P L D 1955 Sind 268 (PLP)

INAMULLAH, J.‑This is an objection under section 30 of the Arbitration Act 1940, with a prayer to set aside the award filed by the Umpire and arises under the following cir cumstances: The plaintiff had contracted to‑ purchase from the defendants 100 bales of cotton of good quality NTR of 1950‑51 season at Nawab Shah at Rs. 111‑12‑J per maund. This amount included sales‑tax. The contract was of the nature of " Factory Selection Contract ". It may be men tioned at the very outset that the main difference in the " Factory Selection Contract " and " Ready Delivery Con tract " is in the mode of appointment of Arbitrators. In the former, the Arbitrators are appointed by the secretary of the Association from a panel of Arbitrators while in the latter, the Arbitrators are appointed by the parties themselves. A dispute arose between the parties regarding the contract in question dated September 29, 1950. Under the contract, the delivery was to be completed by January 25, 1951. The result of the dispute between the parties was that the plaintiff appointed one Mr. Baboolal as his Arbit rator on March 29, 1951 while the defendant appointed Mr. Gulzar on April 13, 1951. The defendant replaced his Arbitrator by one Fazal who was not acceptable to the plaintiff with the result that one Mr. A. R. Sidiqi was appointed an Arbitrator by the defendant on December, 3, 1951. The defendant again replaced his Arbitrator by‑one Mr. Raoof but he refused to act as an Arbitrator with the result that one Mr. Gulzar of Fazal & Gulzar Co. was appointed as Arbitrator by the defendant on February 4, 1952. The defendant finally appointed one Rafi Manoo as his Arbitrator on April 18, 1952. The Arbitrators, namely : Rafi Manoo and Babulal gave notice to the parties on August 16, 1952 to appear on August 23, 1952 for the hearing of the dispute before them. The Arbitrators also intimated the parties that they had appointed one Sukhdeo as Umpire under by‑law 39 (e). The Arbit rators wrote on November 5, 1952 to the Umpire, Seth Sukhdeo, that they had failed to agree upon the award and therefore they requested the Umpire to proceed with the matter. The Umpire, the said Mr. Sukhdeo, wrote to the parties on November 18, 1952 informing them to appear before him on November 25, 1952 at 10‑30 a.m. at Karachi Cotton Association Building. Seth Sukhdeo again intimated the parties on November 29, 1952 that they should appear before him on December 4, 1952. On December 4, 1952 the parties appeared before the Umpire, Seth Sukhdeo. The proceeding of December 4, 1952 filed by the Umpire along with the award which is also signed by both the parties, shows that they filed statements of their dispute and were examined orally by the Umpire. The parties after that stated that they had nothing further to add. The Umpire again, by his notice of December 29, 1952, called upon the parties to appear before him on December 30, 1952. It appears that both the parties, in response to the notice of the Umpire, appeared before him on December, 30, 1952. The award was given by the Umpire on January 1, 1953. The award was duly filed by the Umpire pursuant to Rule 282 (1) of the Sind Chief Court Rules. The learned advocate, Mr. Ibadat Yarkhan, for the defendant has taken a number of objections in his application under section 30 of the Arbitration Act; but has pressed before me 4 objections only. I would consider these objections separately. The first contention of the learned advocate for the defendant was that the award was illegal as Seth Sukhdeo, the Umpire, should have been appointed not later than one month from the latest date of the respective appoint ments of the 2 Arbitrators, the latest date, in the present case was the appointment of Mr. Rafi Manoo, by the defendant on April 18, 1952. The Umpire therefore, accord ing to the contention of the defendant, should have been appointed by May 17, 1952. Mr. Ibadat Yar Khan relies on paragraph 2 of 1st Schedule of the Arbitration Act, 1990. Paragraph 2 reads as under: " If the reference is to even number of Arbitrators, the Arbitrators shall appoint an Umpire not later than one month from the latest date of their respective appoint ments ". There is no doubt that if the said paragraph 2 were to apply, the appointment of the Umpire being made on August 16, 1952, was beyond time. In. my opinion, a perusal of the by‑laws of the Karachi Cotton Association would show that this contention has no force and that the appointment of the Umpire was within the time provided by the by‑laws of the Association. A perusal of section 3 of the Arbitration