Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

Shivji Poonja Kothari, A Firm (Original Petitioners), v. Ramjimal Babulal, A Firm (Original S),

Bombay High Court
Sep 12, 1930
Important Paras
Please sign up to view Important Paras.
Smart Summary (Beta)

Structured Summary of the Opinion (Beaumont, C.J.; Blackwell, J.)

Factual and Procedural Background

The appellants and respondents were both members of the Marwari Chamber of Commerce and were bound by its rules to submit disputes to arbitration. A dispute arose and was referred to two arbitrators. The arbitrators failed to make an award within the fifteen days prescribed by the Chamber's by-law and applied to the chairman on 18 January 1929 for an extension. The vice-chairman granted that extension. A further extension request was made on 27 January and again the vice-chairman granted an extension. The arbitrators made their award on 1 February 1929, within the period as extended by the vice-chairman.

The award was filed in Court under the Indian Arbitration Act on 2 August 1929; notice of filing was given to the appellants on 16 August 1929. On 26 August the appellants presented a petition to set aside the award primarily on the ground that there was no dispute properly referable to the arbitrators. The appellants did not in that petition raise as a ground the contention that the time had been incorrectly extended by the vice-chairman rather than the chairman.

On 7 October 1929 the appellants' solicitors wrote to respondents' solicitors stating that at the petition hearing they would contend the award was bad for being made after the time limited by the by-law and that, if necessary, they would apply to amend the petition to include that ground. They did not, however, apply to amend the petition at that time.

The matter was adjourned and directions were made (including an order that respondents furnish an affidavit). On 16 November the respondents filed an affidavit by the Secretary of the Marwari Chamber stating the vice-chairman had given an extension because the chairman was absent from Bombay. On 18 November the learned Judge made an order that "I do enlarge the time for making the award till the 1st day of February 1929, and I do further order that the petition be and it is hereby dismissed."

The appellants appealed from that order. The appeal raised procedural and substantive questions about whether the vice-chairman validly extended time, whether the Judge could enlarge time in the absence of a substantive petition and proper notice, and whether the Judge's order was appealable.

Legal Issues Presented

  1. Whether the vice-chairman of the Marwari Chamber of Commerce had authority under the Chamber's rules to extend the time for making the award in the absence of evidence that the chairman had appointed the vice-chairman to act.
  2. Whether the learned Judge should have required a substantive application (petition) served on the other party, under the High Court Rules (notably rule 373), before exercising the Court's power to enlarge the time for making an award under the Indian Arbitration Act.
  3. Whether the order which enlarged the time for making the award and dismissed the petition to set aside the award constituted an appealable judgment (having effect on the petitioners' rights).

Arguments of the Parties

Respondents' Arguments

  • The respondents contended that the appellants were not in a position to complain about the respondents' failure to apply for extension by petition because the appellants themselves had not raised the late-extension point in their original petition (it was only raised later by letter of 7 October 1929).
  • The respondents asserted in substance that the vice-chairman had power to extend the time (i.e., that there was nothing in the point raised).
  • It was argued by counsel for respondents (Mr. Coltman) that an order extending the time for making an award is not appealable.

Appellants' Arguments

  • The appellants asserted that the award was invalid because the vice-chairman, rather than the chairman, had purported to extend the time and the arbitrators were functus officio after the expiry of fifteen days.
  • The appellants' solicitors gave notice on 7 October 1929 that they would contend at the hearing that the award was bad for having been made after the time limited by the by-law and said they would apply to amend the petition if necessary; they relied on that notice (although they did not formally amend the petition before the Judge's order).
  • The appellants contended they were taken by surprise by the Judge's enlargement of time because there was no substantive application before the Court to extend time and they had not had the opportunity to place affidavits before the Judge on that specific point.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Tejpal Jamunadas v. Nathmull & Co. Establishes that the Court has power under the Indian Arbitration Act to extend the time after an award has been made. The Court accepted this authority to hold that the Court has power to extend time, but qualified that such power should have been exercised only after a substantive application in conformity with rule 373 and with notice to the opposing party.

