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Co-operative Hindustan Bank Ltd. Vs. Bhola Nath Borooah - Court Judgment

LegalCrystal Citation
SubjectCivil;Arbitration
CourtKolkata
Decided On
Judge
Reported in31Ind.Cas.597
AppellantCo-operative Hindustan Bank Ltd.
RespondentBhola Nath Borooah
Excerpt:
civil procedure code (act v of 1908), schedule ii, paras. 3, 8 and 15 - arbitration--order of reference authorising arbitrator to extend time made by consent of parties--arbitrator extending time after the period originally fixed by court had expired--arbitrator after such time, if functus officio--award submitted within such extended time, if must be set aside--arbitrator's interest in subject-matter in suit, when insignificant and unknown to him, if would invalidate award. - .....on behalf of the defendant bhola nath borooah that the award made in this case by babu jogendra nath mukherjee, a vakil of this court, may be set aside. two grounds have been urged in support of this application--(1) that the award was made out of time and (2) that babu jogendra nath mukherjee is a share-holder in the plaintiff company and, therefore, ought not to have acted as arbitrator between the parties. the suit was filed on 9th march 1911, to recover rs. 25,000 on five hundis said to be signed on behalf of the defendant's firm by the defendant's son, and endorsed over to the plaintiff bank by rajendra chandra chuckerbutty. the defendant filed his written statement on 1st may 1911, pleading payment of rs. 15,000. on the 9th july 1912, there was a reference to the arbitration of.....
Judgment:

1. This is a petition on behalf of the defendant Bhola Nath Borooah that the award made in this case by Babu Jogendra Nath Mukherjee, a Vakil of this Court, may be set aside. Two grounds have been urged in support of this application--(1) that the award was made out of time and (2) that Babu Jogendra Nath Mukherjee is a share-holder in the plaintiff Company and, therefore, ought not to have acted as arbitrator between the parties. The suit was filed on 9th March 1911, to recover Rs. 25,000 on five hundis said to be signed on behalf of the defendant's firm by the defendant's son, and endorsed over to the plaintiff Bank by Rajendra Chandra Chuckerbutty. The defendant filed his written statement on 1st May 1911, pleading payment of Rs. 15,000. On the 9th July 1912, there was a reference to the arbitration of Babu Tara Kissore Chaudhuri, a Vakil of this Court. Nothing further was don% under that order, and on the 21st July 1913 that order was discharged; and a fresh order of reference was made to Babu Jogendra Nath Mukherjee. Under that order, his award was to be made within three months from the date of the service of an office copy of the order upon him or within such further time as the said arbitrator might allow himself by endorsement on the said office copy of the order. The order was served on 18th August 1913. The three months would expire, therefore, on 18th November 1913. It is admitted that no award was made, nor the time extended, within that date. The arbitrator, however, proceeded with the reference and held a number of meetings. On 28th February 1914, it was brought to his notice that the time had expired and had not been extended. I have -had the advantage of hearing the evidence of the arbitrator as to what precisely occurred. From his evidence, it is clear that on 28th February 1914, there was a discussion with regard to the confirmation of the arbitration. The arbitrator wanted to know if any objections would be taken; and pointed out to Counsel on either side that there might be a difficulty, and that, in case the award went against either party, that party might make a grievance of it. The plaintiff's Counsel appears to have made no objection to the arbitration continuing. The defendant's Counsel on the other hand said, that he would not commit himself, but left the responsibility of proceeding entirely with the arbitrator. Shortly afterwards, the arbitrator made an endorsement on the office copy extending the time for making the award to 31st May 1914. On 31st May, he made and signed his award. There are three additions or alterations in it, two merely verbal, but one of more importance, relating to the costs of the arbitration. Whether he made these alterations on the night of the 31st or early in the morning of the 1st June, is not clear. The award is dated 31st May and was filed by him on 1st June. 1914. The defendant against whom the award was made, now complains that the arbitrator had no authority to extend the time after 18th November 1913. This contention is, I think, correct. It was suggested that the order of this Court, dated 21st July 1913, was ultra vires in so far as it permitted the arbitrator to enlarge the time for making his award. I do not think that is Section The Court proceeded by consent of the parties and there could be no objection to the functions of the Court with regard to the enlargement of time being delegated to the arbitrator if the parties so desired. It is, however clear that the arbitrator would only have such power as was conferred by the order, and he would, therefore, be bound to enlarge the time before the time originally fixed for making the award had expired. If he did not do so, he was by reason of efflux ion of time, functus officio and had no further jurisdiction in the matter. It is a matter of great regret that when this difficulty was first noticed, and there was a discussion with regard to it before the arbitrator, an application was not made then and there to the Court under Schedule II, paragraph 8 of the Code of Civil Procedure, in which case the Court could have enlarged the time, even though the time fixed for making the award had expired. This was not done, presumably because the parties were willing to go on with the reference. I think that on the above ground, the award is invalid and must be set aside.

2. The second ground is that Babu Jogendra Nath Mukherjee was, unknown to the defendant, a share-holder in the plaintiff Company. It appears from Babu Jogendra Nath Mukherjee's evidence that it was also unknown to himself. He had, it appears, applied for one share of Rs. 50, but he says he never paid a pike in respect of it and was unaware until yesterday whether any share had been allotted to him or that his name was on the register of share-holders. It was stated at the Bar that on this share, Rs. 5 had been paid. With regard to this, Babu Jogendra Nath Mukherjee stated that he had paid nothing, tout that some friend must have paid on his behalf. Now it is clear that if an arbitrator, unknown to one of the parties, has a personal interest in the subject-matter of the award, it would be improper that he should act as arbitrator, as the fact of his having such an interest might influence his decision. But in this case, as his interest was so small and was apparently unknown even to himself, it is impossible that it could have influenced his award in any way. If that were the only ground, I should have been unwilling to set aside the award merely because he held that one share. On the first ground, however, the award must be set aside, and I accordingly order that that be done. It appears to me that both the parties were willing to go on with the arbitration, even when they had been made aware of this difficulty. Under the circumstances, I direct that each party do bear their own costs of this application. I think that the suit should proceed before me with all expedition, as it has now been for three years on the file. The case will be set down for hearing four weeks from today, the written statement to be filed within a fortnight.


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