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Bijoy Kumar Swaika Vs. Shyamsundar Swaika and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. Nos. 269 and 270 of 1975
Judge
Reported inAIR1976Cal448,80CWN708
ActsArbitration Act, 1940 - Section 8(1)
AppellantBijoy Kumar Swaika
RespondentShyamsundar Swaika and ors.
Respondent AdvocateSomnath Chatterjee, Adv.
Cases ReferredHari Krishna v. Vaikuntha Nath
Excerpt:
- .....to make the present petition with a view to settle the dispute between the parties within a short time by arbitration. it has however been agreed between the parties that if the arbitration is not completed within the time stipulated, the reference to arbitration would stand superseded and the pending application of the plaintiff will come up in the list for disposal by this hon'ble court.' 4. in spite of two extensions made in june and august 1973, the joint arbitrators could not dispose of the reference. on august 31, 1973, the joint arbitrators having differed, the disputes and differences were referred to b. d. kanoria, the umpire appointed by the arbitrators. thereafter time to make the award was extended from time to time by and with the consent of parties, until time was finally.....
Judgment:

S.K. Mukherjea, J.

1. This appeal is directed against an order made by a learned single Judge on 11-8-1975 by which he ruled that the reference to the arbitration under an order dated 31st May, 1973 by superseded and the arbitration agreement do cease to have effect with respect to the differences referred to arbitration. By the said order, his Lordship was pleased to release the petitioner from an undertaking given by him to this Court on May 31, 1973. The facts of this litigation may be briefly stated. On May 4, 1972, a partition suit being Suit No. 191 of 1972 was instituted by the respondent No. 1 Shyam Sundar Swaika against Ganga Vishnu Swaika and others. On the same date an application was made by the plaintiff for appointment of a Receiver.

2. At the hearing of the application, it was felt that the disputes and differences in the suit might, in the interest of all concerned, be referred to the arbitration of two persons in whom the parties had confidence. The estate comprises of substantial immoveable properties and a large number of business undertakings. The application was adjourned and on May 31, 1973, on a joint application of the parties, the matters in dispute in the suit were, by consent, referred to the arbitration of P. D. Dabriwal and Raja Ram Bhiwaniwala.

3. The relevant portion of the petition by which the parties entered into the arbitration agreement reads:

'8. Your petitioners have agreed to refer the aforesaid disputes to the joint arbitration of Sri Prabhudayal Dabriwal of No. 7-C, Middleton Street Calcutta and Sri Rajaram Bhiwaniwala of No. 3, Goenka Lane, Calcutta with summary powers to dispose of the reference, and with power to appoint an umpire, within a fortnight from the date of order to be passed herein. It is also agreed that in case of any difference between the said arbitrators the matter shall be referred to the Umpire to be appointed herein. The Umpire shall have summary powers to dispose of the reference within 15 days from the date of reference to him.

9. Your petitioners have further agreed and hereby undertake to Court not to proceed with any pending proceedings in any Court or to institute any fresh proceedings in any Court in respect of any matter which are the subject-matter of the reference until further orders of Court.

10. The parties have been advised to make the present petition with a view to settle the dispute between the parties within a short time by arbitration. It has however been agreed between the parties that if the arbitration is not completed within the time stipulated, the reference to arbitration would stand superseded and the pending application of the plaintiff will come up in the list for disposal by this Hon'ble Court.'

4. In spite of two extensions made in June and August 1973, the joint arbitrators could not dispose of the reference. On August 31, 1973, the joint arbitrators having differed, the disputes and differences were referred to B. D. Kanoria, the umpire appointed by the arbitrators. Thereafter time to make the award was extended from time to time by and with the consent of parties, until time was finally extended by an order of Court dated June 7, 1974 by a period of four months from that date.

5. No appreciable progress was made by the umpire in the hearing of the reference, and the time extended by the aforesaid order of Court expired.

6. On March 27, 1975, Ganga Vishnu Swaika the defendant No, 1 died. On June 18, 1975, Bijoy Kumar Swaika, the defendant No. 3 in the partition suit, and the appellant before us, made an application by a master's summons for anorder recording the death of Ganga Vishnu Swaika and of Sm. Badami Devi, the defendant No. 10, for bringing on record Sm. Shakuntala Chirimar, for leave to revoke the authority of the umpire and for an appointment of a sole arbitrator to act in his place and stead and for other consequential reliefs.