Act 1940 would make it clear that the provisions set forth in the 1st Schedule of the Act are subject to the intention expressed by the parties; in other words, the parties can come to a different agreement regarding what is provided in the 1st Schedule. It is open to the parties to give a larger time for the appointment of the Umpire than is provided in paragraph 2 of the 1st Schedule. In this connection by‑law 39 (e) of the Karachi Cotton Association Limited needs consideration. It runs as under ; "The 2 arbitrators when appointed shall, before pro ceeding with the dispute, nominate and appoint an Umpire from the panel of the arbitrators to deal with the dispute, in case the 2 Arbitrators are unable to agree. In case of disagreement between the 2 arbitrators regarding the Umpire, the Board of Directors shall appoint an Umpire from the panel ". It is now well settled law that in matters of interpreta tions, the Court is to be guided by the intention of the parties. The intention of the parties can be gathered from the language used by them. A perusal of the above by‑law 39 (e) would show that the intention of the parties was to put only one limitation on the power of the 2 arbitra tors to appoint an Umpire that if the arbitrators should appoint an Umpire " before proceeding with the dispute ". Mr. Ibadat Yar Khan however has relied upon certain comments of various authors on the Arbitration Act in support of his contention that in spite of by‑law 39 (e), the Court should lead paragraph 2 of the 1st Schedule of the Arbitration Act as one of the terms of agreement between the parties. He relies on the following passage in S. D. Singh's Arbitration Act, 3rd Edition, at page 436: " If the arbitration agreement prescribes a time limit within which the arbitrators shall appoint the Umpire, the appointment will have to be made within that time. If the arbitration agreement is silent on this point, the appointment will have to be made within one month from the latest, date of the appointment of arbitrators. He has also relied on a passage from P. L. Paruck, on Arbitration Act, 2nd Edition, page 372, which runs as under :‑ "The usual form of submission is that' the arbitrators shall, before they enter in the reference, appoint an Umpire '. This clause limits the period to one month from ‑the date when the last arbitrator is appointed. This period of one month applies only if there is no agreement to the contrary: Mr. Ibadat Yar Khan has very strenuously relied upon Paruck in support of his contention. I do not accept the view expressed by the learned author. In the first place, the learned author has given no reason why the intention of the parties should not be gathered relating to the appoint ment of an Umpire from the terms of the agreement between themselves without falling upon paragraph 2 of the 1st Schedule of the Arbitration Act. In my opinion, the intention of the parties must be gathered from the terms of the agreement without falling upon any provision of the 1st Schedule. Section 3 of the Arbitration Act itself makes it very clear that if a different intention is expressed in the agreement, the provisions set out in the 1st Schedule of the Act will not be applicable. The sole question there fore, is whether a different intention is expressed in by‑law 39 (e) or not. I have no doubt that the framers of by‑law 39 (e), for reasons best known to them, did not want to put any time‑limit as is contemplated by paragraph 2 of the 1st Schedule of the Act in the matter of appointment of an Umpire by the arbitrators. The only condition that the by‑law 39 (e) has put, is that the Arbitrators must appoint the Umpire before proceeding with the dispute. The object of by‑law 39 (e) appears to be to avoid the time limit of one month provided under paragraph 2 of the 1st Schedule so that even if the 2 arbitrators failed to' appoint an Umpire within one month but did so before they entered upon the arbitration proceedings which they had to conclude within 4 months of their entering, their, award would be legal. By‑law 39 (e) seems to have been made in order to overcome such time‑limit as is provided, under paragraph 2 of the 1st Schedule of the Act. I have no doubt that by‑law 39 (e) was made only with this object that if an Umpire was appointed after one month but before proceeding with the dispute, it would be valid. Where the framers of the by‑laws did not want to depart from the provisions of the 1st Schedule, they adopted the same word by word. The departure in by‑law 39 (e) from para. 2 of the Schedule is international. By‑law 39 (e) is in the same words