Appeal No 135 of 1972
Appeal by Special Leave from the Judgment and Order dated 12 8 71 of the Delhi High Court in FAO No 47 D of 1964
Gobind Das and Girish Chandra for the Appellant
Bakshi Shiv Charan Singh and Harbans Singh for the Respondents
The Judgment of the Court was delivered by BHAGWATI J
 This appeal by special leave is direct ed against a judgment of the High Court of Delhi setting aside an award made by an arbitrator on the ground that he was not a validly appointed arbitrator and hence had no jurisdiction to arbitrate and make an award
The facts giving rise to the appeal are few and may be briefly stated as follows
The respondents a partnership firm entered into a contract with the appellant for the supply of 30000 tons of East German sugar at the rate and as the terms and condi tions set out in a letter dated 3rd July 1954 addressed by the Secretary to the Government of India in the Ministry of Food  Agriculture to the respondents
The Ministry of Food and Agriculture was concerned with the subject matter of this contract and hence clause 9 provided that superin tendence and inspection of quality weight and packing of sugar Shall be made by a reputable superintending agency to be approved by the Government of India in the Ministry of Food  Agriculture and clause 10 stipulated for delivery to be made to authorities or parties nominated by the Ministry of Food and Agriculture
There was provision for arbitration made in clause 17 and that clause also re ferred to the Ministry of Food and Agriculture
It was in the following terms ARBITRATION All questions disputes or differences whatsoever which may at any time arise between the parties to the agreement touching the agreement or the subject matter thereof arising out of or in relation thereto and whether as to construction or otherwise shall be referred to a single arbitrator for decision
Such a single arbitrator shall be nominated by the Secretary to the Government of India in the Ministry of Food and Agriculture in his absolute discretion and the decision of such arbitrator shall be final and binding upon the parties
The reference to the arbitrator shall be governed by the provisions of the Indian as amended from time to time and the rules made thereunder
 It appears that disputes arose between the appellant and
the respondents in regard to the fulfilment of this con tract
The appellant made a claim for payment of Rs 329107 8 0 against the respondents by a letter dated 11th August 1956 and threatened to recover it from the security furnished by the respondents through their bankers
The respondents disputed the claim of the appellant and by their letter dated 23rd August 1956 pointed out that it was not competent to the appellant to recover the amount of the demand from the bankers of the 485 respondents without first
establishing its claim by arbi tration or suit
The respondents intimated to the appellant that they were prepared to go to arbitration and
suggested that it would be better still if a special case for the opinion of the court were stated under section 90 of the Code of Civil Procedure
The respondents also claimed to recover from the appellant under the contract diverse amounts aggregating to Rs 605689
There was no response to this letter from the appellant and no steps were taken by the appellant to have the disputes referred to an arbitrator nominated by the Secretary in the Ministry of Food and Agriculture as provided in clause 17 of the Contract
In the meantime as a result of an order made by the President under clause 3 of Article 77 of the Constitution the Ministry of Food and Agriculture was bifurcated into two separate Ministries one of Food and the other of Agricul ture with effect from 19th October 1956 and sugar the subject matter of the contract came to be allotted to the Ministry of Food
The respondents by their letter dated 9th November 1956 pointed out to the Secretary Ministry of Food that by reason of this bifurcation the Ministry of Food and Agriculture has ceased to exist and there was no Secretary in the Ministry of Food and Agriculture and the arbitration agreement contained in clause 17 of the con tract had therefore become a dead letter and was no longer enforceable and once again called upon the appellant to agree in stating a special case for the opinion of the court failing which the respondents would have to file a suit against the appellant
This letter also did not evoke any response from the appellant and the disputes remained unre solved
On 13thl4th February 1956 the appellant addressed a letter to the respondents stating that since the Ministry of Food and Agriculture was bifurcated into Ministry of Food and Ministry of Agriculture it was necessary to amend clause 17 of the Contract so as to provide for arbitration by the Secretary to the Ministry Government of India administratively dealing with the subject of contract at the time of reference to arbitration or if there is no Secre tary the administrative head of such Ministry at the time of such reference and proposed an amendment to that effect for the acceptance of the respondents
The respondents by their letter in reply dated 26th February 1957 declined to accept the proposal for amendment of clause 17 of the contract and once again reiterated that the arbitration agreement contained in that clause was dead and unenforce able
However within a short time thereafter another order was issued by the President under clause 3 of Arti cle 77 of the Constitution integrating the Ministry of Food and the Ministry of Agriculture into one single Ministry of Food and Agriculture with effect from 23rd April 1957
