{"id":270944,"date":"1971-09-10T00:00:00","date_gmt":"1971-09-09T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/keshavsinh-dwarkadas-kapadia-etc-vs-ms-indian-engineering-company-on-10-september-1971-4"},"modified":"2019-04-11T05:22:14","modified_gmt":"2019-04-10T23:52:14","slug":"keshavsinh-dwarkadas-kapadia-etc-vs-ms-indian-engineering-company-on-10-september-1971-4","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/keshavsinh-dwarkadas-kapadia-etc-vs-ms-indian-engineering-company-on-10-september-1971-4","title":{"rendered":"Keshavsinh Dwarkadas Kapadia Etc vs M\/S. Indian Engineering Company on 10 September, 1971"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Keshavsinh Dwarkadas Kapadia Etc vs M\/S. Indian Engineering Company on 10 September, 1971<\/div>\n
Equivalent citations: 1972 AIR 1538, 1972 SCR (1) 695<\/div>\n
Author: A Ray<\/div>\n
Bench: Ray, A.N.<\/div>\n
           PETITIONER:\nKESHAVSINH  DWARKADAS KAPADIA ETC,.\n\n\tVs.\n\nRESPONDENT:\nM\/S.  INDIAN ENGINEERING COMPANY\n\nDATE OF JUDGMENT10\/09\/1971\n\nBENCH:\nRAY, A.N.\nBENCH:\nRAY, A.N.\nSIKRI, S.M. (CJ)\nPALEKAR, D.G.\n\nCITATION:\n 1972 AIR 1538\t\t  1972 SCR  (1) 695\n 1971 SCC  (2) 706\n CITATOR INFO :\n RF\t    1992 SC1932\t (5)\n\n\nACT:\nArbitration  Act<\/a> (10 of 1940), Sch. 1, para.  4--Appointment\nof   umpire   by  arbitrators-Whether  consent\t of   umpire\nnecessary-Disagreement between arbitrators what is.\n\n\n\nHEADNOTE:\nDisputes  having  arisen  between  the\tappellant  and\t the\nrespondent, they were referred to arbitration in  accordance\nwith an arbitration agreement.\tThe arbitrators entered upon\nthe reference and- also appointed an umpire.  After the time\nfor  making  the award had expired the\tappellant  took\t the\nstand that one of the arbitrators would be biased in  favour\nof  the respondents.  The respondents therefore called\tupon\nthe  arbitrators to refer the matter to the umpire and\talso\nwrote  to  the\tumpire\tand  the  umpire  entered  upon\t the\nreference.   Thereafter, the appellants\t filed\tapplications\nunder  s. 33<\/a> of the Arbitration Act, 1940.  The\t High  Court\nheld that the umpire rightly entered upon the reference, and\nextended the time to enable the umpire to make an award.\nIn  appeal  to this Court it was contended that\t :  (1)\t the\nappointment of the umpire was not valid because the  consent\nof  the appointee was not obtained,; and (2) under cl. 6  of\nthe Arbitration agreement the operation of para 4 Sch.\tI of\nthe Arbitration Act was excluded, and the umpire could enter\nupon the reference only in the event of a difference arising\nbetween\t the  arbitrators and the arbitrators  referred\t the\nmatter to the umpire.\nDismissing the appeal,\nHELD  : (1) There is a distinction between  appointment\t and\nacceptance  of an office.  The question of effectiveness  or\nperfection  is\tordinarily subsequent to  appointment.\t The\nscheme\t of  arbitration  proceedings  indicates  that\t the\nappointment  of an umpire and the acceptance of\t office\t are\ntwo  separate  matters arising at different  stages  in\t the\nproceedings. [699 H; 700 A: 704 E]\nWhen  the arbitrators are required to appoint an  umpire  it\nonly means that the arbitrators are to concur in  appointing\nthe umpire.  There is no particular method of appointment of\nan   umpire   though  the  usual  method  is   by   writing.\nArbitrators who are required to appoint an umpire are  under\nno  obligation to obtain the approval of the choice  of\t the\nperson by the parties who appointed the arbitrators.  If any\nparty is dissatisfied with the choice it will not affect the\nvalidity   of  the  appointment;  nor  is  the\t appointment\nconditional  upon  the\tacceptance  of\tappointment  by\t the\numpire.\t  The necessity for communication of appointment  to\nthe  parties  as  well as to the appointee  depends  on\t the\nlanguage  of  the arbitration clause.  The  Arbitration\t Act<\/a>\ndoes  not  say\tthat  the  appointment\tof  umpire  by\t the\narbitrators  is to be made only after obtaining the  consent\nof the appointee. [700 D-E; 701 D-F; 704 D-E]\nWhen   the  umpire  assumes  his  office  he   accepts\t the\nappointment.  Acceptance may be express or implied.  It need\nnot  be in writing; it may be evidenced by conduct.  