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Soneylal Thakur v. Lachhminarain Thakur

Soneylal Thakur
v.
Lachhminarain Thakur

(High Court Of Judicature At Patna)

Civil Review No. 1071 Of 1954 | 15-04-1957


Choudhary, J.

(1) This application in -revision arises out of an arbitration proceeding without the intervention of the Court. The facts leading to the institution of the proceeding, put shortly, are these. There was a dispute between the petitioner and opposite party No. 1 with regard to survey plot No. 3926 which, admittedly, belonged to the petitioner. He, however, gave this plot in exchange to one Sribans who, in his own turn, exchanged the same with opposite party No. 1, Thereafter, opposite party No. 1 built, a house on the said plot, and, subsequently, dispossessed Sribans from the land which he had given to him in exchange for the above plot. Consequently, Sribans dispossessed the petitioner from the land which he had given to him in ex-change of that plot. As a result of this, there were several criminal cases between the parties. During the pendency of these cases, it appears the dispute between the parties with regard to land was amicably settled and in consequence of the settlement four sale deeds were executed on 16-11-1951, one by the petitioner in favour of Sribans with respect to the said plot No. 3926, the other by Sribans to opposite party No. 1 with regard to the same plot, the third by opposite party no, 1 to Sribans with regard to the land that the former had given to the latter in exchange and the fourth by Sribans to the petitioner with regard to the land which had been given to the petitioner in exchange by him, The dispute between the parties with regard to certain money claims remained unsettled and for that purpose they on the same date agreed to have their differences decided by opposite party No. 2 as an arbitrator. Accordingly, a registered agreement to refer the above dispute to the arbitration of opposite party No. 2 as executed on that date. Subsequently,, the petitioner, as is alleged by him, learnt that the father-in-law of the said arbitrator was influencing him and, as such, the petitioner requested the arbitrator not to arbitrate. It is said that the said arbitrator accepted the request and promised not to proceed with the arbitration. Accordingly, the petitioner got assured that the arbitration had fallen through and he began to demand his dues from opposite party No.

1. The case of the petitioner is that, opposite party No. 1 was thus annoyed with him and he, therefore, in collusion with the arbitrator, opposite party No. 2, got an award fabricated behind the back of the petitioner and without hearing him. No notice of this award was given to the petitioner, but when he learnt about it, he made an application in court on 13-11-1952, to call upon the arbitrator to file the award in court, As a result of this application, the arbitrator filed the award in court on 15-13-1952; and on 5-3-1953, the Court directed the parties to file objection to the award. Thereafter, the petitioner filed an application on 12-3-1953, for setting aside the award on various grounds. It was contended on his behalf that the agreement of reference is vague and did not mention correctly the dispute that had to be decided by the arbitrator. The ground for this contention was that the petitioner was claiming from opposite party No. 1 mesne profits for the exchanged land for the period during which he was kept out Of possession and for costs incurred by him in the criminal cases. But the deed of reference used the words "Len Den" as being the matter of dispute between the parties. The next contention was that, opposite party No. 2 having promised not to proceed with the arbitration, the reference was terminated. The third contention was that the arbitrator misconducted himself as he gave "the award without giving notice to the petitioner and without hearing him. The fourth point that was raised was that the award was made beyond the time prescribed by Rule 3 of Schedule I, Arbitration Act, 1940 and, as such, it was void. The Courts-below overruled the first three contentions. The Court of first instance, however, accepted the last contention and set aside the award. On appeal, the lower appellate Court reversed the trial Courts finding on this point and passed an order for a decree to follow in accordance with the award. Being, thus, aggrieved, the petitioner has moved this Court in revision.

(2) Mr. Kumar appearing for the petitioner has pressed before us all the four points stated, above. I will first take-up the last point, namely whether the award is void as having been made beyond the time-prescribed by Rule 3 of Sch. I, Arbitration, Act. That rule provides that the arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. In this case, no notice in writing from any party his been given to the arbitrator calling upon him to act, nor has the time for giving the award been extended either by agreement between the parties or by Court. Therefore, the award "had to be made within four months after entering on the reference. The question, however, is as to what the expression "entering on the reference" means. The trial Court interpreted this expression to mean the execution of the deed of reference. The lower appellate Court took the view that this expression meant the appearance of the parties before the arbitrator and the hearing of the matter under reference by him. The two Courts, below have, thus, taken two extreme views both of which, in my opinion, are wrong, and counsel for the parties have not supported the two extreme views. Mr. Kumar has contended that an arbitrator enters on a reference when he accepts the reference after the execution of the deed of reference. On the other hand, Mr. Sinha appearing for opposite party No. 1 has contended that he enters on a reference when, after having accepted the reference, he does something relating to the execution of the work of arbitration.

