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TMI Blog1933 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ire also, and he put certain questions to the arbitrators. No record, however, was kept by the umpire of the proceedings before him. On November 22, 1932, the umpire made his award in favour of the petitioner. The respondents, thereupon, filed an appeal against the said award to the board of directors of the Association under by-law No. 39, to which the petitioner submitted a rejoinder. The appeal was first heard on February 21, 1933, at which meeting certain members of the board of directors were present. The parties appeared by counsel, and the arguments of the counsel for the respondents were partly heard on that day. The hearing of the appeal was then adjourned to March 6, 1933. It did not reach a hearing on that day, and was further adjourned to March 15, 1933. At the hearing of the appeal on March 15, some of the directors, who were present at the hearing of February 21, were not present, and some other directors, who were not present at the hearing of February 21, were present. At this hearing counsel for the respondents finished his arguments, and counsel for the petitioner commenced his; but as the same were not finished on that day, further hearing was adjourned to March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first meeting of February 21 were not present at the second meeting of March 15; (2) two of the directors who were present at the second meeting of March 15 were not present at the first meeting of February 21; (3) one member present at the first meeting of February 21 was not present at the second meeting of March 15, but was present at the final meeting of March 17; (4) two members present at the second meeting of March 15 were not present at the final meeting of March 17; (5) two members who were present at the first meeting of February 21 were not present at the final meeting of March 17 ; and (6) six members who were present at the first meeting of February 21 were also present at the second as well as the final meeting of March 15 and 17, respectively. 4. The respondents deny that the award is not within the Indian Arbitration Act, and they contend that the proceedings before the board of directors in the matter of the said appeal and the award are in accordance with the articles of association and the by-laws of the Association and are valid and binding on the petitioner. They further state that ever since the inception of the Association appeals in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward or ready, and whether between members or between a member and a non-member, made subject to these by-laws, shall be referred to the arbitration of two disinterested persons, one to be chosen by each party. It further provides that the arbitrators shall have power to appoint an umpire, and shall do so if and when they differ as to their award. The explanation to the by-law says that the award shall be deemed to have been made on the date when the arbitrators have first recorded their decision in writing. Then there is a proviso for the appointment of an umpire and for the time within which the umpire has to make his award. Sub-clause E provides that the award of any two arbitrators or their umpire shall be final and binding on both parties, subject to a right of appeal to the board within ten days from the date of publication of the award. The by-law further says that if either party to the dispute refuses to abide by and perform the decision of the arbitrators or the umpire or their board, as the case may be, the award shall be filed in the High Court, and such party shall pay the costs between attorney and client in connection with the filing and enforcement of the award, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the disputes which arose between them, the other party would have successfully maintained an application for stay of the suit under the provisions of Section 19. If this is correct, then it is difficult to see why there is a submission between the parties within the meaning of Section 19 of the Indian Arbitration Act and not a submission between the parties within the meaning of other sections of the Act. 9. The term submission is construed very broadly. A contract which provides that a dispute arising in relation thereto should be tried by a foreign Court is considered a submission of any dispute arising between the parties to the arbitration of such foreign Court. In Haji Abdulla v. Stamp a policy of marine insurance provided: ...All disputes must be referred to England for settlement, and no legal proceedings shall be taken to enforce any claim except in England, where the underwriters are alone domiciled and carry on business. The plaintiffs who had a claim under the policy filed a suit to enforce it against the defendants-underwriters in the High Court of Bombay. The defendants took out a chamber summons under the Indian Arbitration Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission between the parties. There is no definition of the term arbitrators or umpire , or even of arbitration . There is no doubt that these terms are used in a very wide sense. What is contemplated is that there should be a submission within the meaning of Section 4 of the Act, and a final decision under that submission arrived at by the