It\t may\nalso be evidenced by proceeding with\n696\nthe arbitration.  When the umpire is called upon to  proceed\nin terms of the appointment he will either assent  expressly\nor  by conduct to act, or he will decline to act. [704\tA-B,\nD, E-F]\nMirza  Sadik Husain v. Mussamat Kaniz Zohra Begam,  L.R<\/a>.  38\nI.A. 181, applied.\nRingland v. Lowndes, (1863) 15 C.B. (N.S.) 173; 143 E.R. 749\nand Tradax     Export  S.A. v. Vokswagenwerk A.G.  [1970]  1\nAll E.R. 420, explained\t and distinguished.\n(2)  (a) Paragraph 4 of the first schedule provides that  if\nthe  arbitra-delivered\tto  any\t party\tto  the\t arbitration\nagreement or to the umpire a notice in writing stating\tthat\nthey  cannot agree, the umpire shall forthwith enter on\t the\nreference in lieu of the arbitrators.  'Mere is no intention\nin  cl. 6 of the agreement to exclude the operation of\tthis\nparagraph.   On\t the contrary the agreement shows  that\t the\nintention  of  the  parties was that  when  the\t arbitrators\nallowed\t time to expire without making the award the  umpire\nshould enter on the reference in lieu of the arbitrators.\n[704 H; 705 A-C]\n(b)  In the present case, the arbitrators, by reason of\t the\nattitude  of one of the parties could not agree\t to  proceed\nwith  the matter.  Where one of the arbitrators declines  to\nact  and the other is left alone in a case of this type,  it\nwill amount to disagreement between the arbitrators. [705 F-\nG]\n(c)  Failure  to make an award in time where  the  agreement\nprescribed  time does in. certain circumstances,  amount  to\ndisagreement. [705 D-E]\nIossifoglu v. Counmantaros, [1941] 1 K.B. 496 and Russel  on\nArbitration, 18th Ed. pp. 205, 208, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  2441\t and
\n2442 of 1968.\n<\/p>\n
Appeals\t by special leave from the judgment and order  dated
\nOctober\t 17,  1968 of the Bombay High Court  in\t Arbitration
\nPetitions Nos. 49 and 50 of 1968.\n<\/p>\n
I.   N. Shroff, for the appellant (in C.A. No. 2441\/1968).
\nV.   M.\t Tarkunde  and I. N. Shroff, for the  appellant\t (in
\nC.As. Nos. 2442 of 1968).\n<\/p>\n
S.   V.\t Gupte, B. R. Agarwala for the respondent  (in\tboth
\nthe appeals).\n<\/p>\n
The Judgment of the Court was delivered to
\nRay, J. These two appeals are by special leave against I the
\njudgment dated 17 October, 1968 of the High Court at  Bombay
\ndetermining under section 33<\/a> of the Arbitration Act that the
\numpire\trightly\t entered  upon\tthe  reference\tand  further
\nextending  the\ttime till 31 December, 1968  for  making  an
\naward thereof by the umpire.\n<\/p>\n
Two  questions\tarise for consideration\t in  these  appeals.
\nFirst, whether there can be any valid appointment of  umpire
\nby arbitrators without obtaining consent of the appointee to
\nbe an um-\n<\/p>\n
697<\/span><\/p>\n
pire.\tSecond,\t on  the  construction\tof  the\t arbitration
\nagreement in the present case was the operation of paragraph
\n4  of Schedule: I of the Arbitration Act excluded  with\t the
\nresult\tthat the umpire could enter upon the reference\tonly
\nin   the   event  of  a\t difference  arising   between\t the
\narbitrators.\n<\/p>\n
On 26 April, 1967 there was an arbitration agreement between
\nthe  partnership  firm\tof Indian  Engineering\tCompany\t and
\nKeshavsinh  Dwarkadas Kapadia.\tKapadia had  appointed\tM\/s.
\nChetan\tTrading\t Company  as  the  sole\t selling  agent\t  of
\nKapadia’s,  several products including aluminium and  copper
\nwire  by  an  agreement dated 16  September,  1965.   Chetan
\nTrading\t Company in their turn appointed Indian\t Engineering
\nCompany as their sole selling agent in respect of  aluminium
\nand  copper wires.  Chetan Trading Company terminated  their
\nagreement  with\t Indian Engineering Company.   Kapadia\talso
\nterminated  the\t sole  selling agency  with  Chetan  Trading
\nCompany\t Indian\t Engineering Company contended that  on\t the
\ntermination  of the sole selling agency\t between  themselves
\nand Chetan Trading Company Indian Engineering Company became
\nthe sole selling agent of Kapadia in terms of the agreement’
\ndated  16  September,  1965.   Indian  Engineering   Company
\nclaimed damages against Kapadia for breach of the agreement.
