JUDGMENT
P.K. Bahri, J.
(1) [ED. facts : Petitioner filed an application u/Ss. 14 & 17 of Arbitration Act on 20.9.82 for directing Arbitrators, Respdts. 2 & 3 to file the award dt. 6.8.82. Respdt. 3 filed the proceedings stating the award was handed over to the petitioner on 6.8.82. U.O.I. filed objections contending that application was barred by time, that arbitrators did not appoint Umpire as agreed and also as required by R. 2 of 1st Schedule of the Act and that award was not properly stamped. One of the arbitrators filed an affidavit that original award was given to petitioner on 6.8.82. The Court believed this and held that as application u/Ss. 14, 17 was not filed within a month, same was barred.] After detailing above, Judgment is :-
(2) Another objection raised in the objection petition is that the arbitration clause appearing in the contract contemplated appointment of an Umpire before the two arbitrators were to enter upon reference and as no Umpire was appointed at any time, the award given by the two arbitrators is vitiated. The learned counsel for the respondent has placed reliance on a number of judgments in support of his contention.
(3) The learned counsel for the petitioner has, on the other hand, also placed reliance on a number of judgments including a judgment of this court where contrary view has been taken. It is to be mentioned here that the two arbitrators have given a unanimous award. Rule 2 of 1st Schedule of the Act also contemplated that if the reference is to a even number of arbitrators the arbitrators shall appoint an Umpire not later than one month from the latest date of their respective appointments. The contract between the parties in the present case appears to be in consonance with Rule 2 of the 1st Schedule to the Arbitration Act. A D.B. of Allahabad High Court in Jawala Prasad vs. Amar Nath, Air 1951 All. held requirement of Rule 2 of Schedule I of the Arbitration Act is a mandatory one and in the absence of appointment of an Umpire the award made will be invalid. I am afraid that the learned D.B. has not considered the contention now being raised before me that where the arbitrators have given a unanimous award where could arise the necessity of appointing umpire and if the umpire is not appointed before entering upon the reference how any prejudice is caused to any of the parties when the umpire had to perform no role when the arbitrators have ultimately given a unanimous award. It is true that the word “shall” appears in Rule 2 as well as in the arbitration clause in question but it is not necessary to interpret this word “shall” to give it a mandatory colour. It would depend on the facts of particular case to decide whether non-compliance of this particular provision has resulted in any prejudice to a particular party vitiating the award. The same provision came up for consideration in Firm Shriram Haracharan vs. President, The Cotton Seed Association Air 1954 Nagpur 236 (DB) Same interpretation has been given in this judgment to Rule 2. In this case, an appeal was provided which was to be heard by the Managing Committee and the Managing Committee was to comprise of five members and two members were to constitute the coram. The appeal was decided by three members. The court said that if the appeal was to be heard by two members and they are to disagree and where the rules are silent then they are expected to appoint an umpire. Nothing said in this judgment is of any help to decide the point in issue before me because in the present case the facts are not that the two arbitrators had disagreed on any point which require the decision by an umpire. Then, reference is made to Vinayak Vishnu vs. B.G. Gadre, Air 1959 Bom. 38, wherein also it has been held that the provision in the agreement that the arbitrators should nominate umpire before entering upon reference is mandatory in character. This judgment follows the aforesaid two judgments. Again, the reasons given above by me have not been considered in this judgment.
(4) Lastly, the learned counsel for respondent No. 1 has relied upon Nathmull Tolaram vs. Milla & Co. . This judgment has, of course, laid down that the omission to make the appointment of umpire as contemplated by contract of arbitration affects the jurisdiction of the arbitrators to proceed with the reference and thereby the proceeding which took place before the arbitrators and the award made by them though unanimous arc rendered invalid. This judgment places reliance an Vinayak Vishnu (supra).
(5) However, United Printing Works vs. Kishori Lal, , lays down that the word “shall” appearing in clause 2 of Schedule 1 of the Act docs not make the provision mandatory. The court held that if arbitrators failed to appoint the umpire the aggrieved party could take resort to provisions of S. 8(1)(c) for getting the umpire appointed from the court and if aggrieved party fails to follow this procedure, then later on the said party cannot make any grievance and the award made cannot be vitiated or set aside for non-appointment of an umpire. It is pertinent to mention that this judgment places reliance on Shambhu Nath vs. Hari Shankar, , which also lays down that the party would be deemed to have waived the irregularity if the party does not follow the procedure prescribed in Section 8(1)(c) and Section 8(2) of the Arbitration Act for getting the umpire appointed on the failure of the arbitrators to appoint the umpire. So, it is clear that even Allahabad High Court has struck a different note in its later judgment from what has been held by the Allahabad High Court in the case of Jawala Prasad (supra). The Single Bench of the Punjab High Court at Delhi in U.O.I. vs. Allied Trading Co. , held that the word “shall” appearing in Rule 2 in the First Schedule is to be interpreted as directory. In the said case the umpire was not appointed within the period stipulated. The court held that as statute does not provide any penalty or other consequences for the failure to comply with the provisions of Rule 2 the provision is to be treated as directory and it was held that the appointment of umpire belatedly is a mere irregularity which does not render the appointment of umpire invalid. A Sheoramprasad vs. Gopalprasad , also lays down that the failure of the arbitrators to appoint an umpire as required by clause 2 of the First Schedule will not vitiate the award as the said clause is only intended to meet the contingency of the arbitrators being of divided opinion and which difference could not be resolved by the majority of votes. It was held that it cannot be said to impose a condition which must be fulfillled in all eases even when the arbitrators arc not at variance. The D.B. has considered all the judgments of the different High Courts and had come to the conclusion that clause 2 is not mandatory in character. In Raw Kishore vs. Raj Narain Dubey, , the facts were somewhat different. Here, the arbitrators had not appointed umpire and the aggrieved parties did not have any opportunity to take recourse to S. 8(l)(c) for getting the umpire appointed. The court held that in the absence of appointment of the umpire the award was invalid. In the present case, the arbitrators had taken sufficient time for giving the award and respondent could have taken resort to S. 8(l)(c) of the Act for getting the umpire appointed on failure of the two arbitrators to appoint the umpire in consonance with the arbitration clause. In Ram Kali vs. Tulsi, , the learned Single Judge has followed Shambhu Nath (supra) and distinguished the judgment in Jawala Prasad (supra) and had opined that the award is not vitiated if the umpire is not appointed as the party could take resort to Section 8 and failure to do so would amount to waiver on the part of the said party.
