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Bai Laxmibai v. Shridhar Manik Patel And Others

Bombay High Court
Sep 8, 1942
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Concise Analytical Summary of the Opinion

Factual and Procedural Background

This is a petition to set aside an award made in proceedings for partition of a joint Hindu family estate. The petitioner is the widow of a deceased brother of the respondents. The parties entered an agreement of reference dated 5 December 1940 by which seven named arbitrators were appointed to divide the joint and self-acquired movable and immovable properties of the family. The arbitrators made an award on 30 April 1941, signed by all seven arbitrators. Notice of the making of the award was given on 2 October 1941 by the arbitrators' attorneys. The petitioner filed this petition on 20 February 1942.

The petitioner advanced three principal grounds to set aside the award: (1) improper notice of making and signing of the award — asserted in two limbs (that notice must be given on the same day as the award and that notice given by attorneys was improper); (2) unlawful delegation by the arbitrators in causing notice to be given by their attorneys; and (3) lack of jurisdiction to set aside Rs. 8,000 allocated for marriage expenses of daughters and an objection arising from an arbitrators' meeting on 7 March 1941 where two arbitrators were absent.

Legal Issues Presented

  1. Whether Section 14(1) of the Arbitration Act (10 of 1940) requires notice of the making and signing of an award to be given on the same day the award is made and signed.
  2. Whether the arbitrators could lawfully delegate the act of giving notice of the award to their attorneys (i.e., whether such delegation was impermissible delegation of judicial/arbitral functions).
  3. Whether the arbitrators had jurisdiction to set aside Rs. 8,000 for marriage expenses of the daughters (and whether that part of the award should be struck down).
  4. Whether decisions recorded at a meeting of arbitrators (7 March 1941) at which two arbitrators were absent — and subsequently acted on or reflected at a full meeting on 16 March 1941 — rendered the award liable to be set aside for irregularity (including whether any such irregularity was waived).

Arguments of the Parties

Petitioner's Arguments

  • Section 14(1) of the Arbitration Act, 10 of 1940, must be read so that the word "when" requires that making the award, signing the award and giving notice of the award occur at the same time; notice therefore should have been given on the same day as the award (30 April 1941).
  • The notice given by the arbitrators' attorneys on 2 October 1941 was improper because it constituted an unauthorised delegation of the arbitrators' functions — arbitrators cannot delegate their work.
  • The arbitrators lacked jurisdiction to set aside Rs. 8,000 for marriage expenses of daughters of the two branches — this allocation was challenged as being beyond the arbitrators' jurisdiction.
  • The meeting held on 7 March 1941 (when two arbitrators were absent) produced decisions which prejudiced the petitioner; the absence of two arbitrators meant the full tribunal had not applied its mind when those decisions were reached.

Respondents' Arguments

  • The respondents contended (as reflected in the record and submissions) that Section 14(1) does not compel notice to be given on the same day as the award and that the arbitrators acted within the statutory framework and reasonable practice.
  • They asserted that the act of giving formal notice is ministerial and therefore may be performed by an agent or attorney; delegation of such ministerial acts is permissible (reference made to Contract Act, 1872 principles).
  • The respondents (through Mr. Daphtary) agreed that the challenged paragraph allocating Rs. 8,000 for marriage expenses could be omitted from the award and asked for consequential adjustments.
  • With respect to the meetings, respondents relied on the notes showing that the critical decisions were recorded at, and acted upon at, a subsequent meeting on 16 March 1941 when all arbitrators were present; thus no prejudicial irregularity occurred.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
44 Bom. L.R. 4851 Authority that a multi-member tribunal which constituted itself to hear an appeal must have the decision of the constituted tribunal; where members who heard the matter withdraw, the decision of the remainder may not bind unless consistent with tribunal's constitution; also principle that acquiescence in an irregularity may preclude later objection. The court held this case did not assist the petitioner materially because here the award was signed by all arbitrators and, in any event, the petitioner had acquiesced in the later proceedings; the court applied the principle that acquiescence may waive an irregularity.
(1844) 6 Q.B. 637 Statement (Lord Denman C.J.) that waiver may not apply where a party wishing to be present has been excluded from a meeting — in such cases the mischief cannot be remedied simply by later acquiescence. The court considered the Lord Denman passage and distinguished the circumstances: the petitioner was not excluded from subsequent meetings and in fact participated in the proceedings before all arbitrators on 16 March and later; therefore the protecting principle for excluded parties did not operate to the petitioner's advantage here.