\nKapadia\t claimed damages and moneys from Indian\t Engineering
\nCompany.   ‘Disputes  arose  between  the  parties.    These
\ndisputes were referred to arbitration in accordance with the
\nagreement dated 26 April, 1967.\n<\/p>\n
There  was  a similar arbitration agreement  between  Chetan
\nTrading\t Company and Indian Engineering Company on  5  June,
\n1967  in respect of their disputes and claims  against\teach
\nother.\t The arbitration agreement and the arbitrators\twere
\nidentical in both the cases.\n<\/p>\n
Clauses 1, 2, 5 and 6 of the arbitration agreement which are
\nrelevant  for  the purposes of the present  appeals  are  as
\nfollows:-\n<\/p>\n
\t      Clause  (1): All the disputes and\t differences
\n\t      arising out of
\n\t      or in relation to the said Sole Selling Agency
\n\t      Agreement\t be and they are hereby referred  to
\n\t      the arbitration of the said Shri H. G.  Advani
\n\t      and Shri J. N. Gandhi.\n<\/p><\/blockquote>\n
\t      Clause (2) That\tthe  arbitration  shall\t  be
\n\t      governed by them provisions of the Arbitration
\n\t      Act<\/a>, 1940.\n<\/p><\/blockquote>\n
\t      Clause  (5):  The arbitrators shall  make\t and
\n\t      publish  their award within four\tmonths\tfrom
\n\t      the date of their entering upon the  reference
\n\t      and  they are hereby authorised to extend\t the
\n\t      said time from time to time as may be required
\n\t      with the previous written consent of both\t the
\n\t      parties hereto.\n<\/p><\/blockquote>\n
\t      698<\/span><\/p>\n
\t      Clause (6): The said arbitrators shall  before
\n\t      proceeding  with\tthe arbitration\t appoint  an
\n\t      umpire  and  in the event\t of  any  difference
\n\t      arising  between\tthem they  shall  refer\t the
\n\t      ‘matter  to  the umpire for his  decision\t and
\n\t      award.\n<\/p><\/blockquote>\n
The arbitrators Messrs.\t Advani and Gandhi held their  first
\nmeeting\t on 12 September, 1967.\t At the said meeting  before
\nentering  upon\tthe reference the arbitrators  appointed  an
\numpire in the following terms:\n<\/p>\n
“Mr.   Porus Mehta failing him Mr. Murzban Mistry  appointed
\numpire”.\n<\/p>\n
On 11 January, 1968 the time laid down by clause (5) of\t the
\nagreement for making the award expired.\t On 14 January, 1968
\nthe respondents wrote to the appellants to obtain the neces-
\nsary extension of time for making the award.  The appellants
\ndid  not comply with the request and on 6 March, 1968  wrote
\nto  the arbitrators that Mr. Advani one of  the\t arbitrators
\nwould  be biased in favour of the respondents.\t Thereafter,
\nthe  respondents  through their solicitors called  upon\t the
\narbitrators to refer the matter to the umpire and also by  a
\nseparate letter called upon the umpire Mr. Porus A. Mehta to
\nenter\ton  the\t reference  as\tumpire\tappointed   by\t the
\narbitrators.   Mr.  Mehta fixed a meeting on 27\t May,  1968.
\nThe  appellants raised certain objections.  The meeting\t was
\nadjourned.  Another meeting was fixed on 17 June, 1968.\t  At
\nthe  meeting held on 17th June, 1968 Mr. Mehta gave  certain
\ndirections  in\tregard to the proceedings  and\tinstructions
\nthereof and fixed 12 July, 1968 for hearing.  The appellants
\nby  letter  dated  12  July, 1968  addressed  to  Mr.  Mehta
\ncontended  that the consent of the umpire was  not  obtained
\nbefore\this  appointment and therefore there  was  no  valid
\nappointment  of the umpire.  Mr. Mehta fixed the meeting  on
\n13  July, 1968 and decided to proceed with  the\t arbitration
\nand adjourned the meeting to 20 July, 1968.  The  appellants
\nobtained  an adjournment on the ground that  the  appellants
\nwanted to file a petition challenging the appointment of Mr.
