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Textile Machinery Corporation Ltd. Vs. Nalinbhai B. Munshaw - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberCivil Revn. Case No. 1150 of 1968
Reported inAIR1969Cal146
ActsArbitration Act, 1940 - Sections 9 and 28
AppellantTextile Machinery Corporation Ltd.
RespondentNalinbhai B. Munshaw
Appellant AdvocateS. Tibriwal and ;M.P. Chowdhury, Advs.
Respondent AdvocateM.H. Pherwani, Adv.
Cases ReferredL. Charan Das v. L. Gur Saran Das Kapur
- .....on both the parties.' disputes did arise. the arbitration clause was invoked. on january 3, 1967, munshaw appointed shri j. n. choudhuri as arbitrator, and texmaco appointed solicitor b. p. khaitan as arbitrator. the two arbitrators appointed dr. l. m singhvi an umpire, and on february 11. 1967, entered upon the reference. on april 25 1967, the learned subordinate judge was moved for extending the time within which the award was to be made. and he allowed such extension until january 311968. on december 20, 1967, however, solicitor b. p. khaitan informed all concerned in writing that he was not willing to act as arbitrator, and wanted his letter to be treated as letter of resignation. on december 28, 1967, texmaco wrote to munshaw, informing him that shri sasanka majumdar was the new.....

Bijayesh Mukherji, J.

1. This is a rule, under Section 115, of the C. P. C. (5 of 1908), obtained by Texmaco, an abbreviation for Textile Machinery Corporation Ltd., calling upon the opposite party Munshaw to show cause why the order dated March 12, 1968, of a learned Subordinate Judge, Alipore, dismissing Texmaco's application for a declaration that Shri Sasank Majumdar has been validly appointed a new arbitrator under Section 9, Clause (a), of the Arbitration Act, 10 of 1940, should not be set aside.

2. The facts, which have led up to this rule, need not be referred to further than as follows:--

On April 27, 1962, Texmaco, a leading engineering concern, engaged in the manufacture of cotton spinning machinery, appointed Munshaw its Sale Technical Adviser for textile machinery imported into India from Howa Machinery Ltd. of Japan, by virtue of an agreement dated November 10, 1954, or thereabouts, for technical collaboration between Texmaco and 'Howa'. An appointment as this of Munshaw is evidenced by an agreement of that day (April 27. 1962), the arbitration clause of which bears: 'Any dispute arising at any time between the parties hereto, concerning this agreement, its interpretation or its subject-matter, shall be settled under the rules of the Indian Arbitration Act and the decision of the arbitrators shall be final and binding on both the parties.'

Disputes did arise. The arbitration clause was invoked. On January 3, 1967, Munshaw appointed Shri J. N. Choudhuri as arbitrator, and Texmaco appointed Solicitor B. P. Khaitan as arbitrator. The two arbitrators appointed Dr. L. M Singhvi an umpire, and on February 11. 1967, entered upon the reference. On April 25 1967, the learned Subordinate Judge was moved for extending the time within which the award was to be made. And he allowed such extension until January 311968. On December 20, 1967, however, Solicitor B. P. Khaitan informed all concerned in writing that he was not willing to act as arbitrator, and wanted his letter to be treated as letter of resignation. On December 28, 1967, Texmaco wrote to Munshaw, informing him that Shri Sasanka Majumdar was the new arbitrator appointed in place of Solicitor B. P. Khaitan. only to bring forth a reply that very day (December 28. 1967) from Munshaw, proposing Shri J, N. Chaudhuri to 'be the Sole Arbitrator henceforth', and inviting Texmaro's concurrence thereto. Concurrence did not come. Came instead a reply dated January 3, 1968, telling Munshaw: 'Shri Sasanka Majumdar's appointment as new arbitrator is valid We are applying to the Court for a declaration to that end'. Two days later, that is, on January 5, 1968, Texmaco did move the Court, by an application under Section 9, Clause (a), which, as noticed, the learned Judge dismissed. Hence this rule.

