex-officio member of the Tribunal and executive and the administrative head thereof.

3. In the succeeding rules reference is always to the Tribunal. In the present case what happened was this : The plaintiff appointed an arbitrator but the first defendant did not choose his arbitrator within the prescribed period. The case was heard and disposed of by the arbitrator appointed by the plaintiff and the secretary who acted as the ex-officio member of the Tribunal. The contention of the first defendant was that the award made by the arbitrator appointed by the plaintiff and the secretary, is not valid because the secretary was not entitled to take part in the arbitration under Rule 17, Clause (c).

The learned City Civil Judge did not accept this construction of Rule 17(c). He held that the constitution of the Tribunal was valid as the secretary would always be an ex-officio member of any Tribunal. He, therefore, directed that a decree may be passed in terms of the award. There was an appeal against this decision to this Court by the first defendant which was disposed of by Basheer Ahmed Sayeed J. The learned Judge took a view contrary to that taken by the learned trial Judge and held that the award was void because the secretary was not entitled to take part in the disposal of the dispute. According to him the intention of Rule 17(c) was to exclude the secretary as ex-officio member of the Tribunal in extraordinary circumstances contemplated by the clause.

According to him on a proper construction of Rule 17(c) in a case like the present the dispute should be determined only by the arbitrator appointed by one of the parties. The decision of Panchapakesa Ayyar J. on the very point in C.M.A. Nos. 451, 452 and 453 of 1950 in which that learned Judge took the same view as that taken by the learned trial Judge was brought to the notice of the learned Judge, but he dissented from the interpretation put upon the rule by Panchapakesa Aiyar J. We may point out that the judgment of Panchapakesa Ayyar J. was binding on him and if he was not inclined to agree with it, he should have referred the matter to a Division Bench or placed the papers before the Chief Justice for further orders.

4. We are in complete agreement with the construction placed upon the relevant rule by Panchapakesa Ayyar J. in the eases mentioned above. Rule 17 (c), in our opinion, provides for an extraordinary case when one of the parties fails to appoint an arbitrator or arbitrators. When that contingency arises the arbitrator or arbitrators appointed by the other party should be deemed to be, as it wore, also the arbitrator or arbitrators appointed on behalf of the defaulting party as well. This is, of course, notional, but on a reading of the material rules together we think that it is a reasonable construction. Rule 21 provides that the secretary of the Association will always be an ex-officio member of the Tribunal. The rules contemplate only a decision by the Tribunal. The secretary cannot, therefore, be excluded from being a member of the Tribunal even in the contingency contemplated in Clause (c) of Rule 17. In the view we have taken the appeal must be allowed.

5. The judgment of Basheer Ahmed Sayeed J. is hereby set aside and the decision of the learned City Civil Judge is restored with costs throughout.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //