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Luxmi Chand Baijnath Vs. Kishanlal Sohonlal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSuit No. 217 of 1954
Judge
Reported inAIR1955Cal588,59CWN623
ActsArbitration Act, 1940 - Section 2
AppellantLuxmi Chand Baijnath
RespondentKishanlal Sohonlal
Appellant AdvocateG.P. Kar and ;A.C. Bhadra, Advs.
Respondent AdvocateTabriwal, Adv. for the Award Holder
DispositionApplication allowed
Cases ReferredSundarmullPoreshram v. Tribhubandas Hirachand and Co
Excerpt:
- .....'y' tribunal and it cannot be said with , certainty whether 'x' tribunal or 'y' tribunal is the appointed arbitrator. under this argument 'prime facie' the arbitration agreements are uncertain.16. mr. meyer contends that the uncertainty is curable by election. i agree that uncertainty in certain cases may be cured by election, e.g., in the case of a grant by giving a right of election to the party who is to do the first act towards completion of the grant -- halsbury, vol. x, articles 349-50, pp. 281-82; and in the case of alternative promises by giving right of election to the party who is to perform the promise -- halsbury, vol. vii, article 461, p. 331 and article 267, pp. 189-90.it has also been held that where there are several legatees to whom the option is given -- e.g., where.....
Judgment:
ORDER

Bachawat, J.

1. This is an application to declare that the arbitration agreement and the awards are void, illegal and inoperative and for setting aside the awards.

2. By the two separate contracts dated 12-8-1953 the petitioner agreed to purchase blankets from the respondent. I have looked at the original contracts which are in Hindi and I accept the Official Translation to be correct. Each of the contracts contained the following arbitration clause:

'If there arise any dispute or trouble regarding this contract, then the same shall be decided by the Arbitration Board of the Blanket and Shawl Traders'Association or by the arbitrators appointed by the buyer & by the seller one (by) each both of whom shall be senior traders, (and such decision) shall be accepted by both persons -- (buyer and seller), and the said decision shall be deemed as the final decision.'

3. Part of the goods were delivered. The respondent claims the balance of the price of goods sold and delivered. The petitioner counter-claims for damages for not delivering the balance goods.

4. The respondent appointed Shri Ram Nath Bagaria as his arbitrator and by notice dated 16-2-1954 requested the petitioner to appoint his arbitrator. Thy notice was received by the petitioner on 17-2-1954. Fourteen clear days expired from the date of the service of the notice, but the petitioner did not appoint his arbitrator and did not send any reply. On 5-3-1954 the respondent appointed Ram Nath Bagaria as sole arbitrator and gave notice of the appointment to the petitioner.

The petitioner did not send any protest nor any reply to this letter. By notice, dated 19-4-1954 the arbitrator enclosed the statement of the respondent and asked the petitioner to submit its statement within 7 days. This notice was received by petitioner on 20-4-1954. The petitioner did not file any statement and did not send any reply. By notice, dated 5-5-1954 to the petitioner the arbitrator appointed 10-5-1954, 3-30 P. M. for hearing.

The notice was received by the petitioner on 10-5-1954. The petitioner did not appear at the hearing of the arbitration on 10-5-1954. On 19-5-1954 the arbitrator made, an ex parte award against the petitioner.

5. The objections to the award are summarised in paras. 5 and 6 of the petition.

6. Objections under para. 6: Grounds (c) and (f) of this paragraph have been abandoned by learned counsel for the petitioner. The petitioner charges that there was no opportunity or reasonable opportunity to file a statement or to put forward its defence or to place relevant facts, (b) that no notice or reasonable notice of the hearing on 10-5-1954 was. given and (c) that the arbitrator proceeded ex parte without sufficient cause.

7. The following issues1 were raised:

1. Did the petitioner receive the letter dated 19-4-1954 referred to in para. 6 of the affidavit-in-opposition?

2. Did the arbitrator give no opportunity and/or reasonable opportunity to the petitioner to file any statement and/or put forward any defence before the arbitrators as alleged in para. 6(a) of the petition?

3. Did the arbitrator give no notice or reasonable notice of the hearing of the case before him on 10-5-1954 or on any other date or at all as alleged in para 6(b) of the petition?

8. These issues were tried on oral evidence. Issue No. 1:

Clearly the issue must be answered in the affirmative.Issue No. 2:

The petitioner received the notice dated 19-4-1954 and had full opportunity to file statement and to put forward its defence and to place relevant facts before the arbitrator and the issue is answered in the negative. Issue No. 3:

The notice dated 5-5-1954 was served on the petitioner on 10-5-1954, The notice was issued in Calcutta and was served in Calcutta. The delay of 5 days in the Course of transmission of the notice is somewhat curious. The original cover has not been produced by the petitioner. The notice was receivedby Raghunath on 10-5-1954. The hearing of the arbitration was fixed at 3-30 P. M. on that day,

Raghunath has given evidence. He does not say that the notice was unreasonable or that after receipt of the notice he could not attend the meeting. The petitioner has not proved that the notice was unreasonable. The issue is answered in the negative.

9. The arbitrator was justified in proceeding ex parte. The petitioner did not file any statement and did not attend the meeting in spite of notice. The petitioner did not intend to appear before the arbitrator.

10. The objections raised in para. 6 of the petition are rejected.

11. Objections under para. 5 of the petition: Clauses (c) and (d) of the paragraph have been abandoned by learned counsel for the petitioner. The remaining objections may be summarised thus:

(a) The arbitration agreements are uncertain as they provide for alternative Board of Arbitrators without specifying under what circumstances reference is to be made to one or the other Board of Arbitrators:

(b) in any event the reference could not be made to one set of Arbitrators without the consent of both parties:

(c) in any event the reference could not be made to second set of Arbitrators without exhausting the first alternative. The respondent disputes these contentions & also pleads waiver and estoppel.

12. The following constructions of the expression 'The Arbitration Board of the Blanket and Shawl Traders Association or by the Arbitrators appointed by the buyer and by the seller one by each' in the Arbitration agreements may be suggested:

(a) The word 'or' is substitutional and appends a secondary alternative after a primary alternative, and the expression means 'by the Arbitration Board of the Blanket and Shawl Traders' Association and failing them by two Arbitrators one to be appointed by each party'. See -- 'Dwarkadas v. Daluram Yoganmuh', : AIR1951Cal10 .

(b) The expression provides for a panel of Arbitration Tribunals, and the reference is to a Tribunal to be selected out of the panel by the consent of the parties.

(c) The word 'or' provides for alternatives and the expression means 'either the Arbitration Board of the Blanket and Shawl Traders' Association or the Arbitration: Tribunal consisting of the Arbitrators appointed by the buyer and by the seller one by each.'

13. Mr. Meyer on behalf of the respondent expressly repudiated the first two of the suggested constructions. It is clear that the respondent fails in this application if either of the first two constructions are adopted. The Arbitration Board of the Blanket and Shawl Traders' Association was never asked to arbitrate and cannot be said to have failed to act as Arbitrator.

It is also clear that the Arbitration Tribunal consisting of two Arbitrators to be appointed by each party was not selected with the consent of both parties. The selection was a unilateral act of the respondent.

14. Mr. Meyer, therefore, bases his client's case entirely on the footing that the third construction is the correct construction and he argues that the Arbitration clause provides for reference of the disputes to either the Arbitration Board of the Blanket and Shawl Traders' Association which I will callTribunal 'X' or by the Arbitration Tribunal consisting of two Arbitrators one to be appointed by each party which I will call Tribunal 'Y'.

15. If this construction is accepted, the Arbitration agreements do not say under what circumstances the reference is to be made to 'X' Tribunal and under what circumstances the reference is to be made to the 'Y' Tribunal and it cannot be said with , certainty whether 'X' Tribunal or 'Y' Tribunal is the appointed Arbitrator. Under this argument 'prime facie' the Arbitration agreements are uncertain.

16. Mr. Meyer contends that the uncertainty is curable by election. I agree that uncertainty in certain cases may be cured by election, e.g., in the case of a grant by giving a right of election to the party who is to do the first act towards completion of the grant -- Halsbury, Vol. X, Articles 349-50, pp. 281-82; and in the case of alternative promises by giving right of election to the party who is to perform the promise -- Halsbury, Vol. VII, Article 461, p. 331 and Article 267, pp. 189-90.