(3) The alternative provision in Rule 3 of Schedule I of the Act to the effect "that the award has to be given within the prescribed time after having been called upon to act itself signifies that the arbitrator has already accepted the reference. The expression "entering on the reference" has also been used in Section 11 (1) of the Act which runs as follows:

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

This section, therefore, clearly rules out the possibility of the date on which the agreement of reference is executed or the reference is accepted by the arbitrator to be the date of entering on the reference. It, in my opinion, necessarily implies that there must have already been an acceptance by the arbitrator to arbitrate on a reference being made to that effect. Otherwise., there is no meaning in removing him if he fails to use all reasonable dispatch in entering on the reference. It is, thus, clear that the expression "entering on the reference" relates to something which has to be done in the matter of arbitration in furtherance thereof apart from the acceptance of reference. In my opinion, therefore, an arbitrator enters on the reference when after having accepted it he proceeds to do something in furtherance of and towards the execution of the work of arbitration. The contention of Mr. Sinha in this regard is accepted.

(4) There is no decision of this Court on the point under consideration. In support of the view taken by the Court of first instance that an arbitrator enters on a reference when the deed of reference is executed, reliance has been placed on a passage in the Judgment of Lakshmikanta Jha, C. J., in an unreported decision of this Court in Damodar Thakur v. Ramlochan Thakur, Civil Revn. No. 544 of 1951, D/- 6-5-1952 (A), which runs as follows:

"The domestic tribunal was created by agreement of the parties. The law prescribes that the award must be made within four months of the date of reference or within the time extended under the provisions of the Act."

It was, therefore, submitted that the learned Chief Justice took the view that the award must be made within (our months of the date of reference itself. The argument is based on confusion. His Lordship by that passage did not intend to decide the question as to whether the award has to be made within four months from the date of execution of the agreement of reference itself. He intended to reproduce the provision as laid down in Rule 3 of Schedule 1, Arbitration Act, as will appear from the earlier passage in the Judgment itself where his Lordship observed as follows;

"I think the view taken by both the Courts below is erroneous. Rule 3, of Schedule 1, Arbitration Act provides that the arbitrators shall make there award within four months after entering on the reference. ......"

It is thus clear that in the passage referred to above on which reliance has been placed by the petitioner, his Lordship used the expression "within four months of the date of reference" inadvertently in place of the expression "within four months after entering on the reference." On the other hand, opposite party No. 1 successfully supported his contention before the lower appellate Court on the authority of Abdul Majid v. Bahawal Bakhsh, A.I.R. 1950 Lah. 174 (B) and Sardar Mal Hardat Rai v. Sheo Bakhsh Rai Sri Narain, I. L. R. 44 All. 432 : (A.I.R. 1922 All 106 (C)). In the Lahore case on a certain date the arbitrator decided that no further notice need be sent to one of the parties and on a subsequent date the actual ex parte order was given by him. It was held that the arbitrator entered on the reference on the subsequent date when the ex parte order was given; In coming to this conclusion Rahman J. relied on the decision of the Allahabad High Court referred to above in which it was held that "entering upon the reference" means not when the arbitrator accepts the office or takes upon himself the duty, but when he actually enters upon the matter of the reference, when the parties are before him, or under some peremptory order compelling him to conclude, the hearing ex parte. Reliance was placed, by their Lordships in that Allahabad case on the decision of Baker v. Stephens, (1867) 2 Q B 523 (D). No doubt, In the case of (1867) 2 Q B 523 (D) it was held that an arbitrator enters on the reference when he enters into the matter of reference, either with both parties before him, or under a peremptory appointment enabling him to proceed ex parte but a different view was expressed In a recent decision of the English Courts in lossifoglu v. Coumantaros, 1941-1 K, B. 396 (E) in which it was held that arbitrators enter upon a reference as soon as they have accepted their appointment and have communicated with each other about the reference. This case does not seem to have been brought to the notice of Rahman J,, who decided the above Lahore case. According to this decision, the arbitrators enter upon a reference not necessarily at the time of actual hearing by them but even at a much earlier stage. This case, however, has gone too far in holding that the enter upon a reference as soon as they accept their appointment and for the reasons already given, I record my disagreement with this view. But the view that they entered upon the reference when they communicated with each other about the reference, in my opinion, is the correct view to be followed. Following this case, the Calcutta and the Bombay High Courts have also taken the same view. In Bajranglal Laduram v. Ganesh Commercial Co. Ltd., 55 Cal. W N 147: (A. I. R. 1951 Cal. 78) (P), a Bench of the Calcutta High Court held that the arbitrators, must be held to have entered upon the reference when, they have accepted their appointment and instructed the Registrar to call for statements from the parties. In Dr. Babubhal Vanmalidas v. Prabhod Pranshankar, A. I. R. 1956 Bom. 146 (G), a single Judge decision of the Bombay High Court, it was held that an arbitrator must do some act which is referable to his position as an arbitrator and to nothing else before it can be said that he entered upon the reference. It was also held there that it would be going a bit too far to hold that the moment the arbitrator accepts an appointment he enters upon a reference. I am in perfect agreement with the view taken in this case.