\nMehta as an umpire.  Mr. Mehta adjourned the matter till  30
\nJuly, 1968.\n<\/p>\n
In this context of events the appellants filed\tapplications
\nunder  section 33<\/a> of the Arbitration Act which\tresulted  in
\nthe order appealed against.\n<\/p>\n
Three contentions which had been advanced An the High  Court
\nwere repeated here.  First, that the arbitrators before pro-
\nceeding\t with  the reference did not obtain consent  of\t the
\numpire\tto his appointment as umpire, and, therefore,  there
\nwas no appointment of umpire.  Secondly, under clause (6) of
\nthe  arbitration  agreement  operation\tof  paragraph  4  of
\nSchedule I of the
\n699<\/span>
\nArbitration Act<\/a> was excluded and the umpire could enter upon
\nthe  reference\tonly in the event of  a\t difference  arising
\nbetween\t  the\tarbitrators  on\t their\t disagreement.\t  No
\ndifference arose between the arbitrators in the present case
\nbut only time for making the award expired.  Therefore,\t the
\numpire\thad  no right to enter upon the\t reference.   Thirty
\nunder  clause (6) of the arbitration agreement,\t the  umpire
\nhad  no\t right\tto  enter  upon\t the  reference\t unless\t the
\narbitrators  referred  the matter to the umpire.   The\tHigh
\nCourt  relied on the decision of the Judicial  Committee  in
\nMirza  Sadik  Husain  v. Mussanmat  Kaniz  Zohra  Begam\t and
\nAnr<\/a>.(1) (38 I.A. 181) and held that the umpire signified the
\nconsent\t by  taking  up the office and\tthe  umpire  rightly
\nentered\t on  the reference.  The High Court  held  that\t the
\ncontingency provided for in paragraph 4 of Schedule I to the
\nArbitration  Act<\/a> was not excluded.  The High  Court  however
\nsaid  that  if\tthe High Court was wrong in  the  view\tthat
\nparagraph  4  of Schedule I to the Arbitration Act<\/a>  was\t not
\nexcluded,  expiry  of  time to make an award  could  not  be
\nregarded  as  a disagreement between the  arbitrators.\t The
\nthird contention of the appellants was also rejected by\t the
\nHigh Court on the ground that clause (6) of the\t arbitration
\nagreement  in  the  present  case did  not  apply  when\t the
\narbitrators did not make an award within time.
\nCounsel for the appellants contended that the words ‘if\t any
\nappointed arbitrator or umpire I neglects or refuses to get’
\noccurring in section 8(1)<\/a> of the Arbitration Act, 1940\tmean
\nthat  one can refuse to act only after one has accepted\t the
\nappointment.   This contention was supported by\t relying  on
\nthe  following observation in Russell on  Arbitration,\t18th
\nEdition, at page 212:\n<\/p>\n
\t      “Acceptance  of  offices:-Acceptance  of\t the
\n\t      office   by  the\tarbitrator  appears  to\t  be
\n\t      necessary to perfect his appointment.  It\t has
\n\t      been so decided in the case of an umpire,\t and
\n\t      it  would seem to be only reasonable  that  an
\n\t      appointment should not be considered effective
\n\t      until  the person appointed has agreed  either
\n\t      expressly or tacitly to exercise the  function
\n\t      of the office”.\n<\/p><\/blockquote>\n
Two  decisions are cited in Russell in support of  the\tview
\nexpressed  by the author.  These decisions are: Ringland  v.
\nLowndes\t (7  )\t(1863) 15 C.B.(N.S.) 173=143  E.R.  749\t and
\nTradax Export S. A. v. Volkawagenwerk 3 A.G.’, (1969) 2 O.B.\n<\/p>\n
599.   The decision in Tradax Export case (supra)  has\tbeen
\naffirmed  by the Court of Appeal as will appear in (1970)  1
\nA.E.R. 420.\n<\/p>\n
It   is\t  important  to\t notice\t the   distinction   between
\nappointment  and acceptance of office.\tThe present  appeals
\nconcern\t the  appointment of an umpire.\t  The  questions  of
\neffectiveness or per-\n<\/p>\n
700<\/span><\/p>\n
fection\t  of  appointment  are\tby  the\t nature\t of   things
\nsubsequent  to\tappointment  unless  the  agreement  or\t the
\nstatute provides otherwise.  Arbitrators and umpire too\t are
\noften  appointed  by the parties.  Sometimes  an  umpire  is
\nappointed  by arbitrator.  The constitution of the  arbitral
\nbody  and the manner in which the appointments are made\t are
\nprimarily  dealt with in the arbitration agreement  or\telse
\nthe  Arbitration  Act<\/a>  will  apply.   In  some\tcases,\t the
\nappointment of arbitrator may require special consideration.
