Jagjit Singh and Sons vs Garrison Engineer

R.P. Sethi, J.—When a arbitrator is deemed to have ""entered on the reference"" within the meaning of para 3 of Schedule-I of the Arbitration

Act? is an important question of law to be decided in this petition.

The aforesaid para provides that the arbitrators shall make their award within four months after entering upon the reference or after having been

called upon to act by notice in writing by any party to the arbitration agreement or within such extended time as the Court may allow. The point

was first considered in the Queen's Bench case entitled Baker v. Stephens (1867) 2 QB 523 wherein Blackburn J. Held:

Now, the first contest on behalf of the defendant was, that ""entered on the reference"" must mean having accepted the office and if that were the

meaning, then, in the present case, the arbitrators being willing to proceed in July, they would have then accepted the office and entered on the

reference and the award would have been made too late. But, I think the words ""or shall have been called upon to act"", shew this, for that implies

that the arbitrator has already accepted the office; it is plain, therefore, as it seems to me, that entering upon the reference means something else

than merely accepting the office. Then if it does not mean merely accepting the office, what does it mean? It is quite possible to construe the phrase

so as to suit the defendant's case. Here the arbitrators gave a notice of their intention to proceed peremptorily; and no doubt this was, so far, a

step in the reference, and gave them a right to proceed and decide ex parte if both parties did not appear; and it is something like the issuing of a

writ; therefore, it might be said that the arbitrators entered on the reference on the 5th of October, in which case, also the award would be out of

time.

But the words ""entering on the reference"" may also bear the meaning of beginning to hear the parties; and it is very reasonable and proper that time

should be given for preparation before proceeding with the reference; frequently, also, good deal of time is lost before the actual commencement of

the business of the reference; and it might very well be that the whole three months might elapse before this, when the parties, or one of them, are

unwilling to go on. And on the whole I think the latter is the true construction of the section;....

In the same case Mellor, J. held :

...... ""entering on the reference"" means something more than giving notice, especially when the arbitrator is to re-enter upon the matter; and that

until the parties are before him, or until he proceeds ex parte, he has not entered on the reference; and that the mere giving notice that he will enter

on the reference with both parties before him, or will proceed ex parte, is not entering on the reference.

Shee J. observed that the object of the section was to limit the time for making an award in cases in which the parties have not by the agreement or

order set any time and the statutory period must be taken first in the sense of the original appointment and secondly in the sense of reference back.

Enter on the reference"" was held to mean the beginning of the real business of reference by holding a meeting of the parties or proceeding under a

peremptory appointment ex parte. However, in Issoifoglu v. Coumantaros (1941) 1 KB 396 a different view was taken and it was held that the

arbitrators enter upon a reference as soon as they have accepted their appointment and have communicated with each other about the reference.

In Nanda Kishore Goswami and Another Vs. Bally Co-operative Credit Society, Ltd. and Others, it was held :

......It does without saying that an arbitrator cannot be said to enter on the reference the moment that he is appointed an arbitrator. It is necessary

that he must actually begin the work in the presence of the parties or with notice to them before he can be said to have entered on the

reference......

The Allahabad High Court in Sardar Mal, Hardat Rai Vs. Sheo Bakhsh Rai, Sri Narain, held that the provision, ""entering on the reference"" and

having called upon to act by notice in writing"" are alternative in this sense, that where no reference is entered at all the time runs from the notice

calling upon the arbitrators to act. But, on the other hand, even though the arbitrators may be called upon to act by entering upon the reference if

they enter upon the reference, they have to submit the award within the statutory period from that date.

In Babubhai Vanmalidas Mehta Vs. Prabhod Pranshankar Joshi, Tendulkar J. considered the case of Queen's Bench and King's Bench as also

that of Allahabad and Calcutta High Courts and held:

Now, the exercise of a function does not necessarily mean hearing the matter on the merits; and where an arbitrator holds a preliminary meeting

and gives directions to the parties as to the progress of arbitration proceedings before him, in my opinion, he assumes the office of an arbitrator and

exercises the functions of an arbitrator, because in no other capacity would he be entitled to give any directions with regard to the progress of the

arbitration proceedings.

Punjab and Haryana High Court in S.D. Ghai and Co. Vs. Punjabi University, Patiala, held:

....The ratio is that the date on which the Arbitrator applied his mind and wrote to the parties that they should appear before him is the date on

which he entered on the reference. In support of his proposition, the learned counsel for the appellant has also relied on Ramsahai Sheduram Vs.

Harishchandra Dullchandji and Another, and Assadullah Makhdoomi v. Lassa Baba AIR 1966 J&K 1. From the reading of the first clause of Rule

3 and the aforesaid cases, it is clear, that the period of four months prescribed for giving the award starts from the date when the Arbitrator enters

on the reference but no specific date can be laid down as to when the Arbitrator be said to enter on reference. It depends on the facts of each case

and is, therefore, a question of fact. One thing, however, is clear that the Arbitrator should do some judicial act for progress of the reference

pending before him......

