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First Appeal from Order No. 12 of 1955 decided on 11th July 1955.
----Sch. 1, para. 3‑Arbi trators enter on the reference when they enter on the matter of the reference‑Receiving by one arbitrator some account books of one of the parties‑Whether amounts to entering on reference.
Arbitrators are deemed to enter on the reference only when they enter on the matter of the reference.
Where one of two arbitrators had received some account books from one of the parties to reference, held, that if the arbitrators had in fact begun proceedings on the date on which account books were received, the arbitrators should be taken to have entered on the reference.
Abdul Majid v. Bhawal Bakhsh P L D 1950 Lab. 228 fol. lossifogul v. Coumantaros 19411 K B 396 distinguished.
Agreement to refer to arbitration entered into after the other party had approached the military authorities in martial law regime‑Agreement, held, not necessarily executed under undue influence.
One of the parties to the dispute over a partnership business submitted an application regarding the dispute to the military authorities under martial law regime who referred the application to the police. An agreement to refer the dispute to arbitration appeared to have been then entered into by parties. In the proceedings taken to make the award given, the rule of Court, the objection was raised that the agreement to refer was entered into under undue influence.
Held, that in the absence of any direct or indirect influence exerted on the other party to agree to the reference or any threat held out to him, being afraid merely that proceedings might be started before military or police was not by itself sufficient to establish plea of undue influence.
In any case, an agreement procured by undue influence being voidable, if a party does not repudiate the agreement and takes part in the arbitration when he is freed from such influence, such party is estopped from objecting to the validity of arbitration proceedings.
Gobardhan Das v. Kishen Das I L R 22 All. 224, Kunja Lal Bhuiya v. Hara Lai Bhuiya A I R 1943 Cal. 162, Sheonoth v. Ramnath 10 M I A 413, Chowdhri Murtaza Hossein v. Mst. Bibi Bechunnissa 3 I A 209, Lakshmamma v. Gorle Appadu A I R 1932 Mad. 157, Venkatachellam v. Suryanarayanamurty A I R 1941 Mad. 129, C. c 1. Engineering Co. v. Malik Thakurdas Mathuradas A I R 1930 Sind 79, Jagmohan v. Suraj Narain A I R 1935 Oudh 499, Jaimal Singh v. 7"ib Ram A I R 1930 Lab. 523, Gajadhar v. Chunni Lal A I R 1929 All. 559 and Chaturbhuj v. Deokaran Nanji A I R 1924 Bom. 370 ref.
Resulting from a former arbitration‑Submission to arbitration again‑Former award impliedly superseded Quarae: whether an award not made rule of Court can be relied upon.
A second submission to arbitration of a dispute on which an award exists necessarily implies an agreement between the parties that the previous award is superseded. If the second agreement to refer be valid, the previous award is devoid of any effect.
Quarae: whether an award which has not been made a rule of the Court can be relied upon at all by a party after coming into force of the Arbitration Act of 1940.
Issue conceded in trial Court‑Point re- agitated in appeal‑Allowed to be argued only to a limited extent.
-----S. 8 and Sch. I para. 2 ‑Failure to appoint Umpire‑Proceedings not invalidated.
In a case where there is no provision in an arbitration agreement rendering the appointment of an umpire essential to the assumption of their functions by the arbitrators, the mere failure to appoint an umpire by arbitrators who have not disagreed does not vitiate the award.
Failure to appoint an umpire within one month has not the effect of invalidating arbitration proceedings irrespective of any need in fact for the appointment of an umpire. Such need arises only when the arbitrators disagree and even when that need arises and the arbitrators fail to make the appointment, the Court has power to make the appointment under Schedule VIII of the Arbitration Act.
The arbitrators themselves can, when a notice is served upon them, make the appointment after the expiry of one month and failing them the Court can make the appointment.
Ebrahim Ahmad v. Sind Hosiery and Textile Mills P L D 1952 Sind 52, Jawala Prasad v Amar Nath A I R 1951 All. 474 and Chooni Lai v. Madhoram I L R 36 Cal. 388 distinguished.
