JUGGILAL KAMLAPAT v. GENERAL FIBRE DEALERS LTD. (AND CONNECTED APPEAL)
Citation: [1962] SUPP. 2 S.C.R. 101; 1961 INSC 345
Court: Supreme Court of India
Bench: K.N. WANCHOO , J.C. SHAH
Judgment date:
Case summary
1961 INSC 345. Supreme Court of India judgment dated 1961-12-12. JUGGILAL KAMLAPAT v. GENERAL FIBRE DEALERS LTD. (AND CONNECTED APPEAL). Read the judgment...
Judgment text
2 S. C. R. SUPREME COURT REPORTS 101 JUGGILAL KAMLAPAT v. GENERAL FIBRE DEALERS LTD. (AND CONNECTED APPEAL) (K. N. WANCHOO and J. C. SHAH. JJ. ) Arbitralion-.! bnard set aside-Reference to a. rbitration not l1_uperseded-Second reference to arbitration, if permissible- Arbitration Act. 1940 (10 of 1940), s. 19. Disputes which arose between the parties with respect ta carrying out a contract were referred to the arbitration of the Bengal Chamber of Commerce in accordance with an agreement to refer disputes as and when -::hey arose to the arbitration of the Chamber. The award of the Tribunal of Arbitration was set aside by the High Court. On an application for referring the matter for arbitration de novo another tribunal was constituted which made a fresh award.
The questions which arose for decision were whether after the first award was set aside the reference to arbitration was exhaus· ted and the arbitrator had become functus officio and whether without a fresh arbitration agreement it was not possible to have the same dispute decided again _by the arbitrator. Held, that the arbitrator became functus officio after he gave the av. :ard but that did not mean that in no circumstances could there be further arbitration proceedings where an award was set aside or that the sam~ arbitrator could never have anything to do with the award with respect to the same dispute. Section 19 of the Arbitration Act empowered the Court not to supersede the reference and to leave the arbitration agreen1ent effective even when it set aside the award and there ..
upon it would depend upon the terms of the arbitration agreement whether the arbitration proceedings could go on with respect to the same dispute or with respect to some other dispute arising under the arbitration agreement. Barangore Jute Ftu0tory v. H1das Chand Rupchand. (1958) 62 C. W. N. 734, Rallis India Ltd. v. B. V. Manickam Gheuy, A. I. R. 1956 Mad. 369, and Firm Gulab Rai Girdhari Lal v. Firm Bansi Lal Hansraj, A. LR. 1959 Punj. 102, approved. Mordu v. Palmer, ( 1870) 6 Ch. App. 22 and Sutherland and Go. v. Hannevig Bros. Ltd. [1921] I K. B. 336, referred to. In the present case the first award was set aside but as the reference had not been superseded and the arbitration 102 SUPREME OOURT REPORTS fl962] SUPP. agreement subsisted it w:u open to the Chamber to appoint another tribunal under r. X of the Chamber Rules. CIVIL APPKLLA. TB JURISDICTION: Civil Appeal No. 309 and 526 of 59. Appeals by special leave from the judgment a.
nd orders aad decree dated Augiut 27, 1958, November 24, 1958, and March 10, 1958, of the Calcutta High Court, in Award Caae No. 103of1955 a. nd Appeal from Original Order No. 26 of 1956 res-pectively. N. O. Ohatterje. e and B. P. Malieshwa~, for the appellant (in C. A. No. 309 of 59). H,N. Sanyal, Additional Solicitor-General of India, S. K. Gupta and D. N. Mukherjee, for respondent (in C. A. No. '309 of 59). N. G. Ohatterje. e, ! rf. G. Poddar and S. N. Jlukerji, for the appellant (in C. A. N'0. 52. 5 of 59). H. N. Sanyal, Additional Solicitor-General of India, A. N. Sinliu and P. K. -,O,fukherje. e, for the ri>spondent (in C. A. No. 525 of 59). 1961. December l:l. The Judgment of the Court was deliverc,d by WANCHOO, J. -These two appeals by special leave from the judgments of the C'llcutta High Court raise a common question of law and will be dealt with together.
It will be convenient to set out the facts of a peal 309 and deal with them in connection with the point raised on behalf of the appellant. These facts are that a contract was en· tered into betwoen tne parties for supply of corns-acks on August 29, 1951. The contract contained au arbitration clause in the following terms . •·All matters, questions, dieputes, difl'-reuce and/or claim• arising out or and/or oon-uerning and/or in connect. ion with and/or in oonsequence of or relating to thls oontraot whaLher or not the obligation of either or both parties under this contract be subsisting at the time of such dispute and whether or not this Juggil:il Kamlopa• v. contract has been terminated or purported to General Fibre be terminated or completed shall be referred Dealers Ltd, to the arbitration of the. Bengal Chamber of Wanthto J, Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted.