This Court in M.I. Shahdad v. Mod's Abdullah Mir AIR 1967 J&K 120 held that ""entering upon reference"" will be construed to be the date

when some effective step in the arbitration proceedings is taken.

On the basis of various judgments referred hereinabove and looking at the scheme, purport and object of the Arbitration Act, it can be said that

enter upon reference"" does not mean the date when the arbitrator is appointed by the Court or notified to act as such by one of the parties. It also

does not mean the actual appearance of the parties before the arbitrator for the purposes of commuting the period prescribed under para 3 of

Schedule I of the Arbitration Act. ""Entering upon reference"" therefore, means some effective step taken by the arbitrator in furtherance of the

disputes referred to him calling upon the parties to appear in connection with the dispute referred or intimating them of the proposed ex parte

action in case of their non-appearance. This, however, does not mean that the arbitrator can sleep over the matter and commence the proceedings

according to his choice whim or caprice. The arbitrator being judge of the choice of the parties is presumed to act expeditiously and in accordance

with the provisions of law. No hard and fast rule or fixed date can be appointed for the purposes of interpreting the words ""entering on the

reference"" which has to be ascertained on the basis of the record and facts and may differ from case to case.

In the instant case the arbitrator Col. R.K. Chowdhary vide his letter dated 22-11-1988 called upon the petitioner to forward him the statement

of cases in regard to the matters in dispute along with supporting documents by 10-12-1988. The opposite party was directed to submit the

pleadings in defence along with all the supporting documents by 30-12-1988. The petitioner was further intimated that if he desired he may file

reply to the pleadings in defence submitted by the other party latest by 15-1-1989 and was further informed that venue of the arbitration and date

of hearing would be intimated to the parties after compliance of both the aforesaid requirements mentioned in the letter. The petitioner was

informed that if he intended to appear before the arbitrator through a legal practitioner, he should give other party reasonable notice of his intention

to do so. The petitioner submitted his claims on 6-12-1988 and requested the arbitrator vide his letters dated 31-12-1988 and 20-1-1989 to fix

an early date of hearing of the case and disposal accordingly. The department also appears to have submitted their claims within the time specified

in the notice of the arbitrator. The arbitrator intimated the panics vide his letter dated 6-2-1989 that complete documents have not been supplied to

him and sought their concurrence to the extension of time for filing the award by 30-4-1989. The petitioner again vide his letter dated 11-2-1989

requested the arbitrator to intimate him the date when the pleadings in defence by the respondents were received in his office. The arbitrator

replied the query vide his letter dated 19-2-1989. On 27-2-1989 the arbitrator informed the department that the pleadings in defence were still

awaited. On 27-2-1989 the arbitrator informed the parties that their concurrence to enlarge time for making/ publishing the final award has not

been received by him till that date. He again informed the parties on 3-3-1989 that their concurrence for extension of time was still awaited. The

parties gave their consent for the enlargement of time for making and publishing the award upto 30-4-1989. The petitioner was intimated by the

arbitrator on 31-3-1989 to produce before him all books, papers, accounts, bills, writings, documents or in oral evidence on 20-4-1989 at 10.00

hrs. The parties appear to have again agreed for extension of time up to 30-5-1989. Ultimately the arbitrator is shown to have filed his award on

14-6-1989. The proceedings of the arbitrator clearly show that in the instant case he entered up to reference on 22-11-1988 when he took

effective steps for adjudication of disputes between the parties and the time as contemplated by para 3 of Schedule I of the Arbitration Act, is to

be commuted from that date. Admittedly, the award was filed by the arbitrator beyond the statutory period without obtaining any extension of time

from the Court.

It is well settled that when reference of disputes are made to the arbitrator by the Court, the time can be extended only by the Court and not by

the parties. Assuming that the parties could extend the time, the arbitrator has filed the award, in this case even beyond the period agreed to be

extended. The result is that issue No. 1 is decided in favour of the petitioner and against the respondents.

The petitioner has failed to show any misconduct attributable to the arbitrator as is contemplated by the provisions of Section 30 of the

Arbitration Act. Issue No. 2 is accordingly decided against the petitioner and in favour of the respondents.

Accordingly the award filed by the arbitrator is set aside. As no misconduct has been proved, the case is remitted back to the already appointed

arbitrator for adjudication of the claims of the parties afresh and to submit his award within the statutory period of 4 months from the date when the

parties appear before him. The arbitrator shall not be influenced by his earlier findings and pass the award after affording the parties an opportunity

of being heard.

Parties have been directed to appear before the arbitrator on 17th December, 1990.