JUDGMENT R. P. Gupta, J. - This is a first appeal against the Judgment dated 27.2.1993 of 3rd Additional District Judge, Jabalpur. By this judgment, the objections under Section 30 of Arbitration Act, filed by the appellant Karodi Shah Kohli against Award dated 9.4.1985 given by two arbitrators Bakhatmal Sethi (now deceased) and Manoharlal Sahni (respondent No. 2) in a reference made by the two parties to them in writing, were dismissed. The award had allowed Rs. 19,760/- as payable by Karodi Shah Kohli (appellant) to Sukra Datta Anand (respondent No. 1). On the award, there were signatures of appellant Karodi Shah Kohli under endorsement that he had read the award and received its copy in taken of acceptance. S. D. Anand also signed below it. A cheque for Rs. 19,760/- dated 30.4.1985 bearing No. 309530 drawn on Punjab National Bank, Kohli, had been received by Sukra Datta Anand (respondent No. 1) on the same date and a receipt of the same was recorded on the face of the award, also under the signature of Sukra Datta Anand. 2. The petitioner under Sections 14 and 17 of the Arbitration Act, 1940 had been filed by Sukra Datta Anand (respondent No. 1) for getting the award filed from arbitrators and for making it rule of the court. The award was filed by arbitrators on 3rd Sept., 1985. There was no recorded proceedings of arbitration prepared by the arbitrators. So, no such proceedings had been filed. The hearings of the parties by the arbitrators were done orally. Notice of the filing of the award had been given to the parties and objections to the award were filed by appellant Karodi Shah Kohli on 20-1-1986. The objections were to the effect that the dispute had arisen out of a transaction which was not legal and could not have been referred to arbitrators, that the arbitrators failed to appoint an umpire within the stipulated period and had commenced proceedings without appointing umpire and so the proceedings are vitiated ab initio, that the petitioner namely S. D. Anand had procured this award and the arbitrators realising the fault set aside the award and further that the award was bad otherwise. 3.
3. A petition of amendment to this petition of objection, by adding various other grounds was moved under Order 6, Rule 17 of the Civil Procedure Code and the same was allowed by the trial court subject to objections as to limitations to be taken by the opposite party during the trial. As a result, the objection petition was amended by appellant Karodi Shah Kohli on 26th July, 1986. By this amendment, the objector had raised additional pleas against the award urging that one of the arbitrators namely respondent No. 2 Manoharlal Sahni was biased against the objector and that the 2nd arbitrator Bakhatmal Sethi was old and infirm and had not applied this mind to the arbitration proceedings and it amounted to one man's award. Certain pleas on merits of the claims of the parties were also raised regarding who was entitled to what amounts by way of interest or profits or otherwise and it was assented that arbitrator Manoharlal Sahni had obtained the signature of objector on a blank stamp on which he subsequently scribed the award, that blank cheques were obtained by the arbitrator on 2nd April, 1985 from the objector and Manoharlal Sahni filled the blank cheque and gave it to Shukra Datta Anand. It was urged that the arbitrators mis-conducted themselves and the proceedings and they did not maintain proper records of the arbitration proceedings; that the rules of natural justice were not properly followed by the arbitrators, it was said that Manoharlal Sahni, arbitrator, had resigned from the office of arbitrator by letter dated 7.4.1985 addressed to 2nd Arbitrator Bakhatmal Sethi and also addressed to both the parties. It was asserted that this arbitrator could not pass an award on 9th April, 1985 i.e., two days after resignation. 4. The claimant S. D. Anand controverted all these pleas of the objector and urged that both the arbitrators had given a joint award which was accepted by the objector and he signed the award in token of its acceptance, even a cheque for the amount awarded was given by objector to him.
