Case: Juggilal Kamlapat Vs. General Fibre Dealers Ltd (And Connected Appeal)

It will be convenient to set out the facts of appeal 309 and deal with them in connection with the point raised on behalf of the appellant. These facts are that a contract was entered into between the parties for supply of cornsacks on August 29, 1951. The contract contained an arbitration clause in the following terms :"All matters, questions, disiputes, difference and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligation of either or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted."Disputes arose with respect to carrying out of the contract and on October 25, 1951 the respondent referred these disputes to the arbitration of the Bengal Chamber of Commerce (hereinafter referred to as the Chamber). That case was numbered 217-G of 1951 in the Chambers records. On April 17, 1952, the Tribunal of Arbitration made an award disallowing the claim of the respondent. This award was filed in the High Court. On May 25, 1953, the award was set aside on the ground of misconduct on the part of the arbitrators by a learned Single Judge. That order was taken in appeal and on July 8, 1954, the appeal was dismissed. Later, leave to appeal to this Court was refused and thus the order of the learned single Judge setting aside the award finally stood2. Soon after the award had been set aside by the learned Single Judge, the respondent addressed a letter to the Chamber on September 7,1953. It was said in this letter that as the award in case No. 217-G of 1951 had been set aside by the High Court, the respondent begged to refer the matter for arbitration de novo and enclosed its statement of the case. Thereupon another tribunal was constituted under the rules of the Chamber to decide the dispute afresh. The appellant appeared before the tribunal and contended that it had no jurisdiction to make an award on a second reference in the same dispute. The tribunal, however, proceeded to decide the reference and made the award on March 15, 1955. This time the award was in favour of the respondent. Thereupon on August 4, 1955, the appellant made an application to the High Court praying that the award be set aside. In the alternative, the appellant prayed that the award be declared null and void and the arbitration agreement between the parties be superseded on the ground that the second reference was incompetent,3. The application was opposed by the respondent and its contention was that this was not a second reference, and what the respondent wanted was that the Chamber should in the event that had happened take up the dispute again and make a proper award. Reliance in support of the plea that such a course was permissible was placed on behalf of the respondent on the decision of the Calcutta High Court in Barangore Jute Factory Co. Ltd. v. M/s. Hulaschand Rupchand, 62 Cal W N 754 : (AIR 1958 Cal .490)4. The learned Single Judge relied on the decision in 62 Cal W N 734 : (AIR 1958 Cal 490  ) and held that from what the respondent said to the Chamber in its letter of September 7, 1953 it was reasonably clear that all that it wanted was that the Chamber should in the event that had happened take up the dispute again and make a proper award. It could not therefore be held because of some language used in the letter that the respondent was making a fresh reference, Consequently, it was held that the Chamber had jurisdiction to decide the dispute after the earlier award had been set aside and what the respondent had asked for was for the continuance of the original reference, which had not been superseded. The learned Single Judge then went into the question whether there was such misconduct as would justify setting aside the award and held that there were no grounds made out which would justify the setting aside of the award, Consequently, the application for setting aside the award was dismissed. Thereafter the appellant came to this Court for special leave, which was granted; and that is how the matter has come up, before us.

