The Judgment of the Court was delivered by
Bachawat, J.:— This is an application for extension of the time of the arbitrators to reconsider their award.
2. On December 29, 1952, the petitioner referred its claim for damages to the arbitration of the Bengal Chamber of Commerce and Industries under the arbitration clause contained in the contract dated December 15, 1952, On June 27, 1953, the Bengal Chamber of Commerce made its award No. 680 of 1953 in favour of the petitioner. By consent order dated April 15, 1954, this Court remitted the award to the Bengal Chamber for reconsideration in accordance with the rules of its Tribunal of Arbitration and the Chamber was directed to submit its decision within 3 months from April 15, 1954. Subsequently correspondence passed between the Registrar of the Chamber and the attorneys of the parties with regard to the question whether the reconsideration of the award should be by the arbitral court which made the award or by a new arbitral Court to be appointed by the Registrar of the Chamber. By letter dated June 23, 1954, the Chamber fixed July 1, 1954, for the reconsideration of the matter. But no meeting was held on July 1, 1954, or thereafter. On July 12, 1954, the Registrar of the Chamber wrote to the attorneys for the petitioner stating that it would not be possible for the Chamber to make the award within July 14, 1954, and requesting the parties to apply to the Court for two months' extension of the time to reconsider the award. On or about July 15, 1954, the time to reconsider the award and to submit the fresh decision expired. On August 19, 1954, this summons was taken out.
3. Mr. Bhabra appearing on behalf of the respondent contends that after the expiry of July 15, 1954, the Court has no power to extend the time and also that assuming that the Court has such power, the Court ought not to grant the extension in the circumstances of this case.
4. section 16(1) of the Indian Arbitration Act, 1940, gives power to the Court from time to time to remit an award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such term as the Court thinks fit in certain circumstances mentioned in the sub-section. The provisions of sections 16(2) and (8) and 28(1) of the Indian Arbitration, Act 1940 are as follows:—
16(2). “Where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court;
Provided that any time so fixed may be extended by subsequent order of the Court.
16(3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.”
5. 28(1). The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award.
6. Section 16 requires the Court to fix a time within which a remitted award has to be reconsidered and within which the reconsidered award has to be submitted and empowers the Court to extend the time, so fixed. In my opinion, section 16 in itself contains an exhaustive and complete provision with regard to such time. The Court can enlarge this time in exercise of its powers under section 16 and not by recourse to section 28. Section 28 enables the Court to enlarge the time fixed for the making of the award and not the time fixed for filing a new award on reconsideration of an award which has already been made.
7. The provisions of section 16(2) and (3) require careful consideration. Under the proviso to section 16(2) the Court may extend the time fixed by the order of remission by a subsequent order. The proviso does not require that the subsequent order must be made before the expiry of the time, so fixed. The discretion of the Court is unfettered and may be exercised both before and after the expiry of the time according to the necessities of the case.
8. Mr. Bhabra contends that Court cannot now extend the time because the award has become void under section 16(3) on the expiry of the time fixed and there cannot be reconsideration of a void award. This argument though attractive is unsound and ought not to be accepted.
9. The expression “time fixed” in section 16(3) clearly refers to the time fixed under section 16(2) whether by order of the remission or by a subsequent order for extension and the award does not become void before the expiry of the extended time. Section 19 shows that even when this time has expired and the award has become void in the absence of any further order the arbitration agreement subsists and the reference is not superseded. Though the time has expired the reference is still pending and the Court has the power to extend the time.
10. The effect of the subsequent order of extension is as if the extended time was originally inserted in the order of remission. The extended time should be read as having been originally inserted in the order of remission in the same manner as the time of making the award extended under the Common Law Procedure Act, 1854, was read into the submission in Lord v. Lee, (1) [(1868) L.R 3 Q.B 404]. When an award is remitted under section 16(1) the award is rejected and the second award is the only effective award. See Mohan Kissen v. Bhooban Shyam, (2) [(1882) 7 Weekly Reporter 406]; and Johnson v. Latham, (3) [(1851) 20 L.J.Q.B 236]. The order of remission is worked out by final cancellation of the award either by the making and filing of the reconsidered award within the time fixed or by the failure of the arbitrators to make and file the new award within that time. Ex-hypothesi the power of enlargement of time given by the proviso to section 16(2) must be exercised at a time when the original award has ceased to be an operative and effective award. The exercise of the power after the expiration of the time fixed only suspends retrospectively the mode of its final cancellation.
11. In my opinion section 16(3) does not put a fetter upon the power of enlargement of time conferred by section 16(2). A review of the previous legislation will support this conclusion.
12. The power of setting aside is defined and circumscribed by section 30 of the Indian Arbitration Act, 1940, corresponding to the analogous provision of paragraph 15, Schedule 2 of the Code of Civil Procedure, 1908, section 521 of the Code of Civil Procedure, 1882, and section 324 of the Code of Civil Procedure, 1859.
13. The power to remit the award or any matter referred to the arbitration is given by section 16(1) of the Indian Arbitration Act, 1940, corresponding to paragraph 14, Schedule 2 of the Code of Civil Procedure, 1908, section 520 of the Code of Civil Procedure, 1882, and section 323 of the Code of 1859.
14. All the 3 previous statutes required the Court to fix the time for the making of the award and empowered the Court to enlarge the time, so fixed. None of them provided for the fixing and enlargement of the time to reconsider the remitted award. The Indian Arbitration Act, 1940, section 16(2) for the first time requires the Court to fix the time within which the award has to be reconsidered and the new award has to be submitted and empowers the Court to extend the time so fixed.
