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Heeralal Agarwalla and Co. Vs. Joakim Nahapiet and Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata
Decided On
Reported inAIR1927Cal647,103Ind.Cas.648
AppellantHeeralal Agarwalla and Co.
RespondentJoakim Nahapiet and Co. Ltd.
Cases ReferredSurajmull Askaran v. Chandmull Mulchand
Excerpt:
- .....with a proviso that in casa either party was dissatisfied with the award, they might appeal to the appeal committee of the london corn trade association subject to the rules of that association. it was argued that it was a scheme of arbitration not provided for by the arbitration act, 1889. lord esher, m.r. observed as follows:in the contract the parties had agreed, in case a dispute should arise, to refer it to the arbitration of certain persons as arbitrators and under certain conditions, if no objection was taken by ?either party to the award, it was of course to be final; but if either party wished to take the matter to an umpire or by way of appeal, as the parties call it, then the umpire was to be the appeal committee of the london corn trade association. the case accordingly went.....
Judgment:

C.C. Ghose, J.

1. This is an appeal against an order made by my learned brother Mr. Justice Pearson on the 3rd December 1926 by which he allowed an application made by the respondents to take off the file of this Court an award made under the rules of the Calcutta Baled Jute Association. The facts, shortly stated, are as follows: By a contract in writing, dated the 6th November 1925, the respondents purchased from the appellants 3.000 bales of jute, delivery in December 1925 at Rs. 126 per bale of 400 lbs. net. The contract contained an arbitration clause being Clause No. 17. It provided that in the event of any dispute arising between the parties, the same should be referred to arbitration and that each party to the dispute would be at liberty to appoint one arbitrator. If either party failed to make the appointment within three clear working days after being called upon so to do by the other party, the arbitrator appointed by such other party should act as the sole arbitrator and proceed accordingly. In default of the appointment by the arbitrators, if more than one, of an umpire within 7 days of the appointment of the arbitrator first nominated, the Committee of the Calcutta Baled Jute Association should be notified accordingly and should before the reference is entered upon nominate an umpire.

2. It was also provided that if the arbitrators should fail to make their award in writing within 40 days of the appointment of the arbitrator first nominated or on or before any later date to which the arbitrators in writing signed by them might from time to time enlarge the time for making the award, the umpire should forthwith enter on the reference in lieu of the arbitrators. The award made by the arbitrators or the umpire respectively, if no appeal therefrom should be admitted by the committee, or the award of the committee made on appeal therefrom, as provided for in the Association's rules and bye-laws, should be final. The Association's rules and bye laws, which are printed on the reverse of the contract, form part of the contract between the parties. Rules 28 and 29 are as follows:

28. The committee may at the discretion and upon payment of the prescribed fees hear appeals from arbitrators' awards, provided they proceed in conformity with the bye-laws of the Association.

29. The award of the committee in any appeal considered by them confirming, varying or setting aside the award of arbitrators or umpire shall be accepted as finally binding on all parties.

3. It appears that disputes and differences arose between the parties and thereupon they were referred to arbitration. The two arbitrators appointed by the two parties failed to agree whereupon the matter was referred to the umpire who had been appointed as such by the arbitrators. The umpire heard the reference and made an award on the 25th June 1926. That award was in favour of the present respondents. Thereafter the present appellants appealed to the Committee of the Calcutta Baled Jute Association against the award of the said umpire. The Committee heard the appeal and made an award on the 23rd September 1926. This award is printed on pages 21 and 22 of the paper-book and the material portion thereof is as follows:

And whereas in accordance with the terms of the said contract Messrs. Heeralal Agarwalla & Co. were entitled to appeal arid did so appeal against the award of the umpire to the Committee of the Calcutta Baled Jute Association. Now we, being a quorum of the said Committee, having taken upon ourselves the burden of the said reference on appeal and having duly weighed and considered the several allegations of the said parties and the proofs and documents laid before us, do hereby make and publish this our award concerning the matter so referred to us in manner following, that is to say:

(i) we find an award that the buyers Messrs Joakim Nahapiet & Co. shall pay to the sellers Messrs. Heeralal Agarwalla & Co. the sum of Rs. 21,000 in full settlement of their claim under the contract;

(ii) we also award and direct that Messrs. Joakim Nahapiet & Co. shall pay the costs of the umpire's award, dated 25th June 1928, which were fixed at the sum of Rs. 247-8-0;

(iii) we further award and direct that Messrs. Joakim Nahapiet & Co., Ltd. shall pay the costs of this appeal which we fix at Rs. 116.

4. On the 15th November 1926 the Committee of the Calcutta Baled Jute Association transmitted the said award to this Court in order that the same might be filed. Thereupon on the 19th November 1926 the present respondents made an application, as stated above, to this Court for an order that the said award of the Committee of the Calcutta Baled Jute Association should be taken off the file of this Court.

5. Mr. Justice Pearson held that the award made by a Committee of the Calcutta Baled Jute Association sitting in an appeal on an award made by an umpire did not conform to the scheme of the Indian Arbitration Act and that the same could not be filed under the Act. He was further of opinion that having regard to the language used in Sections 10 to 15, the only persons or tribunals considered as having seisin of the arbitration were the 'arbitrators or umpire,' and that there was no recognition in the Act of an award by a tribunal superior to the umpire.

6. On behalf of the appellants, the argument is presented in this way : It is pointed out that the intention of the parties is to be gathered from the whole of the document, namely, the contract between the parties and that when the arbitration clause is properly construed, there cannot be any doubt that what the parties contemplated was that, in the first instance, the dispute between the parties should be arbitrated upon by two arbitrators and, in the event of their failing to agree or failing to make an award within the time limited therefor, by the umpire appointed as such by the arbitrators, and that, in the event of the dispute between the parties still subsisting even after the date of the umpire's award or of the parties not having agreed to treat the umpire's award as final, the parties should be at liberty to go before the Committee of the Calcutta Baled Jute Association, the latter being regarded as a fresh set of arbitrators agreed upon by the parties and who would enter upon the reference with a full knowledge of what had gone before, i.e., of what had been done by the arbitrators and the umpire, and that if the arbitration clause is viewed in this light, there is nothing whatsoever k ''-ha scheme of the Indian Arbitration Act which prevents an award of the Committee of the Calcutta Baled Jute Association, made in such circumstances, being filed in this Court.

7. On the other hand, it has been strenuously argued before us on behalf of the respondents that according to the schema of the Indian Arbitration Act and particularly having regard to the language of Section 11 of the Act, although there is nothing to prevent the parties from agreeing that the award made by an umpire should be reviewed or revised or considered by an appellate authority, the award made by such appellate authority cannot be filed in this Court. It is argued that the language of the English Arbitration Act is different from that of the Indian Arbitration Act and that the Indian Act does not contemplate a series of awards except as indicated in the Act itself.

8. This form of contract has been frequently before the Courts see in this connexion Sassoon & Co. v. Ram Dutt A.I.R. 1922 P.C. 374 and Surajmull Askaran v. Chandmull Mulchand A.I.R. 1922 P.C. 374, but the point raised was, as far as I am aware, never raised before. In England, similar forms of contract are used in certain trades and in at least one case the question now raised was sought to be argued : see In re Keighley Maxstead & Co. and Durant & Co. (1893) 1 Q.B. 405. In that case the dispute arose out of a contract for the sale of a cargo of wheat made between Keighley Maxstead & Co. as purchasers and Bryan Durant & Co. as sellers, the purchasers having refused to accept the wheat when tendered to them. The contract contained a clause that all dispute arising out of it should be from time to time referred to two arbitrators, who should have power to call in a third, the award of any two of them to be binding and conclusive, with a proviso that in casa either party was dissatisfied with the award, they might appeal to the appeal committee of the London Corn Trade Association subject to the rules of that Association. It was argued that it was a scheme of arbitration not provided for by the Arbitration Act, 1889. Lord Esher, M.R. observed as follows:

In the contract the parties had agreed, in case a dispute should arise, to refer it to the arbitration of certain persons as arbitrators and under certain conditions, if no objection was taken by ?either party to the award, it was of course to be final; but if either party wished to take the matter to an umpire or by way of appeal, as the parties call it, then the umpire was to be the appeal committee of the London Corn Trade Association. The case accordingly went to arbitration and one of the parties being dissatisfied with the award wished the case to go before the umpire. Now the parties had not only agreed that the committee should be to umpire but that they had agreed that it should act according to the rules of the London Corn Trade Association which were well known, and when the committee, which consisted of 25 persons, came to be umpire, they, acting under their rules, exercised their duty by appointing, out of their own body, a committee of 5 to act as umpire in the dispute.

9. Apparently the point sought to be canvassed in that case did not find favour with the Court and the actual decision turned on the question whether having regard to discovery of new evidence the Divisional Court in the exercise of its discretion was right in sending the case back to the umpire. The Court of appeal held that the Divisional Court was right.

10. There is, as indeed is recognized by the respondents, nothing to prevent the parties from agreeing to a submission such as is contained in the contract before us. In other words there is nothing to prevent the parties from agreeing to a submission containing in it a further submission to arbitration. No doubt in Section 11 of the Indian Arbitration Act, there is not to be found any reference to arbitration by a committee; but in my view it does not matter in the slightest whether the committee is described as committee of appeal or whether they are described as a fresh set of arbitrators; the substance of the matter has got to be looked at, and giving to the sections of the Indian Arbitration Act my very best consideration I can find nothing in it which would prevent an award by a committee of the Calcutta Baled Jute Association, being the final award contemplated by the parties in certain eventualities, being filed in this Court. I think the contention put forward on behalf of the appellants is correct and that the committee are really a fresh set of arbitrators called in by the parties. In other words, the contract contains as it were two submissions or a submission within a submission. The question was discussed during the course of the argument as to whether the award of the umpire could also be filed in circumstances such as have happened in this case. That point is not before us, and it is unnecessary in my opinion to go into that. The point immediately before us is whether the award of the committee can be filed, and in my opinion the answer is in the affirmative. I do not desire to be drawn into a discussion as to the competing merits of an award by the umpire and an award by the committee of the Calcutta Baled Jute Association should ever the two awards be filed together.

11. In my view the judgment and order of Mr. Justice Pearson should be set aside and this appeal allowed with costs.

Buckland, J.

12. The appellants have appealed against the judgment of Mr. Justice Pearson, dated the 3rd December 1926, on an application to take an award off the file. (After setting out the the facts as stated in the previous judgment his Lordship proceded.) The respondents applied before Mr. Justice Pearson, on notice of motion, to have the award taken off the file. The learned Judge has so directed on the ground that the award is not one to which the provisions of the Arbitration Act can apply so that it may be filed thereunder. His reasons for so holding were that under the Act an award must be made by arbitrators or an umpire, that they must cause it to be filed under Section 11, that the body which made this award is not within either of the terms 'arbitrators' or 'umpire' and therefore it is not an award which conforms to the scheme of the Act, and it cannot be filed.

13. It may be said that my learned brother's reasons rather lead to the conclusion that the committee had no power to make or to file the award, for its procedure has not been challenged and the terms of the award itself have not been impugned. Be that as it may, the judgment fully indicate the question which has to be determined. That there was a submission to arbitration is incontestable. Equally incontestable is the fact that there has been an award, made under that submission, and that it has been filed.

14. On behalf of the respondents it has been argued that though under the more limited terms of the Arbitration Act, 1889, Section 12, it would suffice to produce the submission and the award in order to obtain leave to enforce it; under Section 11 of the Indian Arbitration Act, the preliminaries to the filing of the award and the filing itself must be done by arbitrators or an umpire, and that the committee of the Calcutta Baled Jute Association is not within the expressions 'arbitrators or umpire.' The argument in support of the latter proposition is based in a great measure upon the successive courses which under the contrast, the rules and bye-laws, the reference may follow. It is not argued that the appellants may not otherwise be able to enforce their rights under the award : the argument is limited to the application of Section 11 to an award so made.

15. Before considering the question I desire to dispose of one point to which allusion was made in the course of argument. There are cases, in particular In re Smith and Nelson (1800) 25 Q.B.D. 545, in which it was held that the terms of the submission were such that the Court had no power under the Arbitration Act, 1889, to order a party to appoint an arbitrator. No analogous question arises here as it has been conceded on behalf of the respondents for the present purpose that, provided the person or persons acting under Section 11 are an umpire or arbitrators, no exception could be taken to their so acting on the ground that their number or constitution is such, or on any other ground, that the aid of the Court could not have been invoked should occasion have arisen a an earlier stage, when, but for such reason, any necessary order might have been obtained. A matter may be within the section of the Act immediately applicable, even though it should be the case that circumstances are such that in some other respect the Act could not be called in aid Manchester Ship Canal Co. v. S. Pearson & Son Ltd. [1900] 2 Q.B. 606.

