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Babulal Churiwala and ors. Vs. Sri Aurobindo Agency - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward No. 54 of 1966
Judge
Reported inAIR1968Cal396
ActsArbitration Act, 1940 - Section 9
AppellantBabulal Churiwala and ors.
RespondentSri Aurobindo Agency
Appellant AdvocateGoho, Adv.
Respondent AdvocateA.K. Basu, Adv.
DispositionPetition dismissed
Cases Referred and Thomas v. Fredricks
Excerpt:
- ordera.n. sen, j.1. this is an application for setting aside an award made by shri g. p. lath, a solicitor of this court. acting as the sole arbitrator shri lath made the award on the 28th of september. 1965 awarding a sum of rs. 26,821.11 p in favour of the award (sic) is being challenged in this proceeding.2. the award is being challenged mainly on two grounds, namely (i) shri lath was never appointed asthe sole arbitrator and in any event shrilath was not validly appointed as the solearbitrator and as such the award made byshri lath as the sole arbitrator is bad; and (ii) shri lath as arbitrator has miscon-ducted himself and the proceedings. 3. the relevant allegations on the basis of which the validity of the award is questioned are set out in paragraph 34 of the petition.4. before.....
Judgment:
ORDER

A.N. Sen, J.

1. This is an application for setting aside an award made by Shri G. P. Lath, a solicitor of this Court. Acting as the sole arbitrator Shri Lath made the award on the 28th of September. 1965 awarding a sum of Rs. 26,821.11 p in favour of the award (sic) is being challenged in this proceeding.

2. The award is being challenged mainly on two grounds, namely

(i) Shri Lath was never appointed asthe sole arbitrator and in any event ShriLath was not validly appointed as the solearbitrator and as such the award made byshri Lath as the sole arbitrator is bad; and

(ii) Shri Lath as arbitrator has miscon-ducted himself and the proceedings.

3. The relevant allegations on the basis of which the validity of the award is questioned are set out in paragraph 34 of the petition.

4. Before dealing with the respective contentions of the parties and for proper appreciation thereof, it is necessary to consider certain facts. M/s. C. K. Agarwalla is a partnership firm of which the first three- petitioners are partners. The petitioner No. 4 is a minor, is said to have been admitted to the benefits of the said partnership. On the 8th of August, 1962 the said firm of M/s, C. K. Agarwalla entered into an agreement with M/s. Shri Aurobindo Agency, the respondent herein. The said agreement between M/s. C. K. Agarwalla and M/s. Shri Aurobindo Agency contains an arbitration clause which is to the following effect:

'All disputes and differences arising of this presents or concerning any of the terms herein shall be referred to arbitration of two persons - one to be appointed by each party, and the two Arbitrators appointing an Umpire before they enter upon the reference and the decision of the Arbitrators aforesaid or the Umpire, as the case may be, shall be final and binding on the parties hereto. The Arbitration as above shall proceed as per provisions of the Indian Arbitration Act, 1940 and the statutory modifications thereof from time to time.'

