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Attorney(S)
  • For the Appellant: M.A. George, K.L. Varghese, Advocates.
  • For the Respondent: M. Ramachandran, U.K. Ramakrishnan, T.K. Jayaram, Advocates.
Judges
  • George Vadakkel, J.
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Attorney(S)
  • For the Appellant: M.A. George, K.L. Varghese, Advocates.
  • For the Respondent: M. Ramachandran, U.K. Ramakrishnan, T.K. Jayaram, Advocates.
Judges
  • George Vadakkel, J.
Acts
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petitioner was engaged under a works-contract for construction of a road and culverts. The petitioner alleges that, without terminating the contract and after the work had substantially progressed, the respondents entrusted the balance work to another agency (not specified) which commenced work. The petitioner sought an interim injunction in the lower Court restraining the respondents from altering, modifying, tampering with, or destroying the work already done by the petitioner until an Arbitrator could inspect and measure it.

The contract contained an arbitration clause, but no dispute had been referred to arbitration; the petitioner asserted disputes had arisen while the respondents denied that. The petitioner invoked Section 41(b) of the Arbitration Act, 1940 and clauses 1, 3 and 4 in the Second Schedule to that Act. The lower Court refused relief on the ground that no arbitration proceedings were pending and therefore Section 41(b) did not assist the petitioner. The petitioner challenged that refusal by filing the present civil revision petition, which is dismissed by the Court with costs.

Legal Issues Presented

  1. Whether Section 41(b) of the Arbitration Act, 1940 can be invoked by a party to an arbitration agreement to obtain orders (in particular interlocutory relief such as injunctions) before any reference to arbitration has been made — i.e., prior to the commencement of arbitration proceedings.
  2. When, for the purposes of the Act, do "arbitration proceedings" commence — whether upon formation of an arbitration agreement, upon disputes arising, upon nomination of an arbitrator, upon service of notice under Section 37(3) for limitation purposes, or only when the arbitrator obtains authority to act (by submission or by Court reference under Section 20/Chap. IV).

Arguments of the Parties

Petitioner's Arguments

  • The petitioner sought an interim injunction to prevent respondents from altering or destroying the work already performed until the Arbitrator could inspect and measure it.
  • The petitioner contended that Section 41(b) of the Arbitration Act, 1940 (and clauses 1, 3 and 4 of the Second Schedule) can be invoked before a dispute is referred to arbitration and even before any dispute formally arises, i.e., that the Court may exercise the powers in Section 41(b) in anticipation of arbitration proceedings.

Respondents' Position (and Lower Court)

