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Revision Application No. 400 of 1963, decided on 16th August 1966.

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Ss. 8, 9, 5 & 11‑Appointment of substitute of previously appointed arbitrator‑Provision of S. 8 applicable only in case of agreement under which arbitrators are appointed by consent of both parties‑Agreement under which each party to appoint its own arbitrator‑Attracts provision of S. 9‑Appointment of new arbitrator under S. 9‑Recourse to Court not necessary‑Provision of S. S, no bar to appointment of arbitrator in terms of S. 9(a)‑Justification for appointment under S. 9(a)‑‑Death, incapacity, refusal or omission to act should be satisfactorily established‑"Neglecting to act" different from "acting negligently"‑Arbitrator acting negligently and causing delay‑Remedy lies in applying to Court for his removal under S. 11 (1) or for leave under S. S to revoke his authority.

Both sections 8 and 9 of the Arbitration Act, 1940 provide that a substitute can be appointed by a certain party in the place of an arbitrator who neglects to act. If the party who is to concur in such an appointment or is to appoint such a substitute, fails, in terms of the section, to do so, then under section 8(2), recourse is to be taken to the Court but under section 9(b) the opposite‑party may appoint his own arbitrator to act as the sole arbitrator. In other words, recourse to the Court is not required under section 9. Secondly the words: "by consent of the parties", which occur in section 8 (1) (a) and the words "notice to concur" which occur after clause (c) of that subsection, unmistakably indicate that the section applies to those arbitration agreements under which arbitrators are appointed by the consent of both the parties. On the other hand, section 9 applies to those of such agreements under which two arbitrators are appointed and one of them is to be appointed by each party. This is cleat from the opening part of the action.

If in a case section 9 of the Act is applicable then section 5 of the Act does not come in the way of the appointment, in terms of section 9 (a), of an arbitrator as a substitute to the previously appointed arbitrator. The reason is that section 5 of the Act applies to those cases in which the authority of an appointed arbitrator or umpire subsists and needs to be revoked. Revocation means withdrawal, recall, annulment or repudiation. The occasion for such an action arises when the appointee is living, is capable of acting, is willing to act and does carry out the mandate. If he is dead, or is otherwise incapable of acting, or refuses to act or neglects to act, then there is a vacancy. The use of the word "vacancy" in section 8 (1) (b) and after clause (c) of subsection (1) of that section should be noted. The words, "may appoint a new arbitrator in his place", which appear in clause (a) of section 9, without any reference to revocation of authority or displacement of the previously appointed arbitrator, are also significant. There is a presumption to this clause that an arbitrator who has died or has become incapable of acting or has refused or neglected to act, has left the office letting it fall vacant. "To neglect" means, according to the Ballentines Law Dictionary, "to omit" ; according to the Oxford Dictionary, it means: with infinitive, to omit through carelessness to do some thing. There is no point in getting revoked the authority of an arbitrator who has neglected to act.

However, what is required to justify the appointment of a new arbitrator under clause (a) of section 9 of the Arbitration Act, 1940 is satisfactory establishment of death, incapacity, refusal or omission to act.

There is a difference between neglecting or omitting to act and being careless or being fettered by incidents which are not one's own doings or being imprudent in applying oneself to work. Neglecting to act is entirely different from acting negligently. In the latter sense there is an omission to act like a prudent or reasonable man ; whereas neglecting to act means failing to act. Where an arbitrator was hampered in the discharge of his duties owing to his absence from the place and there was thus consequent delay, he cannot be said to have neglected to act. Therefore, if an arbitrator has acted negligently and caused delay, then the remedy is to apply to the Court for his removal under section 11 (1) of the Act, or for leave, under section 5 of the Act, to revoke his authority. His substitute cannot, in such circumstance, be appointed under section 9(a) of the Act.

Harimram Khiararn v. Gobindram Rattan Chand A I R 1949 Sind 24 ; Dwarkaprasad v. Firm Dipchand Parsram 44 I C 360 ; Bharat Construction Co. Ltd. v. Union of India A I R 1954 Cal. 606; Haji Sattar Haji Muhammad v. Abdul Karim Haji Issa P L D 1958 Kar. 378; Dwarkaprasad v. Dipchand Parsram A I R 1918 Sind 21; Dwarkaprasad v. Firm Dipchand Parsram I L R 11 S L R 101 and A. Ramjibhai & Co. v. Yousifali & Bros. A I R 1925 Sind 12 held not applicable.

