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K.G.S. Venkatanaranayya and anr. Vs. K.G.S.V.R. Lakshmidevamma - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported in(1947)2MLJ520
AppellantK.G.S. Venkatanaranayya and anr.
RespondentK.G.S.V.R. Lakshmidevamma
Cases ReferredIn Sadiq Hussain v. Nazir Begam
Excerpt:
- - the letter of october 11 adds that the respondent was satisfied that mr. venkata seshayya as well as that of the other arbitrator, occasioned the respondent giving to the appellants the notice dated june 16. the appellants did not comply with the notice and the respondent did not make an application to the court to appoint an arbitrator in place of, so far as material, mr. acceptance of the office by the arbitrator appears to be necessary to perfect his appointment. ) it was observed by the board at page 751: it appears to their lordships that, when an arbitrator is nominated by parties, his refusal to act is signified as clearly by his refusal to accept nomination as by any other course he could pursue. in these circumstances, it is not necessary to investigate the occasion and..........so to act, then the agreement should be taken as referring the matters in dispute to mr. katta venkata seshayya. the respondent thereupon withdrew her proceedings in the bombay court each of the two named arbitrators refused to act. on june 16, 1943, the respondent's pleader, by notice in writing addressed to the appellants, stated that the named arbitrators were unwilling to act and called upon the appellants to concur with the respondent in the appointment of some one competent to decide the matters in dispute. it would seem that this notice was one given pursuant to section 8(1) of the indian arbitration act. on june 30, the appellants replied enquiring the dates when the arbitration agreement was sent to the named arbitrators and when they expressed their unwillingness to act and.....
Judgment:

Frederick William Gentle, C.J.

1. The first appellant is the son of the second appellant. They are members of a joint Hindu family. The respondent is the widow of another son of the second appellant. In 1942, the respondent alleged that the first appellant and his mother had taken or had misappropriated her jewellery and she instituted criminal proceedings against them in the Bombay Magistrate's Court. She also had several claims against the members of her late husband's family. Subsequent to the institution of the proceedings in Bombay, the respondent and the two appellants agreed to refer the several claims by the former and also the matters in dispute relating to the jewellery, to arbitration. An agreement, dated April 28, 1943, in that behalf was made between the parties by which they appointed Rao Saheb Donthi Bheemayya Setti as sole arbitrator, and in the event of his not agreeing so to act, then the agreement should be taken as referring the matters in dispute to Mr. Katta Venkata Seshayya. The respondent thereupon withdrew her proceedings in the Bombay Court Each of the two named arbitrators refused to act. On June 16, 1943, the respondent's pleader, by notice in writing addressed to the appellants, stated that the named arbitrators were unwilling to act and called upon the appellants to concur with the respondent in the appointment of some one competent to decide the matters in dispute. It would seem that this notice was one given pursuant to Section 8(1) of the Indian Arbitration Act. On June 30, the appellants replied enquiring the dates when the arbitration agreement was sent to the named arbitrators and when they expressed their unwillingness to act and requesting all relevant correspondence to her forwarded, and upon receipt, it was stated, a reply would be sent. The appellants did not suggest the name of another arbitrator. On July 15, the respondent's advocate wrote two letters, one each to the named arbitrators requesting re-consideration of the matter and consent to act as arbitrator. Rao Saheb Bheemayya replied immediately declining to do so Mr. Venkata Seshayya neither acknowledged receipt of the letter nor replied to it; and it must be inferred he did not withdraw his refusal to act. On August 21, the respondent filed a fresh complaint in the Bombay Presidency Magistrate's Court against the first appellant and his mother which, it is convenient to record, was ultimately dismissed on September 7, 1945. On October 1, 1943, about five months after he had refused to act as arbitrator and about 21/2 months after he had received the respondent's advocate's letter of July 15, Mr. Venkata Seshayya sent a notice to the respondent headed : 'Notice under Arbitration Act.' It states that the inquiry into the matters in dispute between the respondent and the appellants, mentioned in the arbitration agreement executed by them on April 28, 1943, was posted to October 30, at his residence at 11 a.m. The respondent's advocate wrote to Mr. Venkata Seshayya on October 11 stating that in spite of her repeated requests Mr. Venkata Seshayya had declined to act as arbitrator, he had not even the courtesy to acknowledge receipt of the advocate's letter, dated July 15, and that his conduct convinced the respondent he had no intention to act as arbitrator and she had been compelled to revive her case in Bombay. The letter of October 11 adds that the respondent was satisfied that Mr. Venkata Seshayya had been approached by the other side and had consented to act as arbitrator under pressure from them after the accused in the Bombay case had been arrested ; in those circumstances, she was afraid she would not have impartial justice, and as Mr. Venkata Seshayya had already declined to act as arbitrator she had treated the reference as cancelled and as null and void and that he had no authority to act as arbitrator. Later, Mr. Venkata Seshayya notified the respondent of the adjournment of the proceedings to November 6, on which date he purported to hold the inquiry of the arbitration ; the respondent did not appear and participate in the proceedings; and on November 13, Mr. Venkata Seshayya made an award in favour of the appellants in respect of all matters in dispute set out in arbitration agreement.