domestic tribunal in the manner agreed upon between the parties. So long as the tribunal is agreed upon and so long as the method of reaching a final decision is agreed upon in accordance with the submission between the parties, I see no difficulty in holding that the final decision of the domestic tribunal agreed upon under the submission would be the award which could be filed under the Act. 12. It is clear law in England that a reference can be made to a fluctuating body or to a committee of a trade association who appoint certain of their members to act. As an authority for the proposition I may refer to In re Keighley, Maxsted Co. and Durant Co. [1893] 1 Q.B. 405, in which the form of the contract and the submission is similar to the present case. The contract in that case contained a clause that all disputes arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly agreed that the committee should be the umpire, but they had agreed that it should act according to the rules of the London Corn Trade Association, which were well known; and when the committee which consisted of twenty-five persons, came to be umpire, they, acting under their rules, exercised their duty by appointing out of their own body a committee of five to act as umpire in the dispute. And it may be noticed here that, by the rules, if one of the five members of the committee died before the matter was finally determined, another member of the body of twenty-five might be appointed in his place. The submission in Produce Brokers Company, Limited v. Olympia Oil and Cake Co. Limited [1916] 1 A.C. 314 is exactly similar to the submission and the contract between the parties in the present case, and is in these terms (p. 315): 13. All disputes from time to time arising out of this contract including any question of law appearing in the proceedings...shall be referred to arbitration according to the rules endorsed on this contract.... It was never suggested in that case that such a contract and submission were outside the scope of the Arbitration Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by arbitration in the manner agreed upon resulting in a final decision. If so, that final decision is an award, and I do not see why it cannot be filed in Court even under the Arbitration Act. In In re Keighley, Maxsted Co. and Durant Co. [1893] 1 Q.B. 405 the decision of the appeal committee is described by Lord Esher M.R. as the decision of the umpire and the proceedings before the appeal committee as umpirage, although in that case the award of the arbitrators was unanimous. 14. On this point in India there has been no reported decision in any authorised reports, but exactly the same point arose in Heeralal Co. v. Joakim and Co. [1927] A.I.R. Cal. 647. In that case, according to the contract between the parties, a dispute was referred, firstly, to arbitrators, then to an umpire, and then to a committee of appeal from him; and the Court held that the award made by the committee of appeal fell within the terms of the Indian Arbitration Act. It is pointed out in that decision that such forms of contract are used in certain trades and the awards made under similar submissions were treated as good and valid awards within the meaning of the Indian Arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter constitutes a submission, and if according to the terms of that submission the award is made, it cannot be contended that the submission and the award fall outside the scope of the Indian Arbitration Act. The learned Judge referred to In re Keighley's case in support of the view which he took. In appeal, Shah Ag. C.J. observed as follows: In the appeal before us the only point urged is that the submission by the parties to arbitration under Rule 51 of the Cotton Contracts Board constituted under the Bombay Act of 1919 is not valid. It is conceded that the award by the arbitrators may be valid but it is contended that the interference by the Board on appeal is not contemplated by the Arbitration Act, and that the award made by the Board on appeal from the decision of the arbitrators is outside the scope of the Act. It is, however, clear from section 6 of the Indian Arbitration Act that it is open to the parties to express their intention at the time of submission to carry out the arbitration on such lines as the parties are willing to agree to. In the present case assuming, without deciding, that the nature of the original contract between the parties as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the board or the resolution made by them are to be signed. In similar cases in England there is a distinct provision as to how such awards should be signed (see In re Keighley's case). Section 11 of the Indian Arbitration Act states that when the arbitrators or the umpire have made an award they shall sign it, and that being so, in my opinion, the award ought to have been signed by all the members of the board who joined in the making of it. But the omission to do so is a mere irregularity as pointed out by Russell on Arbitration and! Award, 12th edn., p. 431, and is capable of being rectified. If necessary, I would have remitted the award for being signed in accordance with Section 11 of the Act; but, in view of the conclusion to which I have come, I do no think it necessary to do so. 20. This brings me to the last and perhaps the