Hariram Narsingdas vs Shyamlal Sriprokash

Bachawat, J.—This is an application for declaring null and void and for setting aside an award of the Bengal Chamber of Commerce and Industry.

The charges set out in paras. 29, 30, 31, 32, 33 and 34 of the petition have been pressed.

Charges under paras. 29, 30, 31, 32 and 33 of the petition:

Both parties filed their respective statements before the arbitrators.

By letter, dated May 24, 1954, the Registrar of the Chamber informed the parties that the meeting of the arbitrators will be held on May 29, 1954, and requested them to appear at the hearing and stated that if any party failed to appear before the arbitrators on the date mentioned, the Court would hear and take into consideration whatever evidence was adduced by the opposite party.

By letter, dated May 5, 1954, the Plaintiff''s attorney asked for adjournment till June 14, 1954, on the ground that the Petitioner''s partner, who was in charge of the matter was out of town and was expected back on or about June 14, 1954. By letter, dated May 29, 1954, the Registrar informed the parties that the hearing was adjourned till July 5, 1954 and directed the parties to appear on that date in accordance with the directions in the letter, dated May 24, 1954. By letter, dated July 3, 1954, the Plaintiff''s attorney again applied for adjournment for a fortnight as an accommodation for the last time on the ground that the Petitioner''s partner could not return due to his illness. By letter, dated July 24, 1954, the Registrar informed the parties that the hearing was adjourned finally till August 5, 1954 and requested the parties to attend in accordance with the directions in the letter, dated May 24, 1954. By letter, dated August 4, 1954, the Petitioner''s attorney again applied for adjournment till the first week of September, 1954, on the ground that the Petitioner''s partner Tilak Raj Seth had not then arrived and was expected to arrive definitely by the end of the month and stating that the Petitioner was prepared to consent to an extension of the time to make the award. My letter, dated August 6, 1954, the Registrar informed the parties that the arbitration was finally postponed till September 3, 1954, when the parties were to attend in accordance with the directions in the letter, dated May, 24, 1954. By letter, dated September 2, 1954, the Petitioner again applied for adjournment till some other date as Tilak Raj Seth was compelled to start for Punjab due to sudden illness of a dearest and nearest relation. On September 3, 1954, the arbitrators held a meeting when the representatives of both parties appeared. The arbitrators considered the letter, dated September 2, 1954 and informed the parties that the adjournment would be granted only if the parties consented to an extention. With the consent of both the parties the time to make the award was extended till November 30, 1954 and the meeting was then adjourned. By letter, dated September 4, 1954, the Registrar informed the parties that the arbitration was postponed till November 4, 1954, when the court will sit to hear the oral evidence of the parties and witnesses and requested the parties to attend. By letter, dated October 30, 1954, the Registrar reminded the parties that as advised by the letter, dated September 4, 1954, the arbitration would be held on November 4, 1954. By letter, dated November 4, 1954, the Petitioner again applied for adjournment till the middle of December, 1954, as the partner in charge could not reach Calcutta. On November 4, 1954, the arbitrators held a meeting. Nandalal Jalan representing the Respondents appeared. Nobody on behalf of the Petitioners appeared before the arbitrators. The arbitrators considered the Petitioner''s letter, dated November 4, 1954 and refused to grant adjournment as the time to make the award would expire shortly. The arbitrators then proceeded with the arbitration. By letter, dated November 9, 1954, the Registrar informed the Petitioner that the arbitrators were unable to comply with the request for adjournment as the time for making the award was due to expire shortly and that the arbitrators were proceeding to consider their award on the evidence before them. No reply was sent to this letter. On November 15, 1954, the arbitrators made their award.

It is contended on behalf of the Petitioner that the arbitrators took no notice of the application, dated November 4, 1954, and that they acted arbitrarily and capriciously in refusing the adjournment on November 4, 1954. In my opinion there is no substance in this contention.

The arbitrators duly considered the application for adjournment, dated November 4, 1954, and duly refused to grant * the adjournment asked for. The arbitrators are entitled to judge if the application was made bona fide and supposing it was so made that it was reasonable. The Petitioner asked for and was granted adjournment repeatedly. In the previous application, dated July 3, 1954, the Petitioner''s attorney stated that the adjournment was asked for the last time by way of accommodation. By letters, dated June 24, 1954, and August 6, 1954, the Petitioner was informed that the adjournments were being granted finally. On September 3, 1954, the adjournment was granted as a matter of grace as the parties agreed to consent to an extension of time to make the award. By letter, dated November 4, 1954, the Petitioner did not even offer to consent to an extension of time. On November 4, 1954, the Petitioner did not send any representative to the meeting held on that day. In that background when the time to make the award was to expire shortly, the arbitrators refused to grant the adjournment. The Petitioner cannot even complain that it was willing to consent to a further extension and that yet the arbitrators refused to grant a further adjournment. The arbitrators exercised their judicial discretion honestly. I think this Court would also in the circumstances have refused to grant the adjournment prayed for. Even if the court might have exercised the discretion differently, the award cannot be impeached on that ground. I am satisfied that the Petitioner had ample and sufficient opportunity of presenting the case and of adducing evidence in support of its case.