Ghias Muhammad for Appellant.
Karam Elahi Chauhan for Respondent.
.‑Malik Muhammad Anwar, the appellant before me, and Wali Muhammad, respondent, both of whom belong to Lahore, entered into a partnership agreement for the purchase and sale of iron sometime in the year 1951,
They carried on only for seven months and then, as usual, disputes arose. There 'vas some recourse to regular or irregular arbitration, but there was no settlement of the disputes. In the meantime Martial Law was imposed in Lahore. Wali Muhammad respondent submitted an appli cation to the Martial Law authorities, which was forwarded to the police. At this stage there was an agreement between the parties to refer the dispute to the arbitration of Mian Jalal Din and Mian Muhammad Abdullah, who were nominated by the appellant and respondent respectively. On the 5th of September 1953, the arbitrators gave an award against the appellant for a sum of Rs.7,289‑4‑0. On the 1st of October 1953, the respondent applied to the Court for a decree in accordance with the award. The appellant raised a number of objections which were overruled by the Court and the award was made a rule of the Court. This is an appeal by Malik Muhammad Anwar against the order refusing to set aside the award.
Objections which were taken to the award in the lower Court and which were repeated before me are :‑
(1) The award is time barred.
(2) The agreement of reference on which the award was based is vitiated by undue influence.
(3) There had been a previous award between the parties and, therefore, the present proceedings in arbitration were incompetent.
(4) The arbitrators were guilty of misconduct inasmuch as both parties had been ordered to put in their accounts and to give copies of their accounts to the other party, so that opportunity may be given to the other party to file objections, but that without allowing the appellant sufficient time for raising objections an award 'vas delivered.
(5) The arbitrators failed to appoint an umpire within time and that vitiates the arbitration proceedings.
As regards the first point the case of the appellant is that the arbitrators had entered on the reference sometime in April and the award was delivered on the 5th of September. Under Paragraph 3 of Schedule I to the Arbitration Act the arbitrators have to make their award within four months of entering on the reference. Learned counsel for the appellant contends, in the first place, that the moment an arbitrator agrees to arbitrate he is deemed to have entered on the reference and limitation begins. The second contention is that in any case arbitration proceedings had actually begun in April, because by means of receipt Exh. D.2 Jalal Din arbitrator had received some account books from the appellant for the purpose of arbitration. As regards the first contention learned counsel relies upon lossifogul v. Coumantaros (1941 1 K B 396). In that case there was a disagreement between two arbitrators as to the procedure, which they were to adopt. There was dib agreement also with respect to the question whether they should proceed with the reference at all. According to one of the arbitrators the agreement of reference was no longer operative. As the arbitrators disagreed, an application was made to the Court for the appointment of an umpire. The question arose whether there was legal 'disagreement' between the arbitra tors, that being the condition precedent to the appointment of an umpire. The Court held that there was disagreement and that an umpire should be appointed. There is an observation in the judgment that the arbitrators are deemed to enter on the reference when they accept their appointment and communicate with each other. Even this judgment does not say that by mere acceptance of their duties the arbitrators are deemed to enter on the reference. The observation regarding communication between them has reference to the special facts of that case. The real point involved in the case was only whether there was disagreement between the arbitrators so as to justify the appointment of an umpire and the case is not of any help in the decision of the question before me. On the other hand, it has been decided in Abdul Maid v. Bhawal Bakhsh (P L D 1950 Lab. 228) that the arbitrators are deemed to enter on the reference only when they enter A on the matters of the reference. With this judgment I am in respectful agreement. The first contention fails.
