HARISH CHANDRA SAXENA v. UNION OF INDIA — 1965 DIGILAW 2 (DEL)

Gurdev Singh, J. ( 1 ) THIS first appeal is directed against the order of Shri Jagmohan Lal Tandon, Subordinate Judge, dated 11th April 1957 whereby he rejected the objections preferred under sections 30 and 33 of the Indian Arbitration Act, by the appellant Harish Chandra Saksena and making the award of the arbitrator dated 14th July 1955 rule of the Court directing that a decree be preapred in accordance with it ( 2 ) TENDERS had been invited by the Union of India for executing certain repair works. On the 11th December 1951 the appellant Harish Chandra Saksena submitted his tender in which he quoted rate as 149 percent above those given in the Schedule A of the tender. This tender was accepted by the C. W. E. Delhi Area, Lieut: Col: Ghumman, on the 17th December 1951. It appears that in the meantime on 16th December 1951 the appellant realised that there had been , a mistake in the filling up the tender inasmuch as in quoting rates he had wrongly put down 149 instead. of 249 per cent above the rates given in the Schedule A. Accordingly, on the 16th December 1951 the appellant sent a letter of revocation. Exhibit P. 2 to authorities under the certificate of posting Exhibit P. 3 This letter, according to the records of the respondent, however, -reached. the autliorities concerned on the 24th December 1951, but, as has. been noticed earlier, prior to the 17th December 1951 the appellants tender had been accepted by Lieut: Col. G. S. Ghumman. A dispute having thus arisen between the parties, on 9th February 1955 the Union of India referred it for adjudication to Lt. Col. G. S. Ghumman as sole arbitrator in accordance with the terms and conditions of the contract in dispute. ( 3 ) ON the 15th February 1955 the arbitrator sent letters to the parties wherein, after stating that he had accepted his nomination to act as arbitrator/he called upon them to submit their respective pleadings to him. The claimant was directed to put in a detailed statement erf claim alongwith a copy of the pleadings by the 2nd March 1955. The opposite party was asked to furnish a written statement arid pleadings by the 14th March 1955. The claimant was directed to put in a detailed statement erf claim alongwith a copy of the pleadings by the 2nd March 1955. The opposite party was asked to furnish a written statement arid pleadings by the 14th March 1955. After the parties had complied with these directions on the 2nd June 1955 the arbitrator issued a formal notice to the parties to appear before him on the 15th June 1955 warning them that if any of the parties absented himself he shall be proceeded ex-parte if so requested by the other party to the reference. On the 15th June 1955 the appellant absented himself and after taking the necessary proceedings ex-parte, on the 14th July 1955 the arbitrator gave his award under which the appellant Harish Chandra Saksena was directed to pay Rs. 7. 176. 00 to the Union of India- On the 7th November 1955 an application under section 17 of the Arbitration Act for filing the award was made by the Union of India. Thereafter, on the 17th February 1956 the appellant Harish Chandra Saksena filed an objection petition under sections 30 and 33 of the Indian Arbitration. Act assailing the validity of arbitration proceedings and the award. Besides pleading that there was no valid contract between the parties nor any agreement to refer the matter to arbitration, a number of objections were raised to the validity of the award and the conduct of the proceedings by the arbitrator, one of which was that the award, having not been made by the arbitrator within four months of the day he entered upon the reference, was. null and void. Being of the opinion, that there was no defect in the award, the learned Subordinate Judge dismissed the appellants objections and directed that a decree in accordance with the award shall issue, ( 4 ) IN assailing the order of the Subordinate Judge the appellants learneded, counsel has contended : (1) That the award is a nullity having been made beyond the prescribed period of four months from the date on which the arbitrator entered on the reference. (2) That the reference being unilateral and not with the consent of the appellant was invalid. (3) That there was no lawful contract between the parties as no valid. contract was. executed between the parties in accordance,with the. provisions of Article 299 of. the Constitution and (4) That Lt. Col. (2) That the reference being unilateral and not with the consent of the appellant was invalid. (3) That there was no lawful contract between the parties as no valid. contract was. executed between the parties in accordance,with the. provisions of Article 299 of. the Constitution and (4) That Lt. Col. G. S. Ghumman who, according to the respoadents case had accepted, the respondents tender, was not theau. thority competeat. to accept it. This last objection, however, does not find any place in the grounds of appeal and I see no justification for allowing it to be urged, at the hearing before me. After hearing the parties counsel I am of the opinion. . that the first objection to the-validity of the award is well-founded and must prevail, and once it is found that the award has been made beyond the period of- limitation it will not be necessary to deal with the other objections. ( 5 ) IT is not disputed that unless the time was extended and. this has was bound, to -make. . his award within four months ofhis entering upon the reference, in returning the finding that the award was made within the. prescribed period of. four months, the learned Subordinate Judge has held. that this. period of four months has to be counted from l5th of June 1955, whic according to him, was the day on which the arbitrator entered"upon the reference. The appellants learned counsel seriously challenged this. later premises and has, on. the other hand, maintained, that the, arbitratior entered upon the reference much earlier, on the 15th of February 1955, and accordingly the award made on 14th of July 1955, was beyond the "when did 0 arbitrator enter upon the reference ?" ( 6 ) POR proper appreciation of the matter, it is necessary to turn to the relevant facts. The reference was made to Lt. Col. G. S. Ghuman as olearbitrator on 9th of February 1955. It was on 15th of February, 1955 that the -arbitrator sent letters to the parties wherein, after inforiiofts "theiu that he had accepted his appointment as sole arbitrator, liecuecl npon theift to submit their respective pleadings to him. The reference was made to Lt. Col. G. S. Ghuman as olearbitrator on 