This Ministry of Food and Agriculture had two departments one of Food and the other of Agriculture and there was a Secretary incharge each department
It seems that the appellant requested the Secretary Department of Food in the Ministry of Food and Agriculture to nominate an arbitration for adjudicating upon the disputes which had arisen between the appellant and the respondents in terms of clause 17 the Contract and the Secretary Department of Food in the Ministry of Food and Agriculture by a letter dated 27th February 1958 nominated Shri AV Vishwanath Shastri Advocate to act as sole arbitrator to 486 adjudicate upon such disputes
On the same day the re spondents served a notice on the appellant under section 80 of the Code of Civil Procedure demanding payment of the amounts due to the respondents and stating that in case the appellant failed to meet these demands the respondents would have to file a suit against the appellant
Though respondents gave this notice under section 80 of the Code of Civil Procedure they did not proceed to file a suit but instead filed their statement of claim before the arbitrator and in the statement they claimed payment of an aggregate sum of Rs 789858 from the appellant and also prayed for a declaration that the contract stood final and properly performed by the respondents
The appellant filed its reply disputing the claim of the respondents
The appellant also field a statement making its own claim for Rs 329107 8 0 against the respondents
It was stated in paragraph 18 of the statement of claim of the appellant that under Clause 17 of the contract the Secretary Food and Agriculture Ministry of the Government in his discretion has the right to nominate a sole Arbitrator and refer the dis pute to the Arbitrator and that has been duly done on 27th February1958 and the parties have been duly notified under Secretary to the Government letter No SIMP 34C dated the 27th February 1958
The respondents filed their written statement denying the claim of the appellant and in para graph 18 of this written statement they averted That para 18 of the Statement of Claim of the Government of India is not objected to
The proceedings in connection with the claim of the respondents and the counter claim of the appel lant were carried on before the arbitrator and the respond ents participated in the arbitration proceedings without objection or protest against the jurisdiction of the arbi trator
The arbitrator ultimately made an award against the respondents
The appellant made an application before the Sub Judge Delhi to pass a decree in terms of the award
The respond ents resisted the application of the appellant and sought to set aside the award mainly on two grounds
One ground was that Daljeet Singh a partner of the respondents had no power to bind the other partners by an arbitration agreement and hence clause 17 of the contract was not binding on the respondents and the other was that the arbitrator was not validly appointed and he had therefore no jurisdiction to enter upon the reference and adjudicate upon the disputes between the parties
Both these grounds were rejected by the learned Sub Judge and the award was made a rule of the court
The respondents thereupon preferred an appeal to the High Court
The same two grounds were also urged in the appeal
Out of them the first ground relating to lack of authority in Daljeet Singh to bind the respondents by clause 17 of the contract Was negatived by the High Court and it was held that clause being an integral part of the contract the authority of Daljeet Singh to enter into the contract on behalf of the respondents extended also to clause 17 of the contract and in any event the conduct of all the partners showed that Daljeet Singh had authority on behalf of the other partners to enter into the arbitration agreement contained in clause 17 of the contract
The second ground however found favour with the High Court which held that in view of the bifurcation of the Ministry of Food and Agriculture into two separate Ministries 487 one of Food and the other of Agriculture by the Presiden tial Order which came into effect from 19th October 1956 the arbitration agreement in clause17 of the contract became dead and unenforceable and nothing that happened thereafter could revive it and in any event even after reintegration of the Ministry of Food and Agriculture into one single Ministry of Food and Agriculture the arbitra tion agreement could not be given effect to since there were then two Secretaries in the Ministry of Food and Agriculture and clause 17 of the contract did not indicate as to which Secretary was to exercise the power of nomi nating the arbitrator with the result that the arbitration agreement suffered from the fault of vagueness and uncer tainty
The High Court accordingly allowed the appeal and set aside the award made by the Arbitrator
Hence the present appeal by the appellant with special leave obtained from this Court
The only question debated before us in this appeal was as to whether the appointment of the arbitrator by the Secretary Department of Food in the Ministry of Food  Agriculture was a valid appointment
Obviously if the appointment was invalid the arbitrator would have no juris diction to arbitrate upon the disputes between the parties and the award would be invalid
