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Chaturbhuj Sohanlal Vs. Clive Mills Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 20 of 1963
Judge
Reported inAIR1965Cal145
ActsArbitration Act, 1940 - Section 28; ;Bengal Chamber of Commerce and Industries, Tribunal of Arbitration Rules - Rules 5(2), 7 and 14
AppellantChaturbhuj Sohanlal
RespondentClive Mills Co. Ltd.
Appellant AdvocateS. Tibriwalla, Adv.
Respondent AdvocateE.R. Meyer and ;R.M. Dutt, Advs.
DispositionAppeal dismissed
Cases ReferredArbitration Ladmam Kedia v. Dunichand Sons and Co.
Excerpt:
- .....the consent of all parties concernedin the proceedings, by any writing signed by them,may from time to time, enlarge its time thereforor any extension of time granted by the high courtat calcutta. provided that if any commission for examination of witness shall at any time be issued under the provision of rule xxi of section 43 of the arbitration act, 1940 or any provision in that behalf this rule shall be read as if the abovementioned initial time limit of four months were increased by a period of time equal to the time which elapses between the date when the civil court concerned shall have made its order for the issue of such commission and the date when the same khali have been executed and returned to the court, and all enlargements and extensions of time as above provided.....
Judgment:

Bachawat, J.

1. This is an appeal from an order refusing to set aside an award of the Bengal Chamber of Commerce and Industry. Upon the application of the respondents for arbitration oftheir disputes with the appellants, the Registrar of the Bengal Chamber of Commerce and Industry constituted an arbitral Court on or about the 9th April, 1947.

2. Rules V(2), VII and XIV of the Tribunalof Arbitration of the Bengal Chamber of Commerce and Industry are as follows:

'Rule' V(2): On receipt of such application, the Registrar shall constitute a Court for the adjudication of the dispute.

Rule VII: If the Court have allowed the time or extended time to expire without making any award, and without having signified to the Registrar that they cannot agree, the Registrar shall constitute in manner aforesaid another Court which shall proceed with the Arbitration and shall be at liberty to act upon the record of the proceedings as then existing and on the evidence, if any, then taken in the arbitration or to commence the arbitration de novo.

Rule XIV: The Court shall make its award inwriting within four months after entering on thereference or on or before any later day to whichthe Court, with the consent of all parties concernedin the proceedings, by any writing signed by them,may from time to time, enlarge its time thereforor any extension of time granted by the High Courtat Calcutta.

Provided that if any commission for examination of witness shall at any time be issued under the provision of Rule XXI of Section 43 of the Arbitration Act, 1940 or any provision in that behalf this Rule shall be read as if the abovementioned initial time limit of four months were increased by a period of time equal to the time which elapses between the date when the Civil Court concerned shall have made its order for the issue of such commission and the date when the same Khali have been executed and returned to the Court, and all enlargements and extensions of time as above provided shall take effect as from the expiry of such increased initial time limit.'

3. The Court constituted by the Registrar on 9th April, 1947 under Rule V(2) entered on the reference on the 12th April, 1947 and directed the appellants to file their statements by the 19th April, 1947, On the 10th May, 1947 the appellants by their attorneys took out a notice of motion for determination of the validity and existence of the arbitration agreement, and on the same day obtained an interim order staying the arbitration proceedings before the Bengal Chamber of Commerce and Industry. The application was adjourned from time to time and was eventually dismissed with costs on the 26th January, 1949. In the meantime on the 31st July, 1947 the Registrar asked the parties to agree to an extension of time to make the award till the 30th September, 1949 and intimated that if they could not agree, he would exercise his power of constituting another Court under Rule VII. From the records of the arbitration proceedings submitted to this Court it does not appear that either party agreed to an extension of time or that the Registrar constituted another Court nor did the Registrar inform the parties that he had constituted another Court under Rule VII. Having regard to the long lapse of time, the other records,if any, lying with the Chamber have been destroyed. In all the circumstances of the case, it appears to us that no new Court was constituted by the Registrar. On the 18th July, 1949, the Registrar intimated to the parties that the arbitration would take place on the 21st July 1949. On the 21st July, 1949, both parties appeared before the arbitral Court and made their submissions. On the same day the arbitrators made an award. On the 17th April, 1950, the Court passed a decree according to the award. On the 1st May, 1961, the ex parte decree was set aside. On the 18th November, 1961, the appellants applied for an order setting aside the award. On the 14th December, 1961, the respondents applied for extension of time to the Bengal Chamber of Commerce and Industry to make the award. By an order dated the 14ih December, 1961, the Court extended the time as prayed for and by a separate order on the same day dismissed the application for setting aside the award. The time of the arbitral Court constituted by the Registrar on the 9th April, 1947, was, by Rule XIV, four months from the date of entering on the reference. The arbitral Court having entered on the reference on the 12th April, 1947, their time to make the award expired on the 12th August, 1947. Long after the expiry of this time, the arbitral Court made the award. On behalf of the appellant Mr. Tibriwalla contends that after the expiry of the period of four months, the first Court ceased to have jurisdiction and the Registrar was bound to constitute another Court, that the extended time mentioned in Rule VII means the time extended before the expiry of four months and that being the agreement between the parties the Court cannot extend the time after the expiry of four months. The opinion of S.R. Das Gupta, J. in Ramnath Narendranath v. Nanjee Shamjee and Co., : AIR1953Cal787 supports this contention. On a careful consideration of the arguments of the learned counsel we are not prepared to accept this contention or the aforesaid opinion of S.R. Das Gupta, J. It is true that on the expiry of the period of four months after entering on the reference, the authority of the arbitral Court ceases and the Registrar is bound to constitute another Court. Rut supposing the Registrar does not constitute another Court, and the first Court continues to act without objection and makes an award, can not the time for making the award be subsequently extended? The extended time mentioned in Rule VII means the time enlarged either by the consent of the parties or by an order of Court as contemplated by Rule XIV. Now the parties may, by consent, enlarge the time after the period of four months expired, and equally the Court can do so. The effect of the enlargement is to ratify that which was previously done by the arbitrators without authority as if the extended time was originally inserted in the arbitration agreement by consent of parties. See Lord v. Lee, (1868) 3 QB 404. Rules VII and XIV on their true construction do not prevent the enlargement of time after the period of four months expired. Tho effect of the enlargement is as if the time fixed for making of the award never expired and as if the Registrar became never bound to constitute another Court under Rule VII.

