Find a Lawyer

Suit No. 979 of 1953, decided on 13th September 1956.

, S. 14 (2)‑ Depositions and documents taken and proved'‑Whether form part of the award‑Omission by umpire to file depositions and documents with award‑Whether affects merit of the case.

Under subsection 2 of section 14 of the Arbitration Act, whatever the intention of the legislature may have been in calling upon the arbitrators or the umpire to file the docu ments and depositions along with the award, such documents cannot be said to be documents actually incorporated in the award.

The omission by the umpire to file the deposition and documents which may have been taken and proved before him, is a mere irregularity not affecting the merit of the award.

, S. 30‑Finding out error on face of award‑Whether Court can make sifting investigation of entire proceedings before arbitrators.

The proceedings before the arbitrators may be of some help to the Court in understanding the award, but in an application to set aside an award the Court cannot look into it in order to find out the error apparent on the face of the award.

Champsey Bhata of Company A I R (1923) P C 66 ; Messrs. Bajranglal Laduram A I R 1951 Cal. 78 ; Bijoy Singh v. Bilasrai & Co. A I R 1952 Cal. 440 ; Gulzarilal Kanoria and Company v. Busi and Stephenson Limited A I R 1953 Cal. 621; F. R. Absalom, Limited v. Great Western (London) Garden Village Society Ltd. L R 1933 A C 592 ; King v. Duveen and others (1913) 2 K B 32 ; Attorney General for Manitoba and Kelly and others 1922 A C 268 ; Debidass and others v. Keshavdas and others A I R 1945 All. 432 and Union of India v. Premehand Satramdas A I R 1951 Pat. 201 ref.

Munavvar Abbas for Plaintiffs.

Ibadatyar Khan for Defendants.

‑ This is an application under section 30 of the Arbitration Act, 1940, contending that the award is invalid oil the numerous grounds stated in the application, and that the same may be set aside.

The facts, shortly put, are these :

The plaintiff had entered into four contracts with the defendant to purchase some cotton bales. Two contracts were entered into on the 22nd September 1951 and the other two were entered into on the 24th September 1951. In all the four contracts the last date of delivery was the 25th January 1952. There being a breach of the contract, according to the terms of the by laws of the Karachi Cotton Association Limited, the parties referred their dispute to two arbitrators. There was a disagreement between the arbitrators, and the matter was ultimately referred to the umpire, Hamid Dawood Habib who gave his award on the 20th July 1953, awarding a certain amount to be paid by the defendant to the plaintiff. The award was filed in this Court in pursuance of section 14 of the Arbitration Act, 1940 on the 26th August 1953. The service of the award having been effected on the defendants on the 3rd November 1953, they filed their objections on the 27th November 1953.

Number of grounds have been taken in the objections to the award under section 30 of the Arbitration Act, 1940. Mr. Ibadatyar Khan, the learned advocate for the defendants, however, has taken four fold objections before me :‑

(1) The Umpire has failed to comply with section 14(2) of the Arbitration Act, 1940 and the rules of the Sind Chief Court regarding the filing of the award.

(2) The Umpire was partial.

(3) The Umpire had failed to state the case as requested by the defendants on a question of law.

(4) There is an error on the face of the award inasmuch as the Umpire has calculated the damages not in accordance with the rate prevalent on the 25th January 1952, but according to the rate mentioned in the debit note dated the 14th March 1952.

I would consider these contentions separately

So far as the first objection is concerned, the contention of Mr. Ibadatyar Khan was that the Umpire was required under the Sind Chief Court Rules as also under subsection (2) of section 14 of the Arbitration Act to file the award "together with any depositions and documents which may have been taken and proved" before him. The Umpire no doubt, has failed to comply with this provision, but, to my mind, this is a mere irregularity and does not affect the merit of the case. Moreover, this objection is a belated one which had not specifically been taken in the grounds of objections. If it had been so taken, the other side may have called upon the Umpire to file the documents that may have been with him.

So far as the question of partiality of the Umpire is concerned, I would reproduce the contention of the defendants as given in their application under section 30 of the Arbitration Act, 1940, which runs as under :‑

"That the Umpire was expecting the satisfaction of his maims from the plaintiff; case plaintiff had any money to pay and thus the Umpire in his own interest, in collusion with the plaintiff gave this award against the defendant which is neither just nor equitable."

In his statement, the defendant, S. M. Fuzail, stated that "Hamid Dawood himself had ..asked me to pay the amount, if any found due from me to him directly. It is candidly conceded by Mr. Munavvar Abbas, the learned advocate for the plaintiffs, that on an award a certain amount had been found due to his clients but the same is contested by his clients. I have perused the statement of the defendant and his son who is the Manager of the defendant‑Company, and I cannot give much weight to their statements. If the Umpire had any such intention to award a certain amount against the defendants in order to realise his own dues from the plaintiff, he would not disclose it to the defendants. In the second place, this story appears to me to be fantastic. I would hold that the Umpire had not been influenced in giving the award against the defendants as suggested by the defendants.