Ballentines Law Dictionary and Oxford Dictionary ref.

Suleman U. Panja for Applicant.

Shaikh Hailer for Respondent.

This revision application has been filed under section 115, C. P. C. to question the validity of the judgment given by an Additional District Judge, Karachi, on the 31st of July 1963, dismissing the First Appeal of the present applicant with costs.

2. The parties had entered into a contract under which one of them had to supply and the other to buy 5,000 maunds of cottonseed. The. contract was made on the 21st of August 1959. Disputes arose in respect of it, with the result that the applicant appointed Abdus Sattar to be its arbitrator on the 19th of December 1959 and called upon the respondent to appoint its arbitrator. The respondent appointed Muhammad Sadiq on the 30th of December 1959 to be its arbitrator. On the 7th of January 1960 a notice was given by Abdus Sattar to Muhammad Sadiq with the object that an umpire be appointed and proceed ings be taken in respect of the arbitration. On the 30th of January 1960 they appointed Haji‑Amir Umer to be the umpire, and fixed the 1st of February 1960 to proceed with the arbitra tion. On the 1st of February 1960, the umpire refused to act. On the 18th of February 1960, a complaint was made by the applicant to the arbitrators about the adjournment of a hearing, together with a request for fixing a date. On the 22nd of February 1960, Abdus Sattar wrote to Muhammad Sadiq for intimation of a suitable date so that the arbitration proceedings could be held on it. On the 26th of April 1960 he wrote to the parties and to Muhammad Sadiq that the 2nd of May 1960, had been fixed for the hearing. On the 12th of May 1960, the applicant wrote to the respondent that the proceedings were being prolonged, and that the respondent's arbitrator had neglected to attend the proceedings on the 2nd of May 1960. The applicant, therefore, made a request that the respondent may appoint another arbitrator in the place of Muhammad Sadiq within 15 days of receipt of that intimation. The respondent's reply of the 16th of May 1960, was that the date of hearing had been fixed without authority and that the respondent's arbitrator, Muhammad Sadiq, was not in Karachi. An allegation was made that the arbitrator of the applicant was trying to delay the proceedings. On the 4th of June 1960 the applicant appointed Abdus Sattar to be the sole arbitrator on the ground that the respondent had failed to appoint a substitute within time. On the 7th of June 1960 the respondent wrote to the applicant, with reference to its own letter of the 16th of May 1960, that the applicant's arbitrator had not been co‑operating and that, therefore, Muhammad Sadiq was appointed to be the sole arbitrator of the disputes.

3. On the 16th of June 1960, Abdus Sattar gave notice to the parties, as the sole arbitrator, to hear them on the 21st of June 1960. On the 18th of June 1960, he gave another, notice to the respondent conveying intimation that ex parte proceedings would be taken in the event of the respondent's failure to appear on the date of hearing. He wrote another letter to the respondent conveying the information that the applicant had appeared on the date of hearing, but the respondent had failed to do so. He fixed the 27th of June 1960 to be the next date of hearing anal intimated that ex parte proceedings would be taken if the respondent did not appear on that date. On the 28th of June 1960, he gave his award decreeing the applicant's claim for Rs. 13,125 and costs. On the 14th of July 1960, he filed the award in Court, and his application was registered as Suit No. 1367 of 1960.

4. Muhammad Sadiq also issued notices at the sole arbitrator for holding arbitration proceedings, and gave his award on the 26th of July 1960. On the 31st of October 1960, he filed his award in Court, which was registered as Suit No. 2281 of 1960.

5. The two suits were heard together by a Civil Judge first Class, Karachi. The late Mr. Syed Riaz Ahmad, Advocate, appearing on behalf of the present respondent, conceded that both the awards were legally defective, but Mr. Suleman Panja appearing on behalf of the present applicant, contended that the award given by Abdus Sattar in favour of his client was valid. The trial Judge dismissed both the suits on the 17th of March 1961, by a common order, on the grounds that no umpire was appoint ed within 30 days and that, after the refusal of the umpire to act, no substitute was appointed at all. He relied on paragraph 2 of Schedule I of Arbitration Act, 1940, in support of this view.