" Disputes arose with respect to carrying out of the contract and on October 25, 1951, the respondent referred these disputes to the arbitration of the Bengal Chamber of Commerce (hereinafter referred to as the Chamber). That case was numbered 217-© of 1951 in the Chamber's records. On April 17, 1952, the Tribunal of Arbitration made an award disallowing the claim of the respondent. This award was filed in the High Court. On May 25, 1953, the award was set aside on the ground of misconduct on the part of the arbitrators by a learned Single Judge. That order was taken in a. peal and on. July 8, 1954, the appeal wa8 dismissed. Later, leave to appeal to this Court was refused and thus the order of the learned Single Judge setting a. side the award finally stood. Soon after the award had been set aside by the learned Single Judge, the respondent addressed a letter to the Chamber on September 7, 1953. It was said in this letter ·that as the award in case No.
217-G of 1951 had been set aside by the High Caurt, the respondent begged to refer the matter for arbitration de novo and enclosed its statement of the case. Thereupon another tribunal was constituted under the rules of the Chamber to decide the disput afresh. The appellant appeared before the tribunal and contended that it had no jurisdiction to make an award on a second reference in the same dispute. The tribunal, however, proceeded to decide the reference and made the award on March I ;i, 1955. This timl' the award wu in· favour of the respondent. Thereupon on August 4, 1955, the appellant made an applioation to the High Court praying that the award be set aside. In the alternative, ~he appellant prayed that the award be declared null and void and the arbitration agreement between the parties be superseded on the ground that the second reference was incompe-tent.
The application was opposed by the respondent and its oontention was that this was not a second reference, and what the respondent wanted was that the Chamber should in the event that had happened take up the dispute again and make a proper award. Reliance in support of th·· plea that such a course was permissible was plaoed on behalf of the respondent on the decision of the Calcutta High Court in The Baral'l{Jol'e Jute Factory 1 Cu. Lt,d. v . . lle,. ssrs. Hui. as Chand Rupcharu1{ ). The loamed Si1111le Judge relied on the decision in The Ram1!. gore Jute Factory ('J and held that from what the respondent said to the Chamber i,ts letter of September 7, 1953, it was reasonably clear that all that. it wanted was that the Chamber should in the event that had happened take up the dispute again and make a proper award. It could not therefore be held because of some langqage used in the letter that the respondent was making a fresh reference.
Consequently, it was held that the Chamber had jur isdictiun to dooide the dispute after the earlier aw~d had been'~t aside and what the respondent had aaked for wa. 8 for the continuance of the original reference, which h&d not been supel'l! eded. The learned Sirtgle Judge then went into the question whether there wa. 11 souh misconduot aa would justify setting aside the award and held that there were no grounds made out which would juetUy the 11etting aside of the aw-atjl. Consequently, the application for setting aside the award was dismiaaed. Thereafter the llppellant ea. me to th;~ Ccinrt for special ,. ) (19SR)6'C W ~ 73i 2 s. c. R. SUPREME COURT REPORl't-i 10. J leave, &hich was granted; and that is how the matte. r has come up befort: us.
The main question that has been argued before us is tliat the first award was set aside on May 25, 1953, the reference was exhausted and the arbitrator had become funct·us officio and it was therefore not possible without a fresh arbitration agreement to have the same dispute decided agian by the arbitrator, irrespective of whether the letter of September 7, J 953, amounted to a second reference or was a mere request for continuation of the proceedings in the original reference, which had proved abortive as the award originally made had been set aside. Reliance i'l this connection is placed on what are called certain fnndainental principles governing all arbitrations. It is urged that once an award is wholly set aside, the arbitrator is Junci·us ojfico and thereafter he cannot function again to decide the same dispute. This is said to be a fundamental principle of all arbitrations, and reliance is placed on a passage in "Russel on Arbitration" (15th Edu. , p.
298), where the effect of setting aside an award is stated thus-"If an award is wholly set aside, the arbitrator is functus officio. " Reliance is also placed on Mordue v. Palmer ('), where it was held- "An arbitrator having signed his award is functus officio and cannot alter the slightest error in it, even thoug such error has arisen from the mistake of the clerk in copying the draft. The proper course in such a case is to obtain an order to refer the award back to the arbitrator. " Reliance is also placed on S1~therl&nd and Company v. Hannevig Brothen Limited('). That was a case under the English Arbitration Act of 1889 which provided that an arbitrator could correct in a. n a. ward any clerica. l mistake or error from any (! ) ( 1870) 6 Ch. App. 22. (2) [1921] I. K. B. 336, 106 SUPREME OOURT REPORTS [1962] SUPP. accidental slip or omiBBion and had thus varied the rule laid down in Mordue's case(').