7. On June 25, 1975, an application was made on behalf of the plaintiff by a Notice of Motion, for supersession of the reference to arbitration, for an order that the arbitration agreement do cease to have any effect with respect to the differences referred to arbitration, that the petitioner be discharged from the undertaking and directions be given for hearing of the application for appointment of Receiver. The application was disposed of by an order made by the learned Judge on August 11, 1975 to which reference has already been made. From that order, Bijoy Kumar Swaika, a legal representative of the defendant No. 1, Ganga Vishnu Swaika has come up on appeal.

8. In making the order, the learned Judge was of opinion that having regard to the language of the joint petition by which the parties agreed to refer the disputes and differences in the suit to arbitration, it appeared that the parties agreed to stay their hands for a maximum period of one month or so, in order to enable the arbitrators or the umpire, as the case might be, to complete the arbitration within that period. His Lordship relied on the provision that if for any reason, the arbitration could not be completed within the time stipulated in the arbitration agreement embodied in the joint petition, the arbitration agreement would stand superseded. He also took into consideration the fact that the joint arbitrators as well as the umpire were clothed with summary powers, so that they could make their award within the short period stipulated in the petition.

9. The learned Judge thought that the language of paragraphs 8, 9 and 10 of the petition signified that the parties intended that any vacancy, which might arise in the offices of the arbitrators or the umpire would not be supplied. In course of his judgment, he said:

'The only person who could act as umpire with such summary powers would be nominated by the chosen arbitrators and if vacancy arose in respect of such umpire, the same could not be supplied unless agreed to by and between the parties. The language used in paragraphs inthe said joint petition also signifies that the reference to arbitration would have to be completed within the stipulated time or within such time as might be extended by and with the consent of parties and if the same were not completed, then the reference would come to an end.'

Further on, in his judgment, the learned Judge observed:

'In this case, the two arbitrators are named arbitrators. They had chosen such persons and given them summary powers and such persons and/or their chosen nominees, according to the joint petitioners, were the only persons who were competent to decide their family dispute in a summary manner and within a fortnight's time. According to the joint petitioners such arbitrators and/or the umpire only could be able to complete the reference and make their award within a fortnight's time. It was clear that any outsider as such arbitrator or umpire might take a much longer time than a fortnight even though summary powers were given to them. There is clear indication in the joint petition that in case the arbitration could not be completed within the stipulated time, the same would be put an end to and the suit should be proceeded with.'

10. In that view of the matter, the learned Judge superseded the reference and directed that the relative arbitration agreement shall cease to have effect with respect to the differences referred to arbitration. He also released the petitioner from the undertaking he had given.

11. In view of the judgment and order by which he disposed of the plaintiff's application, the learned Judge did not find it necessary to grant leave to revoke the authority of the umpire or to remove him or appoint a sole arbitrator in his place as prayed for by the petitioner Bijoy Kumar Swaika in his application dated June 14, 1975. The learned Judge, therefore, rejected those prayers. He merely directed that the records of proceedings be amended by recording the death of Ganga Vishnu Swaika the defendant No. 1, Sm. Badami Devi, the defendant No. 10 and bringing on record Sm. Shakuntala Chirimar by necessary amendments in the plaint.

12. Bijoy Kumar Swaika has comeup on appeal before us from the formerorder in appeal from Original Order No.269 of 1975 and also the latter order inAppeal No. 270 of 1975.

13. The relevant provisions of the Arbitration Act which arise for consideration in these appeals are as follows:--

'Section 8:

8 (1) In any of the following cases:--

(a) * * * *

(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting or dies, and the arbitiation agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy;

(c) * * * *any party may serve the other parties or the arbitrators, as the case maybe, with a written notice to concur in theappointment or appointments or in supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all the parties.

Section 11:

(1) The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable despatch in entering on and proceeding with the reference and making an award.

(2) The Court may remove an arbitrator or umpire who has misconducted himself or the proceedings.

(3) * * * *(4) * * * * Section 12:

(1) Where the Court removes an umpire who has not entered on the reference or one or more arbitrators (not being all the arbitrators) the Court may, on the application of any party to the arbitration agreement, appoint persons to fill the vacancies.

(2) Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the Court, or where the Court removes an umpire who has entered on the reference or a sole arbitrator or all the arbitrators, the Court may, on the application of any party to the arbitration agreement, either-

(a) appoint a person to act as solearbitrator in the place of the persons displaced, or

(b) order that the arbitration agreement shall cease to have effect with respect to the difference referred.

(3) *

Section 19:

Where an award has become void under sub-section (3) of Section 16 or has been set aside, the Court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred.

