P L D 1966 Dacca 54 (PLP)

This case is apparently against the petitioner. Mr. Asrarul Husain has argued that "entering on the reference" means when the arbitrators take action in the reference. In support of this contention he has relied on the case of Messrs Rajrangalal Laduram v. Ganesh Commercial Co. Ltd. (A I R 1951 Cal. 78) the case reported in P L D 1958, Karachi, the case of Lossifoglu v. Coumantaros, (L R (1941) 1 K B 396) the case of Hari Senkar Lal v. Shamsbhu Nath and others (A I R 1962 S C (Ind.) 78) and the case of Md. Ismail Serang v, Munshi Ali Hussain and others (6 D L R 641). The relevant passage in the Calcutta case relied on by Mr. Asrarul Husain is as follows:‑

"I agree with the learned Chief Justice that Baker v. Stephens 1867‑2 Q B 528, 36 L J Q B 236 would not be considered as good law in England in view of the judgment of the Court of appeal in Lossifoglu v. Counmentaros (1941) 1 K B 396: 110 L J K B

54. In the latter case six learned Judges including Viscount Caldecota, C J and Scott, L J rejected the argument advanced on behalf of the appellants that entering upon reference does not take place till the arbitrators actually meet and discuss matters. In my view, the arbitrators enter upon reference when they take upon themselves the office of arbitrators and exercise some functions as arbitrators. If they meet and determine the date of hearing and issue directions as to pleadings they exercise the functions of arbitrators and therefore, they should be treated as having entered on the reference." The Karachi case relied on by Mr. Asrarul Husain has already been reproduced in connection with the contention of the learned. Advocate for the petitioner. In L R 1941, 1 K B 396, it was held: "In this case a question has arisen as to the appointment of an umpire pursuant to the provisions of section 5 of the Arbitration Act, 1889, under an arbitration clause contained in an agreement. The question raised by the appeal nearly resolves itself into this: when can arbitrators be said to enter upon a reference? In my view, they enter upon it as soon as they have accepted their appointment and communicated with each other about the reference." Mr. Asrarul Husain has also relied on the provision of Rules 11, 4, 5 and 24 of the Dacca‑Narayanganj Chamber of Commerce and the Rules of the Tribunal of the Arbitration. In order to support his contention he has contended that the Registrar acts at the direction of the arbitrators and notice that had been issued in this case was issued at the direction of the arbitration and as such when the arbitrators issued notice on 21st October 1955, they entered upon a reference on that very same date. Now I propose to make my own comments on the cases cited by the learned Advocates for the parties. As to the Allahabad decision it appears from the judgment that reliance was placed on 2 Q B 523 which as appears from (1941)1 K B 396 was not followed in latter base and a different view was taken as already quoted. In P L D 1950 Lahore His Lordship only followed the case in A I R (1922) Allahabad. In the Calcutta case referred to above, the decision is that the arbitrators entered upon the reference when they take upon themselves the office of arbitrators and exercise some function as arbitrators as to meet and determine the date of hearing as to the pleadings. The Karachi case is also on the same line and in the King's Bench cage it has been held that the arbitrators entered upon a reference when they accepted their appointment and communicated with each other about the matter: In the case of Supreme Court of India referred to above, it was held that the legal position might 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 give, 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 section 28 of the Act; such period may also be extended by the Court, though the award has been actually made." The above observation of Subba Rao, J. perhaps, has not been correctly printed as it subsequently appears from the observation of Raghubar Dayal, J. . . The following quotation is to the point: "If the arbitrators have entered upon the reference, the period of four months begins to run from the date they entered on the reference. Any notice subsequently given to them calling upon them to act will not make the period of four months start afresh from the date of the service of the notice. Such a notice would be ineffective for the purposes of deter mining the period of four months within which the arbitrators had to make the award. In fact, there would be no valid occasion for giving such a notice subsequent to the arbitrators entering on the reference. Parties cannot prompt them for conducting their‑ enquiry or taking steps in connection with the enquiry. Even if they do, in case the arbitrators were lethargic, such a notice is not contemplated by R. 3 of the First Schedule. I also do not consider it necessary to decide in this case as to when arbitrators can be said to enter on the reference or what is meant by `their being called upon to act' by notice under R. 3 of the First Schedule. I simply note that I agree with the view expressed in Lossifoglu v. Counmantaros (1941) 1 K B 396 