Court's Reasoning and Analysis

The Court proceeded through the following analytical steps (as reflected in the text):

  1. Procedural requirements: The Court emphasized the importance of compliance with the High Court Rules governing applications under the Indian Arbitration Act. It relied on rule 373 (applications by petition), rule 377 (specifying persons affected in petitions), and rule 378 (service of notice). The Chief Justice and Blackwell, J. agreed that an application to extend time should normally be made by substantive petition served on the other side so the matter could be properly argued.
  2. Waiver and conduct: The Chief Justice observed that although the appellants had not included the point about improper extension in their original petition, they had put the respondents on notice by the 7 October letter. Because the respondents subsequently filed an affidavit addressing that point, the Chief Justice considered that respondents had waived any objection that the point was not in the petition and that the appellants had given notice.
  3. Power of the vice-chairman under Chamber rules: The Court examined the relevant by-laws that were before it. Rule 21 required the award within fifteen days or within such further time as the chairman may extend upon request; rule 7 provided for appointment of chairman and vice-chairman. The Court noted there was no evidence that the chairman had appointed the vice-chairman to act for him; the only evidence was that the chairman was absent from Bombay. The Chief Justice concluded the vice-chairman was at most a deputy and, in the absence of evidence of appointment to act, was not entitled to extend the time. Therefore, on the face of the by-law as presented, the award was out of time.
  4. Court's statutory power to extend time: Citing Tejpal Jamunadas v. Nathmull & Co., the Court accepted that the Court can extend time under the Indian Arbitration Act even after an award has been made. However, both Beaumont, C.J. and Blackwell, J. held that the learned Judge should have required a substantive application by petition served under rule 373 before exercising that power at the hearing where the petition to set aside the award was being heard.
  5. Procedural fairness at the hearing: Blackwell, J. emphasized that the petitioners (appellants) had no opportunity to place affidavits before the learned Judge specifically addressing the question whether time should be enlarged; accordingly, even if the Judge could have acted without a petition, fairness required that the petitioners be given an opportunity to meet the point. The learned Judge had also refused an adjournment which would have allowed such preparation.
  6. Appealability: The Court analyzed the effect of the Judge's order. The enlargement of time directly affected the petitioners' right to contend the award was a nullity; the further step of dismissing the petition treated the award as binding. Therefore the order was a "judgment" within clause 15 of the Letters Patent and was appealable.

Holding and Implications

Holding:

The Court's final decision was to allow the appeal. The core ruling is set out as follows:

Appeal allowed with costs; the appeal is allowed and the matter is remitted for further procedure.

The Court provided specific directions and consequences arising from its decision:

  • The Court declined, on the materials then before it, to make any final order on the petition to set aside the award; instead the matter must go back to the learned Judge for further consideration.
  • The respondents were given liberty to raise, by petition or otherwise as they may be advised within three weeks, the question whether the Court should extend the time for making the award. The two petitions (the original petition to set aside and any petition on extension) were to be heard together.
  • The appellants were given liberty, if so advised, to amend their petition.
  • On appealability, the Court held that an order which enlarged the time and dismissed the petition was a "judgment" for purposes of appeal under the Letters Patent (clause 15) and was therefore appealable.

The opinion does not set aside the award on the present record and does not resolve finally whether the vice-chairman had authority in all circumstances to extend time; rather, it finds that on the material before the Court the vice-chairman had not shown authority to extend, that the Judge should have required a substantive petition and service before extending time, and that the procedural irregularity required remittal for further proceedings consistent with the Court's directions.

Ancillary Information

Attorneys for appellants: Messrs Malvi, Modi, Ranchhoddas & Co.

Attorneys for respondents: Messrs Shah & Co.

Disposition: Appeal allowed.

Show all summary ...

Beaumont, C.J:

This is an appeal from the judgment of Mr. Justice Mirza. The matter has got into a considerable state of confusion owing to the parties not having complied with the rules as to procedure. The rules of procedure are made in the long run for the convenience and benefit of litigants. Occasionally expense and delay may be involved in complying with the rules, but if the parties do not comply with the rules, they must take the consequences.