14. It is now necessary to refer to Section 25 of the Act. By that Section the provisions in other chapters of the Arbitration Act, so far as they can be made applicable, apply to arbitrations under Chapter IV, that is to say, the Chapter on Arbitration in suits.

15. The section also provides that the Court may, in any of the circumstances mentioned in Sections 8, 10, 11 and 12 instead of filling up the vacancies or making the appointment, make an order supperseding the arbitration and proceed with the suit and where the Court makes an order superseding the arbitration under Section 19, it shall proceed with the suit. It has to be remembered that Section 25 speaks only of circumstances mentioned in Sections 8, 10, 11 and 12. Those sections are not attracted in their entirety.

16. Mr. Somenath Chatterjee appearing in support of the respondents submitted that the Court has found that by the arbitration agreement the parties intended that any vacancy in the office of the arbitrator or the umpire should not be supplied and has therefore refused to appoint a fresh arbitrator. As no appeal lies to this Court from an order refusing to appoint a fresh umpire or arbitrator and no appeal from that order has been preferred to the Supreme Court, the order has become final. The appeal against the order by which the arbitration has been superseded should, therefore, necessarily Jail.

17. The primary question which arises for consideration is whether the arbitration agreement shows that it was intended that the vacancy should not be filled up as contemplated in Section 8(1)(b). In the case of P. C. Agencies v. Union Of India, : [1971]2SCR564 it was pointed out by Hegde, J., that the language of the provision is not that the parties intended to supply the vacancy but on the other hand it is that the partiesdid not intend in supply the vacancy. In other words, if the agreement is silent as regards supplying the vacancy, the law presumes that the parties intended to supply the vacancy. To take the case out of Section 8(1)(b) what is required is not the intention of the parties to supply the vacancy but their intention not to supply the vacancy.

18. In the present case, the agreement is silent as regards supplying the vacancy. Not only is there no express provision in the arbitration agreement that the vacancy will not be filled up, but it can also be hardly contended that by necessary intendment, the arbitration agreement imports such a provision. The fact that the agreement provides that the arbitration is to be completed by the arbitrators within a fortnight from the date of the order to be made on the joint petition or if the arbitrators differ, by the umpire within 15 days from the date of reference, by itself does not imply that the vacancy, if any, will not be supplied, on the expiry of the prescribed period. After all, the parties must be presumed to have entered into the arbitration agreement in the context of the Arbitration Act or in other words, subject to the provisions of the Arbitration Act.

19. Section 28(1) of the Act provides that the Court may, if it thinks fit, whether the time for making the award has expired or not, enlarge from time to time, the time for making the award. Sub-section (2) provides that any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award shall be void and of no effect. The Court has therefore ample power to extend the time. The parties therefore knew or ought to have known that if the arbitration was not completed within the stipulated period, the Court might extend the time.

20. It is again hardly arguable that the fact that the arbitrators had been invested with summary powers, necessarily implies that it was intended not to supply the vacancy. The argument that the parties might not have invested the substituted arbitrators with summary powers not having the same trust and confidence in them, as they had in the original arbitrators of their choice is of little force. The learned Judge has found support for the order he has made, in the fact the parties had implicit confidence in the arbitrators appointed by them under the agreement. Ordinarilyparties choose only such persons to act as arbitrators in whom they can repose trust and confidence, the more so, when the arbitrator is a persona designata. It may also be, said that in appointing an arbitrator, the parties expect and contemplate that the award will be made by the arbitrator of their choice. Nevertheless, in proper circumstances, the Court removes him and appoints a fresh arbitrator. It is to be presumed that the Court, in appointing an arbitrator or an umpire in filling up a vacancy will act on the basis that the appointee is a fit and proper person to arbitrate, or in other words, appoint a person who enjoys the confidence of the Court.

21. It was contended that the provision in the arbitration agreement for supersession of the arbitration, if the arbitration was not completed within the stipulated period, indicates that the parties intended that only the arbitrators appointed by the parties or the umpire appointed by the arbitrators were to arbitrate and make an award or else there was to be no adjudication by arbitration at all.

22. It is clear from Section 5 ofthe Arbitration Act that the parties may by the arbitration agreement reserve the right to revoke the authority of an appointed arbitrator or umpire. If no such intention is expressed in the agreement, the authority of the arbitrator or umpire can be revoked only with the leave of Court.