It is next contended that the arbitrators ought not to have proceeded with the reference in the absence of the Petitioner without further notice of any intention to do so. In my opinion there is no substance in this contention.

Rule 20 of the Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce is as follows:

The court may proceed with the reference notwithstanding any failure to file a written statement within due time and may also proceed with the reference in the absence of any or both of the parties who, being entitled to appear before the court, after due notice, refuse or neglect to attend.

Rule 20 is a standing notice to the parties that the appointment for hearing is a peremptory appointment and that the arbitral court may proceed with the reference ex parte and in the absence of a party who refuses and/or neglects to attend.

Due notice to attend had been given to the. Petitioner. The Petitioner willfully failed to attend the arbitration and in my opinion, therefore, neglected to attend as contemplated by the above rule. The arbitral court was, therefore, entitled to proceed with the reference in the absence of the Petitioner: Ramanarain Ganga Bissen v. Liladhur Lowjee ILR (1906) Cal. 1237.

Assuming that a further notice of intention to proceed ex parte was required, I am satisfied that the Petitioner was not prejudiced by the omission to give such notice. The evidence on the record shows that the Petitioner would not have appeared before the arbitrators on November 4, 1954, even if the Petitioner had been given a notice intimating that if he failed to appear, the arbitrators would proceed with the reference. I am satisfied that the Petitioner had no bona fide intention to appear before the arbitrators and that the award ought not to be set aside on the application of the Petitioner. See Udaychand Pannalal v. Debibux Jiwanram ILR (1920) Cal. 951.

The case of Juggilal Kamlapat v. General Fibre Dealers Ltd. (1954) 54 C.W.N. 146 is clearly distinguishable because (a) the Court there did not consider the implications of Rule 20, (b) it was not and could not be contended in that case that the absent party had not been prejudiced and (c) in that case the arbitrators refused to give a further hearing though the absent party appeared before the arbitrators on the same day and requested them to give a further hearing.

Paragraph 34 of the petition:

Some time in 1952, the Respondent made a reference to the Bengal Chamber of Commerce and Industry for adjudication of the disputes. The arbitration was marked as case No. 6064 of 1952.

The Registrar duly constituted the court consisting of G.J.K. Cook and L.A. Macpherson to adjudicate upon the disputes. The time of the court to make the award expired. Thereupon the Registrar purported to constitute a second court under Rule 7 and the second court eventually made the award on or about February 8, 1953. The second court was illegally constituted because it consisted of the same set of persons who constituted the first court and on that ground by an order of this Court, dated November 2, 1953, the award was set aside. By letter, dated November 23, 1953, the Respondent re-submitted his case for arbitration before the Chamber for a fresh award. Thereupon, the arbitration was marked as case No. 343G of 1953. By letter, dated March 11, 1954, the Registrar informed the parties that he had reconstituted the court under Rule 10. By letter, dated March 25, 1954, the Registrar cancelled the notice, dated March 11, 1954, and constituted a court consisting of B.G. Bouffaer and F.X. Pinto to adjudicate upon the disputes. An award, dated April 15, 1954, was made by this Court. These facts are admitted by both parties although the affidavits do not clearly bring out these facts.

In re. Arbitration Hulachand Rupchand v. Baranagore Jute Factory Matter No. 226 of 1954 (unreported), I observed as follows:

If an award is made by an arbitral court which is constituted illegally and in contravention of the Rules the award is invalid and the proceedings before the illegally constituted court are abortive and incompetent. On the award being declared invalid or set aside the parties are relegated to the position which they occupied before the abortive proceedings began and they are entitled to appointment of a legally constituted arbitral court and to a new and effective determination by the Chamber acting through the lawfully constituted arbitral court.

* * * In my opinion where the disputes are referred to the arbitration of the Bengal Chamber of Commerce and Industry under the rules of its Tribunal of Arbitration and an Award is made by an illegally constituted arbitral court and is therefore set aside the parties are entitled to a revival of the arbitration proceeding from the point when the abortive arbitration proceedings began and to the appointment and constitution of a lawful arbitral court and to an effective hearing and determination by the Chamber acting through a legally constituted court. A second reference is not competent but in the appropriate circumstance the second reference may be treated as a continuation and revival of the first reference.

The appointment of the second court in case No. 6064 of 1952, was illegal and, the award by and proceedings before the second court were abortive and incompetent. The parties were, therefore, entitled to be placed in the same position which they occupied before the appointment of the second court. They were entitled to appointment of the second court in accordance with the Rule 7. The Registrar, on March 11, 1954 in fact appointed a court consisting of persons other than those who constituted the first court. In the circumstances of the case, the further proceeding was clearly in continuation of the first reference and the Registrar was empowered to make the appointment under Rule 7. The marking of the arbitration as a separate arbitration case was a formal defect, not affecting the substance and the merits of the case and does not entitle the Petitioner to set aside the award, see the observations in Chowdhury Murtaza Hossain v. Bibi Bechunnissa (1876) 3 I.A. 209, 216.

It is, therefore, not necessary to decide whether the Petitioner is debarred by waiver or estoppel from raising the objection.

The application is dismissed with costs.