\nIf,  for  instance,  two  arbitrators  are  required  to  be
\nappointed one by each party an appointment of arbitrator  by
\na party is not complete without communication thereof to the
\nother party.  The reason in the words of Lord Denman is this
\n:  ‘Neither party can be said to have chosen  an  arbitrator
\nuntil he lots the other party know the object of his choice”
\n(See Thomas v. Fredricks) ( 1 847) 10 Q.B. 775).  Where each
\nparty was to appoint a valuer by 31 May, 1847 and one of the
\nparties nominated a referee late on 31 May and sent by\tthat
\nnight’s post a notice thereof to the defendant who  received
\nit  on\t1  June,  it was held that  the\t plaintiff  had\t not
\nnominated a referee by 31 May. (See Tew v. Harris (1848)  11
\nQ.B. 7).\n<\/p>\n
The necessity for communication of appointment of arbitrator
\nto the parties as also to the appointee depends often on the
\nlanguae\t of  the arbitration clause.  In the  Tradax  Export
\ncase, (supra) the arbitration clause was as follows :-\n<\/p>\n
\t      “………. Any claim must be made in  writing
\n\t      and  claimant’s  arbitrator  appointed  within
\n\t      three  months’  of final discharge  and  where
\n\t      this provision is not complied with the  claim
\n\t      shall  be deemed to be waived  and  absolutely
\n\t      barred”.\n<\/p><\/blockquote>\n
This is described as the usual Centrocon arbitration  clause
\nin  charterparty  agreement.  It is noticeable that  in\t the
\nCentrocon  arbitration\tclause the claimant is\trequired  to
\nappoint an arbitrator within three months of final discharge
\nof  cargo  or  else  the  claim\t is  barred.   An  effective
\nappointment  of an arbitrator in such a clause is  necessary
\nto constitute arbitral authority within the stipulated\ttime
\nto prevent the claim from being barred.\t Therefore, in\tsuch
\na  clause not only communication to the appointee  but\talso
\nthe  acceptance of office by the appointee is essential\t for
\neffective  appointment of arbitrator within the\t meaning  of
\nthe clause.  A mere nomination or appointment unknown to the
\nappointee  was\theld not to be an appointment  far  less  an
\neffective  appointment of arbitrator within the\t meaning  of
\nthat  clause.  The appointment will be effective  only\twhen
\nthe  appointed arbitrator accepts office and is\t armed\twith
\nthe  duty  and authority of an arbitrator.  Even in  such  a
\nclause\tthe stage of effective appointment will be  when  he
\nhas indicated his willingness to act in that matter.\n<\/p>\n
701<\/span><\/p>\n
In the Tradax Export case (supra) the charterers gave notice
\nof appointment to the arbitrator.  Three months expired\t The
\nother side contended that there was no appointment of arbit-
\nrator  within the stipulated time.  The arbitrator  was\t not
\nset in motion.\tNeither was the arbitrator clothed with\t the
\nmandate of arbitration nor was the machinery of\t arbitration
\ninvoked by the charterers.  The appointment of an arbitrator
\nthere  had to be perfected and implemented by  calling\tupon
\nthe appointee to act.  In the Tradax Export case (supra) the
\nCourt  of  Appeal  observed that  if  an  application  under
\nsection\t 27  of the English Arbitration Act, 1950  had\tbeen
\nmade,  the court would have, granted relief as explained  in
\nLiberian  Shipping Corporation ‘Pegasus’ v. A. King  &\tSons
\nLtd.  (1967)  2 Q.B. 86.  Section 27 of the  English  Arbit-
\nration Act is a special provision conferring power upon\t the
\ncourt  to  extend the time for commencement  of\t arbitration
\nproceedings  where  in the circumstances of the\t case  undue
\nhardship would otherwise be, caused.  This aspect  indicates
\nthat in the Centrocon clause commencement of proceedings  by
\neffective-  appointment\t is  vital and that  is\t why  relief
\nagainst\t rigour of time clauses is granted under section  27
\nof the English Arbitration Act, 1950.\n<\/p>\n
In the present appeals, the reference was to arbitrators and
\nthey were required to appoint an umpire.  The appointment of
\nan umpire by two arbitrators means that the arbitrators\t are
\nto  coneur in appointing an umpire.  There is no  particular
\nmethod\tof appointment of an umpire prescribed by  the\tAct.
\nThe  usual  method  of\tappointment  of\t an  umpire  by\t the
\narbitrators is in writing.  Arbitrators who are required  to
\nappoint\t an  umpire are under no obligation  to\t obtain\t the
\napproval  of the choice of the personnel by the parties\t who
\nappointed  the\tarbitrators.  If any party  is\tdissatisfied
\nwith  the  choice that will not affect the validity  of\t the
\nappointment  (See Oliver v. Collings (1809) 11 East  367-103
\nE.R. (1045).\n<\/p>\n
The  appointment by arbitrators of an umpire should  be\t the
\nact  of the will and judgment the two.\tSuch an\t appointment
\nis  to\tbe  one of the choice and not of  chance.  [See\t Re.