6. The respondent did not appeal against the above order, but the applicant preferred an appeal on the 13th of April 1962, which was, as mentioned above, dismissed by the Additional District Judge, Karachi, on the 31st of July 1963. He disagreed with the trial Court that the umpire had been appointed beyond time, but said nothing about the finding that, owing to the omission to appoint a new umpire after the previous umpire had refused to act the arbitration proceedings had become invalid. He, on the other hand, held that the present applicant had to apply to the Court under subsection (2) of section 8 of the Arbitration Act, 1940, for appointing his arbitrator, Abdus Sattar, as the sole arbitrator. He further held that there was no proof of the negligence of Muhammad Sadiq, the arbitrator of the present respondent. Moreover according to the learned First Appellate Judge, there was no proof that the notice required by section 9 (i5) of the Arbitration Act, 1940, calling upon the respondent to appoint a substitute had been served on the respondent in accordance with section 42 of the Act. Thus, according to the learned First Appellate Judge, no sole arbitrator had been validly appointed by the present applicant.

7. Mr. Suleman Panja, appearing for the applicant, has criticised the above judgment on the grounds that:

(i) the trial Court had dismissed the applicant's suit on two grounds, both of which had been raised in the rejoinder of the respondent, after the period of limitation for objecting to an award had expired in terms of Article 158 of the Limita tion Act, 1908;

(ii) the First Appeal was decided on grounds which were not taken by any party;

(iii) there was no question of proof of the service of notice because the disputes were decided by the trial Court on affidavits in terms of Order XIX, rule 1, C. P. C. read with section 41 of the Arbitration Act, 1940;

(iv) it was unnecessary to apply to the Court for the appointment of Abdus Sattar as the sole arbitrator because section 9, and not section 8, of the Arbitration Act, 1940, was applicable; and

(v) the question of negligence by as arbitrator could be agitated under section 9 (b) of the Arbitration Act, 1940, but not in the proceedings under section 30, in which the award is questioned.

8. I proceed to examine each of the above‑mentioned criticisms separately. The first criticism is correct to the extent that the two grounds on which the trial Court dismissed the present applicant's suit, were not taken in the application that was made under section 30 of the Arbitration Act, 1940, but the present applicant objected try the contents of that application mainly on the ground mentioned in paragraph 2 of the affidavit, which was submitted to support the application for further and better particulars. That paragraph is as follows :‑

"The objections under section 30 of the Arbitration Act and the affidavit in its support have been read over to me and I say that the objections are very vague, uncertain and can be twisted in any manner as the defendants pleased at the time of arguments; therefore, the plaintiffs are likely to be taken by surprise at the time of arguments."

The date of this affidavit is the 21st of November 1960. The present applicant did not wait nor press for the disposal of that application before submitting his counter‑affidavit which is dated the 8th of August 1961. In the latter document, the present applicant has traced the history of events to the extent that suited it. The respondent was allowed by the trial Court to submit a rejoinder, which was filed on the 9th of December 1961. In that document the respondent raised the objections that an umpire was not appointed within time and that no umpire was appointed at all after the first one declined to act. Nothing has been brought to my notice to indicate that any objection was taken to these pleas. It appears that they were raised and were entertained because of the manner in which a large number of facts were alleged by the present applicant in its counter‑affidavit. In view of the failure of the present applicant to press its application for further and better particulars and in view of the permission with which the rejoinder was submitted without any objection. I do not think that, on the whole; this criticism has force in it.

9. The second criticism has been vaguely and inaccurately made. It is contained in ground No. 4 of the revision application, which is as follows :‑

"The lower Appellate Court has given finding on a case which was never the case of either of the parties, and never argued before the Hon ble Court."

The sweeping nature of the above allegation is noteworthy. The First Appellate Court has held that the umpire was appointed within time. This question was admittedly before it. Moreover, the applicant has stated in its grounds of appeal that the respondent's arbitrator had indulged to delaying tactics and had failed to attend the proceedings with the result that the respondent was called upon to appoint a substitute. The question as to whether the respondent's arbitrator had neglected to act was thus raised by the present applicant itself before the First Appellate Court. The decision of that Court, in these circumstances that the negligence of the arbitrator has not been proved, cannot be said to be "on a case which was never the case of either of the parties". Mr. Suleman Panja explained the plea by saying it was nobody's case before the First Appellate Court that notice in terms of section 9 (b) of the Arbitration Act, 1940, was not served. This objection is the subject‑matter of the third criticism, which I take up for consideration.

