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Ramlal Roshanlal and Co. Vs. B.C. Paul and Sons (P) Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberAward No. 37 of 1959
Judge
Reported inAIR1960Cal547
ActsEvidence Act, 1872 - Section 115; ;Evidence Act, 1940 - Section 30
AppellantRamlal Roshanlal and Co.
RespondentB.C. Paul and Sons (P) Ltd.
Cases ReferredRekhabdas Baheti v. Banwarilal Garodia
Excerpt:
- .....banwarilal garodia, s. r. das gupta, j. said :'the arbitrators not having jurisdiction to make the award, the award must be held to be nullity and no question of waiver can cure the defect.''6. counsel for the petitioner contended that the respondent had not taken the plea of waiver. it is not necessary to go into the question in view of my finding on the point of waiver.7. i am, therefore, of opinion that the constitution of the court by the secretary is not in accordance with the rules and therefore is an appointment which goes to the root of the matter and the constitution of the court is a nullity.8. counsel for the respondent contended that the appearance before the arbitrator could be considered as a fresh agreement or submission. a point similar to that was also contended before.....
Judgment:

A.N. Ray, J.

1. This is an application for setting aside an award. The petitioner's case is that there was an agreement for reference of disputes arising on or out of the contract to arbitration under the rules of the Calcutta Grain Oilseed and Rice Association. Rule 13 is as follows :

'If the Court have allowed the time or extended time to expire without making any award and without having signified to the Committee that they cannot agree, the Committee 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 de novo.'

2. One of the grounds for challenging the award is that the Secretary, Calcutta Grain Oilseed and Rice Association had no power and authority to constitute a court of arbitration under the rules and therefore the court had no jurisdiction to make the award. By a letter dated December 6, 1958 addressed by the Secretary to Messrs. Ramlal Roshanlal and Co. it was notified as follows:

'I hereby give you notice that I duly reconstituted the court under the provisions of Rule 13 of the Rules as to disputes,'

3. Counsel for the respondent contended that the applicant appeared in the arbitration and took part in the proceedings and therefore there was waiver of objection, if any. Reliance was placed on the decision of Union of India v. K. P. Mandal, : AIR1958Cal415 . That was a case where the arbitration clause contemplated reference to the arbitration of the Superintending Engineer of the Circle for the time being. Disputes arose between the parties. The Government appointed one M as an arbitrator to adjudicate and informed the claimant about the appointment. Both the parties knew that M was not competent to act as arbitrator according to qualifications prescribed in the arbitration clause. It was held that although there could be no representation by A as to the actual competence of the arbitrator, the rule of estoppel would still bind him and would prevent him from contending that M was not qualified under the terms of the agreement to arbitrate in the dispute. At p. 419 of the report Chakravartti, C. J. said :

'It may be that in a particular case there was not and could not be any representation by the party sought to be held to estoppel as to the competence of the arbitrator, but if knowing of his incompetence he submitted to arbitration by him, there was clearly a representation that there was no intention to object to the arbitrator on the ground of his incompetence and there was willingness to go to arbitration before him.'

It was further observed that the representation in order to attract the rule of estoppel need not always be a representation of a physical fact but might as well be the representation of attitude or state of mind. On the facts of that case it was held that though the appointment of M as arbitrator could not have been lawfully made without the consent of the respondent, he induced the Government to believe that he consented to the appointment.

4. I am of opinion that the decision of the Appeal Court does not apply to the facts of this case. The question here is one of jurisdiction. In the case of Katihar Jute Mills Ltd. v. Lachminarayan Jute Manufacturing Co., reported in : AIR1958Cal501 , Chakravartti, C. J. said :

'The chamber being a corporate body can function only in accordance with its rules and therefore when the court constituted is one which cannot be constituted under the rules, the award made by the chamber through such a court is an award made without jurisdiction and as such a nullity.'