\nCassell\t (1829)\t 9 B & C 624==109 E.R. 232].  If  an  umpire
\ndeclines  the  office the appointment is  ineffectual.\t Ile
\narbitrators  in such a case can make another appointment  of
\nan  umpire if the arbitration agreement empowers them to  do
\nSO  Or\tthe  court  can appoint an  umpire  in\tlieu  of  an
\nappointed  umpire who refuses to act.  Declining the  office
\nwill be refusal to act.\n<\/p>\n
It  is,\t therefore, apparent that appointment of  umpire  is
\nsomething  different  from the acceptance of office  by\t the
\numpire.\t The arbitrator Or umpire assumes his office when he
\naccepts\t the appointment.  There is no NO authority for\t the
\nproposition that consent of the appointee is required before
\nan umpire is appointed by the arbitrators.  The observations
\nin Russll on arbitration. 18 th Ed.\n<\/p>\n
702<\/span><\/p>\n
at  page, 212 do not support that submission.  The  decision
\nin  Ringland  v.  Lowndes supra) which\tis  referred  to  in
\nRussell had very special features.  Under the Public  Health
\nAct<\/a>, 1848 a disputed claim to compensation was to be settled
\nby arbitration.\t Arbitrators were required to make an  award
\nwithin\t21  days after the appointment\tor  within  extended
\ntime,  if  any.\t  If arbitrators  neglected  or\t refused  to
\nappoint an umpire for seven days after being requested so to
\ndo  by any party the court of quarter sessions would on\t the
\napplication  of such party appoint an umpire.  In that\tcase
\narbitrators   were   appointed\tin   January,\t1861.\t The
\narbitrators  refused  to appoint an umpire.   The  plaintiff
\napplied\t at  the Easter sessions to appoint  an\t umpire\t but
\nfailed\tin consequence of want of a notice of his  intention
\nto make such application.  The plaintiff thereafter gave the
\nrequired  notice and the second application was made at\t the
\nMidsummer  sessions.  One Johnson was named as umpire.\t But
\nas  his consent had not been obtained no formal\t appointment
\nwas  made.   A third application was made at  the  Michaelms
\nsessions and Johnson was on 14 October appointed umpire\t and
\naccepted  the appointment.  The question  for  consideration
\nwas  whether  the  appointment\tof the\tumpire\twas  at\t the
\nMidsummer sessions or at the Michaelmas sessions.  Under the
\nstatute\t the award was, to be made within three months\tfrom
\nthe  umpire,s appointment.  The umpire made- an award on  30
\nDecember,  1861.  If the appointment was  in  the  Midsummer
\nsessions the Award would be bad.\n<\/p>\n
It  will appear from the report (15 C.B ‘ (N.S.) 173 at\t pp.
\n178, 179 and 196-143 E.R. 4 749 at pp. 752 and 759) that  it
\nwas the duty. and practice of the clerk of the peace to make
\nan,  entry  of the acts and proceedings of  the\t court\tfrom
\nWhich  the  orders of the court were  subsequently  formally
\ndrawn  up  and no order would in the course of\tpractice  be
\nformally drawn up unless the assent of the umpire to act had
\nbeen   previously  obtained.   Counsel\tfor  the  board\t  in
\nRingland’s case did not strongly press the objections  that’
\nan  order ‘was made at the Midsummer sessions because  there
\nwas  no\t formal order of the Court in  Midsummer  ‘sessions.
\nThe  decision  in  Ringland v. Lowndes (supra)\twent  up  on
\nappeal\tas will, appear from, 17 C.B. (N.S.) 514.=144,\tE.R.
\n207,   The  appeal,  however  was  on  actual  decision\t  in
\nTringland,s  case  (supra)  ;is\t ‘to  whether  a  party\t who
\nattended  before,  an,\tarbitrator  under  protest,   cross-
\nexamined adversary’s witnesses and called witnesses did\t not
\npreclude   himself  from  afterwards  objecting\t  that\t the
\narbitrator  was proceeding without authority it will  appear
\nat  conceded that the, appointment of Johnson as  an  umpire
\ntook Place  the October sessions.  the special provisions of
\nthe statute, the mode. of making an application to the court
\nof  quarter Sessions, me practice of the court in regard  to
\ndrawing up of
\n703<\/span>
\norders\t for   appointment  of\tumpire\tand   the   specific
\nrequirement  of\t consent of the appointee to  an  order\t for
\nappointment of umpire are all special and peculiar  features
\nin  Ringland  v. Lowndes (supra) to support  the  view\tthat
\nacceptance  of umpirage is necessary for the appointment  of
\nthe umpire.\n<\/p>\n
The decision of the Judicial Committee in Mirza Sadiq Husain
\nv. Musammat Kaniz Zohra Begam<\/a> (supra) was on the meaning  of
\nthe  words ‘refuses to act’ occurring in section 510 of\t the
\nCode of Civil Procedure, 1882.\tThat section conferred power
\non  the court to appoint a new arbitrator or umpire “if\t the
\narbitrator or  the umpire  refuses  to act”.  The,  Judicial
\nCommittee did not accept the construction put upon the words
\n‘refuses to act’ by the High Courts in India that the  power
\nof the court under section 5<\/a> 10<\/a> to appoint a new  arbitrator
\nin  place of another arises only when that other  had  first
\nconsented to act and thereafter refused or became incapable.