5. Disputes and differences arose between the parties to the said agreement. On the 27th, of February 1963 the respondent firm, namely M/s. Sri Aurobindo Agency intimated to M/s. C. K. Agarwalla about its intention to refer the disputes to arbitration in terms of the agreement between the parties. It appears that disputes had in the mean time arisen between the partners of M/s. C. K. Agarwalla and a suit for dissolution of the said firm was instituted being Suit No. 948 of 1963 (Babulal Churiwala & v. Jhabbarmal Saraf). By an order made bv this Court in the said suit on the 9th of July 1963 Shri M. P Choudhuri as advocate, was appointed Receiver of the said firm of M/s. C. K. Agarwalla. By a letter dated the 1st of June 1964 M/s. Sri Aurobindo Agency intimated to M/s. C. K. Agarwalla about the appointment of Shri G. P. Lath as the arbitrator on behalf of the said firm of M/s. Sri Aurobindo Agency and reauest-ed M/s C. K. Agarwalla to appoint its arbitrator. It is to be noted that receipt of this letter of the 1st of June 1964 has been disputed by the petitioners in this application. On the 22nd of June 1964 the said firm of M/s. Sri Aurobindo Agency wrota another letter to the firm of M/s. C. K. Agarwalla requesting the said firm to contact Shri G. P. Lath who had been appointed arbitrator on behalf of the respondent and called upon M/s. C. K. Agarwalla to appoint as arbitrator on its behalf. This letter of the 22nd of June 1964 of M/s. Aurobindo Agency referred to its earlier letter datpd the 1st of June 1964 and was admittedly received by the Receiver on behalf of the firm of M/s. C. K. Agarwalla. The Receiver on receipt of this letter dated the 22nd of June 1964 had forwarded a copy of this letter 10 the Solicitors for the parties in he said suit. The parties to the said suit are the petitioners in the present applicatioin. M/s. Nehar and Dutta who are acting as Solicitors for the petitioners in this application were the solicitors for some of the parties in the said suit. It appears that some correspondence followed thereafter between M/s. Nehar and Datta, the present solicitors of the petitioners and the Receiver in thesaid suit and the solicitors had written to the said Receiver to say that the Receiver should not be appointed as arbitrator and had contended that permission from Court should be obtained for appointing an arbitrator and the said solicitors further suggested to the receiver that in the event of the Court allowing the receiver to nominate the arbitrator Shri M. P. Churiwala should be the nominee. It is to be noted that on receipt of the copy of the letter of M/s. Sri Auro-bindo Agency dated the 24th of June 1964 from the Receiver, none of the petitioners had contended that the letter of the 1st of June 1964 had not been received. On the other hand, the letter of M/s. Nehar and Datta, Solicitors dated the 20th of July 1964 to the Receiver makes it clear that the let-er of M/s. Sri Aurobindo Agency dated the 22nd of June, 1964 had been duly sent to the parties who are the present petitioners and none of the parties had protested to say that any letter from M/s. Sri Aurobindo Agency of the 1st of June 1964 had not been received by them or by the firm. This letter of the 1st of June 1964 had been sent under registered post with acknowledgment 'due and the acknowledgment had duly come back after service of the letter Reference to this- acknowledgment had been made in the affidavit-in-opposition affirmed by Radhakrishna Shah on the 1st. day of August 1966 and filed on behalf of the firm of M/s. Sri. Aurobindo Agency, the respondent herein In spite of the specific allegation in paragraph 12 of the said affidavit that the letter dated the 1st of June. 1964 had been sent by the respondent to the said firm of M/s. C. K. Agarwalla by registered post with acknowledgment due and reference would be made to the acknowledgment receipt duly received back by the respondent through post office duly signed on behalf of the said firm of M/s C. K Agarwalla In acknowledgment of the receipt of the said letter dated the 1st June 1964 at the hearing of the application the petitioners never asked for and obtained any inspection of the said acknowledgment receipt the said acknowledgment receipt was produced on behalf of the respondent at the hearing On the materials on record I am satisfied that the letter of the 1st June, 1964 addressed by the respondent firm to M/s C K. Agarwalla had been duly received. By an order made on the 13th January 1965 in suit No. 94B of 1963 (Babulal Churiwala v. Jhabbarmal Saraf) Shri M P. Choudhury was discharged from acting as Receiver of the firm of M/s. C. K Agarwalla and Babulal Churiwala and Om Prakash Saraf two of the partners of the said firm were appointed Joint Receivers in his place. It appears that the said Babulal Churiwala and Om Prakash Sarat who had been appointed Joint Receivers and who are also two of the petitioners in this application took no steps for the appointment of any arbitrators on behalf of the firm of M/s. C. K. Agarawalls and no arbitrator was appointed on behalf of the said firm or any of the petitioner who are interested in the said firm. It is, therefore, established that the said firm of M/s. C. K. Agarwalla failed and neglected to appoint any arbitrator on behalf of the said firm although the said firm had been duly informed by the respondent firm of the appointment of Shri G P. Lath as the arbitrator on behalf of the respondent firm and had been called upon to appoint its own arbitrator in terms of the arbitration agreement between the parties by the letters of the 1st. of June 1964 and 22nd. of June 1964 addressed by the said firm to the firm of M/s. C K. Agarwalla.

6. On the 27th of July, 1965 the respondent firm wrote a letter to Shri G. P. Lath, the arbitrator appointed by the said said firm and it is desirable to set out the said letter which reads as follows:-

Sri Aurobindo Agency

135 Cotton Street.

Calcutta 7

Dated July. 27, 1965,

Shri G P Lath

6. Old Post Office Street.

Calcutta.

In the matter of Arbitration

Between

Sri Aurbindo Agency and Messrs.

C K Agarwalla.

Dear sir,

With reference to our letters to you dated 1-6-64 and 22-6-64 no Arbitrator has been appointed on behalf of the respondent uptill now.

Without preludice to our rights, there have been talks of settlement between us and the respondent, but ultimately nothing tangible took place and we have become obliged therefore to proceed with this reference.

We submit that in view of the aforesaid two letters you have become Sole Arbitrator in the matter

We are sending herewith our statement in duplicate and submit that an award should be made in om favour for the amount claimed

Your faithfully.

Sd Illegible.