as para. 3 of the lst Schedule. By‑law (f) runs as under: " The arbitrators shall make their award within 4 months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow". It would appear from a perusal 'of by‑law 39 (f) and para. 3 that the intention of the parties was that the award should be given within .4 months after entering on the reference; while if by‑law 39 (e) and para. 2 of the 1st Schedule of the Act are read together, it would appear that the intention of the parties was to vary the term provided by paragraph 2 of the 1st Schedule, otherwise they would have reproduced it in the same words as they have adopted by‑law 39 (f) in the same words as para. 3 of the 1st Schedule. The time for appointing an Umpire can either be expressly fixed by specifying the number of days or impliedly by putting a certain condition. In the present case the parties expressed their intention as regards the appointment of Umpire by not specifying the number of days but by putting a condition, viz., that the Umpire must be appointed before the arbitrators proceed with the dispute. I would therefore, hold that the arbitrators had validly appointed the Umpire before proceeding with the dispute. The next contention of the learned advocate for the defendant was that the reference was complete by the appointment of Gulzar by the defendant on April 13, 1951 as the plaintiffs had already appointed their Arbitrators on March 29, 1951 and the parties, thereafter had no power to appoint any other Arbitrator except through the inter vention of the Court. This contention does not lie in the mouth of the defendants as it were they who had appointed from time to time another Arbitrator till they finally appointed Rafi Manoo on April 18, 1952. The presumption from the conduct of the defendant in changing their Arbitrator from time to time till April 18 1952, would be that, either those who were appointed by him in the mean time had refused to accept their appointment or were not qualified for some reason or the other to act as an Arbit rator. The defendant at any rate are stopped from taking advantage of their conduct in appointing other Arbitrators from time to time after April 13, 1951. Under these cir cumstances, if anybody was aggrieved it were the plaintiffs who could, if at all, challenge the award if it had gone against them on the ground of this irregularity. In this connection a passage on page 269 in Paruck on arbitration, 2nd Edition, is noteworthy. It runs as under :‑ " A defect in the nomination of the arbitrator can be cured by waiver by the party going before the arbitrator and taking his chance of a favourable decision but not if the party appears under protest, Sheonath v. Ramnath (10 M. A. A. 414 at page 426), If there is irregularity in the appointment of the arbit rators, and if any party' knowing such irregularity takes part in the proceedings and does not raise the point at the first opportunity and an award to be made without raising any protest, he will be deemed to have acquisced and waived his objection ; but the waiver to be effective must be an intended act and with knowledge of the necessary facts, Chaturbhuj v. Deokaran (26 Bom. L R 84 at 96.), Kupu Rau v. Venkataramayar (4 Mad. 311.), Unniraman v. Chathan (9 Mad. 451.), Choudhari Murtaza v. Musammat Bibi (3 I A 209.), Nadir Chand v. Gobind (2 C L J 61.), Ramjiwan v. Kali Charan (29 All. 429), Saturjit v. Dulhin (24 Cal. 469.), Mahindra v. Mahananda (15 C L J 360). In this connection the commentary at page 183 of Russel on Arbitration 15th Edition runs as under :‑ "If the parties to the reference either agree before hand to the method of appointment, or afterwards acquisced in the appointment made, with full knowledge of all the circumstances they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of relevant facts‑will amount to such acqui scence". In the present case, the defendants themselves had been appointing one Arbitrator after another on their behalf till ultimately they appointed Rafi Manoo on April 18, 1952. There is nothing on the record to show that they were not aware of all the circumstances under which they appointed their Arbitrator Rafi Manoo. The Judicial Committee in Choudhari Murtaza Hussain v. Bibi Bachunissa (3 I A 209, at p. 220.) enunciated the principles underlying waiver and acquiescence in arbitration proceedings :‑ " .on the whole, therefore, their Lordships think that the appellant, having a clear knowledge of the circum stances on which he might have founded an objection to the Arbitrators proceeding to make their award, did submit to the arbitration going on ; that he allowed the Arbitrators to deal with the case it stood before them, taking his chance of the decision being more or less favourable to himself ; and that it is too late for him after the award has been made and on the application to file the award to insist oil this objection to the filing of the award". These observations of the Judicial Committee apply with more force in the circumstances of the present case as the defendants themselves had committed the irregularity, if at all, by appointing their Arbitrators from time to time which ended with their final appointment of Rafi Manoo on April 18, 1952. There is therefore no force in the contention raised by the learned advocate that the award was bad as the defendants had no power to appoint any other Arbitrator after April 13, 1951. The third contention of the learned advocate for the defendant was that the award should have been given within 4 months of the appointment of the last Arbitrator on April 18, 1952. The learned advocate for the defendant relies on by‑law 39 (f) of the Karachi Cotton Association Limited which states that : "The Arbitrators shall make their award within 4 months after entering on the reference or having been called upon in writing from any party to the Arbitration agreement or within such extended time as the Court may allow". What is therefore to be seen in the present case is that, can the Arbitrators be said to have entered on the reference from the date of their appointment. This contention in fact is of academic importance so far as the present case is concerned inasmuch as he Arbitrators did not give any award and referred the matter to the Umpire on November 5, 1952. It has, however, been held in the case of Messrs Bajranglala Laluram v. Ganesh Commercial Co. Ltd. (A I R 1951 Cal. 78.). "That an Arbitrator cannot be said to have entered upon the reference the moment he is appointed as an Arbi trator". The gist of the dictum laid down in that case is that the Arbitrators can be said to have entered on the reference when they have actully begun to discharge the functions of Arbitrators as, for instance, by calling upon the parties to submit their case before them. Keeping this observation in view, the Arbitrators in the present case can be said to have entered on the reference only when on August 16,1952, they sent a notice to the parties to appear before them on August 23, 1952. If, as I hold, the Arbitrators entered on the reference on August 16, 1952, they were within their right to have intimated the Umpire on November 5, 1952, that they disagreed and that the Umpire should proceed with the Arbitration. This contention of the learned advocate that the Arbitrators did not give their award within the time prescribed, therefore, has no force. It was lastly contended that the Umpire has failed to give his award within 2 months of his appointment. There is no force in this contention. Under by‑law 39 (n) of the Karachi Cotton Association Limited, the Umpire has to give his award within 2 months of entering on the reference. Even if the Umpire can be said to have entered on the reference from the date that he teas informed by the Arbi trators, the award was given within time, namely on January 1, 1953. The award is therefore within time. In fact, applying the principle laid down in the case of Bajranglal (1) the Umpire can be said to have entered on November 18, 1952, when he intimated the parties to appear before him on November 25, 1952. From a perusal of the objections filed by the learned advocate for the defendant, it would appear that one of the objections taken, was that the contract being "Factory Selection Contract" by‑law 140 of the Karachi Cotton Association applied. This objection, however, has not been pressed before me. I have dealt with all the objections that were urged before me. The parties seem to have treated the contract as ready delivery contract. In conclusion I may observe that the contention raised by the learned advocate for the defendant, were directed against certain irregularities in the arbitration proceedings. In this connection I may only state that the defendants from their conduct are now stopped from raising any such objection. In this connection I may again note certain facts. There is nothing on the record to show that the defendants had ever appeared before the Arbitrators or the Umpire under protest. The defendants themselves had changed their Arbitrators from time to time with the result that there was a great delay in the dispute being decided by the Arbitrators. The defendants dragged on the question of appointment of