Reasoning:
8. It is clear from S. 19 that there are three matters which have to be borne in mind in arbitration proceedings. In such a case there can in our opinion be no doubt that where the reference and the arbitration agreement survive the same dispute may go before the arbitrators again provided there is machinery provided in the arbitration agreement which makes this possible. It will thus be seen that the discretion vested in the Court under S. 19 depends upon the nature of the arbitration agreement in particular cases and it is on a consideration of those terms that the Court may decide in one case to supersede the reference and order the arbitration agreement to cease to have effect after taking into account the reasons which have impelled it to set aside the award and in another not to set aside the reference with the result that the reference and the arbitration agreement subsist ; and if the arbitration agreement provides for machinery to have further arbitration on the same dispute or other disputes arising under the arbitration agreement it is permissible to have further arbitration on the same dispute or other disputes. The same discretion is given to the Court with respect to arbitration under Chap. III of the Act dealing with "arbitration with intervention of a Court where there is no suit pending," as S. 20 (5) provides that after the arbitration agreement has been ordered to be filed, the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of the Act so far as they can be made applicable. Further we find that the same discretion has been given to the Court in the matter of arbitration in suits provided under Chap. IV, as S. 25 provides that "the provisions of the other chapters shall, so far as they can be made applicable, apply to arbitration under this Chapter." The proviso to S. 25 gives discretion to the court in any of the circumstances mentioned in Ss. 8, 10, 11 and 12, instead of filling up the vacancies or making the appointments, to make an order superseding the arbitration and proceed with the suit, and where the court supersedes the arbitration under S. 19 it shall proceed with the suit9. We have already said that generally speaking, the arbitrator becomes functus officio after he has given the award; but that does not in out opinion mean that in no circumstances can there be further arbitration proceedings where an award is set aside or that the same arbitrator can never have anything to do with the award with respect to the same dispute. Section 13 (d), for example, gives power to the arbitrator to correct in an award any clerical mistake or error arising from any accidental slip or omission. Further S. 16 gives power to the court to remit the award to the arbitrator for reconsideration. Therefore, when it is said that the arbitrator is generally functus officio after he has made the award, it only means that he cannot change that award in any matter of substance himself. But that does not take away the courts power to remit the award for reconsideration under S. 16 or to refuse to supersede the reference even though the award is set aside leaving it to the parties to take such further action under the arbitration agreement for further arbitration if it is possible so to do under the terms of a particular arbitration agreement. We are therefore of opinion that whatever may be the position in the absence of a provision similar to S. 19 of the Act there can be no doubt that S. 19 gives power to the court not to supersede the reference and so leave the arbitration agreement effective even when it sets aside the award and thereupon it will depend upon the terms of the arbitration agreement whether arbitration proceedings can go on with respect to the same dispute or with respect to some other disputes arising under the arbitration agreementWe think that this view is correct10. It is not in dispute that the reference was not superseded in this case when the award was set aside in May 1953. It will therefore depend upon the terms of the arbitration agreement in this case whether it was possible to have further arbitration with respect to the same dispute. We have already set out the term in the contract relating to arbitration and it is clear that that term is very wide in its amplitude and contemplates reference of disputes as and when they arise between the parties to the Chamber. Further as the Chamber is constituted the arbitrator in this term of the contract and as the Chamber consists of a large number of members and has its own rules for constituting arbitral tribunals, it is in our opinion quite possible on the terms of such an arbitration agreement to constitute another tribunal to decide the same dispute where the reference remains pending and has not been set aside under S. 19, provided there is machinery for appointing different persons as arbitrators under the rules of the ChamberThose words do not in our opinion show that a second reference was being made of the dispute. The letter begins by saying that the Chamber was aware that the previous award had been set aside. It was in those circumstances that the respondent told the Chamber that it begged to refer the matter for arbitration de novo. In the context this can only mean that the respondent was asking the Chamber to take up the reference again as the reference had not been superseded and arrange to continue the arbitration proceedings further. The only question therefore that will arise is whether under the rules of the Chamber it was possible to constitute another tribunal to consider this dispute again. If that is possible, we fail to see why the arbitration proceedings should not go on further as the reference was not superseded in this case, and the arbitration agreement subsistedIf this contention is justified it will certainly not be possible to appoint another arbitral tribunal to decide the reference after the award made on it by the earlier tribunal is set aside.It appears that no reliance was placed on R. 5 in the High