16. Reverting to the argument for the respondents, it is contended that the section is exhausted by applying it, first to the arbitrators who failed to agree, and secondly, to the umpire who made-his award on the 25th June 1926. Bale No. 29 and Bye-law No. 5, it is said, exclude the possibility of the committee being within either of these terms, for they refer to : (1) the committee; (2) the arbitrators; and (3) the umpire, whereas, the section recognises only the last two. Now the procedure laid down by the arbitration clause and the rules and bye-laws, viz. a reference to arbitrators, and then, in appropriate cases, to an umpire, which may be succeeded by an appeal to another body, is no novelty. In re Keighly Maxtead & Co. and Durant & Co. (1893) 1 Q.B. 405 is not wholly in point, because there it appears that between the arbitrators and the appeal committee of the London Corn Trade Association there was no umpire as usually understood. There is, however, this resemblance, that even though there had beer an award by arbitrators, effective until set aside, it was open to an aggrieved, party to take the matter further and obtain the decision of the committee.

This case turned upon the question of remitting the case to the umpire as the committee was described, but the judgments of the learned Lord Justices contain no comment on a procedure which involves reconsideration of an award by another lay tribunal.

17. Produce Brokers Co. Ltd. v. Olympia Oil and Cake Co. Ltd. [1916] 1 A.C. 314 was a case in which the contract contained a clause hardly to be distinguished from that with which this appeal is concerned. It was there provided as follows:

All disputes from time to time arising out of this contract, including any question of law appearing in the proceedings shall be referred to arbitration according to the rules endorsed on this contract.

18. By these rules it was provided that the reference should be to two arbitrators, one to be appointed by each party and an umpire whose decision in case of disagreement should be final and that in case either party should be dissatisfied with the award an appeal should lie to the committee of appeal of the incorporated Oil Seed Association.

19. In Chandanmull v. Donald Campbell & Co. [1916] 23 C.W.N. 707 N. the submission gave a right of appeal from the award of the arbitrators to the London Jute Association, and in Surajmull Askaran v. Chandmull Mulchand the terms of the arbitration clause were similar to those with which we have now to deal.

20. In all these cases the award ultimately made is treated as though it were an award made by arbitrators or an umpire. In that last cited the judgment of the Court of first instance was supported, but the learned Chief Justice, in his judgment, discussed the matter from the standpoint of the duty of the committee to receive evidence as though arbitrators or an umpire. In the Produce Brokers Company's case (1916) 1 A.C. 314, so far from regarding the appeal committee as anything but arbitrators, the respondents, in the House of Lords, in moving the Divisional Court to set aside the award averred that the members of the appeal committee misconducted themselves as arbitrators' and in his speech Lord Loreburn evidently so regarded them when he said;

The third and fourth grounds, which allege misconduct by the arbitral committee, disappear.

21. Similarly, in cases where the appeal lies directly from the arbitrators to a committee, the fact that there has been an award already made, valid and capable of being enforced, unless set aside, has not prevented the Court from recognizing the final tribunal as an umpire see In re Keighley Maxstead & Co. and Durant & Co. (1893) 1 Q.B. 405.

22. In the course of argument the status, of the first award in this case was touched upon, and it was suggested that-the fact of there having been two awards was an additional reason for the view submitted. I am not concerned directly with the first award, and should on any future occasion a party who has obtained an award which has since been set aside in similar circumstances-succeed in inducing those who made it to file it, I have little doubt that the law would be adequate, should occasion arise, to do justice between the rival claimants. But successive awards are not per se to be condemned and though certain observations of Lord Loreburn in Chandanmull Donald Campbell & Co. [1916] 23 C.W.N. 707 N. were based on different facts, I nonetheless think that they are apposite to this case when he observed;

Sir John Simon ^pointed out the danger of allowing arbitrations upon arbitrations, and so ad infinitum, each arbitration being upon the validity of the previous award. The answer to this ingenious but unconvincing argument is that when an award assumes a shape which makes it available for a judgment enforcing it in a Court of law, the process of infinitesimal repetition is at once arrested because there is nothing left for an arbitrator when the Court of law becomes entitled, to give effect to the award.

23. The procedure whereby the dispute comes before the committee is called an appeal. What it is called is of no consequence; the fast remains that the committee is a body other than a Court of justice to whom the parties have agreed, to refer their dispute. Such a proceeding is known to the law as an arbitration and those in whom the arbitrament is lodged are known as arbitrators or an umpire. In my judgment the committee were arbitrators or, it may be said, an, umpire, and their award as such is one which the successful party is entitled to require to be filed. For these reasons I agree that the appeal should be allowed with costs.


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