(6) A D.B. of Bombay High Court in Mis. Modern Builders vs. Hukmatrai, , also held that the requirement of appointment of an umpire is not mandatory. It was also held that even if the requirement is mandatory its breach does not invalidate the award where the parties have by their conduct waived to non-compliance with that provision. In Chouthmal vs. Bhagwandas, Air Bom. 337, it was reiterated by a Single Judge of the said Court that the provision in clause 2 is not mandatory and omission to appoint the umpire does not vitiate the award unless prejudice is proved. In U.O. vs. M/s. Karsandas & Co, , a D.B. held that non-compliance of provisions of clause 2 does not vitiate the award.
(7) The learned counsel for respondent No. 1 has contended that in the present case, it is not the requirement of clause 2 of Schedule I of the Act which vitiates the award but is the non-compliance of the agreement between the parties which contemplated appointment of umpire by the two arbitrators before entering upon the reference. The learned counsel for respondent No. 1 forgets that even in the agreement between the parties there is no provision made that if the umpire is not appointed the arbitration proceeding shall stand vitiated. There is no penal consequences contemplated by the parties in the agreement. No prejudice has been caused to respondent 1 for inability of the arbitrators to appoint the umpire inasmuch as the two arbitrators were, in fact, the employees of respondent 1. Moreover, respondent No. 1 had ample opportunity to take resort to provision of Section 8 of the Arbitration Act for getting the umpire appointed even before the two arbitrators proceeded with the arbitration proceedings and respondent 1 for reasons known to respondent 1 failed to avail the opportunity and thus, it does not lie in the mouth of respondent 1 to urge that the award stands vitiated for non-appointment of umpire by the arbitrators. Such an objection, if any, available to respondent No 1 stands waived by respondent 1. I agree with the reasonings given by majority of the High Courts in coming to the conclusion the requirement of appointment of umpire may be in clause 2 of Schedule I is not mandatory and for parity of reason, I hold that even requirement of appointment of umpire as contemplated in the agreement between the parties is not mandatory. The Single Judge of this Court also in Chowdhury & Gulzar Singh vs. Frick India Ltd. , has held that a failure of the arbitrators to appoint an umpire under clause 2 is a breach curable by the procedure prescribed by S. 8 of the Arbitration Act itself and if a party fails to follow the procedure permitted by the Statute to remedy the breach and stands by till the award is made he cannot later on put forward non-appointment of an umpire as a ground for setting aside the award. Similarly, in the present case, respondent 1 could have taken resort to S. 8 for getting the umpire appointed and on its failure to have resort to the said section now amounts to waiver on the part of respondent 1 in challenging the award on the ground of non-appointment of umpire. Various judgments of other High Courts have been considered in this judgment I have already referred above. So, I also agree with the view expressed in this judgment of our High Court and hold that the provision contained in Rule 2 Schedule I and similar provision contained in the agreement between the parties regarding appointment of umpire is not mandatory and if it is to be held to be mandatory the aggrieved party could take resort to provision of S. 8 for getting the umpire appointed and failure to do so would amount to waiver of the party to such an objection. Hence, I find no merit in this particular objection of respondent No. 1,
(8) The next contention is that the award was liable to be stamped on a stamp paper of Rs. 110.00as applicable in Delhi and not at Rs. 40.00 as applicable in Bombay, There is no merit in this contention. The stamp duty is to be paid as prevalent at a place where the document is executed. The award in the present case admittedly was made and published at Bombay and thus, was liable to be executed on the stamp duty as prevalent in Bombay.
(9) It was then contended that the arbitrator has no jurisdiction to direct the release of payment due to the petitioner in other contracts. There is no merit in contention. The arbitrator has only held that if certain payments due under the other contracts are retained by the U.O.I. on account of that disputes arisen in the present contract then these payments are not to be withheld on that basis and rightly so because the award was being given in respect of the disputes arising from the contract in question and the U.O.I. could not with hold payments in other contracts on the ground that certain claims or counter claims are pending in respect of the contract in question.
(10) Then, a contention was raised that the award has been given in respect of certain ‘excepted matters”. No details have been ‘given either in the objection petition or in the affidavits to show what are the “excepted matters” on which the award has been given. Award does not give any amount of any particular claim and thus, it cannot be held the arbitrators have given any amount on “excepted matters”. There is no merit in this objection as well.
(11) It was then contended that the arbitrators have obtained a stamp paper of Rs. 40.00 from the petitioner even before hearing the arguments and deciding the matter and thus this conduct of the arbitrator, amounts to judicial mis-conduct. There is no merit in this contention as well because obtaining of a stamp paper for giving the award would not mean that the arbitrators have made up their mind even before hearing the matter to decide the claims in one way or the other. The award has to be executed on an a stamp paper even if award was to go against petitioner. So, there is no merit in this contention as well.
(12) In view of the above discussion, 1 hold the Petition No. 1268- A/82 is liable to be dismissed as barred by time and the award is not to be made a rule of the court.