Case: Hari Shankar Lal Vs. Shambhunath Prasad And Others

2. The facts material to the question raised may be briefly stated. The appellant and respondents 1 and 2 are brothers. On August 17, 1948, the appellant and respondents 1 and 2 and their mother by a registered deed of agreement referred their dispute regarding the partition of two house in the city of Banaras to two arbitrators, respondents 3 and 4. Within 10 days of the reference, the said arbitrators gave notice to the parties and began to take evidence i.e., they entered on the reference. On July 25, 1949, Rajwanti the mother of the appellant and respondents 1 and 2 died, and the arbitrators did not proceed with the inquiry. On August 31, 1950, i.e., more than one year after the death of Rajwanti, the appellant gave a notice to the arbitrators requesting them to proceed with the reference and give the award at an early date. On October 1, 1950, i.e., within 4 months from the date of the notice, the arbitrators made an award and it was duly registered . On January 23, 1951, the appellant filed an application under Ss, 14(2) and 17 of the Act in the Court of the Civil judge, Banaras, praying that the said award be filed and be made a rule of the court. The said application was registered as a suit; the appellant was placed in the position of plaintiff and the respondents in that of defendants. The respondents raised various objections to the said application; one of the objections, with which only we are now concerned, was that the award was not given within the time fixed by law. The learned Civil Judge rejected the objections and made a decree in terms of the award. On appeal the High Court came to the conclusion that the award was made after the expiry of the period of limitation, and on that finding set aside the decree of the learned Civil judge and dismissed the suit with costs. Hence this apple.

Court's reasoning:
No doubt in the above case, unlike in the present case, the arbitrators were called on to act before they entered on the reference; but that cannot make any difference in the application of the principle, namely, that "to act" is not the same as "to enter on the reference", and that the former is of a wider import than the latter.The said discussion leads us to the conclusion that though entering on the reference is an act of the arbitrators, that is not exhaustive of the content of the word "act" in the secondthe relevant provisions do not support thisthis view, the second alternative in R. 3 can be invoked only in a case where a notice to act has been given to the arbitrators either before the arbitrators entered on the reference or after they have entered on the reference but before the period of four months from that date has runthere is some plausibility in the criticism, it is answered by our confining the right to give notice by a party to the period of four months from the date the arbitrators entered upon the reference. Nor the apprehension that a party may go on giving number of notices to act within the said 4 months from the date of the arbitrators entering upon the reference, each notice giving a fresh period of 4 months, has any basis. A notice to act can only be given when an arbitrator is not acting i.e., he has refused or neglected to discharge his duty. Therefore, every notice cannot give a fresh period unless in fact the arbitrators refused or neglected to act before such notice is given. The legal position may be formulated thus : (a) A notice to act may be given before or after the arbitrators entered upon the reference. (b) If notice to act is given before they entered upon the reference, the four months would be computed from the date they entered upon the reference. (c) If a party gives notice to act within 4 months after the arbitrators entered upon the reference, the arbitrators can make an award within 4 months from the date of such notice. And (d) in that event, after the expiry of the said 4 months the arbitrators become functus officio, unless the period is extended by court under S. 28 of the Act; such period may also be extended by the court, though the award has been factually made.12. In the present case, the notice was given long after the expiry of four months from the date when the arbitrators entered on the reference and, therefore , they could no longer act pursuant to the notice calling upon them to act. The proper course should have been to apply to the court for extension of time under S. 28 of the Act. We, therefore, agree with the conclusion arrived at by the High Court, though on different grounds.