4. In exercising its discretionary power under Section 28 of the Arbitration Act, 1940, the Courtshould bear in mind the provisions of Rules of the tribunal of arbitratiqn of the Bengal Chamber of Commerce and Industry which are a part and parcell of the arbitration agreement. Rule VII provides expressly for the course to be followed in the covent of the arbitral Court allowing the time or the extended time to expire without making an award. The proper course under the Rules in such a case, is the appointment of another arbitral Court by the Registrar. The Rules having expressly provided for the machinery to be followed in the event of the expiry of the time, that machinery should normally be followed and normally the powers of the Court under Section 28 of the Arbitration. Act 1940 should not be invoked. But cases may still arise where the interests--of justice demand that the Court should extend the time under Section 28 though the time has already exphed. In the instant case the appellants' representative appeared before the arbitrators after the expiry of their time to make the award without any protest, made his submissions with regard to the market rate and invited the arbitrators to make their award. Besides the appellants are solely responsible for the delay in the making of the award. The arbitral proceedings were held up on account of the slay order obtained by the appellants which was subsequently vacated. In all these circumstances A.N. Ray, J. thought it fit to extend the time under Section 28 on the Arbitration Act, 1940. Before us the propriety of the order of the extension of time is not challenged. Mr. Tibriwalla's sole contention was that the order of A.N. Ray, J. is without jurisdiction. This contention must be rejected. Under Section 28 of the Arbitration Act, 1940 the Court may enlarge the time irrespective of the contract of the parties, and even where the arbitration agreement puts a limit as to the time, see Denton v. Strong, (1874) 9 QE 117; May v. Harcourt, (1884) 13 QBD 688; Knowles and Sons Ltd. v. Bolton Corporation, (1900) 2 KB 253. It is not an obstacle to the extension of times that in the interval the arbitrators had done something which at that Lime was a nullity (See (1868) 3 QB 404) or that the arbitration agreement providee for the course to be followed in the event of the arbitrators allowing the time to expire without making an award, e.g., for a reference of the disputes to the umpire in such an event. See Dhansukhlal C. Mehta v. Navnitlal Chunilal AIR 1934 Bom 398.

5. The actual decision in AIR 1953 Cat 787 indistinguishable. In that ease the first Court allowed its time to make the award to expire without making an award, and thereupon the Registrar constituted a second Court. Under the Rules as they stood then, the second Court was illegally constituted, because ft consisted of the same persons who constituted the first Court. S.R. Das Gupta, J. refused to treat the award made by the second Court as an award made by the first Court and on that footing to extend the time of the first Court to make the award. Sitting singly I felt compelled to follow that decision in similar circumstances in Award Case No. 284 of 1953, In re Arbn. Shankarlal Mahabirprosad v. Imperial Oil Mills un-reported and decided by me on 19-2-1954 (Cal). The question whether in those circumstances this Court could or should treat the award of the second arbitral Court as having been made by the firstarbitral Court does not arise in this case and need not be decided.

6. Under Section 28 of the Arbitration Act 1940, the Court can extend the time of the appointed arbitrator, namely, the Bengal Chamber of Commerce and Industry. Mr. Tibriwalla contended that the Court cannot, under Section 28, extend the time of the arbitral Court appointed by the Registrar under the Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry. This argument is based upon fallacious assumptions and must be a jected. The time of the arbitral Court appointed by the Registrar under the Rules is really the time of the Bengal Chamber of Commerce and Industry acting through that Court to make the award. By the arbitration agreement between the parties, the arbitration proceeding before the Chamber is required to be conducted in accordance with the Rules of the Tribunal of Arbitration of the Chamber The Chamber arbitrates through the medium of arbitral courts selected and chosen by the Registrar in accordance with those Rules. On the constitution of an arbitral Court by the Registrar, the Chamber acting through the arbitral Court has all the time which that arbitral Court has under the Rules to make the award, see the Judgment in Award Case No. 45 of 1952 Re: Arbitration Ladmam Kedia v. Dunichand Sons and Co. unreported and decided by me on 11-0-1952 (Cal). The Court has ample powers under Section 28 to extend the time which the Chamber acting through a particular arbitral Court has to make the award.

7. No other contentions were advanced before us by Mr. Tibriwalla.

8. There is no merit in this appeal.

9. The appeal is dismissed with costs.

Arun K. Mukherjea, J.

10. I agree.


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