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Madhya Pradesh High Court · body

2000 DIGILAW 572 (MP)

CHANDMAL v. JHAMAKLAL

2000-06-19

A.KULASEKARAN

body2000
ORDER A. M. SAPRE, J. - Could the surviving Arbitrator deliver an award on the death of Co-Arbitrator which occurred pending arbitration reference before them and whether such an award delivered by surviving Arbitrator be made rule of Court under the repealed Arbitration Act was the question posed by the learned trial Judge while deciding the lis that was before him and out of which this appeal eminates. By impugned order, the learned trial Judge has answered the aforementioned question in affirmative and accordingly made the award rule of Court. The impugned order was rendered on 23.12.1996 by Ist ADJ, Ratlam in Civil Suit No. 18-A/88. It is this order which is impugned by the appellants in this appeal filed under Section 39 of the Arbitration Act. To appreciate the grievance urged by the appellants few relevant facts need mention. 2. Parties to this appeal (litigation) are real brothers all being sons of late Dhanraj who owned extensive immovable properties. On his dealth, presumably intestate disputes arose between his sons, i.e., present appellants and respondents regarding extent of each share in all the immovable properties left by their late father. This led to an agreement between the parties for referring the disputes to be resolved by the 2 Arbitrators namely, Motilal s/o Deepchand and Nihalchand s/o Ladarchand. Since the reference was not made to these Arbitrators despite agreement, parties invoked Section 20 of Arbitration Act, 1940 (since repealed) by making an application to the Court being Case No. 1/78. The learned Judge by its order dated 5.3.1979 made the reference to Arbitrators which as stated above consisted of Motilal and Nihalchand. The Arbitrators were asked to decide the disputes which had arisen between the parties in relation to their share in the immovable properties and to effect partition. The Arbitrators accordingly embarked upon the reference but could not complete the proceedings in time. The Court then by its order passed on 28.1.1980 in Case No. 7/79 extended the time to enable the Arbitrators to complete the proceedings and pass in award. 3. On 23.12.1982 the Arbitrators delivered an award. It was then filed by the Arbitrators themselves in Court passing a decree in terms thereof in Case No. 18-A/82 (16-A/88). In these proceedings, the respondent No. 2, Amritlal filed objections and contended that the award be not made rule of Court. 3. On 23.12.1982 the Arbitrators delivered an award. It was then filed by the Arbitrators themselves in Court passing a decree in terms thereof in Case No. 18-A/82 (16-A/88). In these proceedings, the respondent No. 2, Amritlal filed objections and contended that the award be not made rule of Court. The trial Court by its order dated 30.11.1989 upheld the objections and set-aside an award. The case was remanded to the Arbitrators for passing a fresh award. Consequent upon the remand, the matter was again taken up by the Arbitrators. It is at this point of time, one of Arbitrator, Motilal died. Even then, it appears as it is clear from the record that other Arbitrator Nihalchand continued with the arbitration proceedings and on 19.2.1990 rendered an award. It is this award which was again filed in the Court for making the same rule of Court. The award was filed by Nihalchand Arbitrator through lawyer Shri Vyas. It may be mentioned that this award was identical to the one earlier passed. 4. The appellants objected to filing of the aforementioned award essentially on the ground that on the death of Motilal i.e., Co-Arbitrator no award could be delivered by Nihalchand, i.e., another Arbitrator. This objection was overruled by the learned trial Judge. In the opinion of learned trial Judge the death of Motilal (one Arbitrator) does not affect the pending arbitration proceedings nor it has any adverse impact on the jurisdiction of surviving Arbitrator to proceed ahead in arbitration proceedings for delivery of an award. It is on the basis of this reasoning, the learned trial judge upheld an award rendered by surviving Arbitrator-Nihalchand. It is this order rejecting the objection of appellant which is impugned in this appeal by the appellant. 5. Heard Shri V. A. Katkani, LC for the appellants (objectors to an award). None for the respondents though served. 6. Learned counsel for the appellants while attacking the validity of impugned order reiterated the same objection that was urged in the Court below. In effect, the submission was that surviving Arbitrator had no jurisdiction to pass an award on the death of Co-Arbitrator. Having heard the counsel of the appellant, and perused the record of the case I am inclined to accept the submission of learned counsel for the appellants. 7. In my opinion, the trial Court went wrong in dealing with the issue urged before him. Having heard the counsel of the appellant, and perused the record of the case I am inclined to accept the submission of learned counsel for the appellants. 