But an alternative argument was also advanced on behalf of the appellant to sustain the award and it was that the respondents not having raised any objection to the appointment of the arbitrator and participated in the arbitration proceedings without any demur or protest it was not open to them after the award was made to challenge it on the ground of invalidity of appointment of the arbitrator
The respondents having taken the chance of obtaining the award in their favour could not denounce the award when it went against them
We will first examine whether the appointment of the arbitrator was valid for if it was the second question which raises the issue of waiver would not arise
Now clause 17 of the contract provided that all disputes arising out of the contract shall be resolved by arbitration
It embodied an arbitration agreement between the parties
It also laid down the machinery for appoint ment of the arbitrator
It provided that the arbitrator shall be nominated by the Secretary in the Ministry of Food  Agriculture in his absolute discretion
There was un doubtedly a Ministry of Food  Agriculture at the time when the contract was made and there was one and only one Secre tary in that Ministry so that at the date of the contract there could be no question as to who was the person autho rised to nominate the arbitrator The same position contin ued to obtain also at the time when disputes arose between the parties
But before an arbitrator could be nominated by the Secretary in the Ministry of Food  Agriculture to adjudicate upon these disputes the Ministry of Food  Agriculture was bifurcated into two separate Ministries and it ceased to exist as Ministry of Food  Agriculture
Then obviously there was no individual who fiIIed the description of Secretary in the Ministry of Food  Agriculture and consequently the machinery for appointment of the arbitrator became unworkable
If the matter had rested there a ques tion could well have arisen whether despite the break down of the machinery for nomination of an arbitrator the arbi tration agreement in clause 17 15 1104SCI76 488 could still be enforced by the Court by appointing an arbi trator in a proceeding under section 20 of the 
But the position again changed and the Ministry of Food  Agriculture came into being as a result of integra tion of the Ministry of Food and the Ministry of Agricul ture with this change namely that the new Ministry of Food  Agriculture had two departments one of Food and the other of Agriculture and there was a Secretary incharge of each department
There were thus after integration two Secretaries in the Ministry of Food  Agriculture and the argument of the respondents was and that argument found favour with the High Court that this event rendered the arbitration agreement vague and uncertain inasmuch as it did not specify which of the two Secretaries was to nominate the arbitrator in his absolute discretion
Though this argument appears attractive at first sight a little scruti ny will reveal that it is unsound
It is based on a highly technical and doctrinaire approach and is opposed to plain commonsense
it must be remembered that a contract is a commercial document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it
It would not be right while inter preting a contract entered into between two lay parties to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents
The meaning of such a contract must be gathered by adopting a commensense approach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation
Here at the time when the arbitrator came to be nominated and the reference was made there was a Ministry of Food  Agriculture and there was a Secretary in that Ministry but the only difficulty according to the High Court was that there were
instead of one two Secretaries and it could not be predicated as to which Secretary was intended to exercise the power of nominating an arbitrator
We do not think this difficulty is at all real
Let us consider for a moment why in clause 17 the power to nominate an arbitrator was conferred on the Secretary in the Ministry of Food  Agri culture and not on a Secretary in any other Ministry
The reason obviously was that at the date of the contract the Secretary in the Ministry of Food  Agriculture was the Officer dealing with the subject matter of the contract
If this object and reason of the provision of clause 17 is kept in mind it will become immediately clear that the Secretary in the Ministry of Food  Agricultureauthorised to nominate an arbitrator was the Secretary incharge of the Department of Food who was concerned with the subject matter of the contract
The Secretary incharge of the Department of Food filled the description Secretary in the Ministry of Food  Agriculture yen in clause 17
The respondents relied strongly on the use of the definite article the  before the words Secretary in the Ministry of Food  Agri culture and urged that what the parties to the contract had in mind was not a Secretary in the Ministry of Food  Agri culture but the Secretary in the Ministry of Food  Agri culture and that clearly postulated one definite Secretary in the Ministry of Food  Agriculture and not one of two Secretaries in that Ministry
This is in our opinion a hyper technical argument which seeks to make a 489 fortress out of the dictionary and ignores the plain intend ment of the contract
We fail to see why the Secretary in the Ministry of Food  Agriculture incharge of the Depart ment of Food could not be described as the Secretary
He would be the Secretary in the Ministry of Food  Agriculture concerned with the subject matter of the contract and dearly and indubitably he would be the person intended by the parties to exercise the power of nominating the arbitra tor