It may be noted that it is the- case of the respondent firm that Shri G P Lath was appointed as the sole arbitrator by this letter The respondent firm had submitted its statement of claim to the arbitrator along with this letter. On the 29th of July. 1965 the arbitrator forwarded a copy of the statement of claim to M/s C K Agarwalla at its office at 174C. Jamunalal Bazaz Street, Calcutta under registered post with acknowledgment due along with his letter of the same date anri directed M/s. C K Agarwalla to file its counter-statement by the 7th of August 1965. The receipt of this letter has been denied by the petitioners in the present application. A copy of tht letter which thearbitrator had addressed to M/s. C. K, Agar-walla on the 29th of July 1965 had duly been sent by the Arbitrator to the respondent company and the respondent company by its letter dated the 9th of August 1965 to the arbitrator acknowledged receipt of the copy of the letter of the 29th of July, 1965 by the arbitrator to M/s. C. K. Agarwalla and requested the arbitrator to Rive separate letters to the partners of the said firm of M/s. C K Agarwalla; and in the letter of the 9th of August 1965 the respondent firm furnished the arbitrator with the name and addresses of the partners of the firm of M/s. C. K. Agarwalla. As requested by the respondent company the arbitrator on the 17th of August, 1965 sent the following notice to the partners of the said firm of M/s. C K. Agarwalla

Registered with Ack/Due

GP Lath.

Solicitor

Temple Chambers.

6 Old Post office street.

Calcutta,

17th August,1965.

1. Sri Babulal Churiwalla,

C/O. The Muir Mills Co Ltd.

Kanpur (U. P.)

2 Sri Jhabarmal Saral

C/O. Calcutta Zari Stores.

50. Cotton Street.

Calcutta 7.

8. Sri Om Prakash Saraf

C/O. Calcutta Zari Stores,

50 Cotton Street Calcutta 7

Dear Sirs

In the matter of Arbitration Between Sri Aurobindo Agency and M/s. C. K Agarwalla.

Sri Aurobindo Agency has forwarded a statement of Claim along with letter dated 27th July. 1965, a copy of the said statement of claim was forwarded to the Office of M/s C. K Agarwalla at No 174C Jamunalal Baza? Street Calcutta along with my letter dated 29th July 1965 The time to file the counter statement on behalf on M/s. C. K. Agarwellf haf- expired on 7th August 1965.

You are at liberty to go through the statement of clain al my office any day during office hours.

If you intend to file anv counter statement you can do so within 24th August, 1965.

A copv of the letter dated 9th August, 1965, received from Sri Aurbindo Agency it enclosed herewith.

Yours faithfully,

Sd/- G. P. Lath.

C C. To

Sri Aurobindo Agency'

On the 25th of August 1965 the arbitrator gave a notice to the parties that he would hold a meeting at his office on 4th of September. 1965 at 2 P. M. Shri Babulal Churiwallby his letter dated September, 1/6, 1965 to the arbitrator in reply to the two letters of the arbitrator dated the 17th of August and 25th of August informed the arbitrator that he along with Mr. Om Prakash Saraf had been appointed Joint Receivers of the assets and liabilities of M/s. C. K. Agarwalla anil contended that no arbitration proceedings could take place without an order of the Calcutta High Court. It is to be noted that in this letter of Babulal Churiwalla the receipt of the letter of the 17th of August 1965 by the arbitrator is admitted and it has not been disputed that any letter of the 29th of July, 1965 had not been received although the said fact is clearly stated in the Letter of the 17-8-1965. On the materials on record I am satisfied that the letter dated the 29-7-1965 addressed by the arbitrator to the firm of M/s. C. K. Agarwalla and sent under registered post with acknowledgment due had been duly received. On the 14th of September. 1965 the arbitrator gave a peremptory notice to the parties of a meeting to be held by him at his office on the 22nd of September, 1965 at 5 P. M. Babulal Churiwalla, one of the Joint Receivers again protested and contended that without an order from Court the arbitrator was not entitled to proceed and the same would be an interference with the Receivers' job. It may be noted that Babulal Churiwalla had not in any of these letters contended that the appointment of Shri G. P Lath as sole arbitrator was improper and illegal and Sri G. P. Lath had no authority to act as sole arbitrator in the matter. The only objection that had been raised on behalf of Babulal Churiwalla was that the arbitrator was not entitled to proceed with the matter without an order from Court as the same would amount to an interference with the Receivers' affairs. On the 28th of September, 1965 Shri Lath as sole arbitrator made his award and on the same date the arbitrator forwarded copy of the award to the petitioners Nos 1, 2 and 3 and to the said firm of M/s Sri Aurobindo Agency. On the 22-4-1966 the award was filed in Court. Notice under Section 14(2) of Arbitration Act was thereafter duly served on the petitioner? Nos: 1, 2 and 3 and the present application for setting aside was made on the 24th of June 1966.