15. The Civil Procedure Code of 1859 did not provide for the legal consequences of the refusal to reconsider the award remitted under section 323. It was held in Mohan Kissen v. Bhooban Shyam, (2) [(1882) 7 Weekly Reporter 406], that on such refusal the award became null and void without proof of misconduct or corruption under section 324. The effect of this decision is codified by providing that the award remitted to the arbitrator or umpire for reconsideration becomes void on their refusal to reconsider it. Such provision was embodied in section 121 of the Code of Civil Procedure of 1882, and paragraph 15, Schedule 2 of the Code of Civil Procedure, 1908, both of which also dealt with the question of setting aside the award. In the Indian Arbitration Act, 1940, this provision was embodied under section 16(3) with suitable modifications having regard to the new provision of section 16(2) instead of incorporating it in section 30, which now deals with the question of setting aside the award. Clearly the object of section 16(3) is to provide that on failure to reconsider the award remitted for reconsideration the award becomes automatically void and need not be set aside under section 30.
16. Section 16(3) has a long legislative ancestry whereas section 16(2) is a new provision of law having no counterpart in the previous legislation. Section 16(3) is intended to embody and re-state the rule in Mohan Kissen v. Bhooban (2) (7 Weekly Reporter 406). It is certainly not enacted with the object of circumscribing the power of enlargement which is now conferred by section 16(2).
17. The Indian Arbitration Act, 1899, by sections 12 and 13 empowered the Court to extend the time for the making of the award and to remit an award for reconsideration and also required the arbitrator to make a fresh award within 3 months of the order of remission unless otherwise directed by the Court. The provisions of sections 12 and 13 of this Act are materially different from section 16 of the Indian Arbitration Act, 1940, and I do not think that any assistance on the question in issue can be derived from the decisions in Martirossc v. Subramaniam, (4) (I.L.R 51 Mad. 103); and Tijpal v. Nathivmal, (5) (I.L.R 40 Cal. 1059), which decided that under sections 12 and 13 of the Indian Arbitration Act, 1899, the time to make fresh award on reconsideration of the remitted award may be extended after the time has expired.
18. The case of Badri Narain v. Sheo Koer, (6) (I.L.R 17 Cal. 512 P.C), deals with the construction of section 549, Code of Civil Procedure 1882, and the power of the Court to extend the time for furnishing security of the costs of appeal and has no direct bearing on the decision in this case.
19. In Raja Har Narain v. Chaudhurani Bhagwant Koer, (7) (L.R 18 I.A 55), it was held on a construction of sections 508, 514 and 520 of the Code of Civil Procedure, 1882, that the power of enlargement of the time to make the award could not foe exercised after the time has expired. The provisions of law and the subject-matter under consideration in that case were different, and I do not feel compelled by that decision to accept the construction put by Mr. Bhabra.
20. I hold that the power of enlargement of time given by the proviso to section 16(2) may be exercised after the expiry of the time fixed.
21. If the opposite construction is accepted not only the application, but the order for enlargement must be made before the expiry of the time fixed and as soon as the time has expired the Court is powerless to enlarge the time irrespective of the justice and the merits of the case. The evils of such construction are obvious.
22. Although, I hold that I have the power to enlarge the time on the facts of this case, I am not satisfied that the time ought to be enlarged. It is clear that the time had expired before the summons was taken out. When the Court made the order dated April, 15, 1954, the time factor was considered important, because the Chamber was given liberty to act upon a signed copy of the minutes. The delay, however is not serious and by itself does not merit dismissal of this application. There are other circumstances in this case, which induce me to hold that, I ought not to enlarge the time. The Chamber formally fixed July 1, 1954, to be the date, when the arbitrators would hold a meeting. Neither party asked for any adjournment. Yet no meeting was held on July 1, 1954.
23. The reason for not holding the meeting has not been explained and has not been communicated to the parties by the Chamber. The Chamber has not officially informed the parties whether the meeting was being adjourned and if so, to what date and for what reason. Even in the letter, dated July 12, 1954, the Chamber does not state why no meeting was held on July 1, 1954, and why it was not possible to make the award before July 15, 1954. The Chamber acted arbitrarily and whimsically in not holding the meeting on July 1, and in not communicating to the parties, the reason why the meeting was not being held on that date. The affidavits and the arguments of learned counsel leave the impression that the parties and the arbitrators are not certain as to the legal effect of the order of remission, dated April 15, 1954, and as to the proper constitution of the arbitral Court, which ought to reconsider the award. The parties have not asked for any directions from the Court to clear the uncertainty. In these circumstances enlargement of time will lead to endless complications. I do not think that the arbitrators really want to reconsider the award as the matter stands now. In these circumstances, I am not satisfied that I ought to extend the time fixed by the order, dated April 15, 1954.
24. The application is dismissed.
25. Each party will pay and bear his own costs of this application.
26. Cost of this application resulting in the order, dated April, 1954, was reserved for being dealt with when the matter would come up after the arbitrators have reconsidered the award. It is no longer possible for the arbitrators to reconsider the award. In these circumstances, I must deal with the costs of that application.
27. I direct that each party will pay and bear his own costs of the application resulting in the order, dated April 15, 1954.
28. Certified for counsel.
Solicitors: K.K Khetry for the Petitioner; Khaitan & Co., for the Respondent.
A.K.D.G