4. The claimant S. D. Anand controverted all these pleas of the objector and urged that both the arbitrators had given a joint award which was accepted by the objector and he signed the award in token of its acceptance, even a cheque for the amount awarded was given by objector to him. As regards the resignation by Manoharlal Sahni arbitrator, it was asserted that although such a letter was given by Manoharlal Sahni, both the parties approached him on the same day and requested him to act as arbitrator along with Bakhatmal Sethi in the interest of both the parties and so Manoharlal Sahni agreed and acted as arbitrator jointly with Bakhatmal Sethi and both the parties had placed their case and the accounts before the arbitrators who took a decision on under standing the claims of both sides and after going through the accounts and after hearing them. It was denied that there was any illegality in the transaction out of which dispute arose between the parties. It was asserted that there was no need to appoint an umpire as no difference had arisen between the arbitrators and only in case of difference between them, there was need to appoint an umpire. In any case, a joint award given by arbitrators cannot be said to be unlawful, merely because, an umpire had not been appointed by them. As regards cancellation of the award by the arbitrators the assertion is that the arbitrators had becomes functus officio after delivery of the award and so they could not cancel the award. Their act of cancelling the award on 11.6.1986 was illegal and ineffective. The objection was urged to be time barred, in any case the objections raised by amendment were barred by time and it was asserted that those objections, in no case, could be permitted to be raised. The allegations of bias of Manoharlal Sahni against the objector No. 1 was totally refuted. The allegations raised on merits of claims of the parties were also denied. The allegations of misconduct of proceedings were also denied. It was asserted that the resignation letter of Manoharlal Sahni had not been received by the claimant. 5. The objections were tried on the following issues : (1) Whether the agreement dated 28.5.1985 referring the dispute between the parties to arbitrators Bakhatmal Sethi and Manoharlal Sahni was valid ?
The allegations of misconduct of proceedings were also denied. It was asserted that the resignation letter of Manoharlal Sahni had not been received by the claimant. 5. The objections were tried on the following issues : (1) Whether the agreement dated 28.5.1985 referring the dispute between the parties to arbitrators Bakhatmal Sethi and Manoharlal Sahni was valid ? (2) Whether the award dated 9.4.1985 was given by the arbitrators after affording opportunity to hear the parties ? (3) Whether the arbitrator Manoharlal Sahni had any bias against objector Karodi Shah Kohli and whether the arbitrator Bakhatmal Sethi gave the award without applying his mind ? (4) Whether the award delivered by the arbitrators Bakhatmal Sethi and Manoharlal Sahni was against law and evidence and was against the principles of natural justice ? (5) Whether the objections raised were barred by limitation ? (6) Whether the claimant was entitled to recover amount of Rs. 19,760.00 with 18% interest per annum from the objector ? (7) Reliefs. 6. During the trial of these objections, both the arbitrators gave their statements before the court on oath by way of evidence and the claimant S. D. Anand gave his statement. The objector Karodi Shah Kohli did not examine himself, nor produced any witness. The original award has been proved on record as Ex. P. 1. The agreement of reference has also been proved on record as Ex. P. 2. The cheque of Rs. 19,760/- signed by Karodi Shah Kohli has also been accepted and is proved on record as Ex. P. 3. Its payment was stayed under order of the trial court, due to objections. A writing by both Bakhatmal and Manoharlal Sahni jointly issued to the parties dated 11.6.1985 cancelling the award, as the parties were unhappy with the award dated 9.4.1985, is also proved on record as Ex. P-B. Xerox copy of rough notes of the excepts of accounts of the parties about their claims and counter claim were placed on record which are Exs. P. 7 & P. 8, the original letter of resignation by Manoharlal Sahni dated 7.4.1985 addressed to arbitrator Bakhatmal Sethi and Shri S. D. Anand and Karodi Shah Kohli, is also proved on record. 7. The trial court in its judgment found that the objections raised by amendment of the original objection petition were barred by time, although the original objections were not barred by time.