\nThe  Judicial Committee said “it appears to their  Lordships
\nthat  when  an.\t arbitrator is\tnominated  by  parties,\t his
\nrefusal\t to  act is signified as clearly by his\t refusal  to
\naccept\tnomination as by any other course he  could  pursue.
\nHis  refusal  to  act necessarily follows, for\the  has\t not
\nperformed  the first action of all, namely, to take  up\t the
\noffice\tby  signifying his assent to his  appointment  Their
\nLordships  do  not  enter at length,into the  matter  as  it
\nappears that any other construction would open the way to an
\neasy defeat of the provisions of the statute”.
\nUnder  section 8<\/a> of the Arbitration Act ,1940 if any  umpire
\nrefuses\t to act and the arbitration agreement does not\tshow
\nthat  it  was  intended\t that  the  vacancy  should  not  be
\nsupplied, and the parties or the arbitrators as the case may
\nbe,  do not supply the vacancy any party may take  recourse’
\nto the provisions of the statute for appointment of  umpire.
\nThe  construction which the Judicial Committee put upon\t the
\nwords ‘refuses to act’ in Mirza Sadik Husain’s case  (supra)
\napplies to the provisions contained in the Arbitration\tAct<\/a>,
\n1940.\tWhere  the arbitrators appoint an  umpire  upon\t the
\ncondition   of\tthe  umpire’s  acceptance  of  office,\t the
\narbitrators  wilt have power to reappoint an umpire  if\t the
\npost is refused.  ‘Where, again, the arbitrators appoint  an
\numpire, without any such condition of acceptance of  office,
\nand  the appointee declines the office, the, arbitrators  in
\naccordance with their powers under the arbitration agreement
\nea  appoint  an umpire again.  The court has also  power  to
\nappoint\t in lieu of an appointed umpire who refuges to\tact,
\nas stated in section 8<\/a> of the Arbitration Act, 1940.  In all
\nthese cases the appointment of an. umpire becomes  effective
\nby  acceptance\tof  the\t office.   Thereupon  the  power  of
\nappointment is exhausted.  If the appointed person
\n704<\/span>
\nafter  acceptance of office refuses to act or will  not\t act
\nthe parties have to take recourse to the court.
\nWhen   the  umpire  assumes  his  office  he   accepts\t the
\nappointment.  The acceptance may be express or implied.\t Ile
\nacceptance  need not be in writing.  It may be evidenced  by
\nconduct.  It may be also by proceeding with the arbitration.
\nIn  Mirza  Sadik Husain’s case (supra) both the\t parties  by
\nagreement  appointed arbitrators to settle their  respective
\nrights.\t  One  of  the\tarbitrators  refused  to  act.\t The
\nrespondents  in\t that  case  declined  to  nominate  another
\narbitrator  in their behalf-.  The Judicial  Committee\tsaid
\nthat  this declinature was within their rights,\t the  reason
\nbeing that the arbitrator refused to accept office or to act
\nafter he had been appointed.  The arbitrators in the present
\ncase  completed their appointment of umpire before  entering
\non the reference.  Thereafter, it remained for the umpire to
\nact or to refuse to act.\n<\/p>\n
The  question of acceptance of appointment of umpire  arises
\nwith  reference to the stage when he is called upon to\tact.