7. In my opinion, the trial Court went wrong in dealing with the issue urged before him. As a matter of fact, the learned trial Judge did not appear to have look to the scheme of Arbitration Act before recording the impugned finding. Section 8 of the Act in clear terms provides that if any appointed Arbitrator is incapable of acting or neglects or refuses to act or dies and the arbitration agreement does not show that it was intended that the vacancy should not be supplied and the parties or the Arbitrators are required to appoint an umpire and do not appoint him then any party to the arbitration agreement serves the other parties or the Arbitrator as the case may be with a written notice to concur in the appointment or in supplying the vacancy. Sub-section 2 then provides that if the appointment is not made within 15 clear days after the service of the said notice, the Court may on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an Arbitrator or an umpire as the case may be who shall have like power to act in the reference and to make an award as it he or they had been appointed by consent of all parties. 8. The effect of death of Motilal, one of the Arbitrator resulted in causing a vacancy entitling the parties to invoke the provisions of Section 8 ibid for appointment of new Arbitrator in his place. Obviously, therefore, so long as the vacancy caused was not filled up in accordance with the procedure laid down under Section 8 ibid, the other Arbitrator Nihalchand did not have any authority much less legal to continue with the arbitration proceedings and deliver an award individually. In other words, the authority of surviving Arbitrator was in abeyance till the appointment of new Arbitrator was made as per the procedure prescribed for said purpose. This is descernable from mere reading of sub-section 2 of Section 8 ibid. It therefore, dearly follows that any act done by Co-Arbitrator acting solely in furtherance of arbitration proceedings including passing of an award would be without jurisdiction and invalid one. This is descernable from mere reading of sub-section 2 of Section 8 ibid. It therefore, dearly follows that any act done by Co-Arbitrator acting solely in furtherance of arbitration proceedings including passing of an award would be without jurisdiction and invalid one. I am fortified by the passage from Russell on the Law of Arbitration (17th Edition) under the heading, Each Arbitrator must Act, page 149. This is what the learned author has to say after quoting 2 old English authorities in support : "On a reference to more than one Arbitrator, when there is no provision for an award made by less than all being valid, each of them must act personally in performance of the duties of his office, as if he were sole Arbitrator; for, as the office is joint, if one refuses or omits to act, the others can make no valid award." 9. In view of aforesaid discussion, I have no hesitation in holding that the impugned award dated 19.2.1990 rendered by surviving Arbitrator-Nihalchand was a nullity and could never been made rule of Court by passing a decree in terms thereof. I accordingly, set-aside the impugned order so too the impugned award dated 19.2.1990. 10. Before parting with the case it is worth mentioning yet another infirmity in the entire proceedings that eventually resulted in passing 2 awards. Although the arbitration reference was made to 2 Arbitrators with the intervention of Court by invoking the provisions of Section 20 ibid yet neither the learned trial Judge nor even the 2 Arbitrators seemed to have taken note of Section 2 of the first schedule to the Act which provides that if the reference is to an even number of Arbitrators, the Arbitrators shall appoint an umpire not later than one month from the latest date of their respective appointment. The record of the case does not show that any efforts were made to nominate the umpire either at the time of making the reference or before embarking upon the reference by the 2 learned Arbitrators. It appears that this invalidity was never made a ground to assail the first award nor even the second one in any proceedings. Since the second award is being set-aside by me on different ground and hence it is not necessary to deal with this issue in detail. It appears that this invalidity was never made a ground to assail the first award nor even the second one in any proceedings. Since the second award is being set-aside by me on different ground and hence it is not necessary to deal with this issue in detail. However, in case either party applies to Court for filling up the vacancy caused due to death of one of Arbitrator then in that event, the Court while passing the order on such application would keep in mind the provisions of Section 2 of first schedule referred supra to make the proceedings in confirmity with the Act. 11. As a consequence and with the aforesaid observations the question posed by the learned Judge is answered in negative. The impugned order is set-aside and the appeal is allowed. No costs.