10. The third criticism appears to be correct. I, therefore, uphold it. Apart from the absence of objection by the respondent to the service of notice, the question of the proof of service does not arise because the suit has been decided, without record ing the statements of witnesses, on the basis of affidavits. But this only means that one hurdles has been removed from the way of the applicant.

11. The fourth criticism occupied most of the time of counsel for the parties. It will be proper to have a look at sections 8 and 9 of the Arbitration Act, 1940, before examining it in detail. They are as follows

"8 (1) In any of the following cases‑

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitra tion agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;

any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator, or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."

"9. Where an arbitration agreement provides that a refer ence‑shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement‑

(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place;

(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent :

Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an abritrator or pass such other order as it thinks fit.

Explanation.‑The fact that an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of section 8 and this section."

12. Let us note, firstly, that both the sections provide that a substitute can be appointed by a certain party in the place of an arbitrator who neglects to act‑see section 8 (I)(b) and section 9 (a). If the party who is to concur in such an appointment or is to appoint such a substitute, fails, in terms of the section, to do so, then under section 8 (2), recourse is to be taken to the Court but under section 9 (b) the opposite‑party may appoint his own arbitrator to act as the sole arbitrator. In other words, recourse to the Court is not required under section 9. Secondly, the words : "by consent of the parties", which occur in section 8 (1) (a) and the words "notice to concur", which occur after clause (c) of that subsection, unmistakably indicate that the section applies to those arbitration agreements under which arbitrators are appointed by the consent of both the parties. On the other hand, section 9 applies to those of such agreements under which two arbitrators are appointed and one of them is to be appointed by each party. This is clear from the opening pert of the section. The facts of the case would thus attract section 9, and not section 8.

13. Mr. Shaikh Haider, Advocate, for the respondent did not dispute the above propositions, but advanced the view that, even if section 9 was attracted, an arbitrator could not be appointed by a party as a substitute of a previously appointed arbitrator, because the exercise of such a power was inconsistent with section 5 of the Arbitration Act, 1940. That section runs as under:

"5. The authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement."

He emphasised the opening words of this section. With reference to the latter part of it he pointed out that no contrary intention has ever been alleged in this case to be inferable from the arbitration agreement:

14. The above contentions of counsel for the respondent, whether right or wrong, are intelligible; but his point of view became embarrassingly blurred by the manner in which he proceeded to support it. His method was to cite a number of precedents without noticing their differences or their applicability to the facts of this case in terms of the Arbitration Act, 1940. None of those precedents appear to be really applicable in the circumstances of this case. Let us see them:

Harimram Khiaram v. Gobindram Rattan Chand A I R 1949 Sind 24.

In this case the arbitrators had been named in the arbitration agreement. They were not to be nominated. Section 9 of the Arbitration Act, 1940 was thus not applicable to it. Moreover, there is nothing in it to indicate that section 5 barred the appoint ment by the parties of a substitute in terms of section 8. The trend is against it.

Dwarkaprasad v. Firm Dipchand Parsram 44 I C 360.

To this case section 8 of the Act was applied, and the learned Judge in effect pointed out that a substitute could not be appointed without following the procedure laid down in section 8 or in section 5 of the Act. Here too the trend is against the view advanced by counsel.

Bharat Construction Co. Ltd. v. Union of India A I R 1954 Cal. 606.

In this case neither section 5 nor section 9 has been applied. The discussion does not appear to be helpful.

Haji Sattar Haji Muhammad v. Abdul Karim Haji Issa P L D 1958 Kar. 378.

Here too, sections 5 and 9 were not applied. The division Bench has held that failure to appoint an umpire did not vitiate the proceedings because the objection was waived by omitting to seek remedy against the failure in terms of section 8 (c).

Dwarkaprasad v. Dipchand Parsram A I R 1918 Sind 21.

This judgment deals with sections 5 and 8 of the Arbitration Act, 1899. The learned Judge pointed out that, as the mandate of the arbitrator was not revocable without the leave of the Court in terms of section 5, the proper procedure to follow, if the arbitrator neglected to act, was that which is to be found in section 8. This case, like the Calcutta case, can be said to be against counsel.