The material facts are these. The appellants and respondents are both members of the Marwari Chamber of Commerce, and as such they are bound under the rules to submit all disputes between them to arbitration. They had a dispute, and the matter was referred to the arbitration of two arbitrators. The arbitrators were unable to make their award within the fifteen days required under the rules, and they applied to the chairman on January 18, 1929, to extend the time. The time was in fact extended by the vice-chairman. On January 27, there was a further application to the chairman to extend the time, and again an extension was given by the vice-chairman. On February 1, within the extended time they made an award. On August 2, the award was filed in Court under the indian arbitration act, and on the 16th notice was given to the appellants of the filing. On August 26, the appellants presented a petition to set aside the award, that petition being based mainly on the ground the there was in fact no dispute which was properly referable to the arbitrators, and they did not take the point in the petition that the time had been extended be the vice-chairman whereas it ought to have been extended by the chairman, and therefore the award was out of time and on its face bad. On October 7, however, the appellants' solicitors wrote a letter to the respondents' solicitors in which in the last paragraph they gave notice that their clients would, at the hearing of the petition, contend that the award was bad as having been made after the time limited for the same under the by-law of the Marwari Chamber of Commerce Ltd., and that the arbitrators were functus officio on the expiry of fifteen days from the date of their appointment. Then they say: “If necessary, we shall apply to Court for the amendment of the petition so as to include such ground therein”. In fact they did not apply to Court for the amendment of the petition, and that was the first irregularity. The respondents did not reply to that letter, but on the next day the matter came on for hearing, and a direction was given that it should stand over to the following Tuesday, respondents to furnish a copy of affidavit by noon on the Saturday. That certainly looks as if the respondents were asking to put in an affidavit in answer to the point raised in the letter written to them on the previous day. The matter was again adjourned on October 15 until November 18 and on November 16 the respondents put in an affidavit by the Secretary of the Marwari Chamber of Commerce stating that the vice-chairman had given an extension of time because the chairman was absent from Bombay. The matter then came on for hearing on November 18, and counsel for the respondents apparently asked the Court itself to extend the time, if in fact the award was out of time and the order of the learned Judge was: “I do enlarge the time for making the award till he 1st day of February 1929, and I do further order that the petition be and it is hereby dismissed”. Now, there was no substantive application to the learned Judge to extend the time, and the appellants say that they were taken by surprise.

Rule 373 of the rules of this Court provides that all applications under the indian arbitration act, other than under section 19, shall be made by petition except as thereinafter otherwise provided; and rule 377 provides that every petition or a copy thereof shall specify the persons affected thereby, and upon whom notice has to be served as thereinafter provided. Then rule 378 provides for the service of the notice on persons specified in the petition. In my view if an application was to be made to the learned Judge to extend the time for making the award, particularly as the application was long after the award had in fact been made, there ought to have been a substantive application by petition which should have been served on the other side, and the matter could then have been argued.

The contentions put forward by the respondents are, first of all, that the appellants are not in a position to complain of irregularity in the respondents not having applied for the extension of time by petition, because they themselves had not taken the point that the award was out of time in their own petition, but had only done so in the letter of October 7, 1929. But I think that the respondents had waived that objection by themselves putting in an affidavit in answer to that particular point, and I think that in face of that conduct it is not now open to them to object that the point ought to have been raised in the petition and not by a letter. The point was in fact raised, and they were given notice of it.

Then it is said that there is in substance nothing in the point because as a matter of fact the vice-chairman had power to extend the time in the absence of the chairman. We have not got a copy of all the rules of the Marwari Chamber of Commerce before us, and I do not propose to express any opinion as to their exact meaning. Rule 21 provides that the arbitrators shall make their award within fifteen days of their appointment or within such time as the chairman of the chamber may extend upon the request of the arbitrators, either at the time of appointment or subsequent thereto. And rule 7 provides for the appointment of a chairman and a vice-chairman before the annual ordinary general meeting, and directs them to take charge of their respective offices. It may be that the chairman has power in case of absence or illness or for some other reason to appoint the vice-chairman to act for him. I express no opinion on that. But there is no evidence here that the chairman did appoint the vice-chairman to act. The only evidence is that the chairman was absent from Bombay. It seems to me quite clear that under rule 21 it is for the chairman to act and the vice-chairman could at the most only act as the chairman's deputy. In my opinion, the vice-chairman was not entitled to extend the time, as he did, and I, therefore, think that the award was out of time, and that the defect could only be cured, as the learned Judge thought, by the Court extending the time.

