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1948 DIGILAW 225 (CAL)

Dominion of India v. Kalyan Kumar Purkayastha

1948-10-01

body1948
JUDGMENT 1. This is an application for setting aside an award dated the 13th January, 1948, made by Bakshi Shib Charan Singh who purported to act as sole arbitrator in the following circumstances. In December, 1944, the Petitioner, who carries on business under the name and style of Sribhumi Scientific and Industrial Supply at, among other places, No. 13/1, Raja (sic) Roy Road, entered into a contract in writing, for the supply of baskets, with the Governor-General of India in Council, acting through the Director of Civil Supplies. The contract contains an arbitration clause providing that in case of a dispute arising between the parties, a reference shall be made to two arbitrators, one to be appointed by each party. Disputes arose between the parties which, it is not disputed, are within the ambit of the arbitration agreement. 2. By a letter dated the 24th July/26th August, 1947, the Director of Supplies nominated and purported to appoint the said Mr. Singh to hear and determine the disputes between the parties. This letter was addressed to and received by the Petitioner on the 27th August, 1947. 3. By a letter dated the 4th August/3rd September, 1947. the Director of Supplies, after referring to the said letter of the 24th July/26th August, 1947, called upon the Petitioner to appoint his arbitrator within fifteen days after receipt of the letter. This letter was received by the Petitioner on the 8th September, 1947. In reply, the Petitioner on the 22nd September, 1947, by a letter of that, pointed out that the appointment of Mr. Singh as arbitrator was not in order and was invalid and that in the circumstances the petitioner had been advised not to take any steps in the matter. 4. The Director of Supplies, by his letter dated the 17th October, 1947, denied that the appointment of Mr. Singh as arbitrator was invalid or not in order; but concluded by saying that in order to avoid controversy he was once more appointing Mr. Singh as arbitrator on behalf of the Government. 5. 4. The Director of Supplies, by his letter dated the 17th October, 1947, denied that the appointment of Mr. Singh as arbitrator was invalid or not in order; but concluded by saying that in order to avoid controversy he was once more appointing Mr. Singh as arbitrator on behalf of the Government. 5. It should be observed that the first two letters mentioned above were signed by the Director of Supplies for and on behalf of the Governor-General of India in Council and the arbitrator was appointed on his behalf; the last mentioned letter was signed for and on behalf of the Governor-General of India and the arbitrator was appointed on behalf of the Government. This letter was received by the Petitioner on the 17th November, 1947. 6. By a letter dated the 10th November, 1947. the Director of Supplies for and on behalf of the Governor-General of India, wrote to the said Mr. Singh, that he had been appointed arbitrator on behalf of the Governor-General of India to hear and determine disputes between the Governor-General of India and the Petitioner and as the latter had failed to appoint an arbitrator on his behalf within the time allowed by law, he (the Director of Supplies) by virtue of the powers conferred by the Arbitration Act appointed the said Mr. Singh to act as the sole arbitrator to hear and determine the disputes between the parties Mr. Singh by a letter dated the 18th November, 1947, informed the Petitioner that he had entered on the Reference as the sole arbitrator; and fixed the hearing of the case at 9 a.m., on 27th November, 1947, at the Grand Hotel, Calcutta, and required the Petitioner to attend, when he said he would give necessary directions regarding the future trial of the case. To this letter there was a reply on behalf of the Petitioner by his solicitor, saying that the appointment of Mr. Singh was bad and invalid and that he had no jurisdiction to proceed with the reference. 7. Mr. Singh gave a further notice to the Petitioner dated the 5th January, 1948, asking him to file a written statement on the 13th January, 1948. No written statement was filed by the Petitioner. He did not take part in the proceeding. The award was made on the 13th January, 1948, which is sought to be set aside. 8. 7. Mr. Singh gave a further notice to the Petitioner dated the 5th January, 1948, asking him to file a written statement on the 13th January, 1948. No written statement was filed by the Petitioner. He did not take part in the proceeding. The award was made on the 13th January, 1948, which is sought to be set aside. 8. It is contended on behalf of the Petitioner, that the appointment of Mr. Singh as sole arbitrator was invalid, because he notice required by sec. 9 (b) of the Indian Arbitration Act. 9. It is not disputed that the letter of the 18th October, 1947, was received by the Petitioner on the 17th November, 1947. The appointment of Mr. Singh as sole arbitrator was made prior to the receipt of this letter. 10. The power to a party to appoint a sole arbitrator has been conferred by sec. 9 (b) of the Indian Arbitration Act, 1940, and the pre-requisite condition for exercise of that power is that the other party fails to appoint an arbitrator for fifteen clear days after the service of a notice in writing to make the appointment. Before this time a sole arbitrator cannot be appointed;-- that is not allowed by the section, If, therefore, the appointment of Mr. Singh is based on his nomination by the letter of the 18th October, 1947, I most hold that such appointment was had and Mr. Singh had no jurisdiction to enter upon the reference as sole arbitrator inasmuch as the appointment was made even before the letter reached the party who was called upon to appoint an arbitrator. Therefore, the award is bad. No authority is needed for this proposition. But if any authority was needed for this proposition, it is to be found in the Full Bench case of the Madras High Court, reported in Tallapragada Suryanaraina v. Tallapragada Surabaya 9 I. C. 173 (1910). In that case White, C. J., says:-- " An award made by a Tribunal of Arbitration, not constituted in accordance with the provisions of the Civil Procedure Code," (now the Arbitration Act. 1940) "is invalid." Indeed. Mr. Anil Mitra who appears for the Respondent has not disputed the point. His argument, however, is this: Mr. In that case White, C. J., says:-- " An award made by a Tribunal of Arbitration, not constituted in accordance with the provisions of the Civil Procedure Code," (now the Arbitration Act. 1940) "is invalid." Indeed. Mr. Anil Mitra who appears for the Respondent has not disputed the point. His argument, however, is this: Mr. Singh was nominated to act as arbitrator by the letter of the 24th July/27th August, 1947; notice of the nomination was given to the Petitioner by the letter of the 3rd September, 1947, received by him on the 8th September: and as the Petitioner failed to appoint an arbitrator for fifteen days after the 8th September, the Respondent was justified on the expiry of that period in appointing Mr. Singh as sole arbitrator; and his' appointment as sole arbitrator which was made on the 10th November was good. Mr. Mitra further says that such appointment though made on the 10th November. 1947, was retrospective in effect and operated as from the date of his nomination, which' according to Mr. Mitra was the 24th July, 1947. If this view is accepted then the appointment of Mr. Singh as arbitrator was made on behalf of the Governor-General of India in Council and not on behalf of the Respondent; the Respondent had no legal existence on the 24th July, 1947. A Governor-General for India as constituted by the Indian Independence Act, 1947, was appointed as from the 15th August, 1947. It follows, therefore, that the Respondent was not a party to the arbitration proceeding, and consequently cannot take advantage of the said alleged award. To meet this difficulty Mr. Mitra has referred me to cl. 12 of the Indian Independence Order, 1947. cl. 12 of the Order is this:-- Where immediately before the appointed day the Governor-General in Council is a party to any legal proceedings with respect to any property, rights or liabilities transferred by this Order, the Dominion which succeeds to the property, rights or liabilities in accordance with the provisions of this Order shall be deemed to be substituted for the Governor-General in Council as a party to those proceedings and the proceedings may continue accordingly, 11. Mr. Mitra's contention is this : an arbitration proceeding is a legal proceeding; it commences from the date of the appointment of an arbitrator; in this case, therefore, the legal proceeding commenced as from the 24th July, 1947. Mr. Mitra's contention is this : an arbitration proceeding is a legal proceeding; it commences from the date of the appointment of an arbitrator; in this case, therefore, the legal proceeding commenced as from the 24th July, 1947. Therefore, there was a legal proceeding pending on the 15th August, 1947, and the Governor-General of India in Council was a party thereto; that legal proceeding was with respect to rights or liabilities transferred to the Dominion of which the Respondent was the Governor-General, Consequently the Respondent should be deemed to be substituted for the Governor-General of India in Council as a party to the arbitration proceedings; and the proceedings have continued accordingly. Therefore, the Respondent is entitled to the benefit of the award. Ingenious though the argument is, it is unsound. It is unnecessary for me to examine each part of Mr. Mitra's contention. For I consider that there is a vital defect in his argument. It assumes that the appointment is completed on the date of the nomination, even before it is notified to the other side. But that is not the law. In Russel on Arbitration--12th Edition, at p. 142, the law is stated thus:---"The appointment of an arbitrator by a party is not considered complete until it has been notified to the other side." [Tew v. Harris (1848) 11 Q. B. 7 and Thomas v. Fredricks (1847) 10 Q. B. 775]. In the last-mentioned case Lord Denman said:--" Neither party can be said to have chosen an arbitrator until he lets the other party know the object of his choice." "Nomination " implies "notice." Sir N. N. Sircar in his Law of Arbitration in British India has summarized the law in this way:-- What happens if the appointment is made within fifteen days, but the other party is not informed of it till after fifteen days, or in other words, when is the appointment made within the terms of the statute ? When the nomination is made, or when the making of that appointment is notified to the other party. This matter is concluded by English authorities based on the same language as that used in the. When the nomination is made, or when the making of that appointment is notified to the other party. This matter is concluded by English authorities based on the same language as that used in the. Indian Statutes; and in Thomas v. Fredricks (sic) and Tew v Harris (1848) 11 Q. B. 7, it has been held that the appointment is not to be regarded as complete, until such appointment has been notified to the other side, It is also to be regarded as incomplete until such appointment has been notified to the other side 12. Assuming, therefore, that Mr. Singh was nominated on the 24th July, 1947, as arbitrator, his appointment could not be regarded as complete till it was notified to the other side. 13. The appointment was notified, as I have said before, after 15th August, 1947. Before that date the Respondent had no legal existence. If the nomination was on behalf of the Governor-General of India in Council and not on behalf of the Respondent the appointment would not be made on behalf of the Respondent and the appointment was complete only after such appointment had been notified to the other side. Therefore, on Mr. Mitra's own argument the Respondent was not a party to the arbitration proceedings and Mr. Singh was not validly appointed an arbitrator on his behalf. I must, therefore, set aside the award. The Petitioner is entitled to the costs of this application.