most important point in the case. From the facts I have set out above, it is clear that the composition of the board has changed from time to time since the appeal went on before the board, and when the decision was given, clearly some of those who heard the arguments at the earlier meetings were not present and did not form part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the twenty-five members who formed the appeal committee, five members had to be elected members to hear the appeal. There is no such by-law under the by-laws of the East India Cotton Association, Ltd. Prima facie the parties were entitled to a decision of the board. The board is the tribunal agreed upon. There is no provision for delegating the functions of the board to a particular number of directors. It is true that the board is defined to mean the Board of Directors of the East India Cotton Association, Ltd., acting through at least a quorum of their number at a meeting of that Board duly called and constituted . But there is no by-law which fixes the quorum. It is true that the articles of association provide for six directors acting as quorum. The articles of association, however, are not binding on the petitioner according to the decision of the Appeal Court in Radhakison Gopikison v. Balmukund Ramchandra as the petitioner admittedly is not a member of the East India Cotton Association, Ltd. But, assuming that the petitioner knew that six directors formed a quorum, does that mean that different members can sit at the meetings of the board at different times to hear the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore any of them arrived at a decision upon it. In this case the arbitrator of the applicant ought to have been allowed an opportunity of hearing what was urged by the other, and of making any answer to it, and urging any arguments in support of the opposite view before the umpire had formed an opinion upon the question. It would be a most dangerous precedent to allow an award to stand which had virtually been arrived at and resolved on by the umpire on the ex parts statements of one of the arbitrators, in the absence of the other. On that ground, therefore, the award must be set aside.... In Re Plews and Middleton (1845) 6 Q.B. 845 Lord Denman C.J. observed that an award is procured by unfair means if it is arrived at by a departure from natural justice in ascertaining the facts. In that case, ascertaining the facts by one arbitrator apart from the other and by an examination of an interested witness was held to be a departure, not merely from an established course of procedure, but from natural justice. Mr. Justice Coleridge observed (p. 852): To uphold this award would be to authorize a proceeding contrary to the first principles of justice. The arbitrators her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvad relies on the decision in In re Keighley, Maxsted Co. and Durant Co. [1893] 1 Q.B. 405, and that part of the judgment which directed that the award should be remitted for further consideration of the appeal committee although one of the members had by that time been dead. It is true that in that case the award was remitted. It must, however, be remembered that in that case there was a distinct rule which was a part of the contract and submission by which such a contingency was provided for, and, under that rule the vacancy could be supplied. But that does not mean that the appeal committee would change its personnel from time to time. It only means that you have a different body to re-hear the whole appeal and finally to dispose of it. Under the rules of the Association, the tribunal was definite and a fixed body. In this case, however, there is no similar rule, and, therefore, in my opinion, this decision is not of much help to Mr. Setalvad. I think, it would be desirable if the East India Cotton Association, Ltd., framed a similar or suitable rule to provide for such a contingency. 25. It is said that hundreds of appeals have been heard in this way by the board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the question of waiver can arise in these circumstances. In support of his contention, Mr. Setalvad relies on Moseley v. Simpson (1873) L.R. 16 Eq. 226. But in that case the proceedings were commenced de novo, and there was an agreement not to impugn the award on any ground. 27. Lastly, it is submitted that as six directors were present throughout at all the meetings, the award made by the board being the award of the quorum of the board of directors is a good award. As I have pointed out, there is no by-law which fixes the quorum binding on the petitioner. Under the by-laws he is entitled to the benefit of a decision of all the directors acting through a quorum which was not fixed. Mr. Setalvad relies on Beck v. Sargent (1812) 4 Taunt. 232 and contends that if the award made is that of the arbitrators and a stranger joins in it, the award is still good. In that case, however, the award was made by all the arbitrators and the joining of a stranger was held not to affect the validity of it. In this case, there is nothing to show that the persons who were not present at the earlier meetings did not influence the decision, and, in any event, they cannot be said to be stra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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