Court's Reasoning and Analysis

The court proceeded by addressing each of the petitioner's contentions in turn and applying statutory interpretation, the factual record of the arbitrators' notes and correspondence, and established principles on irregularity and waiver.

Interpretation of Section 14(1), Arbitration Act (10 of 1940)

  • The court rejected the petitioner's argument that the opening word "When" in Section 14(1) requires notice to be given at the same moment the award is made and signed. The word "when" must be read with "have made" and does not control the subsequent phrase "shall give notice" in the restrictive sense the petitioner proposed.
  • The time for making an award is governed by clause (3) of Schedule 1 (four months from entering on the reference, unless otherwise contracted or extended). Signing follows making. The requirement to give notice in writing does not necessarily mean contemporaneous notice; rather, the arbitrators must give notice within a reasonable time, the duration of which depends on case-specific circumstances.
  • The court observed that neither the Arbitration Act nor the Limitation Act fixes a statutory time within which arbitrators must give notice of the making or filing of an award; the omission appears deliberate and leaves arbitrators a measure of discretion, subject to reasonableness.

Application of the facts to notice timing

  • The arbitrators' notes show the award was signed on 30 April 1941, but parties had requested the arbitrators to wait before filing the award. Under High Court Rule 375 a notice of filing and an affidavit of service must accompany filing; consequently, when parties asked the arbitrators to refrain from filing, the arbitrators naturally delayed serving formal notice of the making of the award until a reasonable time had elapsed.
  • Correspondence annexed to the respondents' affidavit indicates that copies of the award were provided soon after the award was made and that from 7 May the petitioner sought clarifications on points — the time gap between making the award and serving formal notice was therefore spent in these discussions and preparation of documents.

Delegation of notice to attorneys

  • The court found that giving the notice of the award is a ministerial act and not the exercise of any judicial function of an arbitrator. Therefore, absent statutory limitation, an arbitrator may entrust ministerial acts to an agent or attorney consistent with general agency principles (as governed by the Contract Act, 1872).
  • The petitioner did not demonstrate that delegating the notice to attorneys was impermissible; accordingly, the contention that the arbitrators unlawfully delegated their authority had no substance.

Objection to Rs. 8,000 allocation for marriage expenses

  • Respondents' counsel (Mr. Daphtary) agreed that a portion of the paragraph allocating Rs. 8,000 for marriage expenses should be omitted. The court ordered that the specified portion be omitted and directed consequential amendment in the schedule and the column dealing with joint family expenses.
  • The court explained that the amount left undisposed would fall under the award's final part addressing the balance — to be divided between the parties — and considered that outcome fair, given the normal rule that each branch bears the expenses of its unmarried daughters after partition.

Meeting irregularity (7 March 1941) and subsequent proceedings

  • Two decisions are recorded in the notes of the 7 March meeting (when two arbitrators were absent): (a) petitioner to have first choice among three divisions prepared by the architect; (b) regarding the Library Road property, preference and sale terms recorded. The plan was shown and signed by the three parties.
  • On 16 March, when all arbitrators were present, the notes show the petitioner exercised the first selection (portion C—C.1) and respondents made their selections. An offer to respondent 1 to retain the Dadar Library Road property for Rs. 18,000 (engineer's figure) was made at the 16 March meeting; respondent 1 asked for four days to consider.
  • The court rejected the petitioner's contention that absent arbitrators had not applied their minds. The report of the engineer was before the arbitrators at both meetings, and the decisive acts and offers were recorded and made when all arbitrators and parties were present at the 16 March meeting. Thus, the alleged absence did not occasion injustice.
  • The court further held that if any slight irregularity occurred at the 7 March meeting, it was waived by the petitioner because she participated in subsequent proceedings before all arbitrators (16 March and later meetings) and took part in the process — surrendering the right to object on that ground.