As regards the second contention, learned counsel relied on the receipt (Exh. D. 2), signed by Mian Jalal Din arbitrator which shows that some documents were received by him from the appellant for the purpose of the arbitration. If were to accept that on the 13th of April, which is the date of Exh. D. 2, the arbitrators had in fact begun proceedings, there would be force in the argument put forward. I am not prepared to accept, however, that the receipt (Exh. D. 2) is a genuine document. Mian Jalal Din is the arbitrator who was appointed by the appellant. It is a feature of this case that both the arbitrators, each of whom had been produced as a witness by the party that nominated him, have gone out of their way to help their respective parties. Mian Jalal Din does say, that the receipt (Exh. D. 2) is signed by him. But he does not say when they started arbitration proceedings. On the other hand, Malik Muhammad Anwar appellant states that it was only about a month after the execution of Exh. D. 2 that he had appeared before the arbitrators and that on that date the arbitrators had ordered the parties to exchange their objections. Exh. P. 9 is the order by which parties had been ordered to file objections. This is dated the 8th of July 1953. So it is clear that the date on which the appellant appeared before the arbitrators and to which he is referring is the 8th of July 1953. He says it was one month after he handed over the khatas to Jalal Din by Exh. D. 2. His statement does not tally with the date of Exh. D. 2. Also, according to his own statement, the khatas having been delivered only one month before the 8th of July 1953, that is, in June, and the award having been delivered in September, the award would be within limitation. However, Khan the true reason of my finding on this point is that I do not accept Exh. D. 2 as genuine.
As regards the second point, namely, that the agreement of reference was vitiated by undue influence, no doubt there are indications on the record that the appellant may not have been a free agent while agreeing to arbitration. The evidence led is, however, insufficient to establish that any undue influence was exercised by the other party. The admitted facts are that an application (the contents of the application are not before me) was submitted to the military authorities by the respondent and that application had been forwarded to the police. After the agreement of reference had been executed, the police had been informed by the respondent on the 11th of April 1953, by a document (Exh. D.1) which is signed by the respondent that with respect to the subject matter of the application which the respondent had submitted to the police and the military, the parties had reached an agree ment and that the question of accounts had been referred to the arbitration of Mian Muhammad Abdullah and Mian Jalal Din. There is a prayer in Exh. D. 1 that all the applications should be regarded as with drawn. It is admitted too by the respondent that a writing signed by three persons, Haji Muhammad, Muhammad Yaqub and Abdul Haq, had been presented to the police in order to protect the appellant. It may be mentioned here that the previous award, on which the appellant relies, is an award signed by these three persons, Muhammad Yaqub, Haji Muhammad and Abdul Haq, and though the respondent does not accept that there was any award by them, he has admitted that a document signed by them had been presented to the police. This previous award, to which I will presently refer, also points to the conclusion that the appellant had not agreed to arbitration of his own free‑will However, there is no evidence at all on the record to show that the respondent had exerted any influence directly or indirectly for making the appellant agree to the reference. The appellant himself does not state that either the respondent or any officer ever approached him for agreeing to the reference or any threat was held out to him that if he did not agree he would be persecuted or prosecuted. All that one can say under the circumstances is that the reason for the appellant agreeing to the arbitration was that he was afraid of the proceedings before the police or the military. That, however, is not by it self sufficient to establish a plea of undue influence. I may refer in this connection to Gobardhan Das v. Kishen Das (ILR22Al1.224), which is almost on all fours with the present case. It was held therein that in order to render a contract voidable on account of undue influence, it is not sufficient that the party claiming to avoid the contract should have been, at the time he entered into it, in a state of fear amounting to mental distress which enfeebled the mind, but there must further be action of some kind, the employment of pressure or influence by or on behalf of the other party to the contract.
I would hold, in agreement with the trial Court, that undue influence is not established.