The parties to the contract obviously could not be expected to use the words a Secretary in the Ministry of Food  Agriculture because their intendment was not that any Secretary in the Ministry of Food  Agriculture should be entitled to exercise the power of nominating an arbitra tor but it should only be the Secretary in the Ministry of Food  Agriculture concerned with the subject matter of the contract
That is why the use of the definite article the 
It is also significant to note that when the Secre tary in charge of the Department of Food in the Ministry of Food  Agriculture nominated the arbitrator the respondents did not raise any objection to the appointment of the arbi trator and participated in the arbitration proceedings without any protest
The respondents knew at that time that there were two Secretaries in the Ministry of Food and Agriculture and the appointment of the arbitrator was
made by the Secretary in charge of the Department of Food and yet they acquiesced in the appointment of the arbitrator and took part in the proceedings
This circumstance is also clearly indicative of the intendment of the parties that the Secretary in the Ministry of Food  Agriculture concerned with the subject matter of the contract should be the person entitled to nominate the arbitrator
Or else the respondents would have objected to the appointment of the arbitrator and declined to participate in the arbitration proceedings or at any rate participated under protest
We are therefore of the view that the arbitrator was validly nominated by the Secretary in charge of the Department of Food in the Minis try of Food  Agriculture
This view renders it unnecessary for us to consider whether by participating in the proceedings before the arbitrator without objection or protest and taking the chance of obtaining an award in their favour the respond ents could be said to have waived the defect in the appointment of the arbitrator
We accordingly allow the appeal set aside the order of the High Court and while dismissing the application for setting aside the award pass a decree in terms of the award
Having regard to the peculiar facts and circum stances of the case we make no order as to costs through out


Summary:
The respondent partnership firm entered into contract with the appellant for the supply of East German sugar
Provision for arbitration was made in clause 17 of the contract and the arbitrator was to be nominated by the Secretary in the Ministry of Food  Agriculture
In the present dispute before an arbitrator was nominated the Ministry of Food  Agriculture was bifurcated into two separate Ministries and the subject matter of the contract was allotted to the Ministry of Food
The respondents took the stand that there was no longer any Secretary in the non existent Ministry of Food and Agriculture and clause 17 of the contract was a dead letter
The appellant s proposal to amend clause 17 to suit the changed circum stances was rejected by the respondents
Thereafter the two Ministries were reintegrated into a Ministry of Food  Agriculture and two Secretaries were put incharge of the two departments
The Secretary Food Department on a request from the appellant under clause 17 appointed an arbitra tor
The respondents served on the appellant a notice under CPC Sec 80 but instead of proceeding to sue the appel lants they submitted to the jurisdiction of the Arbitrator without protest until award was made The appellant s appli cation to the Sub Judge Delhi for passing a decree in terms of the award was resisted by the respondents who sought to set aside the award challenging the validity of the Arbitrator s appointment and contending that the arbi tration agreement under clause 17 was made by only one of the partners and was not binding on the others
The Sub Judge rejected their objections and made the award a rule of the court
An appeal to the High Court was allowed on the ground that on bifurcation of the Ministries clause 17 of the contract became dead and could not be revived on their re integration
Allowing the appeal the Court HELD There were after integration two Secretaries in the Ministry of Food  Agriculture but the argument that this event rendered the arbitration agreement vague and uncertain is based on a highly technical and doctrinaire approach and is opposed to
plain common sense
A contract is a commercial document between the parties and must be interpreted in such a manner as to give it efficacy rather than to invalidate it
It would not be right while inter preting a contract entered into between two lay parties to apply strict rules of construction which are ordinarily applicable to formal documents
The meaning of such a contract must be gathered by adopting a common sense ap proach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation
The Secretary in the Ministry of Food and Agriculture in charge of the De partment of Food would be the Secretary in the Ministry of Food and Agriculture concerned with the subject matter of the contract and under clause 17 he would be the person intended by the parties to exercise the power of nominating the arbitrator
Furthermore the respondents did not raise any objection to the appointment of the arbitrator and participated in the arbitration proceedings without protest indicating the clear intendment of the parties that the Secretary in the Ministry of Food  Agriculture concerned with the subject matter of the contract should be the person entitled to nominate the arbitrator
488 B E 489 A E 484