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Katragadda Ramayya and anr. Vs. Katragadda Bapayya - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported in97Ind.Cas.824; (1926)51MLJ440
AppellantKatragadda Ramayya and anr.
RespondentKatragadda Bapayya
Cases ReferredBala Pattabirama Chetti v. Seetharama Chetti
Excerpt:
- - it is well settled that when a reference is made to two or more arbitrators the award is not valid unless it is concurred in by them all. seetharama chetti (1894) 1 l r 17 m 498 that this order is good......provisions of the civil procedure code relating to arbitration must be taken to be intended by the parties to the agreement to apply and that this order was not inconsistent with the terms of the agreement. whether that decision is correct on the facts it is not necessary to express any opinion, for the question must be decided in this case on whether the order appealed against is inconsistent with the agreement of the parties. if it is understood, as it must be, that a reference to three arbitrators implies an agreement to be bound by the decision of all the three and not merely of a majority, then this order is inconsistent with the agreement. if all the parties had agreed to file the reference in court, it can possibly be argued that they did so with full knowledge of the provisions.....
Judgment:

Phillips, J.

1. The parties in this case referred their disputes to the arbitration of three named arbitrators. One of them, the plaintiff, then applied to the Court under para. 17 (1) of Scheduel 11 to the Civil Procedure Code to have the agreement filed in Court. This has been done and under para. 4 an order of reference has been made, but the Court has added a further direction that in case of disagreement among the arbitrators the opinion of the majority should prevail. The appellants contend that such an order is illegal because it is inconsistent with the agreement to refer to arbitration. It is well settled that when a reference is made to two or more arbitrators the award is not valid unless it is concurred in by them all. This was laid down in United Kingdom Mutual Steamship Assurance Association v. Houston and Co. (1896) 1 Q B 567 and was assumed in Cameron v. Cuddy (1914) A C 651. It is also laid down in Baboo Surubjeet Narain Singh v. Baboo Gouree Pershad Narain, Singh (1867) 7 W R 269, In the matter of Junglee Ram v. Ram Heet Sahoy (1873) 19 W R 47 and Nem Roy v. Bharut Roy and Ors. (1874) 22 W R 139. It is true that in these cases one or more of the arbitrators did not sign the award and on that ground it was held not to be valid, but the reason given for such a conclusion is that all the arbitrators had not concurred in the award. Prima facie, therefore, the order of the Subordinate Judge would appear to be inconsistent with the reference to three named arbitrators. It is, however, contended for the respondent on the authority of Bala Pattabirama Chetti v. Seetharama Chetti (1894) 1 L R 17 M 498 that this order is good. That was a case in which the agreement was filed in Court and one of the arbitrators refused to act. The District Judge appointed another arbitrator under the provisions of paragraph 5 of Scheduel II and it was held that this order was valid. It was argued that under para. 19 ail the provisions of Scheduel II are made applicable to proceedings on reference out of Court which is afterwards filed in Court and that consequently when such a reference is filed in Court the parties must be deemed to submit to all the rules and procedure prescribed in the second schedule. It was there held that the words in paragraph 19 'so far as they are consistent with any agreement filed ' do not mean that the agreement must contain in every case an express provision as to what ought to be done if any arbitrator is unwilling to act and that the reasonable construction is that the action of the judge should not be inconsistent with the agreement if it contains any special provision on the subject. The argument in support of this was that the order of reference made in a suit pending should not prove abortive but result in an award according to the original intention of the parties and it was consequently held that the provisions of the Civil Procedure Code relating to arbitration must be taken to be intended by the parties to the agreement to apply and that this order was not inconsistent with the terms of the agreement. Whether that decision is correct on the facts it is not necessary to express any opinion, for the question must be decided in this case on whether the order appealed against is inconsistent with the agreement of the parties. If it is understood, as it must be, that a reference to three arbitrators implies an agreement to be bound by the decision of all the three and not merely of a majority, then this order is inconsistent with the agreement. If all the parties had agreed to file the reference in Court, it can possibly be argued that they did so with full knowledge of the provisions of the Code and with the intention that these provisions should be applied to their arbitration. When, however, only one of the parties applies and drags the others to Court, no such presumption can be drawn, and when an order is made inconsistent with the original agreement, such an order is not valid. In the present case the defendants agreed to abide by the concurrent award of three persons and consequently there can be no presumption of an agreement to abide by the opinion of a mere majority. This order, therefore, directing that the opinion of the majority shall prevail appears to be inconsistent with the original agreement and consequently the provisions of paragraph 4 under which the order has been made cannot be applied in the present case.

2. The appeal is therefore allowed and the order that the opinion of the majority shall prevail must be. struck out of the order of reference. The respondent will pay the appellants' costs of this appeal.


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