Even if I were to hold that initially the agreement was the result of undue influence that would not result in the setting aside of his award in view of the conduct of the appellant. An agreement procured by undue influence is only voidable at the option of the party influenced. It is open to C the party, when it is freed of that undue influence, either to repudiate or to affirm the contract, but as pointed out in Kunja Lal Bhuiya v. Hara Lai Bhuiya (1 L R 1943 Cal. 162), he has that option only once. In the present case, the Martial Law terminated on the 15th of May 1953. The arbitration proceedings were begun in July 1953. At that time any undue influence under which the appellant was acting had ceased to exist and it was open to the appellant to repudiate the agreement and to refuse to take part in the arbitration proceedings or at least to appear before the arbitrators only under protest. He participated in the arbitration proceedings without objection and even the last notice which he sent to the arbitrators after they had delivered the award does not make any reference to the appellant having agreed to the reference under undue influence. It will befits a party to participate in arbitra tion proceedings without objection, take the chance of an award in his favour and if the award goes against it, to challenge the validity of the arbitration proceedings. The other party would, if objections were allowed to be urged under such circumstances, be at a great disadvantage and the position of the person objecting would be very secure. If the award went in his favour, he would take the benefit of it, and if it went against him he would be able to avoid it.
The rule is well established that a party taking part in arbitration proceedings without protest is estopped from objecting to the validity of the proceedings. In Sheonoth v. Ramnath (10 M I A 413) their Lordships of the Privy Council recognized this rule when their Lordships said :‑
"Again, the appeal having been heard ex‑parse, their Lordships have felt bound to consider, whether this case could be brought within the principle of those authorities, which establish that a defect in the nomination of Arbi trators, may be cured by the waiver implied from the act of the party in going in before them, and taking his chance of a favourable decision. Their Lordships are, however of opinion that the Appellant cannot be held to have forfeited in this manner his right to question the validity of these awards. From what has been already stated, it appears that his protests and appeals were frequent, and were repeatedly rejected as inadmissibe by the judges. Whatever part he took in the proceedings before the Arbitrators, he must be deemed to have taken under a continuing protest, and in self‑defence".
In Chaudhry Murtaza Hussain v. Mst. Bibi Bechunnissa (3 I A 209), their Lordships refused to set aside an award saying :‑
"On the whole, therefore, their Lordships think that the Appellant, having a clear knowledge of the circum stances on which he might have founded an objection to the arbitrators proceeding to make their award, did submit to the arbitration going on; that he allowed the arbitrators to deal with the case as it stood before them, taking his chance of the decision being more or less favourable to himself; and that it is too late for him, after the award has been made, and on the application to file the award, to insist on this objection to the filing of the award".
In Russell on Arbitration the rule is thus stated : -
"Irregularities in the mode of conducting an arbitration will be waived by the party continuing the proceedings with full knowledge and without protest. The Courts will not permit a party to lie by or act in an indecisive manner, so as to obtain the benefit of the award if it is in his favour and endeavour to set it aside if it is not".
Some cases in point are: Lakshmamma v. Gorle Appadu (A I R 1932 Mad. 157), 17enkatachellam v. Suryanarayanamurty (A I R 1941 Mad. 129), C & 1 Engineering Co. v. Malik Thakurdas Mathuradas (A I R 1930 Sind 79), Jagmohan v. Suraj Narain (A I R 1930 Lah. 523), Jaimal Singh v. Tib Ram (A I R 1935 Oudh 499). Gajadhar v. Chunni Lal (A I R 1929 All. 559) and Chaturbhuj v. Deokaran Nanji (A I R 1924 Bom. 370).