Use of precedents and guiding principles

  • The court considered 44 Bom. L.R. 4851 (appeal committee case) but found it not directly helpful because in the present case the award was signed by all arbitrators and, crucially, the petitioner had acquiesced in later proceedings.
  • The court quoted and considered the 1844 report (6 Q.B. 637) (Lord Denman C.J.) about waiver and exclusion: while waiver may not be permitted where a party was excluded from participation, that protective principle did not apply here because the petitioner had an opportunity to participate in subsequent full hearings and did so.
  • On this combined basis, the court concluded any irregularity was waived and did not invalidate the award.

Holding and Implications

Holding: The petition to set aside the award is dismissed, subject to the modification ordered in respect of the Rs. 8,000 item.

Implications and consequential orders:

  • The court ordered deletion of the specific paragraph and item in the award allocating Rs. 8,000 for marriage expenses (as agreed by respondents' counsel). The item is to be removed from the schedule and the relevant column dealing with joint family expenses.
  • As a consequence, Rs. 650 (the petitioner's fixed costs) and Rs. 400 (the respondents' fixed costs) are directed to be paid out of the Rs. 8,000 originally set apart for marriage expenses. The remaining balance is to be treated as part of the amount disposed of under the last part of the award (to be divided as directed there).
  • The court declined to order the petitioner to pay costs of the respondents; on the facts and circumstances it was not thought right to make such an order.
  • No new legal precedent is stated to have been created by this judgment; the court applied established principles of statutory interpretation, agency for ministerial acts, and doctrine of waiver for irregularities in arbitral procedure to the facts before it. The decision's immediate effect is a dismissal of the petition with the specified modification and cost directions described above.

Final disposition: Petition dismissed (with the Rs. 8,000 modification and specified cost directions).

Show all summary ...

1. This is a petition to set aside an award made in the matter of partitioning the estate of a joint Hindu family. The petitioner is the widow of a deceased brother of the respondents. The agreement of reference is dated 5th December, 1940, and seven persons named in the agreement were appointed arbitrators to make a division of the joint and self-acquired moveable and immovable properties of the family. The arbitrators made their award on 30th April, 1941. It is signed by all the seven arbitrators. The notice of making of the award was given on 2nd October, 1941, by the arbitrators' attorneys and this petition was filed on 20th February, 1942. On behalf of the petitioner only three points are pressed in support of the application. The first is that no proper notice of making and signing the award was given. The argument is two-fold: firstly, that notice must have been given on the same day on which the award was made, and, secondly, that the notice given by the attorneys is improper and should have been given by the arbitrators themselves. The petitioner contends that under Section 14(1) of the Arbitration Act (10 of 1940) notice must be given on the same day as the award because the section opens with the word, “When.” According to the petitioner all the three acts, viz., making of the award, signing the award and giving notice to the parties must same time. sub-section (2) of that section is used in contrast to show that when the Legislature intended that an act might be done by another party, e.g, causing the award to be filed, the Legislature had stated so clearly. It is argued that causing the notice to be given by the attorneys amounts to delegation of authority and no arbitrator is entitled to delegate his work. In my opinion this line of reasoning is unsound. I am unable to read the word “when” as meaning what is contended for by the petitioner. The word “when” in S. 14(1), in my opinion, has to be read with “have made.” It does not control (with the meaning stated to attach thereto) the words “shall give notice.” Section 14(1) provides that the arbitrators have to make their award. The time to make their award is controlled by cl. (3) of Sch 1, which provides that in the absence of a contract to the contrary the arbitrators must make their award within four months from the date of entering on the reference or within the further extended time as mentioned therein. The signing of the award must follow the making of the award. The provision about giving notice in writing to the parties, in my opinion, does not necessarily mean at the same time or moment.

2. It is true that the arbitrators are expected in the ordinary course to give notice within a reasonable time after the award is made and signed by them; but, I am unable to read Section 14(1) of the as compelling them to give notice on the same day on which the award is made and signed. By Sch. 4, Arbitration Act, Articles 158 and 178 of Sch. 1 of the Limitation Act, are amended. Thereby the time is fixed for filing the award, after the date of the service of the notice of making of the award, and time is also fixed for filing an application to set aside an award after the notice of filing of the award is given to the parties. No time is fixed either by the Arbitration Act or by the Limitation Act within which the arbitrator should give notice of the making and filing of the award. In my opinion, that is a deliberate omission and the result is that the arbitrators are left with a free hand on that point. As I have pointed out, it is their duty after they make and sign their award to give notice to the parties within a reasonable time, which must be fixed according to the circumstances of each case.