Dwarkaprasad v. Firm Dipchand Parsram I L R 11 S L R 101.

This is the same ease which is reported in 44 I C 360.

A. Ramjibhai & Ca. v. Yousifali & Brothers A I R 1925 Sind 12.

In this case, section 8 of the Arbitration Act, 1948 has been examined and applied. It was held that the facts did not warrant the appointment of a substitute in terms of the section because the arbitrator who was substituted was willing to act. The trend of the case is against counsel.

Reference to the above cases appeared to be particularly inept because the reason of the applicability of section 9 in this case to the exclusion of section 8, was disregarded by counsel.

15. If section 9 of the Act is applicable to this case, as to my mind it is, then section 5 of the Act does not come in the way o the appointment, in terms of section 9 (a); of an arbitrator as a substitute to the previously appointed arbitrator. The reason is that section 5 of the Act applies to those cases in, which the authority of an appointed arbitrator or umpire subsists and need to be revoked. Revocation means withdrawal, recall, annulment or repudiation. The occasion for such an action arises when the appointee is living, is capable of acting, is willing to act and doe carry out the mandate. If he is dead, or is otherwise incapable of acting, or refuses to act or neglects to act, then there is a vacancy. Note the use of the word "vacancy" in section 8(1) (b) and after clause (c) of subsection (1) of that section. The words, "may appoint a new arbitrator in his place", which appear in clause (a) of section 9, without any reference to revocation of authority or displacement of the previously appointed arbitrator, are also significant. There is a presumption in this clause that an arbitrator who has died or has become incapable of acting or has refused or neglected to act, has left the office letting it fall vacant. "To neglect" means, according to the Ballentines Law Dictionary, "to omit"; according to the Oxford Dictionary, it means: with infinitive, to omit through carelessness to do something. There is no point in getting revoked the authority of an arbitrator who has neglected to act. The fourth criticism of Mr. Suleman Panja is, therefore, upheld.

16. But the above rejection of Mr. Shaikh Haider's contention does not very much help Mr. Suleman Panja because what is required to justify the appointment of a new arbitrator under clause (a) of section 9 of the Arbitration Act, 1940 is satisfactory establishment of death, incapacity, refusal or omission to act. In this case, Muhammad Sadiq was out of Karachi on the 2nd of May 1960. He was perhaps hampered in the discharge of his duties owing to his absence from Karachi and there was consequent delay, but the learned First Appellate Court has held that be cannot be said to have neglected to act because he did actually discharge his duties as the sole arbitrator. There is a difference between neglecting or omitting to act and being careless or being fettered by incidents which are not ones own doings or being imprudent in applying one self to work. Neglecting to act is entirely different from acting negligently. In the latter sense there is an omission to act like a prudent or reasonable man, whereas neglecting to act means failing to act. I agree with the learned First Appellate Court that Muhammad Sadiq did not neglect to act. If he has acted negligently and caused delay, then the remedy open to the present applicant was to apply to the Court for his removal under section 11 (1) of the Act, or for leave, under section 5 of the Act, to revoke his authority. His substitute could not be appointed by the respondent under section 9 (a) of the Act. Thus the appointment by the applicant of Abdus Sattar under section 9 (b) of the Act as the sole' arbitrator owing to the supposed failure of the respondent to act under section 9 (a) was illegal. Consequently, Abdus Sattar had no authority to give an award as the sole arbitrator. His award has been rightly set aside.

17. Mr. Suleman Panja contended that the appointment of Abdus Sattar ought to have been questioned by the respondent before a Court under the proviso to section 9. The respondent having omitted to do so, could not, according to counsel, re‑open the question under section 30 of the Act. I invited the attention of counsel to clause (c) of section 30 under which an award can be set aside on the ground that it was "improperly procured" or was "otherwise invalid". If, in this case, the conclusion is correct that Abdus Sattar had no authority to give the award as the sole arbitrator, then there is apparently no reason why the award should not be open to question under section 30 of the Act. Counsel advanced no argument against the point of view. The plea of waiver could not be entertained because, apart from other reasons, the respondent's conduct in appointing its own arbitrator as the sole arbitrator is inconsistent with it. Counsel's fifth criticism, therefore, does not hold good.

18. In conclusion of the above discussion, the revision application is dismissed with costs.

K. B. A.

Application dismissed.

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