Next, there is the objection relating to the existence of a previous award. An award dated the 1st of February 1953, signed by Haji Muhammad, Muhammad Yaqub and Abdul Haq, has been placed on record by the appellant. After consider ing the evidence, I come to the conclusion that the award is genuine. The respondent had in his application admitted that there had been previous arbitrations, though he said it was the appellant who did not accept the awards. He had also stated that in order to save the appellant from the police, a docu ment signed by Haji Muhammad, Muhammad Yaqub and Abdul Haq had been presented to the police. All the three arbitrators have appeared as witnesses and have proved the award. There is nothing to show that any of them was in anyway inimical to the appellant .The learned trial judge has observed that Haji Muhammad and Muhammad Yaqub were inimical to the respondent and for this inference he has relied on Exh. P. W. 7/1 and Exh. P. W. 7/2, which are reports made at Police Station Misri Shah. The report, Exh. P. W. 7/2, is dated the 2nd of December 1953, whereas the award is dated the 1st of February 1953. A report made ten months after the award had been delivered cannot be of any avail to the respondent for proving the enmity of the arbitrators. Even Exh. P. W. 7/1, whose relevancy does not at all appear from the record, for it does not refer to the arbitrators, is dated the 9th of April 1953. Exh. P. 10 has also been relied upon by the trial Court in this connection. A It is an order by a Magistrate dismissing a complaint filed by one Nawab Din against Wali Muhammad respondent on the ground that the complainant was absent. I do not see t what connection this order has with the alleged enmity of the arbitrators. None of the arbitrators are parties to this case and it is not shown that Nawab Din is connected with any of them. I would, therefore, hold that the award is a genuine one. That, however, does not end the matter. In the first place, according to the statement of Muhammad Yaqub arbitrator himself, this award covered only a dispute relating to Rs. 1,000. On a reference to the award, I find that though there is a reference in the beginning to disputes between the parties, it states that the total loss was of Rs. 2,000, half of which was ordered to be paid by the respondent to the appellant. There is also a reference in the award to a sum of Rs. 1,056 which each party alleged it had paid. A perusal of the award as a whole confirms the impression that the award did not cover the whole dispute between the parties. The agreement of reference on which the award is based has not been produced at all. I would, therefore hold that apart from other objections to the previous arbitration, it has no effect upon the present proceedings because the dispute has not been proved to be the same.
Another and more important reason for disregarding the previous award is this. The award had not been made a rule of the Court. It was open to the parties to treat it as non‑existing or to supersede it. The moment the appellant executed the agreement under reference he waived any rights that he had under the previous award. A second submission to arbitration of a dispute on which an award exists necessarily implies an agreement between the parties that the previous award is superseded. If the present agreement to refer be valid, the previous award is devoid of any effect. In view of what is stated above, it is not necessary to consider the question whether an award which has not been made a rule of the Court can be relied upon at all by a party after coming into force of the Arbitration Act of 1940.
The objection as to the misconduct of arbitrators in not allowing the appellant a full opportunity of raising objections to the other party's account does not need an elaborate discussion. The case for the appellant is that although both parties had filed their accounts and had given copies of accounts to each other, he wanted to file objections only after going to Karachi and finding out whether the accounts filed by the respondent were correct, some of the purchases relied upon by the respondent having been made at Karachi. It is accepted that on the 8th of July parties had been ordered to file their objections. Three or four days afterwards, according to Jalal Din, the arbitrator of the appellant, the appellant went away to Karachi. The award was delivered only on the 5th of September 1953, and it cannot be said that the time which was granted to the appellant for filing objections or for getting accounts verified at Karachi was inadequate. I would reject this objection too.
The last point to consider is the defect in the appointment of an umpire. A plea had been taken by the appellant in the trial Court that the arbitrators had not appointed an umpire at all. The respondent rejoined that the arbitrators had appointed an umpire orally on the 13th of July 1953 An issue was framed with respect to it and the respondent G led evidence to prove the appointment. At the time of arguments, however, counsel for the appellant conceded the issue. The matter has been re‑agitated before me.
In view of the concession made in the trial Court, I have allowed the point to be argued only to a limited extent, that is, whether even if an umpire had been appointed on the 15th (sic) of July 1953, the arbitration proceedings are vitiated. Learned counsel for the appellant urges that by virtue of Para. 2 of Schedule I to the Arbitration Act, 1940, the arbitrators are bound to appoint an umpire within one month of their appointment and the appointment of the arbitrators having taken place on the 11th of April 1953, an appointment of umpire on the 15th (sic) of July 1953, is of no avail and the whole proceedings are invalid.
Para. 2 of Schedule I runs
"If the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire not later than one month from the latest date of their respective appointments".