  • The respondents denied that disputes had arisen between the parties.
  • The lower Court held that no arbitration proceedings were pending and therefore Section 41(b) was not available to the petitioner to obtain the injunction sought.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ranjit Chandra Mitter v. Union of India, AIR 1963 Cal 594 Held that relief under Section 41(b) can be granted by the Court only in some pending proceeding or suit; an application invoking S.41 was incompetent where there was no reference to arbitration. The Court treated this decision as supporting the proposition that Section 41(b) does not authorize interim relief in the absence of any arbitration proceeding before the Court; the decision was relied on to reject the petitioner's contention.
Mohinder Singh v. Executive Engineer, AIR 1971 J and K 130 Held that relief under S.41(b) is only available in some pending proceeding or suit; where disputes had been referred for arbitration injunction application was considered competent (though dismissed on merits). The Court cited this decision as consistent with the position that S.41(b) operates in relation to pending proceedings; it does not assist the petitioner who had no pending arbitration reference.
Chedilal v. Brit Over Ltd., (1948) 52 Cal WN 45 Case where an interim injunction was granted in a suit (relating to goods and a letter of credit) and an observation by Das, J. suggested the power under S.41 is not in terms limited to pending arbitration proceedings. The Court observed that the passing observation by Das, J. in this case did not constitute authoritative support for the petitioner's broader proposition; the decision was distinguished because the injunction arose in the context of a suit pending before the Court.
Zalineff v. Hammon, (1898) 2 Ch 92 Illustrated that courts may appoint receivers and thereafter stay the suit (an example of interlocutory relief exercised by courts despite stays). Referenced as part of the background distinguishing the Chedilal case's context where interlocutory orders were made in the course of a suit; used to show historical instances of interlocutory relief in court proceedings.
Willesford v. Watson, (1873) 8 Ch 473 Court issued an injunction after staying the suit; another example of interlocutory relief during pendency or stay. Also cited in the discussion of Chedilal to indicate courts can issue interlocutory orders in suits; Court relied on such authority to explain why Chedilal did not support the petitioner's position beyond its context.
Daulat Ram v. Shriram, AIR 1964 Madh Pra 219 When parties had referred partition to arbitrators and arbitrators had entered on the reference, arbitration proceedings were pending and the Court could be moved for appointment of a receiver. Used to show that when arbitration proceedings are actually pending, the Court has power to make interlocutory orders such as appointment of receiver; relied upon in related subsequent cases.
Nagarchand Goenka v. Surendra Nath, AIR 1946 Pat 70 Held that a proceeding under Section 20 (to compel reference) is a proceeding for arbitration from the start, and that words "arbitration proceedings" in S.41(b) include proceedings under S.20; Court there allowed appointment of a receiver while S.20 proceedings were pending. The present Court discussed this decision at length and treated it as supporting the proposition that S.20 proceedings attract court powers under the Code; however, the present Court preferred to treat powers in S.20 as governed by S.41(a)/CPC application rather than broaden S.41(b) itself to cover pre-reference matters.
Jammu Forest Co. v. State, AIR 1968 J and K 86 Considered whether on making an order of reference under S.20(4) the Court can issue a temporary injunction; decision indicated the Court could do so and relied upon Daulat Ram. The Court noted the decision and observed that it ultimately rests on S.41(b) as applied in Daulat Ram; used in comparative discussion but did not alter the Court's conclusion that S.41(b) does not authorize pre-reference interlocutory orders in the matters covered by clauses 1–4.

Court's Reasoning and Analysis

The Court undertook a textual and functional analysis of Section 41(b) of the Arbitration Act, 1940 and the items in the Second Schedule. Key points of the Court's reasoning, stated step-by-step as found in the opinion, are:

  1. Textual scope of Section 41(b): Section 41(b) confers on the Court "the same power of making orders in respect of the matters mentioned in the Second Schedule to the Act as it has for the purpose of and in relation to any proceedings before the Court, for the purpose of and in relation to arbitration proceedings", subject to a proviso protecting the arbitrator's power. The Court focused on the phrase "for the purpose of, and in relation to, arbitration proceedings".
  2. Construction of the Second Schedule items: Clauses 1 and 3 limit the Court's power to goods or property "which are the subject-matter of the reference" or "as to which any question may arise 'therein' (i.e., in the reference)." Clause 2 concerns "the amount in difference in the reference." These formulations led the Court to conclude that the orders contemplated by S.41(b) read with clauses 1–3 can logically be made only when there has been a reference of the dispute or disputes for arbitration.
  3. Nature of Clause 4 and interlocutory orders: Clause 4 (relating to interim injunctions or appointment of receiver) read with S.41(b) gives the Court the same power to make interlocutory orders "as it has for the purpose of and in relation to any proceeding before it." The Court explained that interlocutory powers in suits derive from Section 94(c) and (d) of the Civil Procedure Code, and are exercised under Order 39/40 rules. An interlocutory order is incidental to a principal proceeding; insofar as S.41(b) is concerned, the principal proceeding is an arbitration proceeding the object of which is an arbitrator's award. Thus, interlocutory orders under Clause 4 are intended to operate during the course of arbitration proceedings pending determination by an award.
  4. Conclusion as to pre-reference relief under clauses 1–4: Combining the textual limits in clauses 1–3 and the interlocutory character of clause 4, the Court concluded it is not competent to pass orders in respect of those matters in anticipation of a reference. Hence the lower Court's refusal to entertain the petitioner's S.41(b) application (in absence of any arbitration proceedings before the Court) was correct.
  5. Clause 5 (guardian appointment) considered separately: Clause 5 (power akin to appointment of a guardian for a minor or person of unsound mind) was examined. The Court noted that the power to appoint a guardian for a suit arises only on institution of a suit, and by analogy S.41(b) may not empower appointment of a guardian to a party to an arbitration agreement until there is a reference. However, the Court acknowledged narrow situations where a guardian appointment prior to actual reference may be necessary (e.g., where an arbitrator needs to be nominated but a party is a minor or unsound). The Court declined to decide finally on that point as it did not arise in the case.
  6. Discussion and reconciliation of authorities: The Court reviewed prior decisions. It found that decisions such as Ranjit Chandra Mitter and Mohinder Singh supported the requirement of a pending proceeding or suit for S.41(b) relief. It commented that the Chedilal decision's passing observations were not authoritative for the wider proposition that S.41(b) can be invoked absent a pending arbitration proceeding. The Nagarchand Goenka decision was considered on its facts to hold that S.20 proceedings are proceedings for arbitration from the start; the present Court observed that where S.20 is pending, the Court's powers derive from the Code (and S.41(a) application) rather than by extending S.41(b) to pre-reference matters. The Court thus declined to broaden the meaning of "arbitration proceedings" in S.41(b) to cover every pre-reference stage.
  7. When arbitration proceedings commence: The Court held that arbitration proceedings commence only when the arbitrator gets authority to act — by actual submission of a particular dispute to a particular arbitrator, by one party requesting the appointed arbitrator to enter on the reference, or by the Court making an order of reference under Section 20 or Chapter IV of the Act. The Court rejected the petitioner's contention that arbitration (or arbitration proceedings) begin simply by the making of an arbitration agreement or upon the arising of disputes. The Court further observed that Section 37(3) creates a limitation fiction (for computation of limitation) but does not mean arbitration proceedings actually commence at the earlier date of notice for limitation purposes.

Holding and Implications

Holding: The civil revision petition is dismissed and the petitioner's challenge to the lower Court's refusal to grant an injunction under Section 41(b) (read with clauses 1, 3 and 4 of the Second Schedule) fails. The Court expressly held that the lower Court was right in rejecting the petitioner's motion for injunction in the absence of any arbitration proceedings or reference.

Implications:

  • Direct effect on the parties: The petitioner's application for an interim injunction under S.41(b) was refused and that refusal is upheld; the petition is dismissed with costs.
  • Scope of S.41(b): Orders in respect of the matters set out in clauses 1–4 of the Second Schedule (goods or property that are the subject-matter of the reference, amount in difference, and interlocutory relief such as injunctions or receivers) can be granted by the Court only in relation to arbitration proceedings that are actually pending — i.e., after a reference to arbitration or when the arbitrator has authority to act (or, in practice, in proceedings under Section 20 where the Code's procedural powers apply while S.20 is pending).
  • Clause 5 left open: The Court acknowledged a limited possibility that under clause 5 (appointment of a guardian) a Court may be competent in narrow circumstances to appoint a guardian before an actual reference (for example, where nomination or commencement is impossible because a party is a minor or of unsound mind), but the Court did not decide that question finally as it did not arise on the facts before it.
  • Preliminary procedural point on commencement of arbitration: "Arbitration proceedings" commence when an arbitrator obtains authority to act (by submission, request, or Court reference under Section 20/Chap. IV); statutory fictions for limitation (Section 37(3)) do not alter that substantive commencement rule.

This summary is confined to and faithful to the contents of the provided opinion and does not add or infer facts or holdings beyond what the Court expressly stated in the text.