7. Mr. Goho, learned Counsel appearing in support of this application has contended that there has been no appointment of Shri G. P. Lath as the sole arbitrator. It is his contention that in the letter of the 27th of July, 1965 on which the respondent firm reliep for its case of appointment of Shri Lath as the sole arbitrator, there is no appointment of Shri Lath as the sole arbitrator Mr. Goho has drawn my attention to the letter of the 27th of July, 1965 which I have already set out. Referring to this letter Mr Goho has argued that the Court will look in vain for any appointment of Shri Lath as the sole arbitrator by the respondent firm in the said letter. It is Mr. Goho's argument that the right to appoint the sole arbitrator when the same accrues, must be properly exercised and there must be a clear and unequivocal appointment as .uch sole arbitrator to satisfy the requirement of Section 9 of the Arbitration Act. He has submitted that unless there is an unequivocal and formal appointment as such sole arbitrator there is no appointment within the meaning of Section 9 and the arbitrator cannot arrogate to himself the functions of the sole arbitrator. It is his submission that in the instant case there being no formal and unequivocal appointment by the letter of the 27th of July, 1965 there was really no appointment of Shri Lath as the sole arbitrator and Shri Lath had no authority to act as the sole arbitrator. Mr. Goho has next contended that even if it be held that by the letter of the 27th of July, 1965 Shri Lath was appointed as the sole arbitrator, such appointment is illegal and invalid. It is his contention that to make the appointment of the sole arbitrator valid under Section 9 of the Arbitration Act it is incumbent on the party appointing such sole arbitrator to notify the 'other party of such appointment and this appointment as sole arbitrator is not perfected till notice of such appointment is given by the party appointing such sole arbitrator to the other party. Mr. Goho has referred to the decision in the case of Dominion of India v. Kalyan Kumar, report-td in 53 Cal WN 180 and has relied on the following observations of the Court at page 183 ;-

'It assumes that the appointment is complete on the date of the nomination, even before it is notified to the other side. But that is not the law. In Russell on Arbitration 12th Edition at pace 142 the law ia stated thus:- The appointment of an arbitrator by a party is not considered complete until it has been notified to the other side Lew v. Harries (1847) 11 Q. B. 7 and Thomas v. Fredricks (18471 10 QB 775: in the last mentioned case Lord Denman said 'neither party can be said to have chosen an arbitrator until he lets the other party know the object of his choice' ' 'Nomination' implies notice ' Sir N. N. Sircar in his law of Arbitration in British India has summarised the law in this way 'what happens if the appointment is made within 15 days, but the other party is not informed of it till after 15 days, or in other words when is the appointment made within the terms of this statute. When the nomination is made, or when the making of that appointment is notified to the other party? This matter is concluded by English authorities based on the same language as that used in the Indian Statute and in, (1847) 10 Q. B. 775 & (1847) 11 QB 7 it has been held that the appointment is not to be regarded as complete until such appointment has been notified to the other side. It is also to beregarded as incomplete until such appointment has been notified to the other side.

' Assuming, therefore, that Mr. Singh was nominated on the 24th of July, 1947 as arbitrator, his appointment could not be regarded as complete till it was natfied to tile other side'

Mr. Goho has also relied on a decision of the East Punjab High Court, reported in, AIR 1948 E. P. 11. Mr. Goho has further argued that in the instant case there could be no occasion for any appointment of a sole arbitrator as the letters of the 1-6-1964 and 22nd of June. 1964 had never been duly served and that never been received by the other party. It is his argument that unless there has been a proper service of the notice under Section 9 there can be no question of any appointment of a sole arbitrator.

