P L D 1952 Sind 52 (PLP)

MUHAMMAD BAKHSH, J.‑Two arbitrators were appoint ed to go into the disputes between the parties of this case and they have sent in their award to this Court pursuant to the provisions of section 14 (2) of the Arbitration Act, 1940 and rule 282 (1) of the Sind Chief Court Rules (O. S). Notices were issued to the parties, and several objections were raised against the filing of the award, and making it a rule of the Court. An initial legal objection has been raised by Mr. Aziz, the learned advocate for the defendant, that this award is invalid in the absence of an Umpire being appointed by the arbitrators. The learned advocate for the plaintiff admitted that no Umpire was appointed. On this data I heard the advocates of the two sides. Section 3 of the Arbitration Act of 1940 says that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference. Para. 2 of the First Schedule is relevant in this case. This paragraph reads as under :‑ "If the reference is to an even number of arbitrators, the arbitrators shall appoint an Umpire not later than one month from the latest date of their respective appoint ments". It has been argued on the plaintiff's side that since there was no disagreement or difference between the two arbitrators, the question of appointing an Umpire does not arise. The appointment or otherwise of the Umpire in this case therefore does not affect the award in any manner. It is argued with equal force by the defen dants side that the provisions of law set out in section 3 read with para. 2 of the First Schedule of the Arbitration Act is a mandatory one, and therefore even if there is no disagree ment between the arbitrators an Umpire has got to be appointed not later than one month from the latest date of the appointment of the arbitrators and in the absence of an Umpire being appointed the award becomes invalid. In this behalf it will be interesting to see the relevant provisions of the Arbi tration Act IX of 1899. Section 6 of this Act says that a submission, unless a different intention is expressed therein, shall be deemed to include the provisions set forth in the First Schedule in so far as they are applicable to the reference under submission. Para. 2 of the First Schedule of the Act 1899 reads as follows :‑ "If the reference is to two arbitrators, the two arbitrators, may appoint an Umpire at any time within the period during which they have power to make an award". It will be clearly seen that para. 2 of the First Schedule of the Act of 1899 underwent a very great change at the time the Act of 1940 was enacted. Under the 1899 Act the arbitra tors had the discretion to appoint an Umpire at any time while they retained the power to make the award. If the arbitrators found out at any time in the course of their proceedings that they could not reach an agreement they could appoint an Umpire to settle up the whole matter. If, however, there were no differences between the arbitrators, they were not bound to appoint any Umpire. The word "may" appearing in para 2 of the Act of 1899 was substituted by the word "shall" in the corresponding para : of the Act of 1940 ; also for the words "at any time within the period during which they have power to make an award", appearing in the 1899 Act were substituted by the words "not later than one month from the latest date of their respective appointments" in the Act of 1940. These amendments were deliberate ; it cannot be argued that they were without any purpose. The purpose to my mind appears to be quite clear. The arbitrators were no longer given the discretion of appointing an Umpire at any time they like before making their award. Under the new law they were bound to appoint an Umpire within one month of their ap pointment as arbitrators. On a very simple interpretation or para. 2 of the Act of 1940 it becomes clear that the appoint ment of an Umpire within the period of one month is mandatory and if that appointment is not made within that period an award that follows becomes invalid. I am fortified in this view by the ruling reported in Dharni Dhar and others v. Chandra Shekhar and others A I R 1951 All. 474 wherein too their Lordships say that in the absence of the appointment of an Umpire the award made is invalid. In Chooni Lal v. Madhoram and others I L R 36 Cal. 388, a case which was decided on 17th December 1909, Fletcher, J. observed that the rules relating to arbitration under the Bengal Chamber of Commerce contemplate the appointment of an Umpire before the arbitrators enter upon the reference, and not upon a disagreement between them. Where the terms of a reference provide for the appointment of an Umpire before the arbitrators enter upon the reference, until the Umpire is appointed, the reference cannot proceed. In that case there was no provision to the contrary in the bye‑laws of the Cotton Association under which the arbitration had been held. In a case reported in Sukh Lal v. Inam Chand and another A I R 1945 Lah. 34 there was a clear provision in the reference rim, an Umpire was to be appointed only if the arbitrators disagreed His Lordship Abdul Rehman J. held that as no Umpire could be appointed before the happening of that event, this provision in the agreement must be held to contain an intention different from what has been expressed in para. 2 of Schedule

1. The learned advocate for the plaintiff has relied on the latest ruling of the Peshawar Court reported in Labab Gul v. Badshah Gul P L D 1952 Pesh.

23. His Lordship Muhammad Shafi, J. observed in that case that the emphasis in para. 2 of the First Schedule of the Arbitration Act is not on the appointment of the Umpire but on his appointment within one month of the appointment of the arbitrators. In the case of an even number of arbitrators, who have given a unanimous award, the award cannot be set aside for the mere reason that the arbitrators had failed to appoint an Umpire. The facts of this case however are entirely different from the facts of that case. In the Peshawar case four arbitrators were appointed and they submitted their award on the same day or on the very next day of their appointment as arbitrators. In view of that great fact the observation of His Lordship in the Peshawar case is quite understandable. In view of all these reasons I hold that since an Umpire was not appointed in accordance with the latest letter of law, the award becomes invalid. As a result of this finding the award will be set aside and the suit dismissed with costs. A. H. Suit dismissed.