(5) On a careful consideration of the authorities discussed above, I have no hesitation In arriving at a conclusion that an arbitrator does not enter upon a reference the moment he accepts to work as an arbitrator, nor can it be said that he enters upon a reference only when he actually hears the reference. In my opinion, as already observed, an arbitrator, enters upon a reference when, after having accepted the reference, he applies, his mind and does some thing in furtherance and execution of the work of arbitration. The exact date as to when an arbitrator enters on a reference in a particular case, however, will have to be determined on the facts and circumstances of that case. For example, after having accepted the office of arbitrator,, the first thing that he does is that, the parties, being already before him, he proceeds to hear them, he will be said to have entered on the reference when he actually began the hearing. Again, suppose, parties not being before him, the first act that he does is to give notice to them to appear in that case he enters on the reference when he gives notice. But, suppose, after having, accepted the office, he says that he will hear the parties some time after or on a date to be fixed later or at his convenience, he cannot be said to have entered upon the reference because he does nothing in furtherance of the arbitration till then. Now, applying, these tests we have to see as to when in the present case the arbitrator entered on the reference.

(6) Mr. Kumar has drawn our attention to the statement of the arbitrator who has been examined in this case as opposite party witness No 2 which is as follows:

"The parties had not consulted me before appointing me arbitrator. They told me about It, so far I, remember a few days after the registration o deed of reference. They came to me without that deed. They told me that there was dispute between them about some "lenden." I did, not object as to why, they appointed me arbitrator without consulting me. I called for the deed of reference. Some of them made it over to me after about 2 weeks, I do not remember If both the parties had come on that occasion at my residence at Laheriasarai. It was perhaps In the morning. I did not enquire anything about Len Den then. I did not give them any date then. I told them that I shall do it according to my convenience."

It has been submitted that the above evidence shows that the arbitrator entered on the reference about two weeks after the execution of the deed. I am unable to agree with this contention. All that appears from this statement is that the arbitrator when Informed about his being made an arbitrator did. not challenge as to why he was selected as an arbitrator and that he wanted to see the deed of reference for the purpose of ascertaining for what he was made an arbitrator. The statement quoted above, in my opinion, cannot imply anything more than this that the arbitrator accepted the reference. That, as already held, does not amount to his having entered on the reference. The next work that was done in connection with the arbitration, as appears from the evidence adduced in the case is that the arbitrator on 30/4/1952, sent registered letters to both the parties fixing 20/5/1952 for the hearing of the matter. In my opinion, this is the date in this case on which the arbitrator entered on the reference. The award having been made on 30/8/1952; just" within four months from the date on which he entered on the reference is, therefore, within time. The contention of Mr. Kumar in this regard is, therefore, rejected.

(7) With respect to the other three contentions his Lordship reviewed the evidence on record and came to the conclusion that the Court of appeal below had acted with material Irregularity in the exercise of its jurisdiction and the case required reconsideration.

(8) The result, therefore, is that the application is allowed; the Judgment and the-order of the Court of appeal below are set aside and the case is sent back to it for a fresh decision in accordance with law. Costs will abide the result.

Advocates List

For the Appearing Parties Satyanand Kumar, Vinod Chandra, Lalnarayan Sinha, Raghunath Jha. Advocates.

For Petitioner
  • Shekhar Naphade
  • Mahesh Agrawal
  • Tarun Dua
For Respondent
  • S. Vani
  • B. Sunita Rao
  • Sushil Kumar Pathak

Bench List

HON'BLE MR. JUSTICE R.K. CHOUDHARY

HON'BLE MR. JUSTICE DAYAL

Eq Citation

1957 (5) BLJR 456

AIR 1957 PAT 395

LQ/PatHC/1957/105

HeadNote

Limitation Act, 1908 — S. 12 — Arbitration — Limitation for filing award — When begins — Date on which arbitrator enters on reference — Determination of — Held, an arbitrator does not enter upon a reference the moment he accepts to work as an arbitrator, nor can it be said that he enters upon a reference only when he actually hears the reference — In the present case, the arbitrator entered on the reference when he sent registered letters to both the parties fixing a date for the hearing of the matter — Award having been made within four months from the date on which the arbitrator entered on the reference, was held to be within time — Limitation Act, 1908, S. 12.