8. Mr. A. K. Basu, learned counsel appearing on behalf of the respondent firm has submitted that in the instant case there has been a valid appointment of Shri Lath as sole arbitrator and Shri Lath has validly proceeded to act as the sole arbitrator and to make his award as the sole arbitrator In dealing with the argument of Mr. Goho that there was no appointment of Shri Lath by the letter of the 27-7-1965 Mr. Basu has contended that to make the appointment of a sole arbitrator in terms of Section 9 of the Arbitration Act it is not necessary to use the language of the section or the very word 'appoint' in the letter making such appointment, According to Mr. Basu substantial compliance is all that is necessary and if on a plain reading of the letter it becomes clear that such appointment has been effected the Court should hold that there has been an appointment, although the word 'appointment' has not been mentioned. Mr Basu submits that the letter of the 27th of July, 1965 clearly conveys the sense that Shri Lath was being appointed as the sole arbitrator and there can be no doubt on a plain reading of the letter that the respondent firm was appointing Shri Lath as the sole arbitrator by the said letter Dealing with the contention of Mr. Goho that the appointment as the sole arbitrator is in any event illegal, and invalid. Mr. Basu submits that in the facts of this case the appointment of Shri Lath a? sole arbitrator is perfectly -justified and proper. Mr Basu has contended that in the instant case it is clearly established that both the letters of the 1st of June 1964 and of the 22nd of June, 1964 by the respondent firm to the firm of M/s. C K. Agarwalla have been duly received and in spite thereof there was no appointment of any arbitrator by the firm of C. K. Agarwalla or any of the petitioners within the statutory period of 15 days or at any time thereafter Mr. Basu has argued that on the expiry of the statutory period the party which has appointed the arbitrator becomes entitled to appoint its arbitrator as the sole arbitrator and for ap-porting its arbitrator as the sole arbitrator no further notice is required to be given under S. 9 of the Arbitration Act before making such appointment or after making such appointment. According to Mr. Basu there is no such requirement of any further notice under the provisions contained in Section 9 of the Arbitration Act and the said Section does not contemplate or provide for any such notice. Dealing with the case cited by Mr. Goho, Mr. Basu has argued that the observations relied on by Mr. Goho in the decision reported in 53 Cal WN 180 have no application in the case of an appointment of a sole arbitrator and the said decision is of no assistance to the petitioners in the facts of the instant case. Mr. Basu has submitted that the other decision reported in AIR 1948 E. P. 11 deals with a case of the arbitrator arrogating to himself the powers of a sole arbitrator in the absence of any appointment as such sole arbitrator and the said case does not have any bearing on the facts of the present case Mr Basu himself relies on the decision in AIR 1948 E P. 11 in support of his contention that only a substantial compliance is necessary and he has referred to the following observations at page 14 (paragraph 4) of the report : -

'Last of all it was argued by the appellant's counsel that the notice given by the arbitrators in each case to the other side that they are going to act as sole arbitrators in the respective cases should be regarded as substantial compliance with the provision of clause (b) of Section 9, but there is mention in the notices of the fact that the arbitrators had been appointed sole arbitrators '

9. Before I take up for consideration the respective contentions of the parties, it will be convenient to set out the relevant provisions of Section 9 of the Arbitration Act which read as follows: --

'Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party,then unless a different intention is expressed in the agreement. . -

(a) ..................

(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear daysafter the service by the other party of anotice in writing to make the appointment.such other party having appointed hisarbitrator before giving the notice, theparty who has appointed the arbitrator mayappoint that arbitrator to act as sole arbitrator in the reference, and his award shallbe bindine on both parties as if he had beenappointed by consent: ....

Provided that the Court may set aside the appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an, arbitrator or pass such other order as it thinks fit.'

10. An analysis of this section, to my mind, indicates that the following conditions must be satisfied before there can be any valid appointment of a sole arbitrator under Section 9(b) of the Arbitration Act:-

1. There must be a valid arbitration agreement between the parties.

2. The agreement must provide that the reference shall be to two arbitrators, one to be appointed by each party.

3. The agreement must not express an intention that the power is not to be exrcised.

4. The party willing to exercise this power must have appointed its own arbitrator before service of notice.

5. After appointing its own arbitrator the party must serve a notice on the other party in writing intimating to the other party about the appointment of its own arbitrator and calling upon the other party to appoint its arbitrator

6. There must be default or failure on the part of the other party to appoint its arbitrator for a period of at least 15 clear days from the date of service on the other party of such notice.

7. On the expiry of this period of minimum 15 clear days from the date of service of the notice the party who has appointed its own arbitrator, acquires the right to appoint its own arbitrator as the sole arbitrator.

8. The right so accrued, to appoint its own arbitrator as the sole arbitrator, has to be exercised by the party by appointine its _ arbitrator already appointed as the sole arbitrator.

11. In the instant case it is not in dispute that the requirements enumerated in conditions 1, 2 and 3 above are satisfied. While dealing with the facts I have already observed that on the materiels on record I am satisfied that the letters dated the 1-6-1964 and 22nd of June, 1964 have been duly served and in view of my said finding I must hold that conditions 4 and 5 are also fulfilled in the instant case. It is an admit- ' ted fact that no arbitrator was appointed by the firm of M/s. C. K. Agarwalla or by the Receiver? of the said firm or by any of the partners within the statutory period or at any time thereafter, and I therefore, hold that the requirements mentioned in conditions 6 and 7 are also complied with in the instant case. The contentions that have been pressed on behalf of the petitioners and the arguments that have been advanced relate essentially to the requirement stated in condition 8 above T now propose to deal with the same In my opinion, the contention raised that by the letter of the 27th of July 1965 no appointment of Shri Lath as the sole arbitrator was made by the respondent company, is unsound. It is true that in the said letter the word 'appoint' has not been used, but the said letter, in my view, undoubtedly conveys the clear sense that Shri Lath was being appointed the sole arbitrator and was being requested to act as such. It is to be noted that in the said letter to Shri Lath, the respondent linn mentions that Shvi Latb has become 1he sole arbitrator and the respondent, firm sends its statement alont; with the said letter requesting Shri Lath to make an award. It is evident that Shri Lath on receipt of the said letter had understood the said letter in mean that he was being appointed as the sole arbitrator and he proceeded to act ac-cording agree with the contention of Mr Basu that it is not necessary to use the word 'appoint' to make any such appoint ment. I hold in agreement with the contention of Mr. Basil that by the letter of the 27th of July. 1965 there was an appoint ment in effect and in substance, This con tention of the petitioners is. therefore, neea-tived.

