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HuseIn Ebrahim Vs. Kesardeo Kanoria and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward No. 120 of 1952
Judge
Reported inAIR1954Cal111
ActsRules of the Tribunal of Arbitration, Bengal Chamber of Commerce - Rules 1 and 7; ;Arbitration Act, 1940 - Section 30
AppellantHuseIn Ebrahim
RespondentKesardeo Kanoria and Co.
Appellant AdvocateR.C. Deb, Adv.
Respondent AdvocateH.N. Sanyal, Adv.
Cases ReferredKhushiram Benarasilal v. Mathuradass
Excerpt:
- .....to misconduct, he also urged that in any event, the arbitrators should have placed before the parties the letter dated 5th november 1951 written by them to the gunny trades association to which the letter dated 9th november, 1951 was the reply and therefore, the award should be set aside.5. it seems to me that the first and the third grounds raised by mr. deb should prevail. i am of the opinion that the constitution of the second court was in violation of the provisions of rule 7 of the rules of the tribunal of arbitration, bengali chamber of commerce. rule 1 provides as follows :'after 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.....
Judgment:
ORDER

S.R. Das Gupta, J.

1. This is an application to set aside an award of the Bengal Chamber of Commerce. Mr. Deb appearing on behalf of the applicant raised three grounds in support of his contention that the award should be set aside. In the first place, he urged that the arbitrators had no jurisdiction to make the award. The reason for his saying this is that the first Court which was constituted on the 28th June 1951 consisted of two persons namely, Messrs. K. E. Tosh and w. B. Cochran. The said arbitrators or the Court did not make their award in time and the time to file their award having expired, on the 10th November 1951 the Registrar of the Bengal Chamber of Commerce wrote to the parties informing them that he had constituted another Court, and thereafter the second Court proceeded with the arbitration and made its award on the 23rd November 1951 which is now sought to be challenged before me.

2. Mr. Deb contends before me that the second Court as notified on the 10th November 1951 consisted of the same persons, namely, Messrs. K. E. Tosh and W. B. Cochran. That being so, the second Court has no jurisdiction to make the award in view of the provisions of Rule 7 of the Rules of the Tribunal of Arbitration, Bengal Chamber of Commerce.

3. The second ground urged by Mr. Deb is that the arbitrators have been guilty of misconduct, because, the arbitrators did not send to the petitioner the final statement in reply filed before the arbitrators by the respondents, and it was not until the petitioner had searched the records that they came to know that such a statement had been filed. This conduct on the part of the arbitrators, it is contended, amounts to misconduct. Lastly, Mr. Deb urged before me that the arbitrators received from the Gunny Trades Association certain informations behind the back of the parties. What happened was that on the 13th November 1951, the petitioner received a copy of a letter of the Gunny Trades Association addressed to the Registrar, Tribunal of Arbitration, Bengal Chamber of Commerce which reads as follows:

'Dear Sirs,

Case 105-G of 1951.

Your letter No. 24085-C dated 5-11-51. On the 1st March 1951, the market for B twills was not free. The contracts were passed at the maximum plus 2 1/2 per cent to 5 per cent commission overthe maximum, rate but the inter-bazar business was actually reported to have been done at 30 per cent higher on the February 1951 due date. Certain English Dailies also published these rates from time to time.'

4. The said letter was in answer to the letter dated 5-11-51 written by the Registrar to the said Gunny Trades Association. Mr. Deb urged before me that this conduct on the part of the arbitrators, namely, asking for information from a third party without any reference to the parties amounts to misconduct, He also urged that in any event, the arbitrators should have placed before the parties the letter dated 5th November 1951 written by them to the Gunny Trades Association to which the letter dated 9th November, 1951 was the reply and therefore, the award should be set aside.

5. It seems to me that the first and the third grounds raised by Mr. Deb should prevail. I am of the opinion that the constitution of the second Court was in violation of the provisions of Rule 7 of the Rules of the Tribunal of Arbitration, Bengali Chamber of Commerce. Rule 1 provides as follows :

'After 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.'

6. 'Court' has been defined in Rule 1 as meaning'the arbitrator or arbitrators appointed for determining a particular dispute or the umpire where an umpire has been appointed.' Therefore what Rule 7 means is that if the arbitrators who have been appointed did not file their award within the time fixed or allowed the said time to expire, then the Registrar shall appoint another arbitrator or arbitrators who shall proceed with the arbitration. This meaning would be quite clear if in the place of the word 'Court', the words 'an arbitrator or arbitrators' are put in Rule 7. Then it would be apparent that what Rule 7 means is that if the arbitrator or arbitrators 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 arbitrator or arbitrators who shall proceed with the arbitration.

7. Mr. Sanyal contended before me that under Rule 7 the Registrar is authorised to constitute another Court, but it does not follow therefrom that the second Court which is to be constituted is not to consist of the same persons who had been already appointed and constituted the first Court. In other words, his contention is that what is necessary is to constitute a second Court and the second Court may consist of the same persons constituting the first Court. I am unable to accept that contention. The Court, as I have already said, has been defined as meaning the arbitrator or arbitrators appointed for determining a particular dispute. When it is said another court has to be appointed, it means another set of arbitrator or arbitrators is to be appointed for determining the particular dispute; it cannot mean that the same arbitrator or arbitrators who constituted the first Court would be appointed again. In that case,there would be no significance in the use of the expression 'another' before the word 'Court'. I am clearly of the opinion that the constitution of the second Court which consisted of the same persons, namely, Messrs. K. E. Tosh and W. B. Cochran was in contravention of the provision of Rule 7 of the said rules. I should at this stage mention that it is not disputed before me that the first Court consisted of the said Mr. K. E. Tosh and W. B. Cochran and the constitution of the second Court is apparent from the award itself which has been signed by these two gentlemen.