It is, I think, established by the case, to which the learned Advocate General referred, Tejpal Jamunadas v. Nathmull & Co., that the Court has power under the indian arbitration act to extend the time after the award has been made. But, as I have already said, I think that the learned Judge in exercising that power ought to have required a substantive application to be made under rule 373, and that notice of that application should have been served on the other side.

It is also contended by Mr. Coltman that an order extending time for making an award is not appealable. But, in my view, it is quite clear that an order of this sort, which, first of all, extends the time for making the award, and then dismisses the petition to set aside the award, is clearly appealable. For these reasons, I think that this appeal must be allowed with costs.

We are not prepared on the materials before us to make any order on the petition to set aside the award. I think the matter will have to go back to the learned Judge, and the respondents will have liberty to raise by petition or otherwise as they may be advised within three weeks the question whether the time should be extended by the Court, and the two petitions will have to be heard together.

Blackwell, J.:— Mr. Coltman has contended that we ought to disregard that part of the Judge's order which enlarges the period for making the award, and ought to deal with this appeal on the merits of the petition. His argument on that point is that the original petition filed by the present appellants made no mention of the fact that at the hearing the petitioners would contend that the award was bad upon the ground that the time for making it had not been extended by the proper authority, namely, the chairman of the Marwari Chamber of Commerce. In my opinion, there is no substance in this argument, inasmuch as there was a petition before the Court as required by rule 373 of the High Court Rules, and notice of the further application had been given to the respondents' attorneys by the appellants' attorneys' letter of October 7, 1929. In that letter the appellants' attorneys expressly informed the respondents' attorneys that they would apply to the Court for the amendment of the petition so as to include the new point, if necessary. Upon the receipt of that letter, no objection was taken by the respondents to the course suggested by the appellants' attorneys. On the contrary, when the matter came before the Court on October 8, 1929, the matter was ordered to stand over in order that the respondents might furnish a copy of their affidavit by noon Saturday next. They did in fact file an affidavit of the secretary of the chamber on November 16, 1929, in which they contended that the time was properly extended by the vice-chairman, that is to say, by that affidavit they were meeting the very point as to the raising of which notice had been given. In those circumstances, I do not think that it lies in the mouth of the respondents to contend that the matter had not been properly raised on the petition which was before the Court.

Then comes the question whether, that being the position, the respondents were entitled themselves to ask the Judge to enlarge the time under section 12 of the Indian Arbitration Act. In my opinion, it was not open to the Judge, having regard to rule 373 of the High Court Rules, to accede to the oral application made by the respondents at the hearing of the appellants' petition. He ought, if he had thought that the respondents should have an opportunity of making an application, to have granted them an adjournment to enable them to raise the matter in a proper form by petition which would be duly served upon the other side. Instead of adopting that course, the learned Judge dealt with the matter there and then, and refused an application by the petitioners' counsel for an adjournment to show cause why time should not be extended. In my opinion, even assuming that the learned Judge could have dealt with the matter in the absence of a petition in that behalf by the respondents, the petitioners ought to have had an opportunity of placing on affidavit such facts as they deemed necessary to enable the Judge to exercise his discretion on the point of extension of time. They have had no such opportunity, and quite apart from the fact that in my opinion a petition by the respondents was necessary, I should have thought it necessary to send the matter back to the learned Judge on that ground alone, namely, that the petitioners had no opportunity of meeting the point.

The Judge's order not merely enlarged the time, but dismissed the petition. If time was not enlarged, it was open to the petitioners to contend that the award was a nullity. In my judgment, the enlargement of time by itself affected the petitioners' right to contend that the award was a nullity. Be that as it may, the learned Judge went on to dismiss the petition. That clearly affected a right of the petitioners, the effect of the order being that the award was treated as binding upon them. In my opinion, therefore, the Judge's order is a “judgment” within the meaning of clause 15 of the Letters Patent and is appealable.

Accordingly, I agree with the order suggested by the learned Chief Justice, namely, that this appeal should be allowed with costs, with liberty to the present appellants, if so advised, to amend their petition, and with liberty to the respondents to file a substantive petition within three weeks dealing with the question of the enlargement of time.

Attorneys for appellants: Messrs Malvi, Modi, Ranchhoddas & Co.

Attorneys for respondents: Messrs Shah & Co.

Appeal allowed.
B.K.D