12. The next contention that has been raised is that the appointment, of Shri Lalh as sole arbitrator is, in any event, illegal and invalid. I have no hesitation in rejecting the argument advanced on behalf of the petitioners in support of this contention that the appointment as sole arbitrator is illegal, as no notice requesting M/s. C. K. Agarwalla to appoint its arbitrator was served on the said firm and as such the respondent never became competent to appoint a sole arbitrator. I have already held that the letters of the 1st of June 1964 and the 22nd of June 1964 were duly served on M/s. C. K. Agarwalla and T must, therefore, hold that the respondent firm became entitled to appoint Shri Lath as sole arbitrator in view of the default or failure on the part of the firm of M/s. C K Agarwalla to appoint its arbitrator within the statutory period.

13. The other contention of Mr, Goho that the appointment of Shri Lath as sole arbitrator by the respondent firm by its letter of the 27th of August. 1965 cannot be valid in the abcence of any notice of such appointment by the respondent firm to the said firm of M/S C K Agarwalla appears attractive and requires careful consideration. It is common case that no notice of appointment of Shri Lath as sole arbitrator by the respondent firm was given to M/s. C. K. Agarwalla either before or affact appointment of Shri Lath as such sole arbitrator it has not been contended before me that any notice io appoint Shri Lath as sole arbitrator was necessary and required to be served or M/s C. K Agarwalla before making such appointment, and in my opinion, no such notice of intention to appoint its arbitrator as the sole arbitrator, if the occasion of such appointment arises, is necessary before making the appointment. It has been strenuously contended before me that notice of appointment of Shri Lath as sole arbitrator was necessary and required to be served after his appointment as sole arbitrator on the firm of M/s C. K. Agarwalla to make the said appointment perfect and valid. The contention in substance and in essence, is that no appointment oi' a sole arbitrator is valid, unless notice of such appointment is given by the party appointing such sole arbitrator to the other parly and it is contended that till such notice is given the appointment is not perfected and it has not become effective. The decision of Banerjee, J. in the case reported in 53 Cal WN 180 hay been relied on by the learned counsel for the petitioners in sun-port of this contention. In the erase in 53 Cal WN 180 the facts were as follows: In December 1954 Kalyan Kumar Purokayasta in his business of Sribhumi Scientific and Industrial Supply entered into a contract in writing with the Governor-General of India in Council acting through the Director of Civil Supplies for supply ol baskets. There was an arbitration clause in the contract providing that in case of any dispute arising between the parties a reference would be made to two arbitrators, one to be appointed by each party. Dispute covered by the arbitration agreement arose between the parties. By a letter dated the 24th July/26th August 1947, the Director of Supplies nominated and purported to appoint the said Mr. Singh to hear and determine the disputes between parties. This letter was received by Kalyan Kumar Purokayastha on the 27th of August, 1947. By letter dated the 4th August /3rd September. 1947 the Director of Supplies after referring to the said letter of 24th Julv/26th August. 1947 called upon Kalyan Kumar Purokavastha to appoint his arbitrator within 15 days after receipt of the letter. This letter was received by Kalyan Kumar Purokavastha on the 8th of September 1947. In reply Purokavastha by his letter dated the 22nd of September 1947 pointed out that the appointment of Mr Singh as arbitrator was not in order and was invalid and that in the circumstances he had been advised not to take any step in the matter. The Director of Supplies by his letter dated the 17th October, 1947 denied that the appointment of Mr. Singh as arbitrator was invalid and not in order: but concluded by saying that in order to avoid controversy he was once more appointing Mr Singh as arbitrator on behalf of the Government The first two letters, bearing dates 24th/26th August 1947 and 4th August/3rd September, 1947 had been signed by the Director of Supplies for and on behalf of the Governor General of India in Council and the arbitrator had been appointed on his behalf and the last letter bearing date 17th October 1947 had been signed for and on behalf of the Governor General of India and the arbitrator had been appointed on behalf of the Government The letter of the 17th October. 1947 of the- Director of Supplies on behalf of the Governot General of India appointing Mr. Singh as arbitrator once again was received by Purokayastha on the 17th November, 1947. By the letter dated the 10th of Nov-ember, 1847 the Director of Supplies for and on behalf of the Governor General of India wrote to the said Mr. Singh that he had been appointed arbitrator on behalf of the Governor General 01 India to hear and determine disputes between the Governer General if India and Sri Purokayastha and Sri Purukayastha had failed to appoint an arbitrator on his behalf within the time allowed by letter, he (Director of Supplies) by virtue of the powers conferred by the Arbitration Act appointed the said Mr. Singh to act as sole arbitrator to hear and determine the disputes between the parties. Mr. Singh by a letter dated the 18th of November, 1947 informed Sri Purokavastha that he had entered on the reference as the sole arbitrator and fixed the hearing of the case at 9 A.M. on the 27th November, 1947 at the Grand Hotel, Calcutta and required him to attend when be would be giving necessary directions regarding the future trial of the case. To this letter Purokayastha sent a letter in reply by his solicitor stating that the appointment of Mr. Singh was bad and invalid and that he had no jurisdiction to proceed with the reference Mr. Singh gave a further notice to Purokayastha dated the 11th January, 1948 asking to file a written statement on the 13th of January, 1948. No written statement had been filed on behalf of Purokayastha and he did not take any part in the proceeding. An award was made by Mr. Singh on the 13th of January, 1948, acting as the sole arbitrator in the matter. An application for setting aside the award made by Mr. Singh as sole arbitrator was made, am' Banerjee. J. set aside the said award, holding that the appointment of Sri Purokavastha as sole arbitrator was invalid. It is to be noticed that in this case the appointment as sole arbitrator was made by the Director of Supplies by his letter dated the 10th of November. 1947 al a time when his letter dated the 17th of October 1947 appointing Mr. Singh as arbitrator was not even received by Purokayastha. The letter of the 17th October. 1947 had been received by Purokayastha on the 17th of November. 1947 and Purokavastha would have 15 clear days' time from that date to appoint his own arbitrator It had been contended on behalf of Purokayastha that the appointment of Mr Singh as sole arbitrator was invalid, because he was appointed sole arbitrator without complying with the rquire-ment under Section 9(b) of the Indian Arbitration Ac1 and Banerier .1 had upheld thai contention observing:--