9th of February 1955. It was on 15th of February, 1955 that the -arbitrator sent letters to the parties wherein, after inforiiofts "theiu that he had accepted his appointment as sole arbitrator, liecuecl npon theift to submit their respective pleadings to him. The Haimantwas required to furnish a detailed statement of his claim along with fcopy of his pleadings by the 2nd of March 1955, while the opposite party was directed to furnish the written statement and his pleadings by the 14th of March 1955. The parties duly complied with these directions and thereafter on 2nd of June 1955, the arbitrator issued a formal notice to the parties appear before him on 15th of June 1955,makibg-itclearto them taat,, if any of them failed to appear ex-parte proceedings Would be taken. On the 19th of June 1955, the appellant absented himself. Proceedings were taken ex-parte against him and on 14th of July 1955, the arbitrator gave his award. ( 7 ) IN returnihg the finding that it was only on 15th of June 1955, that the arbitrator entered upon the reference the learned trial Je observed as under :- "after hearing the aguments of the learned counsel for the-parties and after looking into the reference on the file, I feel inclined to hold that the arbitrator entered into the reference on 15. 6. 55. If the parties Rad not appeared before him on 15. 6. 55 the arbitrator was entitled to procteed ex-parte. Previous to that whatever letters were issued by the "arbitrator to the parties, they were of preliminary nature. For iifetanbeinthe letter which he sent to the parties on 15. 2. 55 he informed the parties that the date, place of the hearing shall be notified later on. After that he wrote another letter suggesting the date as 15. 4. 55 and sought the consent of the parties if that date Would smt them. These two communications will not justify an inference thtthe arbitrator had entered upon the reference on any of those two dates. I, therefore, hold that the period of four months shall bfecalculated froifa 15. 6. 55 and as the award was made on 14. 7. 55 it is to be taken as Mithin time". These two communications will not justify an inference thtthe arbitrator had entered upon the reference on any of those two dates. I, therefore, hold that the period of four months shall bfecalculated froifa 15. 6. 55 and as the award was made on 14. 7. 55 it is to be taken as Mithin time". ( 8 ) THE comiatg to this finding the learned Subordinate Judge relied pjtibkar "f. Stephens Where it was held that narbifratorenteiph a reference, riot When he accepts the Office or takes upon hialself tte fuhettris of arbitrator by giving notice of his intention to proceed, but when he eriters into the matter of the reference, either with bh prttes before hifti. Or under a peremptory appointment enabling him to proceed ex-parte. The appellants learned Counsel has contended that this riot longer good law and the authority of this decision has been Shaken by recent decision of the House of Lords in Lossifoglu v. Cownantero". He has also ured that it is the rule laid down in the later decision which has been followed by the various High Courts in this country. Particularly reliance is placed upon the following observiations of Scott. L. J. in Lossifoglus case The question raised by the appeal really resolves itself into this when can arbitrators be said to enter upon a reference ? In my view they enter upon it as soon as they have accepted their appointment and communicated with each other about the reference. Both the English, authorities, REFERRED TO above, came up for. consideration before a bench of the Calcutta High Court in Messrs Bajrangal Laduram v. Ganesh Commercial Co. Harries C. J. who delivered the judgment of the Court, after quoting at length from these authorities and referring to some other English decisions, observed as following.- The English Courts have quite clearly changed their view as to the meaning of the term entering upon a reference and the most recent decision in Lossifolgu v. Coumataros cannot possibly be reconciled with the case of Baker v. Stephens * * * From the -report it would appear that the case of Baker v. Stephens * was not cited either to the Divisional Court or to the Court of appeal. But the decision of the Court of appeal is anemphatic one. Thereafter the learned Chief Justice relied upon the observiations of Scoot L. J. which have been reproduced earlier. But the decision of the Court of appeal is anemphatic one. Thereafter the learned Chief Justice relied upon the observiations of Scoot L. J. which have been reproduced earlier. The decisions in Sardar Mal Hardat Rai v. Sheo Baksh Rai Sri Narain NandaKtshorev. Bally. Co-operative Credit Society Ltd. and Ramganathan v. Krishanaya were considered. The learned Cheif Justice did not approve of the view taken, in them. Qua consideration of the various authorities the learned Chief Justice summed up his conclusions in these words;- "it is clear that the attitude of the English Courts towards arbitrators had changed very materially. In eariler decisions such as in. Bakers. Stephens the tendency was to, deny jursidiction. . . to the arbitrators in any case where such a view was possible. This view has changed materially in later years and now the tendency of the Court is to uphold the jurisdiction of arbitrators whenever such a view is possible. That change in attitude does in my view probably account for the convicting decisions in Lossifoglu v Coumaniaros and Baker v. Stephens. This later view of the English Court. accords with my own view and with the view of Sinha J. and I think must be accepted in India. Being of this opinion, the learned Cheif Justice ruled that the arbitrators had entered upon the reference when they had both decided to accept their appointment and had taken steps in concert to. obtain from the. patties- the necessary statements and papers to enable them to decide the matter and make the award. The learned Chief Justice did. not accept the dictum in Sardar Mal s case, that an arbitrator entered upon the matter of reference not when he accepted the office or took upon himself the duty, but when the parties were before him,or under some peremptory order compelling him to conclude the hearing ex-parte. Chatterjee J. agreeing with the learned Chief Justice said. "in my view, the arbitrators enter upon reference when they take upon themselves the office of arbitrators and exercise some functions as arbitrators. If they meet and determine the date of hearing and issue directions as to pleading they exercise the functions of arbitrators and, therefore, they should be treated as having entered on the reference.