Show full summary ...

    Baby Paul v. Hindustan Paper Corporation Ltd. And Another

    1. Alleging that without terminating the contract, and after the work has progressed to a substantial extent, the respondents entrusted the balance work to ‘some other agency’ (not specified) and that agency started work, the petitioner moved the lower Court for interim injunction restraining the respondents, from altering, modifying or tampering with or destroying the work he has already done by themselves (the respondents) or through other agencies, till the Arbitrator inspects and measures the same. The contract mentioned above is a works-contract for construction of a road and the culverts thereon, and contains an arbitration clause, but admittedly no dispute has been referred for arbitration, though according to the petitioner disputes have arisen between the parties - this is denied by the respondents. The petitioner invoked Section 41 (b) of the Arbitration Act, 1940 and the provisions in cls. 1, 3 and 4 in the Second Schedule to that Act. The lower Court said that no arbitration proceedings are pending and therefore S. 41 is not of any avail to the petitioner.

    2. According to the learned counsel for the petitioner before the reference of the dispute or disputes, as the case may be, for arbitration, and even before any dispute arises S. 41 (b) can be invoked by a party to an arbitration-agreement. Whether this submission is right, is the question to be decided in this case.

    3. Section 41 (b) confers on the Court the same power of making orders in respect of the matters mentioned in the Second Schedule to the Act as it has for the purpose of and in relation to any proceedings before the Court, for the purpose of and in relation to arbitration proceedings, but, as per the proviso thereto, without prejudice to any power vested in an arbitrator or umpire for making orders with respect to any of such matters. Whatever be the construction to be placed on the words ‘for the purpose of, and in relation to, arbitration proceedings’ in S. 41 (b), whether, under that provision the Court is, as contended on behalf of the petitioner, in view of the words therein, ‘for the purpose of arbitration proceedings’, competent to pass any order even prior to the commencement of the reference, that is to say, before the parties refer their disputes for arbitration to the arbitrator, or not, (it is also contended that ‘arbitration proceedings’ commence from the time of the ‘arbitration agreement’ and this I will examine hereinafter in due course) cls. 1 and 3 in the Second Schedule limit the power of the Court to make orders only as regards ‘goods which are the subject-matter of the reference’ (clause) and ‘property or thing which is the subject-matter of the reference, or as to which any question may arise ‘therein’ i.e in the reference (cl. 3) and cl. 2 : only as regards ‘the amount in difference in the reference’ which a priori means that the orders contemplated by S. 41 (b) read with cls. 1 to 3 in the Second Schedule can be made only when there has been a reference of the dispute or disputes, as the case may be, for arbitration. Clause 4 in the Second Schedule read with S. 41 (b) confers on the Court the same power of making orders of ‘interim injunction or appointment of receiver’ as it has for the purpose of and in relation to any proceeding before it. In relation to a proceeding before it, the Court derives its power of issuing interim injunction and appointing a receiver from the provisions contained in Section 94 (c) and (d) of the CPC, 1908 and the said powers are to be exercised in accordance with Rr. 1 to 5 in O. 39 and Rr. 1 to 5 in O. 40 of that Code. Section 94 of the Code enables the Court to make interlocutory orders some of which are specified and enumerated in cls. (a) and (d) as is clear from the residuary clause, cl. (e) which says that the Court may ‘make such other interlocutory orders as may appear to the Court to be just and convenient.’ An interlocutory order is an order made during the course of a main proceeding as incidental and ancillary to the object of the principal proceeding. The principal proceeding so far as S. 41 (b) is concerned is an arbitration proceeding the object of which is an award by the arbitrator. Obviously, therefore, the Court's power of making orders in respect of matters set out in items 1 to 4 of the Second Schedule to the Arbitration Act, 1940 is only to make interlocutory orders in interlocutory proceedings during the course of arbitration proceedings pending determination of the rights of the parties thereto finally by an award passed by the arbitrator, and the Court is not competent to pass any order in respect of those matters anticipating a reference.