'The power to a party to appoint a sole arbitrator has been conferred by Section 9(b) of the Indian Arbitration Act. 1940 and the pre-requisite condition for exercise of that power is that the other party fails to appoint as arbitrator for 15 clear days after the service of a notice in writing to make the appointment. Before this time a sole arbitrator cannot be appointed; that is not allowed by the section.'

This decision in my mind is no authority for the proposition contended for on behalf of the petitioner that till notice of appointment as sole arbitrator is given to the other party, the appointment as sole arbitrator is not perfected. The observations of Baner-iee, J. in the aforesaid decision relied on by the petitioner had been made while considering question of appointment of an ar-bitratoi not the appointment of a sole arbitrator The said decision and the observations of Banerjee. J. relied on are of no assistance to the petitioner in the facts of the instant case when the service of notice as required under Section 9(b) of the Arbitration Act has been clearly established.

14. Mr. Goho has further submitted that the observations of Baneriee, J., relied on by him though made in connection with the appointment of an arbitrator, should apply with equal force in the case of an appointment of a sole arbitrator. In other words it is the contention of Mr. Goho that the principle that has been laid down and recognised, namely, 'that the appointment of an arbitrator by a party is not considered complete until it has been notified to the other side,' is equally applicable in the case of appointment of the sole arbitrator. After giving this matter my very anxious consideration I have not been able to persuade myself to accent this contention of Mr. Goho and this contention of Mr. Goho, to my mind, is not tenable. Undoubtedly, it is eminently desirable that notice of such appointment as- sole arbitrator, before appointment and after appointment as such, should be given by the party, exercising its right to appoint its own arbitrator as the sole arbitrator under Section 9(b) of the Arbitratior Act. Normally, in practice, such notices are often given. But failure to give such notice does not in my view, render the appointment of sole arbitrator imperfect and invalid. In my view, there is no such requirement of any notice after appointment of sole arbitrator being given in Section 9 nt the Arbitration Act. I have earlier analysed the relevant provisions of Section 9 of the Arbitration Act and have stated what ir, my opinion, are the requirements of the section for a valid appointment of a sole arbitrator In my view, notice of appointment of sole arbitrator after such appointment is not any of the conditions required to be satisfied for making the appointment of sole arbitrator valid The reasoning which makes such notice imperative in the case of appointment of an arbitrator is clear, as only upon such notice being given the right ot the other party to appoint its arbitral or arises, and the right to appoint the solo arbitrator only arises, if there be failure or default on the part of the other party to appoint its own arbitrator within the statutory period as required under Section 9. In that view of the matter unless the party which chooses to appoint its own arbitrator gives notice of such ap-pointment to the other party, there cannot be any valid appointment of the arbitrator and the appointment is not perfected. The section itself therefore makes provision of such notice in the case of the appointment of the arbitrator. In the case of the appointment of a sole arbitrator under Section 9(b) of the Arbitration Act, the position is different. Notice of appointment of arbitrator by the part to make the appointment of aibitrator valid, must have been duly served on the other party and the other party must have been called upon to appoint its arbitrator. If, in spite of the notice, by virtue of which a valid arbitrator on behalf of the other party is (sic not?) appointed within the statutory period the right to appoint the arbitrator appointed by the party as the sole arbitrator to determine the disputes arises under the law; and as soon as the said right is exercised by the party by appointing the said arbitrator as sole arbitrator, the appointment of a sole arbitrator is validy made.' The validity of such appointment does not depend on any notice of such appointment being given to the other party. The other party must necessarily be informed of the appointment when the reference starts by the arbitrator and the other party has always the right on coming to know of such appointment, to apply to court for setting aside such appointment as sole arbitrator.