23. In sharp contrast to the provision for revocation of authority of the arbitrator or umpire by the parties without taking recourse to intervention by Court, the Act does not provide that by or under a stipulation made in the arbitration agreement the parties to an arbitration may supersede an arbitration of their own accord. The power to supersede an arbitration inheres in the Court and the Court alone. In the present case, the stipulation for supersession of the arbitration in the arbitration agreement could never have been implemented unless the Court made an order to that effect.

24. In providing for supersession of the arbitration in the event of the arbitration not being completed within the stipulated period, the parties must be presumed to have known that under the law, it was for the Court and not for the parties to supersede the arbitration. Time to make the award was extendedby the arbitrators and the umpire from time to time and finally, till 7th October, 1974, by consent of parties. In the case of Hari Krishna v. Vaikuntha Nath, : [1974]1SCR259 it was held that the arbitrator can enlarge time for making award if after entering upon the reference the parties mutually agree to such enlargement. The extensions, in the present case, were therefore perfectly valid. The extensions of time made by consent of the parties also indicate that although under the arbitration agreement time was made, so to say, of the essence of the arbitration agreement, the stipulation made in that behalf was not acted upon, if not waived altogether. The parties must have felt that in the circumstances of the case, extensions were necessary and readily agreed to such extensions. In fact, counsel appearing on behalf of the appellant relied on a decision of the Judicial Committee reported in AIR 1947 PC 182 paragraphs 18 and 19 and contended that the parties must be deemed to have waived the stipulation as to time for making the award originally provided for in the arbitration agreement. Be that as it may, we are of opinion that the stipulation for completion of the arbitration within a prescribed period, or the provision for supersession of the arbitration, in case the arbitration is not completed within the stipulated period, cannot be regarded as an expression of intention of the parties that if a vacancy arises in the office of the arbitrators or the umpire such a vacancy should not be supplied. The view we have taken is re-inforced by the fact that time to make the award was extended by the parties till 7th October, 1974, that is to say, by a period of over one year from the date of the order by which the disputes were referred to arbitration. The conduct of the case was in able hands. Experienced Counsel appeared on either side. They were familiar with the provisions of the Arbitration Act. If the parties intended that any vacancy should not be supplied, surely an express provision in that behalf might be reasonably expected to have been made in the arbitration agreement.

25. Having held that the arbitration agreement does not show that it was intended that the vacancy should not be supplied, in the facts and circumstances of the case, we must also hold that an order superseding the reference should not have been made as a matter of course. After all, the parties themselves were of opinion that in the best interest of allconcerned, arbitration was preferable to protracted proceedings in Court involving delay, waste, and expense, and therefore willingly entered into the arbitration agreement. It is true that little progress was made in the arbitration by the umpire when time to make the award expired on October 7, 1974. The arbitrators had completed their job when they chose to differ. The lack of progress appears to have been entirely due to the inactivity of the umpire, occasioned by his indifferent health. The delay can hardly be ascribed to any act of omission or commission on the part of the parties. In paragraph 9 of the affidavit-in-opposition affirmed by the respondent Shyam Sundar Swaika on July 28, 1975, it is stated that the health of the umpire was not permitting him to undertake the strenuous task of conducting the arbitration proceeding. In these circumstances, there is no reason why the Court should supersede the arbitration altogether. It is not for us to pronounce our views in this appeal as to whether the learned Judge should not have exercised his power to remove the umpire and appoint a sole arbitrator or a fresh umpire to conduct and conclude the arbitration proceedings with expedition. It is clear that the learned Judge superseded the arbitration, largely if not entirely, on the ground that the arbitration agreement shows that it was intended that any vacancy in the office of the arbitrator or umpire should not be supplied. As we have disagreed with the learned Judge on that aspect of the case and have also found that the delay has been occasioned by inaction on the part of the umpire, we are of the opinion that the court below was not justified in superseding the arbitration, having regard to all the facts and circumstances of the case. The appeal from original Order No. 269 of 1975 therefore succeeds and the order made by the learned Judge is set aside.

26. As regards the appeal from Original Order No. 270 of 1975 we are of the view, and indeed it has been so conceded, that no appeal lies from the order having regard to Section 39 of the Arbitration Act. The appeal therefore fails and is dismissed but in the facts and circumstances of the case, we make no order for costs in either of these appeals. We hope that the order we have made will serve the best interests of the estate.

27. As the order of the learned Judge superseding the reference has beenset aside, the parties will be free, in these altered circumstances, to apply for such orders or directions including an, order for appointment of a fresh sole arbitrator or umpire. Needless to say that such application should be made in the Court of first instance.

Masud, J.

28. I agree.


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