Case: Gobardhan Das Vs. Lachhmi Ram &amp; Others

authority and their award cannot be allowed to stand. It cannot be doubted that the dispute between the parties related to the question whether on taking accounts between the parties the respondents 1 and 2 were liable to pay any amount to the appellant. It must be borne in mind that the appellant was claiming against the respondents 1 and 2 a sum of Rs. 35,000 on the basis of bahi khata accounts. The arbitrators were appointed to adjudicate this dispute and to decide whether the respondents 1 and 2 were liable to the appellant for any amount and if so what?The agreement recites that the dispute is of long standing and the parties being anxious to avoid loss by recourse to litigation consider it desirable to have the dispute decided by the arbitrators. The original agreement which is in Hindi uses the words "Jo kuchh tai tasfiya faisala karenge Fricain ko qabul o manzur hoga. It goes on to say"that the arbitrators should sit together, take down the statements of the parties, hear and consider the arguments brought forward by the parties, inspect the documents of all descriptions and take other evidence and evidence of witnesses and whatever award they shall give, is and shall be, acceptable to the parties and whatever award the arbitrators may give unanimously or by majority of votes shall be treated as true and correct and valid in every court and shall be binding upon all of us executants parties".Reuben J., who wrote the judgment with which Sinha J. agreed, construed the words "Tai tasfiya and faisaals" as meaning that the intention of parties was to give the arbitrators power to make concessions where such concessions appeared to them to be fair.7. Mr. Isaacs, the learned counsel for the appellant, has not questioned the motives or bona fides of the arbitrators and has confined his arguments to the question that the arbitrators were appointed to settle and decide the dispute about the liability of respondents 1 and 2 to the appellant in a proper and judicial manner but instead of doing so they granted partial exemption from liability to respondent 1 and total exemption to respondent 2 on extraneous considerations with the result that they exceeded the scope of their authority and their award was liable to be set aside. As already stated the appellant was to contribute the entire capital in the business while respondents 1 and 2 were to contribute only their labour and skill. The former was to get eight annas share in the profits while the latter were given four annas each. The award shows that both the respondents were found liable upon the bahi khata account but the exact amount was not determined and though Rs. 3,500 out of a larger sum found due were awarded against respondent 1, the liability of respondent 2 was remitted in toto. It is obvious that the arbitrators in not finding a specific sum to be due from respondents 1 and 2 to the appellant failed to decide the dispute as contemplate by the agreement to refer to arbitration. On the other hand they went out of their way to declare that whatever amount in addition to Rs. 3,500 was found due from respondent 1 upon the bahi khata account was remitted having regard to his labour and poverty and the whole unspecified amount found due against respondent 2 upon the same bahi khata account was remitted in full in view of "his labour and poverty".It is contended on behalf of the respondents that the word remitted should be read in the sense of rejected, and that the amount so rejected should be taken to represent the amount which was due to fair remuneration for labour to the two respondents. This contention has no force. The respondents were to get profits in lieu of the labour and skill contributed by them and there can, therefore, be no question of any separate remuneration to be granted to them for labour and skill. The contention is also inconsistent with the suggestion that the claim was rejected on the ground of poverty. Either the claim was due or it was not; if it was, then the arbitrators had no power to reject it on the ground that the respondents were too poor to pay it. If it was not due, then the ground of poverty had no bearing upon it. It seems to us that the arbitrators negatived the appellants claim against the respondents on the extraneous ground that they had contributed labour and were men in poor circumstances as against the appellant who was alleged to be a rich man. The award thus arrived at was anything but a settlement of the dispute which had arisen between the parties and which had necessitate the reference to arbitration.We are in agreement with the High Court that the agreement for reference to arbitration should be liberally construed by the court so as to lean in favour of upholding the award given by arbitrators, but that is no ground for sustaining the award where the arbitrators have clearly misdirected themselves and have exceeded the scope of their authority. The words in the agreement "Jo kuchh tai tasfiya faissala karenge Ham ko Kabool-o-manzoor hoga" on a proper interpretation were obviously intended to mean that the arbitrators were to put an end to the dispute by deciding the question of liability once for all and the parties were to abide by their decision but that cannot lead to the inference that the arbitrators were to travel outside the powers conferred upon them by the reference and were to decide the dispute on considerations wholly extraneous to it. So long as the arbitrators Act within the scope of their authority there can be no doubt that their decision must be accepted as valid and binding. In the present case however we are of opinion that the arbitrators acted in excess of their authority and the award must therefore be set aside.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]5. A preliminary objection has been taken on behalf of the respondents that the order was one of affirmance and no leave should have been granted unless the High Court certified that the appeal involves some substantial question oflaw. It may be pointed out that so far as the dismissal of the appeal against the order refusing to set aside the ex parte order is concerned, the matter is closed and no application was filed by the appellant to reopen the matter by way of any application for leave to appeal to thisis no dispute about the valuation and though the order does not in terms mention that the case involves a substantial question of law, we are of opinion that the certificate was granted on that ground. There is no defect in the certificate and the preliminary objection iss contended on behalf of the respondents that the word remitted should be read in the sense of rejected, and that the amount so rejected should be taken to represent the amount which was due to fair remuneration for labour to the two respondents.This contention has no force. The respondents were to get profits in lieu of the labour and skill contributed by them and there can, therefore, be no question of any separate remuneration to be granted to them for labour and skill. The contention is also inconsistent with the suggestion that the claim was rejected on the ground of poverty. Either the claim was due or it was not; if it was, then the arbitrators had no power to reject it on the ground that the respondents were too poor to pay it. If it was not due, then the ground of poverty had no bearing upon it. It seems to us that the arbitrators negatived the appellants claim against the respondents on the extraneous ground that they had contributed labour and were men in poor circumstances as against the appellant who was alleged to be a rich man. The award thus arrived at was anything but a settlement of the dispute which had arisen between the parties and which had necessitate the reference to arbitration.We are in agreement with the High Court that the agreement for reference to arbitration should be liberally construed by the court so as to lean in favour of upholding the award given by arbitrators, but that is no ground for sustaining the award where the arbitrators have clearly misdirected themselves and have exceeded the scope of their authority. The words in the agreement "Jo kuchh tai tasfiya faissala karenge Ham kohoga" on a proper interpretation were obviously intended to mean that the arbitrators were to put an end to the dispute by deciding the question of liability once for all and the parties were to abide by their decision but that cannot lead to the inference that the arbitrators were to travel outside the powers conferred upon them by the reference and were to decide the dispute on considerations wholly extraneous to it. So long as the arbitrators Act within the scope of their authority there can be no doubt that their decision must be accepted as valid and binding. In the present case however we are of opinion that the arbitrators acted in excess of their authority and the award must therefore be set aside.