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1922 DIGILAW 14 (SC)

L. OPPENHEIM AND COMPANY v. MAHOMED HANEEF

1922-03-07

AMEER ALI, LORD PHILLIMORE, LORD SHAW, SIR JOHN EDGE, VISCOUNT CAVE

body1922
Judgement Appeal (No. 31 of 1920) from a judgment and decree (November 6, 1918) of the High Court in its appellate jurisdiction, reversing a decree of the Court in its original civil jurisdiction. The suit which gave rise to the appeal was brought in the High Court at Madras by the appellants, merchants carrying on business in London, against the respondent, a merchant at Madras. Among other causes of action the appellants sued upon an award in their favour made under a submission to " Law Rep. 49 Ind. App. 174 ( 1921- 1922) L. Oppenheim and C ompany V. Mahomed Haneef 53 arbitration in London in the usual manner " contained in a contract of sale made between the parties. To that cause of action the respondent pleaded that the award was not binding upon him, as no notice had been given him by the arbitrator that he was proceeding to arbitrate. The facts are more fully stated in the judgment of the Judicial Committee. The trial judge (Coutts Trotter J.) made a decree for the amount awarded, holding that under the submission the arbitration was to be governed by the law applicable to arbitrations in England, and that upon the authority of Tharburn v. Barnes (( 1867) L. R. 2 C. P. 384.) the defence could not be raised in the suit. On appeal the decision was reversed by Sir John Wallis C.J. and Napier J. The learned Chief Justice (with whose judgment Napier J. agreed) was of opinion that the rule in England that misconduct in making an award was not a good plea to an action on the award did not apply in India, since there was no distinction between law and equity and any ground for equitable relief could be raised as a defence. They referred to three decisions of the Courts in India mentioned in the argument for the appellants, and concluded by saying that the English doctrine on which the above rule rested was of a highly technical character and could not, in their opinion, be imported into India under the terms of justice, equity or good conscience. 1922. Feb. 17. De Gruyther K.C. and Harold Morris K.C. for the appellants. The alleged irregularity was not a defence to the suit upon the award. 1922. Feb. 17. De Gruyther K.C. and Harold Morris K.C. for the appellants. The alleged irregularity was not a defence to the suit upon the award. The contract provided for " arbitration in London in the usual manner." It was clearly the intention of the parties that their rights under that part of the contract should be governed by the law prevailing in England, and consequently that law applied Hamlyn & Co, v. Talisker Distillery. ([ 1894] A. C. 202, 207.) It is well established in English law that in an action upon an award, irregularity or misconduct in the arbitration proceedings is not a defence Thorburn v. Barnes. (( 1867) L. R. 2 C. P. 384.) The award can be set aside if those grounds-are established upon motion under s. 11 of the Arbitration Act, 1889 ; that was the only course available in this case if the validity of the award was to be attacked. Bindessuri Per shad Singh v. Jankee Per shad Singh (( 1889) I. L. R. 16 C. 482.) ; Surjan Raot v. Bhikari Raot (( 1893) I. L. R, 21 C. 213.) ; and Ghellabhai Atmaram v. Nandubai (( 1895) I. L. R, 20 B. 238.) were cases as to arbitrations in India, and do not apply where the parties have by their contract submitted to arbitration in England. The appellate Court in the present cases thought that the English rule was of a technical character, and not within justice, equity, or good conscience. It is, however, submitted that the parties having, by the law which they have agreed is to apply, a good remedy, are fairly precluded from pursuing a different remedy. [Reference was also made to the Code of Civil Procedure, 1882, ss. 520, 521, 525 ; and the Code of Civil Procedure, 1908, clauses 20, 21.] The respondents representatives did not appear. March 7. The judgment of their Lordships was delivered by VISCOUNT CAVE. This is an appeal from a decree of the High Court of Judicature at Madras, in the exercise of its appellate jurisdiction, allowing an appeal from a decree made by Coutts Trotter J. in the exercise of the ordinary original civil jurisdiction of the same Court. March 7. The judgment of their Lordships was delivered by VISCOUNT CAVE. This is an appeal from a decree of the High Court of Judicature at Madras, in the exercise of its appellate jurisdiction, allowing an appeal from a decree made by Coutts Trotter J. in the exercise of the ordinary original civil jurisdiction of the same Court. The appellants are merchants carrying on business in London, and the original respondent (who has died during the pendency of this appeal and is represented by the present respondents) was a merchant carrying on business in Madras. By a contract in writing made in London and dated October 23, 1913, the appellants bought from the Law Rep. 49 Ind. App. 174 ( 1921- 1922) L. Oppenheim and C ompany V. Mahomed Haneef 54 respondent 20,000 tanned Madras sheepskins of a specified quality to be shipped to the appellants in London. The contract contained the following clause " Any differences arising out of this contract, failing amicable adjustment, to be submitted to arbitration in London in the usual manner, and the award of such arbitration to be final and binding on both buyer and seller." Certain skins were shipped to London, and the appellants paid to the respondent 1495l. 15s. &d. in respect of those skins. When the skins arrived in London, the appellants alleged that they were of inferior quality and refused to accept delivery. They were ultimately sold, with the consent of the respondent, at the price of 1242 l. 10s., thus leaving a deficiency of 253 l. 5s. &d., which the appellants demanded from the respondent and which the respondent refused to pay. Thereupon the appellants, in pursuance of the arbitra tion clause contained in the contract and of the English Arbitration Act, appointed Mr. R. H. Pringle as arbitrator on their behalf in the difference which had arisen, and caused the respondent to be served at Madras with a notice, dated February 3, 1916, whereby they informed him of the appointment of Mr. Pringle and required him, within seven days from the service of the notice, to name to the appellants or their agents in Madras an arbitrator to act on their behalf in London in the matter of the difference which had arisen, the notice stating that otherwise the difference would stand referred to Mr. Pringle alone as sole arbitrator. Pringle and required him, within seven days from the service of the notice, to name to the appellants or their agents in Madras an arbitrator to act on their behalf in London in the matter of the difference which had arisen, the notice stating that otherwise the difference