To my mind the distinction which is vital to bear in mind is between waver as to jurisdiction and waiver as to procedure. Defect in or lack of or basic incompetence in jurisdiction can never be waived. Defect in procedure only can be waived.

5. In the unreported decision of Rekhabdas Baheti v. Banwarilal Garodia, S. R. Das Gupta, J. said :

'The arbitrators not having jurisdiction to make the award, the award must be held to be nullity and no question of waiver can cure the defect.''

6. Counsel for the petitioner contended that the respondent had not taken the plea of waiver. It is not necessary to go into the question in view of my finding on the point of waiver.

7. I am, therefore, of opinion that the constitution of the Court by the Secretary is not in accordance with the rules and therefore is an appointment which goes to the root of the matter and the constitution of the court is a nullity.

8. Counsel for the respondent contended that the appearance before the arbitrator could be considered as a fresh agreement or submission. A point similar to that was also contended before S. R. Das Gupta, J. in the unreported decision already referred to. It was held there --

'There is no averment in the affidavit that there was fresh agreement between the parties or that the parties must be deemed to have entered into a fresh agreement modifying the original agreement between the parties.'

9. In the affidavit in opposition there is no statement that there was a fresh agreement or submission. In my opinion, appearance before the arbitrators is not an agreement or submission.

10. It was next contended by the petitioner's counsel that the arbitrators were guilty of misconduct. First, it was alleged that a hundy containing the sample of the linseed under reference was produced before the arbitrators and the arbitrators did not open the seal of the hundy nor did they examine the contents thereof. Secondly, it was contended that the arbitrators did not give the petitioner opportunities with regard to inspection of two exhibits, namely, Ex. B and Ex. C1. Ex. B is an exercise book containing the signature of H. Agarwalla. Ex. Cl is the receipt of the bill which is marked Ex. C. The minutes of December 15, 1958 show that one Agarwalla, a partner of the petitioner produced a hundy containing the sample of the linseed which had been sent by one Chowbey an employee of Ramlal Roshanlal. This was 'seen' by the arbitrators, identified by applicants and was then returned to Agarwalla. As to Ex. B, it appears from the minutes of the arbitrators that Sushil Kumar Paul, a Director of B. C. Paul and Sons, produced an exercise book and an entry in the original of Ex. B. That was perused by the court and it was shown to the opposite party. Agarwalla denied that the signature of H. Agarwalla was that of H. Agarwalla. When shown the original contract, Agarwalla again stated that the signature on the contract was different to that appearing in the exercise book. At the conclusion, it appears from the minutes, that as the parties had nothing fresh to add to the oral and written statements and they had nothing further to adduce in evidence, they were told that the evidence was closed.

11. Counsel on behalf of the petitioner contended that it was clear from the minutes that the arbitrators had just a visual look of the hundy containing the sample but did not examine what that was and thereby committed legal misconduct. In cases of quality arbitration, and more particularly in a quality arbitration of perishable goods, it may be proper for an arbitrator to make use of the expert knowledge of the arbitrators. But that, in any event, implies that the arbitrators must satisfy themselves as to the quality. On the materials before me, I am of opinion that the arbitrators committed the legal misconduct in not satisfying themselves as to the quality. They should have satisfied themselves as to the quality. The hundy was produced in this Court and it was found that the seals remained unbroken and intact. It was admitted by Counsel on behalf of the respondent that the seals remained unbroken and intact. The hundy was thereafter returned to the petitioner. It is manifest that the arbitrators did not see the sample.

12. As to the other contention of the petitioner, it appears that Ex. B was shown to the petitioner and as to Ex. Cl I am satisfied from the minutes that no representation was asked for by the petitioner.

13. I am, therefore, of opinion that the arbitrators had no jurisdiction to make the award. The award is vitiated by misconduct for the reasons stated above.

14. I, therefore, hold that the award is invalid and I set it aside. The petitioner is entitled to the costs of this application.


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