15. The other case relied on by Mr. Goho reported in AIR 1948 E. P. 11 has no application to the facts of this case. In the case reported in AIR 1948 E. P. 11 there was no appointment of the arbitrator as the sole arbitrator by the party. The arbitrator without any such appointment as sole arbitrator by the party arrogated to himself the functions of sole arbitrator on failure of the other side to nominate its arbitrator within the time. A Division Bench if the Punjab High Court held that it was not open to an arbitrator appointed by a party to arrogate to himself the functions of sole arbitrator on failun of the other party to nominate its arbitrator within time and the arbitrator must be appointed as sole arbitrator by the party before he can function as such. In the instant case. I therefore uphold the contention of Mr. Rasu that there has been a valid appointment of Sri Lath as sole arbitrator and Sri Lath as such sole arbitrator had duly entered upon the reference. I have to note that at no point of time the petitioner had Questioned the validity of the appointment of Sri Lath as sole arbitrator and the only stand that the petitioners had taken, was that Sri Lath was not entitled to proceed with the arbitration without an order of Court mr. Goho appearing on behalf of the petitioners did not seek to justify this stand on behalf of his clients and has not contended before me that any permission from court was necessary to enable the arbitrator to proceed with the arbitration. In my view, the attitude that had been taken up on behalf of the petitioners in the correspondence was not justified. The same in any event, did not indicate that the petitioners raised any dispute with regard to the validity of Sri Lath as sole arbitrator. The petitioners also did not choose to make any application for setting aside the appointment of Sri Lath as sole arbitrator. The first ground urged by Mr. Goho on behalf of the petitioners, therefore fails.

16. The other ground that has been urged on behalf of the petitioners is that as sole arbitrator Sri Lath misconducted the proceedings and is guilty of misconduct. It has been contended on behalf of the petitioners that the sole arbitrator misconducted the proceedings by not sending copies of the statement to the petitioners and the direction of the sole arbitrator to take inspection at his office was unreasonable and that the arbitrator misconducted himself and the proceedings by his failure to give reasonable opportunity to the petitioners to file the counter-statement. In my view, there is no substance in any of these contentions. It is to be noted that notice by the arbitrator had originally been duly served on the firm of M/s. C K. Agarwalla and a copy of the statement of claim filed by Sri Aurobindo Agency had been duly supplied to the said firm M/s, C.K. Agarwalla along with the arbitrator's letter of 29th July, 1965. At the request of Sri Aurobindo Agency made by its letter dated the 9th of August, 1965 Sri Lath as sole arbitrator gave a further notice on the 17th of August, 1965 to the three partners of the said firm of M/s. C. K. Agarwalla and gave them a further opportunity of filing their counter-statement. No complaint had been made on behalf of the petitioners or any of them for not supplying the statement of claim and the statement of claim had not been asked for on behalf of the petitioners. No complaint was again made on behalf of the petitioners with regard to the time given to them for filing counter-statement and no extension of time to file any counter-statement had been asked for. As I have already observed the attitude of some of the petitioners appears to be one of complete indifference to the arbitration proceeding on the basis that the arbitrator was not entitled to act without an order of Court in view of the appointment of Receiver over the firm of M/s. C. K Agarwalla.

17. I am, therefore, of the opinion that there is no merit in this application. I have only to add that Mr. Basu has rightly contender that the petitioner No. 4 Chandra Kumar Churiwalla alleged to be a minor has no locus standi to make this application and this application by the said minor who is admittedly not a partner of the firm of M/s. C K. Agarwalla and is only admitted to the benefit of the said partnership is not competent.

18. This application, therefore, fails and is dismissed with costs.


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