I am unable to agree that a failure to appoint within one month has the effect of invalidating arbitration proceedings irrespective of any need in fact for the appointment of an umpire. Such need arises only when the arbitrators disagree and even when that need arises and the arbitrators fail to make the appointment, the Court has power to make the appointment under Schedule VIII of the Arbitration Act. reference to the corresponding provision of the English Arbitration Act, on which our Arbitration Act is based, anti to section 8 and Para. 2 as they stood in the Indian Arbi tration Act of 1899, will support the argument that the failure of the arbitrators to appoint the umpire only lets in the machinery provided by law for appointment and does not put an end to the arbitration proceedings. A provision relating to appointment of an umpire is similar to a provision relating to appointment of an arbitrator and the, effect of failure to appoint in both cases is to entitle the aggrieved party to serve a notice on the person who should make or concur in the appointment and then to approach a Court for an, order. Sections 8 and 10 of the English Arbitration Act run :‑
8.‑-(1) Unless a contrary intention is expressed therein, every arbitration agreement shall, where the reference is to two arbitrators, be deemed to include a provision that the two arbitrators shall appoint an umpire immediately after they are themselves appointed.
(2) Unless a contrary intention is expressed therein, every arbitration agreement shall, where such a provision is applicable to the reference, be deemed to include a provision that if the arbitrators have delivered to any party to the arbitration agreement, or to the umpire, a notice in writing stating that they cannot agree, the umpire may forthwith enter on the reference in lieu of the arbitrators.
(3) At any time after the appointment of an umpire, however appointed, the High Court may, on the application of any party to the reference and notwithstanding anything to the contrary in the arbitration agreement, order that the umpire shall enter upon the reference in lieu of the arbitrators and as if he were a sole arbitrator.
10. In any of the following cases‑
(a) where an arbitration agreement provides that the reference shall be to a single arbitrator, and all the parties do not, after differences have arisen, concur in the appoint ment of an arbitrator ;
(b) if an appointed arbitrator refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied and the parties do not supply the vacancy;
(c) Where the parties or two arbitrators are at liberty to appoint an umpire or third arbitrator and do not appoint him, or where two arbitrators are required to appoint an umpire and do not appoint him ;
(d) where an appointed umpire of third arbitrator refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or arbitra tors do not supply the vacancy; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to appoint or, as the case may be concur in appointing, an arbitrator, umpire or third arbitrator and if the appointment is not made within seven clear days after the service of the notice, the High Court or a judge thereof may, on application by the party who gave the notice, appoint an arbitrator, umpire or third arbitrator who shall have the like powers to act in the reference and make an award as if he had been appointed by consent of all parties".
It will be observed that section 8 requires the arbitrators to appoint an umpire immediately after their own appoint ment and in case of their failure to do so a party can under section 10 serve a notice on the arbitrators to appoint an arbitrator and on their failure to comply with the notice within seven days the Court can make the appointment. It could hardly be argued with reference to provision of the English Act that the failure of the arbitrators to appoint an umpire immediately after their appointment results in making the reference infructuous. The only effect is that recourse can be had to section 10 and even this is clear that the arbitrators can, though the time for making the appointment as provided by section 8 has expired, make the appointment on notice from a party. The object of section 8 (1) of the English Act is only to make it incumbent on the arbitrator nod to make the appointment without visiting the sins of the arbitrators on the parties. The provision in our Arbitration Act is similar. Section 8 runs :‑
"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 arbitration 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".
Para. 2 of Schedule I, I have already quoted.