So far as the third contention is concerned, namely, that the Umpire failed to refer a question of law to the Court for decision, the contention of Mr. Ibadatyar Khan was that according to by‑law 161 of the Karachi Cotton Association Limited, the breach was committed by the plaintiffs, and not by the defendants, and therefore the defendants would not be liable to pay any damages ; his client had requested the Umpire to refer the question whether on the facts disclosed by the parties, the breach was committed by the plaintiffs or by the defendants within the meaning of by‑law 161 of the Karachi Cotton Association Limited. The first question for my consideration is whether any such request was made to the Umpire or not. If no such request was made, the question of reference as alleged by the defendants would not arise. I have given my best consideration to this question and I have come to the conclusion that no such request was made to the Umpire. The contention of the defendants was that they had filed a written statement before the Umpire dated the 11^th June on the 17th June. Reliance has been placed on a register in which letters so sent are entered. There is an entry in this register showing the written statement to have been sent to the Umpire. This entry, however, has been challenged by Mr. Munavvar Abbas on two grounds. In the first place Mr. Munavvar Abbas contended that this register is not reliable. He has been able to show from the cross‑examination of the defendant's son that a certain letter which was alleged to have been sent by the defendants to the plaintiffs is not entered in the despatch register ; the letter is Exh. 7/8. In the second place Mr. Munavvar Abbas contended that, according to the admission of the defendants' Manager, all the various written statements or letters that had been filed before the Umpire from time to time, a copy thereof had always been given to the plaintiffs and to the Association, and that it was surprising that no such copy of the written statement was sent either to the plaintiffs or the Association. It would appear from the statement of the Manager of the defendants that invariably they had been sending copies of such letters all to the plaintiffs and the Karachi Cotton Association. Under these circumstances I am inclined to rule out the contention of the learned advocate for the defendants. Moreover, this ground had also not been taken in the objections filed under section 30 of the Arbitration Act.

The last contention of Mr. Ibadatyar Khan, which he very strenuously urged, was that in the present case the damages has been given on the basis of the debit note dated the 14th March 1952 sent by the plaintiffs to the defendants and not according to the rate prevalent on the date of the breach, viz., the 25th January 1952. The contention of the learned advocate was that this is an error apparent on the face of the award. He relied on the well‑known case of Champsey Bhara and Company, (A I R1923 P C 66). Lord Dunedin observed ‑‑

An error in law on the face of the award means that you can find in the award or a document actually incor porated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous

Mr. Ibadatyar Khan tried to bring his case within the four corners of the principle laid down by the Privy Council reproduced above by relying on subsection (2) of section 14 of the Arbitration Act. He contended that as subsection (2) of section 14 requires the arbitrator or the umpire to file along with the award any depositions or documents which may have been taken and proved before him, this Court can consider under the provisions of the Arbitration Act, 1940 that the various documents filed along with the award formed part of the award itself. His contention was that if these various documents did not form part of the award, there was no reason for the legislature to have introduced this sub‑clause making it incumbent upon the arbitrators or the umpire to file depositions or other documents proved before them Whatever the intention of the legislature may have been in calling upon the arbitrators or the umpire to file the docu ments and depositions along with the award, it is clear to my mind that these documents cannot be said to be documents actually incorporated in the award within the meaning of the principle laid down by the Privy Council in the well‑known case of Champsey Bhara and Company, cited above, Mr. Ibadatyar Khan the learned advocate for the defendants relied in support of his contention on two Indian authorities Messrs. Bajranglal Laduram (A I R 1951 Ca1. 78), and Bijoy Singh v. Bilasrac and Co., (A I R 1952 Cal. 440). It is true that in these two cases, the learned judges have extended the principle laid down by the Privy Council in 1923, but the case of Champsey Bhara and Company has not been referred to in these two cases. Mr. Munavvar Abbas on the other hand relied upon the case of Gulzarilal Kanoria and Company v. Busi and Stephenson Limited, (A I R 1953 Cal. 621) where the case relied upon by Mr Ibadatyar Khan in Bijoy Singh v. Bilasi and Co. has been distinguished. Mukharji, J. observed :‑

"It is quite true that some idea could be obtained from the proceedings before the arbitrators. But in an application to set aside an award, this Court does not make a sifting investigation of the entire proceedings before the arbitrators. Before that can be done, the award must be shown to be bad on the face of it."

This observation of Mukharji J. is very pertinent to the contention raised by Mr. Ibadatyar Khan. The proceedings before the arbitrator may be of some help to the Court in B understanding the award, but the Court cannot look into it in order to find out the error apparent on the face of the award. Reliance was placed on the case of F. R. Absalom, Limited, and Great Western (London) Garden Village Society Limited (L R (1933) A C 592). In my opinion this case also lays emphasis on the same principle as was enunciated by the Privy Council in 1923, as mentioned above.

Mr. Munavvar Abbas relied on the case of King v. Duveen and others ((1913) 2 K B 32); Attorney General for Manitoba and Kelly and others ((1922) A C 268); Debidass and others v. Keshavdas and others (A I R 1945 All. 432). The Union of India v. Premchand Satramdas (A I R 1951 Pat. 201), in support of his contention that the error must be apparent on the face of the award as enunciated by their Lordships of Privy Council in the case of Champsey Bhara d Company, referred to above. In the present case, the award is a very short one; it does not state the basis of the damages awarded by the Umpire. It is impossible to read from the award that the basis of damages awarded was the debit note dated the 17th March 1952. It may be that the damages may work out at that rate. On the other hand, the same rate as mentioned in the debit note may have prevailed on the 27th January 1952. Under the circumstances I am not in a position to hold that there is any error apparent on the face of the award.

I would, for the reasons given above, dismiss the objec tions and make the award a rule of the Court. Under the circumstances of the present case, I would make no order as to costs.

Mr. Ibadatyar Khan has prayed that the amount payable may be allowed to be paid by instalments. Mr. Munavvar Abbas concedes that this Court has power at this stage to order instalments. He also agrees that the amount may be paid by the defendants within one year It is agreed by the learned advocate for the parties that the amount payable may be paid in twelve equal monthly instalments, the first instalment to be payable on the first of October 1956. The instalments must be paid in the first week of every month. In case of defaults pay any one instalment, rile whole amount will become payable and the plaintiffs will be entitled to execute their decree for the balance of the amount due.

K. B. A. Award upheld

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.