\nThe  Arbitration Act<\/a>, 1940 does not say that appointment  of
\numpire\tby  arbitrators is to be made only  after  obtaining
\nconsent of the appointee.  The arbitrators here appointed an
\numpire before entering on the reference: The appointment was
\nnot  conditional upon the acceptance of appointment  by\t the
\numpire.\t  The  scheme of arbitration  proceedings  indicates
\nthat the appointment of umpire and the acceptance of  office
\nare two separate matters arising at different stages in\t the
\nproceedings.   When the umpire is called upon to proceed  in
\nterms of the, appointment he will either assent expressly or
\nby conduct to act or he will decline to act.\n<\/p>\n
The High Court was correct in holding that there was a valid
\nappointment  of\t the umpire and the umpire  rightly  entered
\nupon  the reference.  Ile umpire’s authority commenced\twhen
\nhe entered upon the reference on being asked to proceed with
\nthe reference.\n<\/p>\n
The other contention on behalf of the, appellants that para-
\ngraph  4 of the First Schedule to the Arbitration Act<\/a>,\t1940
\nwas  excluded by clause (6) of the arbitration agreement  in
\nthe: present case is unsound.  Section 3<\/a> of the\t Arbitration
\nAct  provides  that  an\t arbitration  agreement,  unless   a
\ndifferent intention is expressed therein, shall be deemed to
\ninclude\t the provisions set out in the First Schedule in  so
\nfar as they are applicable to the reference.  Paragraph 4 of
\nthe  First  Schedule provides that if the  arbitrators\thave
\nallowed their time to expire without making an award or have
\ndelivered to any party to the arbitration
\n705<\/span>
\nagreement or to the umpire a notice in writing stating\tthat
\nthey  cannot agree, the umpire shall forthwith enter on\t the
\nreference  in  lieu of the arbitrators.\t Clause (6)  of\t the
\narbitration agreement does not state that only in the  event
\nof a difference arising between the arbitrators there  shall
\nbe a reference to the umpire.  There is no intention in\t the
\nagreement  to  exclude the operation of paragraph 4  of\t the
\nFirst Schedule to the Arbitration Act<\/a>.\tIn the present\tcase
\nthe  agreement\tprovided  for appointment  of  umpire.\t The
\nagreement  also\t provided  for making of the  award  by\t the
\narbitrators.  It is, therefore, apparent that the  intention
\nof  the parties was that when arbitrators would allow  their
\ntime  to  expire without making the award the  umpire  would
\nenter on the reference in lieu of the arbitrators.
\nThe  High Court expressed the view that if  the\t arbitrators
\nallowed\t the time to expire that by itself would not  amount
\nto  disagreement  between  the\tarbitrators.   As  to\twhat
\nconstitutes disagreement cannot be laid down in abstract  or
\ninflexible  propositions.  It will depend upon the facts  of
\nthe  case as to whether there was a disagreement.  The\tHigh
\nCourt  did  not agree with the view expressed in  Russel  on
\nArbitration, 18th Ed. at pages 205 and 208, that failure  to
\nmake an award in time where the agreement prescribed time in
\nwhich  the arbitrators award is to be made would  amount  to
\ndisagreement.\tIn Lossifoglu v. Counmantaro [1941]  1\tK.B.
\n396 the arbitration clause provided “in case the arbitrators
\nso  appointed disagree they shall appoints an umpire”.\t One
\nof  the\t arbitrators  repeatedly endeavoured  to  arrange  a
\nmeeting\t with  the  other,  but failed\tto  arrange  such  a
\nmeeting.   The arbitrator then unsuccessfully  attempted  to
\nobtain\tconsent of the latter to the appointment of  umpire.
\nThereafter,  application  was  made to\tthe  court  for\t the
\nappointment of umpire.\tDisagreement between the arbitrators
\nmay take various shapes and forms.  In the present case\t the
\narbitrators   by   reason  of  attitude\t of   a\t  party\t  in
\ncorrespondence addressed to the arbitrators could not  agree
\nto  proceed with the matter.  Where one of  the\t arbitrators
\ndecline to act and the other is left alone it will in a case
\nof  this  type\tamount\tto  disagreement  between  the\t two
\narbitrators.   In the Present case, there  was\tdisagreement
\nbetween\t the  arbitrators.   Time to  make  the\t award\talso
\nexpired.  Therefore, from both points of view the umpire had
\nauthority to inter upon the reference.\n<\/p>\n
For these reasons, we are of opinion that the High Court was
\ncorrect\t in  making the order.\tThe appeals  are  dismissed.
\nThe order of the, High Court is upheld, In view of the\tfact
\nthat  the time granted by the High Court till  31  December,
\n1968 for making the award cannot apply, the umpire Porus A..
\nMehta is I-L3Sup.Cl\/72
\n706<\/span>
\ngranted\t time  for three months to make\t the  award.   Three
\nmonths\twill run from the date of service of this  order  by
\nany party to these appeals.  The appellants will pay one set
\nof hearing fee to the respondents.\n<\/p>\n
V.P.S\t\t\t\t Appeals dismissed.\n707<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Keshavsinh Dwarkadas Kapadia Etc vs M\/S. Indian Engineering Company on 10 September, 1971 Equivalent citations: 1972 AIR 1538, 1972 SCR (1) 695 Author: A Ray Bench: Ray, A.N. PETITIONER: KESHAVSINH DWARKADAS KAPADIA ETC,. Vs. RESPONDENT: M\/S. INDIAN ENGINEERING COMPANY DATE OF JUDGMENT10\/09\/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. SIKRI, S.M. (CJ) […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-270944","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nKeshavsinh Dwarkadas Kapadia Etc vs M\/S. 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