7. The trial court in its judgment found that the objections raised by amendment of the original objection petition were barred by time, although the original objections were not barred by time. Secondly, the trial court held that even on merits the objections raised by amendment had no substance, that Manoharlal Sahni, at the request of both the parties had agreed to act as arbitrator even after the alleged resignation Letter Ex. D. 1 which he admittedly gave, that there was no need to make a further appointment of Manoharlal Sahni by fresh writing, that at the request of the parties Manoharlal Sahni and Bakhatmal Sethi had entered the reference, heard both the parties, understood their accounts and gave a joint award, which was accepted by the objector by signing on the award admitting that he had read the award and he had understood the award, that it was held that there was no illegality either in the reference or in the award, nor there is any misconduct during the conduct of arbitration proceedings and no rules of natural justice were violated. The parties were, heard and proper hearing was given to them. The award was given after understanding their accounts, claims and counter-claims. So the award was held to be valid and was made rule of the court after dismissing the objection petition. 8. I have heard learned counsel for both the parties at length. The counsel for appellant objector has asserted that after the arbitrator has resigned he could not act as Arbitrator and his joining arbitration proceedings was illegal. It was also asserted that the merits of the claim were not properly appreciated as the objector was not allowed interest on his money due against the claimant and it was a mistake which was admitted by arbitrators resulting in their cancelling the award. It is argued that the arbitrator Bakhatmal had admitted in his statement on oath that he had left the entire matter to be decided by Manoharlal Sahni as he himself was old and infirm and hard of hearing. So, he put reliance on Manoharlal Sahni and he just signed the award considering that Sahni must have decided correctly. Thus, it is argued that there is non-application of mind by one of the arbitrators and this amounts to legal misconduct.
So, he put reliance on Manoharlal Sahni and he just signed the award considering that Sahni must have decided correctly. Thus, it is argued that there is non-application of mind by one of the arbitrators and this amounts to legal misconduct. There is no record of arbitration proceedings for this court to assess what proceedings took place and this is also urged to be procedural misconduct. The assertion is that there is a patent error on the face of award as there is no recorded proceedings and so the objections should have been accepted and award set aside. 9. After consideration of the evidence. I am of the view that issue No. 5 of limitation as regards original objections petition which was presented or 21.1.1986, has been rightly decided as within limitation as the notice of filing of award on the objector through his counsel was served only on 23rd December, 1985. The objections had been filed within 30 days. However, the finding of the trial Court that the objections raised by amendment were barred by limitation cannot be upheld as once amendment of objections petition is allowed, it relates back to the date of original objections petition. Raising of additional objections is not the same as addition of parties. This finding of the trial court cannot be upheld. I hold that all the objections are to be considered as within limitation. 10. The trial court has decided all the objections on merits also. So my finding on issue of limitation does not affect rest of the findings which should be considered on their own merits. 11. Issue No. 1 : No argument was raised on issue No. 1. No illegality was pointed out in the agreement of arbitration or in the reference the finding is confirmed. 12. Issue Nos. 2 to 4 : There is no doubt that Manoharlal Sahni had refused to act as Arbitrator by his letter Ex. D. 1. The letter mentions that he was withdrawing his name and requested the parties to decide the dispute between themselves or to refer to somebody else and that he will be able to participate in the decision of the matter between the parties. It is dated 7.4.1985. This is not a letter of resignation, but a letter conveying 'refusal to Act' as arbitrator.