The only important difference is that whereas in section 8 of the English Arbitration Act, the arbitrators are required to make the appointment immediately after they are appointed. By Para. 2 of Schedule I of our Arbitration Act, they are to make the appointment within one month. There is no substantial difference in the provision relating to what is consequent upon the failure to appoint. If with respect to the English provision it be clear that the failure to appoint an umpire immediately after the arbitrators are appointed, does not vitiate the reference, the contention that in our Arbitration Act the intention was to vitiate the proceedings if the arbitrators do not make the appointment within one month, should be supported by something in the Act that clearly points to that conclusion. There is no such indication. Section 8 (c) of our Arbitration Act provides that if the arbitrators do not, when they are required to do so, make an appointment, a party can serve a notice on them to make the appointment. They are to make the appointment within fifteen days, and if they do not, the Court can make one. The section does not say that the party is to serve a notice within a particular period and it would appear that even the arbitrators themselves can, when a notice is served upon them, make the appointment after the expiry of one month. With respect to the English Act, it is clear, as I have already stated, that they can make the appointment even though they have not made it "immediately after" their appointment so that the period prescribed has expired. I would place a similar construction on our Act and hold that even the arbitrators can make the appointment after one month. It should be clear that the party is not bound to give them notice within fifteen days of their appointment, and if a notice is served after fifteen days, the arbitrators have under section 8 fifteen days within which to make the appointment so that the period of one month may have expired before the appointment is made. So far as the Court is concerned, it cannot be doubted that it can appoint an umpire after one K month. I may here refer to section 8 and Para. 2 of Schedule I, as they stood in the Indian Arbitration Act oil 1899.
Section 8. "(1) In any of the following cases :‑
(a) Where a submission provides that the' reference shall be to a single arbitrator, and all the parties do not, after differences have arisen, concur in the appointment of an arbitrator.
(b) If an appointed arbitrator neglects or refuses to act, or is incapable of acting, or dies, or is removed, and the submission does not show that it was intended that the vacancy should not be supplied, and the parties do not supply the vacancy;
(c) where the parties or two arbitrators are at liberty to appoint an umpire or third arbitrator and do not appoint him ;
(d) where an appointed umpire or third arbitrator refuses to act, or is incapable of acting, or dies, or is removed, and the submission does not show that it was intended that the vacancy should not be supplied, and the parties or arbitra tors do not supply the vacancy ; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in appointing an arbitrator, umpire, or third arbitrator.
(2) If the appointment is not made within seven clear days after the service of the notice the Court may, on applica tion by the party who gave the notice, and after giving the other party an opportunity of being heard, appoint an arbitrator, umpire or third arbitrator, who shall have the like power to act in the reference and make an award as it he had been appointed by consent of all parties."
Para. 2. " If the reference is to two arbitrators, the two arbitrators may appoint an, umpire at any time within the period during which they have power to make an award."
The arbitrators were only entitled to appoint and were not bound to do so. If they did not, the party had to proceed under section 8. The insertion of 'shall' in para. 2 is only intended to direct the arbitrators to make an appointment and the other provisions have remained unchanged. If under the Act of 1899 the arbitrators could have made the appoint ment even after expiry of the prescribed period, there is nothing to indicate that the power has been taken away.
I may point out that an award may be made within a month by two arbitrators. Even in such a case could it be said that the whole proceedings are void because an appointment was not made in accordance with para. 2 of Schedule I
Learned counsel for the appellant has relied upon Ebrahim Ahmad v. Sind Hosiery and Textile Mills (P L D 1952 Sind 52) and Jawala Prasad v. Amar T(ath (A I R 1951 All. 474). In Jawala Prasad v. Amar Noth. there is no discussion. In Ebrahim Ahmad v. Sind Hosiery and Textile Mills, Jawala Prasad v. Amar Nath has been followed. There is also a reference to Chooni Lai v. Madhoram (1 L R 36 Cal. 388), the agreement in which case necessitated the appointment of an umpire before the arbitrators entered upon the reference so that the case is distinguishable. There is no discussion in any of these judgments of the effect of section 8. If it be clear that even after the failure of the arbitrators to appoint, there can be an appointment either by the arbitrators or by the Court, the argument that by the mere failure to appoint, the proceedings are vitiated, loses all force. I hold that in a case where there is no provision in an arbitration agreement rendering the appointment of an umpire essential to the H assumption of their functions by the arbitrators, the mere failure to appoint an umpire by arbitrators who have not dis agreed does not vitiate the award.
In any case the omission. To appoint does not create a defect of jurisdiction and the principle of acquiescene or waiver, which I have referred to above, equally applies to this objection. The appellant cannot, after participation in the proceedings with the knowledge of an irregularity, be allowed to urge the irregularity.
This anneal is dismissed with costs.
A. H. Appeal dismissed.
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