    4. The above discussion is sufficient to hold that the lower Court is right in rejecting the petitioner's motion for injunction invoking S. 41 (b) of the Act and cls. 1, 3 and 4 in the Second Schedule thereto. I have for that purpose assumed without deciding that the words ‘for the purpose of arbitration proceedings’ in S. 41 (b) may indicate that the parties to an arbitration agreement can approach the Court before a reference, holding that the limitation on its power, namely, that the Court can pass such orders as are contemplated by cls. 1 to 4 only after the reference of the dispute for arbitration, arises by reason of the very nature of the matters set out in these clauses. In deference to the arguments advanced by both sides, and for the sake of completeness, it is necessary also to advert to the same with reference to the one remaining clause, cl. 5, in the Second Schedule.

    5. Section 41 (b) read with cl. 5 invests the Court with the same power as it has in the matter of appointment of guardian for a minor or person of unsound mind for the purpose of and in relation to, any proceeding before it, ‘for the purposes of arbitration proceedings’ as well. The Court's power to appoint a guardian to defend a suit during its pendency which continues until the same has been finally disposed of and complete satisfaction or discharge has been obtained, is to be found in Rr. 3 and 15 in O. 32 of the CPC, 1908. The former Rule makes it the duty of the Court to appoint a proper person ‘to be guardian for the suit’ for a minor and the latter, makes R. 3 applicable to a defendant who is of unsound mind. This is an inherent power of the Court founded on the principle that it is the duty of the Crown as Parens Patriae to protect the interest of minors and persons of unsound mind and is to be exercised wherever necessary. However, this power arises only on the institution of a suit. On that analogy S. 41 (b) may not empower the Court to appoint a guardian to one of the parties to an arbitration agreement till there is a reference. But it may be that it is necessary to appoint a guardian even prior to actual submission or reference as for instance where the parties have not named the arbitrator in the arbitration agreement wherefore it is necessary to nominate one before the actual reference and this cannot be done because one of parties at the relevant time is not of sound mind, or, he is dead, and his legal representative by or against whom the arbitration agreement is under Section 6(1) of the Act enforceable is a minor. In view of the provision ‘for the purposes of arbitration proceedings’ in S. 41 (b) and in cl. 5 in the Second Schedule, the Court may, perhaps, be competent to appoint a guardian to a party to the arbitration agreement even prior to the Actual reference, but since that question does not arise in this case, it is not necessary to finally decide the same herein.

    6. The decisions cited at the bar are of no assistance to the petitioner. In Ranjit Chandra Mitter v. Union of India, AIR 1963 Cal 594 (597) and in Mohinder Singh v. Executive Engineer, AIR 1971 J and K 130 (133) it was held that relief under S. 41 (b) can be granted by the Court only in some pending proceeding or suit. In the Calcutta case there was no reference to arbitration and therefore, an application for injunction was held to be incompetent. In the Jammu and Kashmir case the disputes had been referred for arbitration and therefore, an injunction application was held to be competent though the same was dismissed on merits. Adverting to an earlier decision of Das, J. in (1948) 52 Cal WN 45 on which strong reliance is made by the learned counsel for the petitioner, Mallick, J., in Ranjit Chandra Mitter v. Union of India, AIR 1963 Cal 594 said that ‘the learned Judge (Das, J.) did not feel called upon in the view taken by him to give a meaning to the expression ‘arbitration proceeding’ in S. 41' and therefore, that decision is no authority ‘for the proposition that the Court can issue an injunction even in the absence of any arbitration proceeding provided there is a dispute which can become the subject-matter of an arbitration proceeding under an arbitration agreement subsisting between the parties.'’ Chedilal v. Brit Over Ltd., (1948) 52 Cal WN 45, was a case where a suit was filed for damages for breach of implied condition as to quality and fitness of goods (Radio sets) supplied by the defendant to the plaintiff for sale in India. The plaintiff moved for temporary injunction restraining the defendant from operating on a letter of credit opened by the plaintiff in favour of the defendant and from forfeiting certain amounts deposited by the plaintiff with the defendant. The Court issued an interim injunction. Defendant invoking Section 34 of the Arbitration Act, 1940 sought for stay of the suit. Before the suit was stayed the injunction application came up for final orders. Relying on Section 41 of the Arbitration Act, 1940 it was contended on behalf of the defendant that the application for injunction was not competent, since there was no pending arbitration proceeding. This contention was repelled on the ground that the application for injunction was filed in a suit and that the proceedings therein had not been stayed. Das, J. said that even after staying the suit under S. 34 the Court is competent to grant injunction and appoint a receiver, and referred to Zalineff v. Hammon, ((1898) 2 Ch 92) where the Court appointed a receiver and then stayed the suit, and to Willesford v. Watson, ((1873) 8 Ch 473) where the Court issued an injunction after staying the suit and during the operation of stay. Therefore, the passing observation made by the learned Judge that the power of the Court under S. 41 ‘is not in terms limited to pending arbitration proceedings’ and that there is no reason to add the word ‘pending’ to that section cannot, with respect, and as pointed out by Mallick, J. in the subsequent decision of that Court, be considered as an authority for the proposition stated therein.