2. The award was filed in the Court of the Subordinate Judge of Anantapur who, in proceedings before him, held it had been improperly procured by the appellants and set it aside under Section 30(c) of the Arbitration Act. This is the appellant's appeal against the decision of the learned Subordinate Judge.

3. Section 8(1)(b) of the Arbitration Act provides that if any appointed arbitrator neglects or refuses to act, and the agreement does not show that it was intended that the vacancy should not be supplied, any party may serve the other party or the arbitrator, as the case may be, with a written notice to concur in the appointment or in supplying the vacancy, by Sub-section (2), if the appointment is not made within fifteen clear days after the service of notice under Clause (b), the Court may, on the application of the party who gave the notice, appoint an arbitrator in place of the one who had neglected or refused so to act. It is clear that the refusal by Mr. Venkata Seshayya as well as that of the other arbitrator, occasioned the respondent giving to the appellants the notice dated June 16. The appellants did not comply with the notice and the respondent did not make an application to the Court to appoint an arbitrator in place of, so far as material, Mr. Venkata Seshayya. But that omission, in my view, did not clothe Mr. Venkata Seshayya with authority to act, if otherwise he was incompetent to do so.

4. When asked by the respondent, in the letter of July 15, to re-consider his refusal and to act as arbitrator, Mr. Venkata Seshayya did not even acknowledge the letter. The Explanation to Section 9 of the Arbitration Act provides that the fact that an arbitrator, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request, may constitute a neglect or refusal to act within the meaning of Section 8. Assuming the. respondent's letter of July 15, addressed to Mr. Venkata Seshayya, was a request within the contemplation of the section, in the light of his earlier refusal and since he did not comply with the request contained in the letter within one month, his conduct must constitute further refusal to act.

5. In the thirteenth edition of Russell on ' Arbitration,' it is stated at page 335, as follows:

Acceptance of the office by the arbitrator appears to be necessary to perfect his appointment. It has been so decided in the case of an umpire, and it would seem to be only reasonable that an appointment should not be considered to be effective until the person appointed has agreed either expressly or tacitly to exercise the functions of the office.

In Sadiq Hussain v. Nazir Begam (1911) 21 M.L.J. 1151 : 1911 L.R. 38 IndAp 181 : I.L.R. 33 All. 743 (P.C.) it was observed by the Board at page 751:

It appears to their Lordships that, when an arbitrator is nominated by parties, his refusal to act is signified as clearly by his refusal to accept nomination as by any other course he could pursue. His refusal to act necessarily follows, for he has not performed the first action of all, namely, to take up the office by signifying his assent to his appointment.

The notice dated October 1, sent by Mr. Venkata Seshayya, by which he purported to make directions in the arbitration by fixing the date for the inquiry, was given after he had expressly refused to act; and, assuming the respondent's advocate's letter of July 15 (which Mr. Venkata Seshayya ignored) was notice contemplated by the Explanation to Section 9, after his omission to comply with the notice within one month, which omission was further refusal to act, as contemplated by the Explanation. Even if the respondent's letter of the 15th July was not such a notice, his refusal to act had been expressed five months before he purported to give directions as arbitrator and had not been withdrawn. In either event, Mr. Venkata Seshayya had done nothing regarding his appointment as arbitrator by the agreement of April 28, before he sent his communication of October 1, save to express and to indicate, refusal to act.

6. In my view, when he wrote the communication of October 1, the time had passed within which he could have accepted the appointment and that that communication itself was not such acceptance. Before he wrote' it, he did not take up the appointment by signifying his assent to it and he had divested himself of the character of an arbitrator. Further, there was no fresh submission by the parties to the arbitration.

7. On behalf of the appellants, it was argued that it is always open to an arbitrator to change his mind after he has expressed his refusal so to act. That may be so ; but his change of mind must be at a time when be is at liberty and in a position to do so. Since Mr. Venkata Seshayya had divested himself of the character of an arbitrator before he sent the communication of October 1, purporting to give directions in the arbitration, it was then too late for him to change his mind so as i to entitle him to act as the adjudicator between the parties. Since Mr. Venkata Seshayya was not the arbitrator at the time when he purported to act as such and he had no authority to decide the matters in dispute between the parties, the award which he made is invalid and of no effect. In these circumstances, it is not necessary to investigate the occasion and the cause why, five months after he had refused to act as arbitrator, suddenly he purported to take up the reference, which conduct the learned Subordinate Judge criticised and condemned.

8. In my opinion, for the reasons given, this appeal should be dismissed with costs.

Tyagarajan, J.

9. I agree.


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