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Judgment
Walter Schwabe, C.J.—This case raises very difficult points under the Arbitration Act. The facts are shortly these. Messrs. Louis Dreyfus
and Co. entered into an agreement in April 1918 with the firm of R.K. Rajagopala Iyer and Brothers, which firm consisted of R.K. Rajagopala
Iyer and Arunachella Iyer. Under that agreement the latter firm acted as Dubashes for Louis Dreyfus and Co on somewhat elaborate terms
contained there in, one of those ternisbeing a very full arbitration/clause. In November 1918 R.K. Rajagopala Iyer was apparently On the point of
death, and on the 3rd November, heads of agreement were come to between Arunachella Iyer, Sundaresa Iyer on the one. Part, certain persons
described, as sureties on another part and Messrs. Dreyfus and Co., the objects of the heads of agreement being to povide for certain things in the
past and for the future acting as Dubashes in this country for Messrs. Louis Dreyfus and Co. Disputes having arisen, Messrs. Dreyfus and Co.
called upon the old firm of R.K. Rajagopala Iyer and Brothers to name an arbitrator and to proceed to arbitration. The firm refused to do so
alleging, as they still allege, that the old agreement with the arbitration clause has been entirely superseded by the heads of agreement which contain
no arbitration clause and to which also the old firm of R.K. Rajagopala Iyer was not a party. Messrs. Dreyfus and Co, thereupon acting within
their rights, assuming that the arbitration clause was still an existing valid clause, appointed two arbitrators and these two arbitrators, acting under
the clause under the old contract, nominated Mr. Chettle as umpire. Ufifcrtunately, it would appear that the time limited by the submission to
arbitration contained in that clause for the arbitrator''s award was allowed to expire before any extension of time had been granted. Shortly after
the expiration in that time, the arbitrators purported to extend their own time. The arbitrators having differed, the umpire took upon himself the
burden of the reference. No information was given to the Dubashes'' firm when the arbitrators differed nor when the umpire was going to proceed
nor when the umpire proceeded to take fresh evidence. An intimation sufficiently clear had been given by the Dubash firm to the arbitrators that
they did not propose to have anything to do with that arbitration. It was sufficiently clear in toy judgment for the purpose of discharging the
arbitrators from any duty to call Upon the Dubashes again to attend but that does not apply to the umpire. On those facts this award is, in my
judgment, bad. In the first place, because the time was allowed to expire without being extended and, in the second place, because the umpire was
guilty of what is called legal misconduct in chat he proceeded to hear evidence or receive writer evidence without informing one of the parties to
the arbitration that he was about to do so. As regards the first point, there is no power in arbitrators to extend their own time after their time has
expired; but there is undoubtedly power in the Court u/s 12 of the Indian Arbitration Act to extend the time even though the award has been
completed. I think this is a proper case for the exercise of that power by the Court and we propose to enlarge the time for making the award. The
second point, the legal misconduct of the umpire referred to above, has been held by the learned Judge to be such an error that he out not to
exercise his power to remit the award but he felt himself bound to set it aside. Now, the words of the Act are that the Court may remit the award
leaving the discretion to the Judge who hears the case, and that is a discretion which has been held by a very high authority, with which I humbly
agree, should not be interfered with on appeal, unless there are very strong grounds to going so, or perhaps it might be better put, unless it is clear
that the learned judge lies not exercised a judicial discretion. In tins case I ask: What are the grounds on which the Judge exercised that discretion.
Judge gives none and I can find none; and none have been suggested. The umpire this case must have been told that the Dubash firing was taking
no part in the arbitration at all, for that was their attitude. I am convinced, if he had said he was going on with the arbitration or was going to near
evidence, they would have taken no notice of it at all. Further, there was nothing in the conduct of this umpire to show that he was prejudiced in
any way or unit to hear and determine this case after giving an opportunity to these persons to be hearing it they so desired. I therefore, thinks that
this is a case where the Judge should have exercised discretion by remitting this award to be heard by the umpire; and we propose to remit it to
Mr. Chettie. It he is not available the proper procedure under the Act is that there should be an application to the Court to appoint a suitable
umpire to take his place.
That still leaves the really difficult point in this case and that is, whether this arbitration clause continues in existence or whether it has been taken
away by the so-called substituted agreement of November. In my judgment the contract of November cannot supersede the old contract
altogether for the simple reason that R.K. Rajagopala Iyer was not a party to the new agreement at all. His partner, Arunachella Iyer, is a party,
but he is so on his own behalf and not on behalf of the firm. I cannot say that the old firm is a party to the new agreement, and, therefore, the old
agreement continues in force. Whether or not the claims made under the old contract are good claims is a matter which will be one of the chief
questions which the Umpire will have to decide. All I can say is that the old contract did not come to an end by the new contract of November. All
such points are open to the umpire to decide and I want to say nothing which will in any way fetter his conduct of the arbitration or the parties
conduct before him. All such points are open to be taken before the umpire and no doubt will be properly argued before him. I have little doubt
that in this arbitration the firm will not adopt the same attitude which they have adopted in saying: ""We do not think this arbitration clause applies
and we will have nothing whatever to do with it."" As a general rule, it is much better to attend an arbitration and take points there or apply to the
Court to stop an arbitration, for the attitude that the defendants took up in this case of holding aloof altogether has an element of danger in it.
There is one other matter for consideration and that is the question of costs. At the present time this award is bad and, as I have already stated
Messrs. Dreyfus and Co. are receiving indulgence from the Court in having the matter revived by a remission of the award to the umpire. In those
circumstances I think that they themselves are to blame and must pay the costs of the motion and of the appeal. The time for the making of the
award will be extended by. Six months from this date. If Mr. Chettle is not available proper steps will be taken. I do not want to be understood to
hold that the document of the 3rd November was not a concluded contract between the parties. That is a question for the umpire to determine. It
has not been proved before us to be a contract to which the respondents in this appeal were parties.
I am clear that the old fire on which of arbitration was served could not resist an appeal to arbitration merely because one member of it has
signed on his own behalf, while his partner was alive, the new agreement. I agree with the learned Chief Justice that the question whether the
contractual obligations of the old firm under the old agreement have been discharged or superseded by the new agreement, is a matter not for this
Court at present to settle, but for the arbitrators, and it is better to make no further pronouncement on this point. I agree that the award should be
remitted on the terms and the time proposed by the learned Chief Justice.