would stand referred to Mr. Pringle alone as sole arbitrator. The respondent refused to appoint an arbitrator to act on his behalf or to take part in the arbitration ; and thereupon Mr. Pringle, at the request of the appellants, proceeded with the arbitration. He gave no opportunity to either party to appear and give evidence before him, but having read the contract and correspondence and inspected the skins, he made his award in writing dated July 11, 1916, and thereby awarded that the respondent should pay to the appellants the sum of 258 l. 5s. 9d., with interest and costs. On July 15, 1916, the appellants brought an action in the Kings Bench Division of the High Court of Justice in England for the amount payable under the award, and, the writ of summons having been served by leave upon the respondent at Madras and no appearance having been entered, the appellants, on November 28, 1916, recovered judgment against the respondent for the sum of 286 l. 2s. 9d., being the amount of the award with some interest and costs. The appellants then brought the suit out of which this appeal arises against the respondent in the High Court of Judicature at Madras, claiming the sum of 286 l. 2s. 9d. due under the judgment of the Kings Bench Division, or in the alternative 263l. 10s. 9d., being the amount of the award and costs, with interest, or as a further alternative 253l. 5s. 4d., being the loss on the contract. The respondent pleaded (among other pleas which are not now material) that the judgment of the High Court of Justice in London was not binding upon him, as it was not given on the merits, that the claim under the contract was barred by limitation, and as to the award, that it was not binding upon him, as no notice was given to him by the arbitrator that he was proceeding to arbitrate. The suit was heard by Coutts Trotter J., who held that, having regard to the decision of this Board in Keymer v. Visvanatham Reddi (L. R. 441. The suit was heard by Coutts Trotter J., who held that, having regard to the decision of this Board in Keymer v. Visvanatham Reddi (L. R. 441. A. 6.), the action upon the judgment could not be maintained, as the judgment had been entered in default of appearance and the action had not been tried upon its merits, and that the claim under the contract was statute-barred. This part of the judgment has not been challenged and need not be further referred to. With regard to the award, the learned judge in a lucid judgment held that the plea of want of notice could not be raised by defence in the suit. After observing that the grievance of the respondent was more imaginary than real, the award having been made by a commercial man who took the commercial documents with which he was familiar and saw the goods and gave his opinion on the spot, he added that if the objection could have been raised in the proceedings he would have felt constrained to give effect to it. But he referred to Thorburn v. Barnes (L. R. 2 C. P. 384.) as a complete authority for the proposition Law Rep. 49 Ind. App. 174 ( 1921- 1922) L. Oppenheim and C ompany V. Mahomed Haneef 55 that according to the English law any objection relating to an irregularity in bringing an award into existence must be taken by motion under the Arbitration Act, 1889, to set side or remit the award, and if not so taken could not be raised by way of defence to an action on the award. He therefore held that the defence that the award was tainted with irregularity by 4 the fact that the respondent had not had an opportunity of being present at the arbitration, was not open to him in the suit. He therefore held that the defence that the award was tainted with irregularity by 4 the fact that the respondent had not had an opportunity of being present at the arbitration, was not open to him in the suit. An application having been made by counsel for the respondent to treat the written statement as an application to the Court at Madras to set aside the award, the learned judge held that he had no jurisdiction to entertain such an application, adding " How a judge in Madras is supposed to have jurisdiction to upset an award made by an arbitrator in London passes my comprehension, and it is perfectly clear that the Court which is given jurisdiction by the English Act is the English Court." He added that even if he had had jurisdiction he would have declined to exercise it. Against this judgment an appeal was brought and was allowed by the Appellate Division, the learned judges of that Division holding that the rule in Thorburn v. Barnes (1) did not apply in India. Thereupon the present appeal was brought. In their Lordships opinion Coutts Trotter J. came to the right decision and this appeal should succeed. The contract of October 23, 1913, was made and was to be performed in England ; and the arbitration clause provided for an arbitra tion which was to take place in London and in accordance with English law and procedure. Under that law, by which both parties agreed to be bound, any objection to an award on the ground of misconduct or irregularity on the part of the arbitrator must be taken by motion to set aside or remit the award, and if not so taken cannot be pleaded in answer to an action on the award. In the present case no such motion was made within the time limited by Order LXIV., r. 14, of the Rules of the Supreme Court, England, or at all, and accordingly the award became as fully binding on both parties as if it had been incorporated in the contract. In the present case no such motion was made within the time limited by Order LXIV., r. 14, of the Rules of the Supreme Court, England, or at all, and accordingly the award became as fully binding on both parties as if it had been incorporated in the contract. No doubt any defence going to the root of the award—for instance, that the arbitrator had no jurisdiction or that the matter was tainted with fraud—could have been pleaded in the suit; but a defence on the ground of irregularity not appearing on the face of the award was excluded by the law by which both parties had agreed to be bound. On this view of the case the Indian law as to arbitration is irrelevant, and their Lordships accordingly express no opinion on the question whether if the arbitration had taken place in India the defence on the ground of irregularity could have been pleaded. It is plain that the Indian Court could not set aside an English award on that ground. In order to prevent misconception it appears desirable to add that it was not pleaded or contended at any stage of the proceedings that the award had merged in the English judgment, and accordingly their Lordships do not deal with that point. For the above reasons their Lordships will humbly advise His Majesty that this appeal should be allowed and that the decree of Coutts Trotter J. should be restored, the respondents to pay the costs in both Courts in India and the costs of this appeal.