3. In the present case the arbitrators' notes show that on 30th April the arbitrators signed their award and the parties intimated that they desired the arbitrators to wait before filing the award. Under High Court Rule 375 it is necessary for the arbitrators, when filing an award, to file along with the same the notice given to the parties and the affidavit of service of such notice on them. If, therefore, the parties have requested the arbitrators to refrain from filing the award the arbitrators must naturally have refrained, from serving notice of the making of the award for some time and given notice when they thought that reasonable time had expired. It may be pointed out that soon after the award was made the parties received copies thereof and as shown by the correspondence annexed to the affidavit of the respondents, from 7th May the petitioner was asking for clarification of certain points. It also appears that certain documents were prepared and perhaps time was taken to do that before the arbitrators were requested to file the award. This correspondence clearly shows that the time between the making of the award and the giving of the notice was spent in this discussion.

4. The second part of the petitioner's contention that the arbitrators had delegated their authority has no substance. The giving of the notice is not exercising any judicial function of an arbitrator. In the ordinary course, a man is entitled to get a thing done which he is himself entitled to do, and unless the Legislature has limited his power he has authority to delegate the same to an agent as provided by the Contract Act, 1872. It is, therefore, for the petitioner to show that this work, which was entrusted to the attorneys, was not permitted in law. The notice is only to the effect that an award has been made. It is not any decision on any of the disputes referred to the arbitrators. In my opinion it is only a ministerial act which the arbitrators were fully entitled to delegate to their attorneys. The second objection urged on behalf of the petitioner is that the arbitrators had no jurisdiction to award Rs. 8000 to be set aside for the marriage expenses of the daughters of the two branches. Mr. Daphtary, who appears for the respondents, has agreed that out of the paragraph marked “(1)” the following portion from the commencement may be omitted viz.; All the three brothers have got in all four unmarried daughters, 1. Miss Prabhavati…. The amount should be made available at the marriage time and the guardians should make the expenditure and use (of the amount) according to their wishes.

5. I make the order accordingly. There will, therefore, be a consequential amendment in Sch. & in col. 2 which deals with the amount set apart for defraying joint family expenses. The item relating to Rs. 8000 for marriage expenses of the daughters should be deleted from there. The result of this alteration is that this amount, which is left undisposed of, will be covered by the last part of the award which deals with the balance after making the expenses directed to be made and directs the same to be divided between the parties as mentioned therein. This, in my opinion, is quite fair because normally each branch of the joint family must bear the expenses of the unmarried daughters of that branch after partition. Having regard to this agreement, I do not propose to deal with this objection, as it is unnecessary to do so. The third objection is in respect of the meeting held by the arbitrators on 7th March, 1941. At that meeting two arbitrators were absent. All the parties were present. Two decisions were taken at the meeting which are recorded in the notes of the arbitrators and which are not disputed. The first was that the valuation report submitted by Mr. Gupte was gone through and the first choice was decided to be given to the petitioner to select one of the three divisions made by the architect. Obviously, this is a decision in favour of the petitioner as it gives her the first selection out of the three divisions made by the architect. The second decision runs as follows:

Relating to property at Library Road if one of the brothers is willing to retain the same for the price fixed by the architect the preference should be given to him; if not the same should be sold for Rs. 20,000 nett without any expenses, i.e, the purchaser should bear all the costs.

6. At this meeting the petitioner asked for the plan to be shown to her pleader and that plan was signed by all the three parties. The next meeting of the arbitrators was held on 16th March when all the arbitrators were present. The notes of that meeting show that, as decided on the previous day, the petitioner was given the first choice and she selected the portion marked C—C. 1 on the plan. The respondents were next asked to select and they made their selections out of the other two divisions. The next paragraph of the notes runs as follows:

Mr. S.M Patel when asked if he is prepared to retain the property at Dadar Library Boad for Rs. 18,000 the price fixed by the engineer said he required four days to consider the proposal which was granted.