Court; reliance however was placed on Rr. 7 and 10 in the High Court. The High Court held that R. 7 justified the appointment of the tribunal in the present case, though it was of the view that R. 10 would not justify it.We are of opinion that this contention is not well founded. Rule 5 (2) applies to the first appointment after the receipt of the application and that appointment was made in this case and the award of the tribunal appointed under R. 5 (2) was set aside. Rule 5 (2) does not in our opinion contemplate a second appointment after the award of the Court appointed under it on receipt of the application has been set aside. The respondent cannot sustain the appointment of a fresh tribunal under R. 5 (2)Rule 25 makes provision that the award shall be made within four months or within such extended time as may be agreed to between the parties to the reference.Rule VII obviously refers to a case where the time or the extended time allowed to the tribunal has been allowed to expire; it cannot refer to a case where the tribunal has made the award within the time fixed but later that award is set aside by Court. It would in our opinion be stretching the language of R. VII too far to make it applicable to a case like the present. We cannot, therefore, agree with the High Court that R. VII justified the appointment of a fresh tribunal in the present caseWe are of opinion that it was open to the Registrar under this rule to appoint a fresh tribunal because the earlier tribunal had become incapable of acting in view of the fact that its award had been set aside on the ground of misconductWe are however of opinion that these words cannot take their colour from the word "dies" and are a separate category by themselves and must be interpreted on their own. Now there is no doubt that generally speaking an arbitrator may become incapable of acting because of some physical cause, for example, he may fall ill or may go mad and so on. But we do not think that these words only refer to physical incapacity ; in our opinion, they refer to any kind of incapacity, which may supervene after the appointment of the arbitrators, even to an incapacity from before but which was not known to the parties, or in this case to the Chamber, before they are appointed.Clearly, therefore, the words "becomes incapable of acting", do not merely refer to physical incapacity but to any kind of incapacity which arises after the appointment or which was there before the appointment but was not known to the parties, or to the Chamber in this case. Take for example, the case of persons appointed by the Chamber to decide a dispute; after the appointment, one arbitrator acquires an interest in the subject matter of the dispute. Obviously such a person must be held to have become incapable of acting even though there is no question of any physical incapacity on his part. We are, therefore, of opinion that the words "becomes incapable of acting" in R. X are of wide amplitude and do not refer to cases only of physical incapacity but to any kind of incapacity arising after the appointment or even before the appointment provided it was not known to the parties, or to the Chamber in the present case. We cannot, therefore, agree with the High Court that R. X will not apply to the present case15. What has happened in this case is that the previous tribunal made an award. That award has been set aside on account of misconduct. In the circumstances we are of opinion that the previous tribunal has become incapable of acting as arbitrator to decide this dispute because of its misconduct. Further as the reference has not been superseded and the arbitration agreement subsists, it was in our opinion open to the Chamber, on the request of the respondent, to appoint another arbitral tribunal under R. X. Therefore, as there is a machinery by which fresh arbitrators can be appointed according to the terms of the arbitration agreement read with the rules of the Chamber and as the reference has not been superseded, the appointment of a fresh tribunal and the carrying on of the arbitration further were within the terms of the arbitration agreement16. No other point has been urged on behalf of the appellant in this appeal to challenge the correctness of the decision of the High Court. Therefore, appeal No. 309 must fail17. Turning now to appeal No. 525, it is enough to say that it is similar to appeal No. 309 in all respects except one. The difference is that in this case the appellant objected to the appointment of a fresh tribunal and an application was made under S. 33 of the Act praying for the relief that no arbitration agreement existed after the earlier award had been set aside and, therefore, there could be no further arbitration. For reasons which we have already given this contention must fail, for it is not in dispute that in this appeal also when the earlier award was set aside there was no supersession of the reference and the arbitration agreement is in the same terms as in the other appealThis point as to jurisdiction was not taken before the appeal Court nor has it been taken in the special leave petition to this Court or in the statement of case. It seems that the appeal was entertained on the High Court on the view that an appeal lay under the Letters Patent from an order of a Single Judge. Even if we were to entertain this argument, the respondent will he entitled to ask for special leave to appeal against the order of the Single Judge and we will be justified having regard to the course of events and the view expressed in the companion appeal in granting leave after condoning the delay, and in passing the same order which has been passed by the High Court in appeal. Technical requirements of procedure may of course be fulfilled by following the course suggested but no useful purpose will be served thereby. For reasons which we have already given the order of the appeal Court is right. There is no reason to interfere with it and this appeal will also have to be dismissed.