It is dated 7.4.1985. This is not a letter of resignation, but a letter conveying 'refusal to Act' as arbitrator. However, the same day, the parties approached him and insisted upon him not to keep himself away and to decide the dispute between the parties S. D. Anand has stated so. Manoharlal Sahni has stated so and Bakhatmal has also stated so. Karodi Shah Kohli, objector has not appeared in witness-box to counter this evidence. There are signatures of both the arbitrators on the award Ex. P. 1 and it was signed by Karodi Shah Kohli under the acknowledgement that he had read the award and received its copy. It was signed by him on 9.4.1985. This writing was signed by S. D. Anand also. So both the parties were present and signed the award. Thus, clearly it is acceptable that the parties had approached this arbitrator Bakhatmal to act as an arbitrator in spite of his earlier refusal. He did so act accepting their request. The award was given jointly by both the arbitrators. 13. Mere refusal to act is not removal nor resignation. Such refusal may be retracted by an Arbitrator and he may start acting as Arbitrator again with the consent of the parties. Such consent need not be in writing and can be oral. Section 2(a) of the Arbitration Act, 1940 defines Arbitration agreement as under : 2. Section 2(a) : Arbitration agreement : "2. (a) "arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not; This shows that arbitrator need not be named in such agreement. The arbitrator may be appointed later on by parties, even orally. No provision in the Act requires that the nomination or appointment or arbitrator must be in writing. Whether the arbitrator was appointed orally by parties, can be established by evidence. In case of 'refusal to act' by appointed arbitrator, the parties can prove that they orally requested the arbitrator to withdraw his refusal to act and to act as arbitrator and that the arbitrator retracted from his refusal and actually so acted. In this case, there is sufficient proof about if from statement of arbitrators and of Shukra Datta Anand, unrefuted by objector Karodi Shah Kohli and confirmed by the fact that both arbitrators and both parties signed the award.
In this case, there is sufficient proof about if from statement of arbitrators and of Shukra Datta Anand, unrefuted by objector Karodi Shah Kohli and confirmed by the fact that both arbitrators and both parties signed the award. The Allahabad High Court in two judgments : (i) Kanchhedmal v. Ganga Prasad and Six others (AIR 1937 All 582) (ii) Madhav Prasad v. Badri Das Ram Swarup (AIR 1928 All 740), has occasion to consider the effect of refusal on subsequent giving of award. In the first of these cases, the arbitrator had been appointed through court. He returned the papers to the court with a note that he was doing so as one of the parties did not wish him to act and also he had no leisure in future to carry out the task. The following day, after receipt of the copy of an order, he asked for return of the papers to him and informed the Court that he would be prepared to carry on the arbitration. The Court held that such communication of arbitrator would not be regarded as flat refusal. It was held that by such communication, the arbitrator does not become functus officio and does not firmly divest himself of his character as an arbitrator. Similar observations were given by a Division Bench of Allahabad High Court in Madhav Prasad v. Badri Das Ram Swarup (supra). The rationale is clear that Courts will not lean against arbitration proceedings and those who appointed arbitrators can persuade them to continue to so act irrespective of any hitch which the arbitrator may feel. So the arbitrator has not totally divested himself by such refusal to act. If the parties later on request him to act and he performs the duties as arbitrator on such request, it is perfectly lawful on his part to do so. In this case, there is ample proof of the parties having requested him to so act as arbitrator even after his refusal in writing. So there is no illegality in the award on this account. 14. Bakhatmal has stated that he was old, hard of hearing and infirm. So he did not go through the accounts of the parties, but Manoharlal Sahni had gone through those accounts on his asking as he had full faith in Sahni.