    7. In Daulat Ram v. Shriram, AIR 1964 Madh Pra 219, the parties had referred the question of partitioning their joint family properties to the arbitrators and they had entered upon the reference, and therefore, arbitration proceedings were pending when the Court was moved for appointment of a receiver.

    8. In Nagarchand Goenka v. Surendra Nath, AIR 1946 Pat 70, along with an application by a partner under Section 20 of the Arbitration Act, 1940 for compelling reference to arbitration, an application for appointment of a receiver for the partnership-business was moved and the lower Court allowed the same. It was contended before the High Court that until actual reference to arbitration is made, that is to say, till the application under Section 20 of the Act is allowed, the Court has no jurisdiction to appoint a receiver. The argument was that a proceeding under Section 20 of the Act is not an arbitration proceeding till the Court orders filing of the agreement and makes an order of reference to the arbitrator appointed by the parties or by the Court, as the case may be as envisaged in sub-s. (4) of S. 20. Reliance was placed on sub-s. (5) of S. 20 which says that ‘thereafter the arbitration shall proceed …………’ and S. 41 (b) which speaks of ‘arbitration proceedings’. It was held that a proceeding under S. 20 is one to enforce an agreement for arbitration wherefore it is a proceeding for arbitration from the very start, and that the words ‘arbitration proceeding’ in S. 41 (b) would include a proceeding under S. 20 of the Act. The Court said:—

    “Furthermore, there is a great danger in putting such a narrow construction upon the words “arbitration proceedings”. Because if the contention of Mr. Baldeo Sahay is accepted, the Court will be completely powerless to pass any order for the preservation or safety of the properties in dispute involved in the subject-matter of the agreement for arbitration, and the opposite party may take his own time in showing cause why the agreement should not be filed and reference should not be made to the arbitrators by which time the entire property may be completely wasted. In that case there will be no point in empowering the Court either to appoint an arbitrator or to pass an order of injunction by way of saving the property concerned long after the proceeding began. I am, therefore, of opinion that this contention of the appellant's learned Advocate has no force.”

    9. With respect, it seems to me, that at the stage the proceedings under Section 20 of the Act are pending in Court and prior to the making of an order of reference to the arbitrator (which may or may not be made), the Court has, in respect of and in relation to the said proceedings, all the powers invested on it by the Code of Civil Procedure, 1908, the provisions of which shall, as per Section 41 (a) of the Act, apply to all proceedings before it, and it is not Section 41 (b) that is to be looked into for its source of jurisdiction to issue interim orders, so that the difficulty mentioned in the above passage need not compel one to extend and widen the meaning of the expression : ‘arbitration proceedings’ in S. 41 (b) of the Act to include a proceeding before Court to compel arbitration.