It was however held in that rase that the correction made by thtl arbitrator was not justified under the Arbitration Act. These cases in our opinion have not much bearing on tho question l1efore us. It is true that generally speaking, an arbitrator is functus officio after he has made the award; but this only means that no power is left in the arbitrator to make any change of substance in the award that he had made (except in certain circumstances which have been provided in tho law). What we have to see however are the scheme and the provisions of the Arbitration Act, No. X of 1940 (hereinafter called the Act), which govern the proceedings in arbitration in this case. These provisions are to be found in Chap. II of the Act which deal with "arbitration without intervention of Court. " Sections 3 to 7 deal with various aspects of arbitration agreements with which we a. re not concerned in the present case.
Sections, 8, 11 and 12 deal with the power of a court to appoint or remove arbitrators or umpire. Section1 9 and IO deal·with the right of a party to appoint a new arbitrator or sole arbitrator and a. IEO with the appointment of an umpire. Section 13 deals with the power of the arbitrator and s. 14 provides for the signing oi the a. ward and giving notice in writing to the parties of the making and signing of the award and filing the same in court. Section 15 gives power to the court to modify the a. ward in the . iircumstan-oes mentioned therein. Section 16 gives power to the court to remit the a. ward for reconsideration under certain circumstances. Section 17 provides for delivery of ju~mont in terms o~ the award where the court sees no ca. use to . -emit tho award or to set it asitle. Section 18 provides for making int. erim orders. Section 30 which is in Cha. p. V sets out the grounds on which an a. ward may be set aside. (I) (1870) 6 Ch. App. 22. Finally, we come to s.
19, which is the section on the interpretation of which the decision of this case depends. Section 19 reads as follws :- "Where an award has become void under suh-section(3) of section lG or has been set aside, the court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred. " Before we consider what. s. 19; provides we might advert to two. matters. In the first palce, it is not disputed before us that the English Arbitration Act does not contain a provision similar to s. 19; the consequence of this is that the decisions of English Courts may not be of much assistance on this particular aspect of the matter before us. Secondly, there was a parallel provision in para. 15(2) of 8ch.
II of the Code of Civil Procedure before 1940 as to the order to be passed by the court when setting aside an award, which was in these terms :- " (2) Where an award becomes void or is set aside under cl use ( l), the court shall make an order superseding the arbitration and in such case shall proceed with the suit. " It will be seen from this provision that when a court set aside an award under Sch. II the reference had to be superseded also, and the court was enjoined to proceed with tht' suit, the provision being contained in that part of Sch. II which dealt with arbitration in suits: But the provjsion also applied to cases covered by para. 1 i read with para. 19 and also by impli8ation to arbitrations outside court un cond reference was being made of the dispute. The letter begins by "aying that the Chamber was aware that tbe previous award had been set aside.
It waa in thoae circumstanres that the respondent told the Chamber that it begged to refer the matter for arltitration de ·wn·n. In the context this can only mean that th(' respondent was asking the Chatnbl'r to take up the refprence again a. s th1· reference had not brt>n superseded and arranire to continue the arbitration proceedings further. The only qui·stion therefore that will arise is whether under the rules of the Chamber it was poRsible to constitute another tribun m· mence t,he arbitration de ·ii. om. "' ltule XXV make:; prov1s10n that th" award · shall be macle within four months or within such extendod time as ru:iy be a. greed to between tlie · partiPs to the reforence. Huie VII obviously rofers to " case where tho time or the extended time (I I i,1•158) Ci:l c_ w N. 734. iJ. llowed to the tribunal has been allowed to expire; ib 0annot refer to a 1laS . which was 11-llowed on the basill of the Barongor~ Jvie Factory case('). Thereupon the present appeal ha.
a been brought to this Court by 1pecial leave. It has been contended on behalf of the appellant that the order under s. 33 was not appealable in view of the provisions of s. :l9 of the Act and therefore the High Court ha. cl no jurisdiction in appeal to set aside the order of the learned Single Judge. This point a. s t. o jurisdiction was not taken before the appeal court nor has it been takl'n in the special leave petition to this Court or in the statement of case. It seems that the appeal was entertained in the High Court on the view that an a. pp<>al lay under the Letters Patent from an order of a 8ingle Judge. Eveo if we were t(> entertain this ~rgument the respo00. n* 1'ill a..
M&iltl io milk epeci&l leave to appeal against the iird41rofthe SiQgle Judge and we will ~ justified having rt·garcl to the course of events and the view expressed in the companion appeal in granting leave after condoning thP delay and in passing the same order which has bern passed by the High Court in appeal. Technical require-ments of procedure may of course ho fulfilled by following the course suggested but no Wlt'lful purpee1 Will be served thereby. For re&aons whieb We have already giv. en the order of the appeal court ill right. There is no re&eon to . interfere with it .. W this appeal Will also have to be dismieled. We therefore dismiss the appealti with con. -one set of hearing cost. a. Appsal d'-'-d. (I) (1958) 62 C. W. N. 73i.
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