an Arbitrator on their behalf till April 18, 1952. After the defendants finally appointed Rafi Manoo as their Arbitrator, they seem to have appeared before the 2 Arbitrators in response to the notice given on August 16, 1952. The Arbitrators, however, could not agree with the result that they intimated on November 5, 1952, to the Umpire to proceed with the reference. The defendants appeared before the Umpire on December 4, 1952, as would appear from the minutes before the Umpire which they (the parties) have signed. The defendants filed their written statement before the Umpire and were also examined by the Umpire. ' There after the defendants again appeared before the Umpire in response to a notice from the Umpire on December 30, 1952. The minute before the Umpire relating to December 30, 1952, (1) A I R 1951 Cal. 78. has been signed on behalf of the defendant as well and the case was closed on that day and the Umpire gave his award on January.1, 1953. The narration of the above facts would show that there is nothing on the record to show that the defendants had ever attended the proceeding either before the Arbitrators or before the Umpire under protest. It is now too late in the day to raise such objections after the award has gone against the defendants. Under these circumstances, the contentions raised by Mr. Ibadat Yar Khan, the learned advocate for the defendants are com pletely repelled by what is stated at page 152 of Russel on Arbitration, 15th Edition: "In a statutory arbitration, it is competent to the parties to renounce or waive statutory provisions which are fort, their benefit. `The first point urged by Mr. Collier was that the award was made after the time for making it had expired, and therefore was a nullity, and that the objection could not be cured by consent of parties. I do not think that objection is good. The arbitration clauses being introduced for the benefit of the parties, they are at liberty to renounce at their pleasure the advantages which those clauses afford: Caledonian Ry. v. Lockhart ((1860) 3 Macq. (H L) Cas. 808.). See also Tyerman v. Smith ((1856) 6 E & B 719 ; 25 L J Q B 359.), and per Mellor, J. in Palmer v. Metropolitan Ry. ((1862) 31 L J Q B 259 at 260.). I may also mention here that the general principle that there is no estoppel against statute, does not apply to the provisions embodied under Schedule 1 to the Arbitration Act. These provisions no doubt are statutory provisions but by virtue of section 3 of the Arbitration Act, they can be modified by the parties by an agreement. The dictum that there is no estoppel against statute applies, to my mind, to only those statutory provisions which the parties cannot, by consent, modify or change. Section 3 of the Arbitration Act, on the other hand, itself provides that the provisions contained in Schedule 1 of the Act, can be modified by the parties, Mushtaq Ahmad, J. in the case of Kantaprashad Nigam (A I R 1951 All. 711.) observed: "Where a party seeks to set aside an award on the ground that it is delivered after the time fixed it is not open to the other party to plead that the first party is stopped by conduct from challenging the award on that ground as there can be no estoppel against statute". I respectfully cannot accept this principle as regards the provisions of the 1st Schedule of the Arbitratien Act as the same is subject to an agreement between the parties unlike any other statutory provision to which the principle that there can be no estoppel against statute, applies. That the general principle that there can be no estoppel against statute, does not apply to the provisions embodied in the 1st Schedule of the Act, would be clear from a passage at page 42 of Halsbury's Laws of England, 3rd Edition, which runs as under: "The parties to an arbitration agreement may, by their conduct, be precluded from objecting to the award on the ground that it was made out of time, although they have given no express consent to the time for making the award being enlarged". In the end, I may observe while dismissing the objections raised by the defendant that an award given by Arbitrators is the result of an agreement between the parties themselves and cannot therefore be lightly disregarded by the Courts of law unless there is some misconduct on the part of the Arbitrators or some other ground which can come under the provisions of section 30 of the Arbitration Act. I would therefore, for the reasons given above, dismiss the objections raised by the defendant and would make the award the rule of the Court with subsequent costs if any. A. H. Objections dismissed.