    10. In Jammu Forest Co. v. State, AIR 1968 J and K 86, the question that arose for consideration was whether, on making an order of reference under S. 20(4) of the Act to the arbitrator, the Court can issue a temporary injunction, and relying on Daulat Ram v. Shriram, AIR 1964 Madh Pra 219, it was held that the Court is competent to do so. In the course of the discussion the decision seems to proceed on the basis that S. 41 (a) empowers the Court in that behalf for it is stated therein that ‘the case will be deemed to be proceeding before the Court right from the time that an application under S. 20 is made in a particular case up to the time the Court finally disposes of the matter either by accepting the award of setting it aside'’ but it appears to me, that the decision is ultimately rested on S. 41 (b) of the Act on which rested the decision in Daulat Ram v. Shriram, AIR 1964 Madh Pra 219 which has been relied on in Jammu Forest Co. v. State, AIR 1968 J and K 86.

    11. Therefore, the expression ‘for the purpose of’ in S. 41 (b) is of no assistance to contend that the Court can make orders in respect of any of the matters set out in cls. 1 to 4 in the Second Schedule to the Act before and in anticipation of a reference to arbitration, and this is so even if the words : ‘arbitration proceedings’ would include a stage prior to actual reference of the dispute or disputes for arbitration, for the matters set out in cls. 1 to 3 concern goods and properties forming the subject-matter of a reference, or amount in difference in the reference, and those set out in cl. 4 enable the Court to pass only interlocutory orders.

    12. When does ‘arbitration proceedings’ commence, is the next point debated at the bar. I am not prepared to subscribe to the view canvassed for on behalf of the petitioner that from the time an arbitration agreement is made arbitration begins, much less, arbitration proceedings start. That thereafter disputes have arisen also does not mean that arbitration has begun or arbitration proceedings have arisen. The parties to the arbitration agreement may or may not have named the arbitrator therein, and in the latter case, they might have nominated one subsequent to the agreement, but neither the nomination by the agreement itself nor the subsequent nomination is of any consequence in this regard, for arbitration begins and arbitration proceedings commence only on the arbitrator getting authority to act. An arbitrator's authority to act arises by actual submission of particular dispute or disputes to the authority of a particular arbitrator by the parties, or by one of the parties to an arbitration agreement requesting the arbitrator appointed by the arbitration agreement itself or subsequent thereto to enter upon the reference in respect of particular dispute or disputes, or by the Court making an order of reference to the arbitrator as contemplated by Section 20 of the Act or where the Court by order refers the matter or matters in difference to the arbitrator as provided for in Chap. IV of the Act. On his authority arising the arbitrator shall ‘use all reasonable dispatch in entering on and proceeding with the reference and making an award’ as otherwise the Court may remove him, S. 11 (1). So also an arbitrator ‘who has misconducted the proceedings’ is liable to be removed, S. 11 (2). These provisions make it clear that arbitration proceedings commence only on the arbitrator getting authority to arbiter, and act in that behalf.

    13. The provision in S. 37 (3), for the purposes of limitation, by a fiction pushes back the date of commencement of arbitration to a date anterior to when the arbitrator derives his authority to act, namely, when one of the parties to the arbitration agreement serves on the other or others a notice requiring the appointment of an arbitrator, or where an arbitrator has already been nominated, requiring that the dispute be submitted to that person. In the case on hand not even that stage has been reached. There is no merit in the contention that from the stage of the arbitration agreement ‘arbitration proceedings’ commence and that S. 41 (b) can be invoked from that stage.

    14. I dismiss this civil revision petition with costs.

    15. Petition dismissed.

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    Comments

    Baby Paul v. Hindustan Paper Corporation Ltd. And Another
    (Mar 28, 1978)