that arbitrators enter upon a reference as soon as they have accepted their appointment and have communicated with each other about the reference. This is 'a stage earlier than their starting the proceedings in the presence of the parties or under some peremptory order compelling them to conclude the hearing ex parte. `Calling upon the arbitrators to act' does not include asking the arbitrators to enter on the reference, but may also include asking them to do anything in connection with the reference except asking them to do the routine acts connected with the enquiry." From the above discussion it is apparent that there are conflicting decisions but in my opinion the words "entering on the reference" do not mean when the arbitrators have the parties before them and begin to hear the parties. They mean that when a reference has been made and the arbitrators accept the reference. The followings are the reasons for adopting the above view. The Arbitration Act is for speedy disposal of the dispute between the parties. Any other view will frustrate that purpose of the Act and put the parties waiting for the result for an unknown time, e.g. After reference the arbitrators may not take up the matter immediately but put it off to indefinite time. It may be argued that for such emergency notice to arbitrators for action has been provided for. This argument cannot be accepted for th: simple reason that in that case the provision "within four months after entering opt the reference", will become redundant; that 4 months has also been provided in such cases; and that the provision for notice is not for a case when the arbitrators have accepted the reference but when not. In the present case the arbitrators entered on the reference not on the 17th March, 1959, but on the 25th October 1955, when notice was issued asking the opposite‑party to file statements etc. But the petitioner is entitled to get the time during, which the arbitrators were restrained from functioning as arbitrators, namely, 14th December 1955 up to 17th December 1958, and as the award was passed on the 12th June 1959, still it cannot be said that award is not barred by limitation being filed beyond four months. In this connection the learned Advocate for the petitioner has contended that his application for extension of time filed before the lower appellate Court should have been accepted and the award passed in this case as filed within time. In support of this contention he has relied on the provision of subsection (1) of section 28 of the Arbitration Act and also the case of Narsing Das Hiralal Ltd. and another v. Bisandayal Satyanarain Firm (A I R 1954 Orissa 29) the case of Lakhmir Singh v. Union of India and another (A I R 1957 Pat. 633) and the case of Nani Bala Saha v. Ram Gopal Saha and another (A I R 1945 Cal. 19). On the merits he has argued that in this case apparently confusion in the mind of the arbitrators was created by the opposite‑party initially. The opposite‑party filed the suit and obtained ad interim injunction and thereafter having it dismissed and again restored and in this way they continued up to December 1958. So the arbitrators ware not in a position to know whether the award that could have been passed by them would be barred by limitation or not. It has been further argued that the action of the opposite‑party had all along been mala fide as observed by this High Court in the case of Pakistan Trading Company v. M. M. Ispahani and another (P L D 1960 Dacca 81) at page 89 of the report. In these circumstances he is entitled to get an extension of time. While on the other hand Mr. Asrarul Husain has argued that section 28 speaks of the Court which means according to his submission, the trial Court and not the appellate Court. In support of his contention he has relied on the case of Abani Bhusan Chakraborty and others v. Hem Chandra Chakraborty and others (A I R 1947 Cal. 93). He has also relied on the case reported in Lakhmir Singh v. Union of India and another in support of his contention that when the matters were argued before the trial Court and an application filed for extension of time, that application could not be accepted as it was not filed within a reasonable time. There is no dispute that the Court has absolute jurisdiction to exercise a judicial discretion in order to extend time in suitable cases. The provision of section 28 is clear on this point. Section 28 of the Arbitration Act runs thus: "28.