It has also been held that where there are several legatees to whom the option is given -- e.g., where there is a bequest of one house each to the nephews and the nieces of the Testator in the event of disagreement between them -- the choice may be determined by lot, -- In re 'Knapton; KnaptOn v. Kindle,, (1941) 1 Ch 428 (B). Reference may also be made to Stroud's Judicial Dictionary, 3rd Edition p. 2008, Norton on Deeds. 2nd Edition, pp. 109-113, Jarman on Wills, 8th Edition, Vol. 1, p. 477, and British Empire Digest, Vol. XVII, pp. 359-61.

17. An uncertainty is not curable by election in all cases. It is not curable by election where there is nothing to indicate who is to have the option, Thus a gift either to A or to B is uncertain where the gift is not substitutional: Jarman on Wills, 8th Edition, pp. 493-95. Arid a contract of sale for either Rs. 500/- or Rs. 1000- also is uncertain. Illutration (f) to Section 29, Indian Contract Act.

18. An arbitration agreement. between A andB to refer disputes to the Arbitration of 'X' or atthe option of A to 'Y' is certain because the agreement itself shows who is to have the option: --'Bhowanidas Ramgobind v. Harsukhdas Balkissen-das : AIR1924Cal524 ; and -- 'SundarmullPoreshram v. Tribhubandas Hirachand and Co 0049/1924 : AIR1924Cal828 . The arbitration agreementsin this case do not indicate who is tp have the option.

19. Mr. Meyer contends that he who is to make the reference first is to have the option. I am unable to agree with the contention. Either parry may commence the arbitration and may require that the disputes be referred and settled by arbitration. The arbitration agreements do not require that one of the parties rather than the other is to commence the arbitration or to do the first act in making the reference.

There is nothing to indicate in the arbitration agreements that one of the parties has the option of determining the arbitration Tribunal to whom the reference is to be made.

20. Mr. Meyer contends that the disputes may be referred to either Tribunal X or Tribunal Y just as a suit may sometimes be instituted in either Court 'X' or Court 'Y'. This analogy is fallacious, Where two Courts have concurrent jurisdiction, the plaintiff has a choice of forum and may institute his suit in either Court. But there is no election in the sense that the choice of Courts is finally determined and the other Court is deprived of its jurisdiction.

Either party may still institute a suit in the other Court which retains its concurrent jurisdiction. Under an Arbitration agreement two Arbitration Tribunals cannot have concurrent jurisdiction over the identical subject-matter at the same time. An Arbitration Agreement is an agreement that the disputes shall be settled by an Arbitrator named or designated in the agreement or by an Arbitrator appointed jin accordance with the Arbitration agreement.

An Agreement to refer either to 'X' or to 'Y' is not an agreement to a named Arbitrator because it is not certain who the Arbitrator is. 'X' does not become the appointed Arbitrator because one of the parties makes the reference to him first. The agreement does not authorise one of the parties to appoint either 'X' or 'Y' as Arbitrator by making a reference to him.

21. Mr. Meyer then contends that the choice may be determined by lot on the analogy of Roman Law and on the analogy of (1941) 1 Ch 428 (B). Assuming that the principle or Roman Law applies to Arbitration agreements, the choice must be determined by lot before the Arbitration is commenced. The respondent made, the reference to one set of Arbitrators before the choice was determined by lot.

The Arbitration Tribunal throughout had no authority to make the award and the award is invalid. Even if the lot is cast now and even if the Arbitration Tribunal which made the award is now chosen by lot, the award cannot be validated retrospectively.

22. The petitioner did not participate in the Arbitration proceedings at all and did not do anything from which waiver may be implied or upon which estoppel may be founded. The petitioner is not barred from taking the objection either by way of waiver or estoppel. From whatever point or view the matter is looked at, Ramnath Bagaria had no authority to make the award, and the award is invalid. The Arbitration agreement is uncertain if the construction put forward by Mr. Meyer is accepted.

23. I must not be supposed to say, however, that I hold that the agreements are uncertain. The agreements are not uncertain if either of the first two constructions are adopted. Those constructions have been expressly repudiated by Mr. Meyer and as I have said already if either of those constructions are adopted on the facts of this case, the respondent cannot succeed.

24. Part of the objections in this case was tried on evidence, and the petitioner has failed to succeed on those objections. Looking at all the circumstances of this case, it is just that each party should be directed to pay and bear his own costs.

25. I pass the following order: I adjudge anddeclare that the award is invalid, and I set asidethe award. Each party will pay and bear his owncosts of the application.


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