7. In my opinion this argument of the petitioner must also fail. It is not alleged in the petition that the offer made to Mr. S.M Patel was unjust or unfair. Although the two arbitrators were absent on the day it was decided to make the offer to either of the brothers, if he was so minded to take it, the actual offer was made by all the arbitrators on 16th March when all the parties were present and it was made to respondent 1 only. The decision of the arbitrators, therefore, is contained in the notes of 16th March, viz., offer to respondent 1. At that time, all the parties were present and the decision to make the offer was also of all the arbitrators. Respondent 1 asked for time and that application was also considered and granted by all the arbitrators. The argument of the petitioner is that all the arbitrators had not applied their mind to let one of the brothers purchase the property at the valuation fixed by the architect. In my opinion, to support this argument the evidence is completely lacking, if it is not the other way. The report of the engineer was before the arbitrators on 7th March as also on 16th March. On the 16th all the arbitrators called upon the petitioner, acting on the report of the engineer, to make a selection out of the plots marked on the plan. In the same way all the arbitrators, being aware of the report of the engineer, made an offer for the first time to respondent 1 to purchase the property at Rs. 18,000, which amount was mentioned in the report to their knowledge. I do not think in this case the absence of the two arbitrators has caused any injustice. I do not think that they arrived at any decision which was acted upon by the others. On the plain reading of the notes, the decision was made by all the arbitrators on 16th March. It is significant that while in respect of the offer made to the petitioner to select one of the divisions the paragraph starts “As decided in the last meeting….” no such reference is made in respect of the offer made to respondent 1 and which offer is contained in a separate and distinct paragraph.

8. Moreover, if there was any slight irregularity, it is clear that no objection was taken to that by the petitioner. The actual acceptance of the offer (although it is not clear from the notes on what date) was certainly made later on and at which meeting all the arbitrators were present. The petitioner strongly relied on 44 Bom. L.R 4851. In that case disputes between the parties arising under a contract made under the rules of the East India Cotton Association, Ltd., were referred to arbitration. After the award was made an appeal was filed under the rules and nine directors formed the Appeal Committee. One of them left during the course of the hearing and the award was signed only by eight directors. Under the rules six directors could constitute a quorum to do any business. It was argued that as the award was made by more than six directors it was valid. That argument was rejected. The decision is that nine persons having constituted themselves the Appeal Committee and heard the appeal, the decision of eight was not decision of the Appeal Committee. I do not see how that decision helps the petitioner in this case. The award here is of all the arbitrators. Moreover, as pointed out in that case, if the party acquiesces in an irregularity, the same cannot be relied upon as a ground to set aside the award. In the course of his judgment Beaumont C.J observed as follows (page 493):

In the absence of consent, I think, the true rule is that the tribunal, which has commenced the appeal, must continue, and if any member is obliged to withdraw, and the parties are not willing to go on before the remaining members, then a fresh board most be constituted.

9. In (1844) 6 Q.B 6372 Lord Denman C.J in considering the question of irregularity observed as follows (p. 648):

It is suggested that the complaining parties waived their right to object by not protesting before the award was made. Where an irregularity takes place at a meeting of all the parties, and is passed over, that observation may apply. But, where a party wishing to be present has been excluded from the meeting, the opportunity of setting right what was irregular is past. The mischief was done at the time, and cannot be removed.

10. While, therefore, the general rule is that the meetings of the arbitrators must be attended by all the arbitrators and the decision arrived at must be the decision of all, it is clear that if some formal decision was made (as noted in this case, in the notes of 7th March), the irregularity may be waived. In particular on the evidence in this case I hold that it was waived by the petitioner by the proceedings which took place before all the members and in the presence of all the parties at the meeting held on 16th March and the subsequent meetings. In my opinion, therefore, the petitioner fails, and subject to the modification mentioned in the judgment in respect of the sum of Us. 8000, the petition is dismissed. Under the circumstances of this case I do not think it will be right to order the petitioner to pay the costs.

11. Her grievance in respect of Rs. 8000 in any event has been remedied as a result of this petition. I, therefore, direct that Rs. 650 being the fixed costs of the petitioner and Rs. 400 being the fixed costs of the respondents be paid out of the sum of Rs. 8000 directed to be set apart in the original award for the marriage expenses of the unmarried daughters. The balance of that sum should be treated as forming part of the amount directed to be disposed of by the last part of the award.

12. Petition dismissed.