(1) The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time, the time for making the award. (2) Any provision in an arbitration agreement whereby the arbitrators of umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect." The above provision authorises the Court to extend the time whether an award has been passed or not, and in the former case extension of time by the Court tantamounts to acceptance of the award after condonation of delay and in the latter case extension of time when an award has not been made authorises to make an award within the extended time. . Now the question is whether in the facts and circumstances of the case the Court should have condoned the delay and accepted the award. In my considered opinion, the facts and circumstances of the case justify condonation of delay. The facts are as follows : After the petitioner approached the arbitrators to make an award, the opposite‑party on 14th December 1955, started a miscellaneous case being No. 151 .of 1955 in the 4th Court of Munsiff, Narayanganj, under section 33 of the Arbitration Act for declaration that the contract had been frustrated and was impossible for performance and that the arbitration clause as such had become null and void and ceased to exist or remain valid. In that proceeding ad interim injunction was obtained restraining the petitioner and the Registrar from proceeding with the arbitration. The petitioner filed an objection against granting temporary injunction and the Court after hearing the parties vacated the order of ad interim injunction on 9th January 1956. Though the petitioner informed the arbitrators of the order vacating temporary injunction but the arbitrators could not proceed with the case inasmuch as the opposite party preferred a miscellaneous appeal being No. 59 of 1956 against the said order of the learned Munsiff and obtained an ex parte order of injunction restraining the arbitration proceedings. The appellate Court after hearing the parties dismissed the appeal on contest and also vacated the order of temporary injunction. The opposite‑party again adopted some other dilatory tactics. During the pendency of the said miscellaneous case and the mis cellaneous" appeal the opposite‑party applied to the Pakistan Jute' Association for declaration that the contract in question had become impossible of fulfillment due to the devaluation of the Pakistan currency. The Pakistan Jute Association refused to interfere and as such it rejected their application. Being aggrieved the opposite‑party filed Writ Petition No. 9 of 1956 to this Court but the said petition was rejected on 2nd March 1956. Thereupon the opposite‑party filed an application for leave to appeal to Federal Court of Pakistan, which was ultimately rejected on 4th April 1957. The opposite‑party also filed an application under section 5 of the Arbitration Act, in the 4th Court of Munsif, Narayanganj for revocation of the authority of the arbitrators and thereon Miscellaneous Case No. 71 of 1956 was started. The opposite‑party obtained an ad interim in. junction restraining the arbitration proceeding which was subsequently made absolute. The Parried Munsif on 29th September 1958 dismissed the miscellaneous case under section 5 of the Arbitration Act upon which the opposite‑party filed an application before this Court under section 115 of the Civil Procedure Code. A rule was issued on l5th October 1958 and ad interim injunction was also issued restraining the arbitrators from proceeding with the arbitration case. It also appears that this Rule was not also diligently prosecuted. The Civil Rule was heard and discharged with costs on the 17th December 1958. That case has been reported at page 81, of P L D (1960) Dacca. It was observed at page 89 as follows:

"I have already stated the facts in the beginning of my judgment relating to the conduct of the petitioner in following proceedings one after another, and to keep his application under Order IX, rule 9 of the Code of Civil Procedure for restoration of the proceeding under section 33 of the Arbitra tion Act dismissed for default pending uptill now which sufficiently makes it clear that it is nothing but an attempt to delay the arbitration proceeding and not a bona fide application." The aforesaid facts conclusively go to show that the opposite -party adopted all means, whether fair or foul, to defeat the arbitration proceedings. The opposite‑party did not try to face the proceedings before the arbitrators, rather tried to create chaos in the proceeding. This being the case, it cannot be said that the arbitrators due to their negligence did not proceed with the arbitration proceeding as the arbitrators could not be in position to know when they were to start with or stop the arbitration proceeding. The above view of mine brings us to the question whether the term "Court" includes "appellate Court". The word "Court" has been defined in section 2 of the Arbitration. Act as follows 'Court' means a Civil Court having jurisdiction to decide the questions forming the subject‑matter of the reference if the same had been the subject‑matter of a suit; but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court." and came up for consideration before the Calcutta, Allahabad and Patna High Courts. In the case of Abani Bhusan Chakraborty and others v. Hem Chandra Chakraborty and others, the Calcutta High Court held that the term "Court" does not include "appellate Court", the reason being that there is nothing in the Arbitration Act to indicate that the term "Court" includes appellate Court, though before the Arbitration Act, 1940, the term "Court" include appellate Court, in view of the provision of section 107 (2) of the Code of Civil Procedure. This was also the view taken by the Allababad High Court in the case of Shukrullah and another v. Mt. Rahmat Bibi and others (A I R 1947 All. 304). A different view was taken by the Allahabad