8. In the premises as aforesaid, I hold that this contention of Mr. Deb should succeed.

9. As for the second ground urged by Mr. Deb, I would have given effect to the same but for the facts which I shall presently mention. It appears from the proceedings of the meeting held on the 12th September, 1951 that Mr. Doshi, who, I am told, is the representative of the petitioner, wanted to make some further comments and wanted to do so in writing. This was accepted and Mr. Doshi was informed that a copy of this statement would be sent to the buyers on receipt of whose comments thereon the Court would give the matter further consideration. It is true that the petitioner was not informed thereafter anything about the filing of this further comments by the respondent. It is also true that the petitioner by its letter dated 2nd November 1951 inquired from the Registrar as to the fate of the reference and in answer to the said letter the petitioner only received a notice that another Court has been constituted, but nothing was said as to whether or not further comments have been filed by the respondent and the petitioners were not supplied with any copy of the said comments. But it appears that on the 21st November 1951 a notice was given to the parties of the next sitting of the arbitration to be held on 23rd November 1951. Mr. Deb's client did not attend the said meeting and nobody on behalf of the petitioners appeared therein. Mr. Deb contends before me that his client was misled by the form in which the said notice was given and they thought that it was a meeting of the arbitrators in which the parties were not required to attend. There may be some justification for this view taken by the petitioner. But the fact remains that the notice was given on the 21st November 1951 fixing the next meeting of the arbitration on the 23rd November 1951 and the petitioner did not attend the said meeting. It appears from the minutes of the meeting held on the 23rd November 1951 that the arbitrators duly considered at the said meeting the written statement put in by the parties with the correspondence and other papers attached and discussed the case. I should have mentioned that at the meeting in which Mr. Doshi was permitted to put in his comments in writing, the arbitrators made it clear that although they would require a statement from the respondent on the said comments, no further statements are to be filed in answer thereto. The position, therefore, is that if the petitioner had appeared on the 12th November 1951, he could have seen the remarks which had been made by the respondents in answer to the statement filed by Mr. Doshi at the said meeting. As I have said, the petitioner was not permitted to file any reply thereto and the petitioner could have made his submissions before the arbitrators on the said statement at the meeting held on the 23rd November, 1951. If the petitioner was misled in not attending the said meeting, it would be no fault of the arbitrators and the arbitrators cannot be held responsible for the same. The respondents did appear and they were not misled. I do notthink that the petitioner is entitled to succeed on this ground.

10. But the last ground seems to me to be fatal for the respondent. The arbitrators, as I have already pointed out, asked for information from the Gunny Trades Association on certain points. A letter was written on the 5th November 1951 asking for such informations and on the 9th November 1951 the informations asked for were supplied the informations were asked for without any reference to the parties. In my opinion, the arbitrators were not justified in behaving in this manner. They could not, occupying a quasi-judicial position, which they did, ask for information during the conduct of the proceedings from third parties without any reference to the parties before them, and if they did so, such a conduct on their part would amount to misconduct, even sprit from any other considerations. In this case, theposition seems to be worse, because, the arbitrators who wanted certain information by their letter dated 5th November 1951, did not disclosethat letter. The parties do not know -- and I am not aware also -- as' to the points on which thearbitrators wanted informations from the Gunny Trades Association. It was the duty of the arbitrators, if they wanted to act fairly in the matter,to disclose the said letter dated 5th November 1951 as well. In my opinion, the conduct of the arbitrators in asking for such information and not disclosing the letter in which they asked for such information and which would show the points on which informations were asked for, amounts to misconduct. Following the view expressed by S. B. Sinha, J. in the case of --'Khushiram Benarasilal v. Mathuradass', 52 Cal WN 826 (A), I would add that persons occupying a judicial and quasi-judicial position must not behave in a manner in which no reasonable man occupying such a position would behave. There must be some standards to which the arbitrators occupying such quasi-judicial positions should conform. The arbitrators obtained informations from Gunny Trades Association without requiring any of the parties to call evidence on the points on which they wanted such informations. If the arbitrators were so minded, they could have asked the parties to call some persons from the Gunny Trades Association to give evidence on the points on which informations were asked for or the arbitrators might have themselves called such evidence. But to allow certain information to go in without calling evidence on those points and thereby depriving the parties of their right to cross-examine cannot, in my opinion be justified. I am conscious of the fact that the strict rules of evidence are not applicable to arbitration proceedings but there is a thing known as natural justice and it would be repugnant to the fundamental conception of natural justice that evidence should be allowed to go in without calling the person whose evidence is admitted, and without allowing the parties to test such evidence by cross-examination. In the premises, as aforesaid, I am of the opinion that the arbitrators have been guilty of misconduct.

11. The result, therefore, is that the award is set aside. Each party to pay its own costs.


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