3. As a matter of words, it beats me, as it beats the learned Subordinate Judge, how Section 9. Clause (a), of the Arbitration Act can be called in aid here. Taking the arbitration agreement to be valid, as the learned Counsel for both parties have taken it to be, Texmaco can appoint a new arbitrator, in terms of Section 9, Clause (a), only if the following ingredients are present--

1. The agreement itself provides that a reference shall be to two arbitrators,

2. The agreement further provides that, of the two arbitrators, one has to be appointed by each: one by Texmaco and another by Munshaw,

3. One, in fact, has been appointed by each,

4. An arbitrator, so appointed, has refused to act.

5. The agreement expresses no intention that a new arbitrator has not to be appointed.

4. Now, look to the arbitration agreement reproduced above. It does not provide that a reference shall be to two arbitrators. It provides instead that a reference shall be to arbitrators. Necessarily it does not provide either, as indeed it cannot, that, of two arbitrators, one shall be appointed by each party, that is one by Texmaco and another by Munshaw. So, the first two ingredients tabulated above -- and they are basic ingredients upon which depend the remaining three ones -- are found conspicuous by their absence in the arbitration agreement on hand. Hence, as a matter of words, Section 9, Clause (a), does not fit the facts here, and cannot, therefore, be pressed into service.

5. But, it is said, no matter what the arbitration agreement is, the parties, in fact, have mutually agreed upon two arbitrators, Chaudhuri and Khaitan, one appointing each; Khaitan, one appointed so, has refused to act; and no intention prohibiting the appointment of a new arbitrator is expressed in the agreement. That being so, the contention concludes, the requirement of Section 9, Clause (a), is well met. In my judgment, it is not. Because, to hold so will be to read, in the section, words which are not there, such as:

'Where, however, two arbitrators are, in fact, appointed, one by each party, though the agreement does not provide so, the remaining provisions of this section will apply.'

It will be legislating, not interpreting the law.

6. Not exactly to the point, but somewhat close to it, is a Bench decision of this Court in General Electric Trading Co. v. Siemens (India) Ltd., (1928) 33 Cal WN 418, where two arbitrators were mutually agreed upon, and, by a written agreement, appointed as such: not one by each party, -- facts which, it was held did not come within the language of Section 9 of the old Arbitration Act, 9 of 1899, corresponding to the present Section 9 of the 1940 Act. Thus, there was infraction of the language of the section in that, by the agreement, two arbitrators were appointed by both the parties, not one by each. Here there is infraction too, because the agreement itself does not provide what it must in terms of Section 9. It provides for a reference to arbitrators. And that is all it does, without saying that a reference shall be to two arbitrators, one to be appointed by each party. So, by its very terms, Section 9 cannot apply.

7. An escape is sought from such a conclusion on the ground that extension of time for the making of the award was prayed for and allowed, with the result that the question of validity of the arbitration agreement is now concluded by the doctrine of res judicata. In support of this proposition, two authorities have been cited. One is Anderson Wright Ltd. y. Moran & Co. : [1955]1SCR862 , where it has been held inter alia that, on an application for stay under Section 34, the Court may, in its discretion, decide an issue (if raised) as to the existence or validity of the arbitration agreement. The other is John Patterson & Co. Ltd. v. Soorajmull Nagarmull, A. F. O. O. No. 190 of 1965 (Cal), decided by Banerjee and Masud, JJ,, on 8-9-1966 where it has been held, after an elaborate analysis of Jawaharlal Burman v. Union of India : [1962]3SCR769 that a Court can overrule the defence as to the non-existence of an arbitration agreement, in granting an extension of time under Section 28, and that if the Court does so, it operates as res judicata.

8. The simple answer to such a contention is that in the present proceedings the validity of the arbitration agreement is not in issue. What is at issue is if the agreement comes within Section 9. Clause (a). Sure enough, that is not concluded by the rule of res judicata, only because extension of time has been prayed for, and allowed. Such extension, indeed, has nothing to do with the facts here fitting Section 9, Clause (a), or not.

9. Umpire Singhvi entering on the reference has been objected to, on the ground that no disagreement between the two arbitrators is there, within the meaning of Rule 4 to Schedule 1 to the Arbitration Act. But when Arbitrator Khaitan enters on the reference on February 11, and works on it until December 20, following, when he resigns, it does amount to a disagreement, unless the contrary is shown. The contrary has not been shown.

10. On behalf of the opposite party has been questioned the power of this Court to entertain a matter as this under Section 115 of the Procedure Code. No doubt, Section 41 of the Arbitration Act is there, prescribing that, subject to the provisions of the Act and of rules made thereunder, the Code shall apply to all proceedings before the Court, and to all appeals under the Act. But in Section 41 the Allahabad High Court saw no ouster of the revisional jurisdiction under Section 115: L. Charan Das v. L. Gur Saran Das Kapur : AIR1945All146 . Nor do I, if I may say so, with respect.

11. In the result, the rule fails and do stand discharged with costs. Hearing fee 10 gold mohurs.

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