High Court in the case of Munni Lal v. Kishun Prasad and another (A I R 1948 All. 443) and the case of Lakshmi Narain v. Ram Babu and another (A I R 1953 All. 9). The case reported in A I R 1953 All. 9 was also followed by the Patna High Court in the case of Thakur Prasad v. Baleshwar Air and others (A I R 1954 Pat. 106). I am inclined to hold that the term "Court" includes' Appellate Court for the following reasons given in the Patna case: "Section 21, Arbitration Act speaks of parties to a suit and matters in difference between them in the suit. It enables such parties to apply in writing to the Court, before judgment is pronounced, for an order of reference. Examining the defini tion of the term "Court" as given in section 2(c), Arbitration Act, quoted above, there seems no valid ground for holding that it excludes an appellate Court. Just as a Court of first instance has jurisdiction to decide the questions forming the subject‑matter of the reference, if the same had been the subject- matter of a suit, so also an appellate Court has the same `juris diction to decide the question forming the subject‑matter of the reference, if the same had been the subject‑matter of a suit. This is the function of an appellate Court as well." I see, therefore, no reason why a restricted meaning should be given to the word 'suit' as used in section 21, Arbitration Act in my opinion, the term 'suit' in that section ought not to be taken to exclude an appeal. I, for myself, find no good ground for the Legislature, while giving power to the Court of original jurisdiction to make an order of reference under section 21, Arbitration Act, to exclude an appellate Court, from making such an order. The Arbitration Act, 1940, was an Act passed mainly to consolidate the law relating to arbitration. I have already pointed out that, before the passing of this Act, the law bad been that an appellate Court had the power to make an order for reference to arbitration. This power has not been specifically taken away by the Legislature while passing the Arbitration Act, 1940. It is always to be assumed that the Legislature knows the law, even in technical matters. It is the rule that, where words and expressions in a statute are plainly taken from earlier statutes in pari materia which have received judicial interpretation, it must be assumed that the Legislature was aware of such interpretation and intended it to be followed in later enactments. I would, accordingly, conclude that it may be inferred that the Legislature intend the words used in section 21, Arbitration Act, 1940, to be understood as they were understood in their previously accepted meaning. There would seem to be no basis for the view that the Legislature intended to deprive the parties to a civil litigation from settling their disputes by arbitration after the termination of a suit and when an appeal is pending. The distinction between statutes which codify and those which consolidate the law has been well summarised in paras. 770, 771 of Volume 31 Halsbury's Laws of England (Hallsham 2nd Edition): "770. 1n construing a codifying statute the proper course is, in the first instance, to examine its language and to ask what is its natural meaning. It is an inversion of the proper order of consideration to start with inquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear interpretation in conformity with this view. After the language has been examined without presumptions, resort may be had to the previous state of the law for the construction of provisions of doubtful import, or of words which have acquired a technical meaning. The same words used in different codes may have different meanings in each code according to the intentions of the statutes having regard to the mischiefs which they are designed to prevent. `

771. If a distinction is to be drawn between statutes which codify and those which consolidate the law, it is that in constru ing the latter there is presumption that the law was not intended to be altered, but this presumption must yield to plain words to the contrary, where a consolidating statute re‑enacts sections that have come into existence at different previous dates, the state must be construed on the same principles as one which enacts the provisions in question for the first time . . . . . . . ' I am of the opinion that the term `Court' in section 2 (c), Arbitration Act, 1940, must be construed to include an appellate Court, and that, therefore, the appellate Court may also pass an order for reference to arbitration under section 21 of the Act." Now coming to the merits of the case, it may be observed here that I have already stated the facts and circumstances beforehand in order to show that the Court in such circumstances should condone the delay and accept the award. I accordingly condone the delay and accept the award. The learned Advocate for the opposite‑party referred to some provisions in the Civil Rule and orders but I do not find that they in any way affect my above view. In the result the Rule is made absolute, the judgments and decrees of the Courts below are set aside and the suit is decreed with costs all through. K. B. A. Rule made absolute.