So there is no illegality in the award on this account. 14. Bakhatmal has stated that he was old, hard of hearing and infirm. So he did not go through the accounts of the parties, but Manoharlal Sahni had gone through those accounts on his asking as he had full faith in Sahni. He says that no written proceedings were maintained and Sahni obtained his signatures on the award without explaining the award to him. This is controverted by Sahni who says that Bankhatmal had actively joined in the proceedings and in the deliberation. They both had heard the parties and gone through the records of their accounts and excerpts of the accounts were looked into and copies of certain notes taken by them are Exs. P. 7 and P. 8 and they both had passed the award. 15. Ex. P. 1 is a non-speaking award as no reasons are given. Admittedly, there is no written record, but there is ample proof that both sides were heard and their accounts were gone into. Exs. P-7 and P. 8 are merely rough notes. It appears clear that the contention of Bakhatmal that he did not understand the accounts, is not acceptable and he is only siding with the objector. He admittedly carries on his own accounts of his own business properly. He may be hard of hearing, but used hearing-aids, admittedly. He can understand accounts as he does he own accounts. So, the findings of Sahni that the arbitration had fully joined in the arbitration proceedings and understood the accounts and that the award was given by joint deliberation of the arbitrators, is acceptable. It is confirmed by the award itself which was signed by both the arbitrators and further both the parties signed this award. The mere fact that blank cheques were obtained by the arbitrators before undertaking the proceedings or entering the reference, does not mean that there was pressure on the parties or that the award is illagal. It was just to ensure confidence of the parties in the arbitrators. The signing of the award of the parties shows that it was announced in their presence and that the cheque was handed over duly filled to the claimant, then and there. There can be held no illegality on this account either in proceedings or in the award.
It was just to ensure confidence of the parties in the arbitrators. The signing of the award of the parties shows that it was announced in their presence and that the cheque was handed over duly filled to the claimant, then and there. There can be held no illegality on this account either in proceedings or in the award. It is not necessary that a written record of the hearing should be kept when the dispute arose only out of the accounts between the parties. The arbitrators are well within their jurisdiction to go through the accounts and pass an award. The rule of natural justice requires that parties should be given an opportunity to be heard by the arbitrators, which means whatever material they want to place before the arbitrators should be allowed to be placed and should be looked into. It was not the case where any of parties had made a statement on oath before the arbitrators. They did not required to make any such statement. They showed their documents i.e. their accounts and let the arbitrators decide. Then the arbitrator decided. There is no illegality in this procedure before the arbitrators. Thus rules of natural justice are not violated. 16. In view of my above discussion, I am of the view that the findings of the trial court that Monoharlal Sahni had acted at the request of the parties even after refusing to act in writing and that the award was given after the deliberation between the arbitrators, after both the parties were heard and given opportunity to place their case before the arbitrators and the accounts of both the parties were looked into, is proper and legal. I find no infirmity in these findings of the trial court. 17. As regards the cancellation of the award by the arbitrators by the writing Ex. P. 1-B, the learned trial court has rightly discarded it as the arbitrators had no jurisdiction left after announcing the award. They could not set it aside by themselves, taken into consideration some objections by one of the parties against whom an award has been passed. So the writing dated 11.6.1985 given by the arbitrators cancelling the award has no legal force and does not affect the award at all. Issues No. 2 to 4 have been rightly decided by the trial court 18. Issue No. 6.
So the writing dated 11.6.1985 given by the arbitrators cancelling the award has no legal force and does not affect the award at all. Issues No. 2 to 4 have been rightly decided by the trial court 18. Issue No. 6. The objector wanted the court to decide on perusal of the material on record that he was entitled to interest on his share of profits and that the same has not been taken into consideration while giving the award. Thus, he wanted a decision on merits of award of this extent. In hearing objections under Section 30 of Arbitration Act, the court does not act as court of appeal and does not over-rule findings of arbitrators on appreciation of material on record. The civil court will not say that on consideration of material on record, it would reach a different finding than was reached by the arbitrators. There is nothing on record to show that there was a mistake or illegality on the face of award. It appears from the record of objections that cross-examination of the claimant and the arbitrators was directed towards merits of the claim and counter claim of the parties. That has to be ignored as the court cannot go into these aspects, as correctness of the award is not to be adjudicated upon under Section 30 of the Arbitrator Act. The issue was decided against the objector rightly. 19. The net result is that the award was rightly upheld as valid. I confirm the findings. There was no misconduct of proceedings by the arbitrators nor any misconduct by any of the arbitrators personally. There was no proof of bias of Bakhatmal, arbitrator, in favour of the claimant or against the objector/appellant. The award was rightly made rule of the court. The appeal is dismissed with costs. Appeal dismissed.