P L D 1953 Sind 18 (PLP)

MUHAMMAD BAKHSH, J.‑In this case the parties are cotton merchants. There arose disputes between them and two Arbitrators were appointed in accordance with the bye-law of the Karachi Cotton Avocation. One Arbitrator was appointed by the plaintiff's on 9th January 1952. The defendants were called upon to select their own Arbitrator which they did not do and therefore the plaintiffs selected the other Arbitrator also in accordance with the bye‑laws on 26th January 1952. The award was made on 18th March 1952 and the arbitrators have submitted the same now to the Court under the provisions of section 14(2) of the Arbitration Act, 1940 and rule 282(1) of the Sind Chief Court Rules for making it a rule of the Court. Several objections have been raised against this award. Some of these objections are as follows: The very first objection is that the Arbitrators were not ap pointed in accordance with the bye‑laws of the Karachi Cotton Association. It appears these Arbitrators were appointed in accordance with the old Bye‑Law No. 39 where under each of the two parties was to select its own Arbitrator, and in default of any party nominating its Arbitrator, the other party could nominate one on his behalf. This Bye‑law 39 was sub sequently replaced by Bye‑law 140 which came into immediate effect from 29th October 1951. Under this bye‑law there was to be a panel of thirty‑six Arbitrators consisting of eighteen from buyers and eighteen from sellers appointed by the Board as soon as possible after the beginning of the calendar year. It may be noted here that this Bye‑law No. 140 was to apply only to the Factory Selection Contracts, and the contract in suit is one such. The Secretary of the Cotton Association then had to draw the names of Arbitrators by ballot, one from the seller's panel and the other from the buyer's panel, and the name of the Umpire was also to be drawn by ballot simultaneo usly by the Chairman of the Cotton Association or in his absence by the Vice‑Chairman or by the Secretary. The award was to be given by the Arbitrators within fourteen days following the day of their entering on the reference; and if the Arbitrators disagreed, the matter was to be referred to the Umpire. The Umpire had also likewise to complete his duty within fourteen days of his taking over. In this case the Arbitrators were appointed in January 1952, and it is therefore clear that Bye‑Law 140 which applied to the contract in suit and which came into effect from 29th October 1951, was not complied with. The very constitution of the Arbitration Tribunal therefore is illegal. The' learned advocate Mr. Castellino for the plaintiffs, has raised a plea that the panel of Arbitrators as contemplated by rule 140 was not brought into being before April 1952 and therefore in January 1952 the old rule 39 applied. He also produced before me an uncertified copy of a notice issued by the Secretary of the Cotton Associ ation on 14th April 1952 whereby it was laid down that new Bye‑Law 140 governed arbitrations under Factory Selection Contracts and not Bye‑Law 39, unless both the parties to a Factory Selection Contract agreed by mutual consent to go into arbitration under the terms of Bye‑Law 39, if so, award made in pursuance of such reference will also be valid and binding on such parties. I agree, that if this notice be true, the two parties to a dispute could by consent refer the matter under the provisions of Bye‑Law‑ 39, but I cannot agree with the view that because the panel of Arbitrators was not appointed in January 1952, the parties were automatically to be governed by the provisions of old Bye‑Law

39. In that case all the arbit rations in the Factory Selection Contracts, in the absence of the consent of both the parties, had to be held in abeyance till the panel of arbitrators was appointed. The duty of the plain tiff was to approach the Secretary or the Chairman of then Cotton Association to appoint a panel without any further delay so that this matter could be referred under the provisions of Bye‑Law

140. Since the very constitution of the Arbitra tors is without jurisdiction it follows automatically that the award which came in consequence is invalid and of no effect. Under the old Arbitration Act, it was left to the discretion of the Arbitrators to appoint an Umpire in case of disagreement at any time before making of the award. Under the Arbitra tion Act of 1940 it was made mandatory that the Arbitrators had to appoint the Umpire within one month of their appoint ment as Arbitrators. This provision of the Arbitration Act has been modified by the rules of the Cotton Association which under Bye‑Law 140 governing the contract in suit, lay down that the award was to be made within fourteen days from the date of the Arbitrators entering on the reference. In this case the Arbitrators were appointed on 26th January 1952 and the B award was made on 18th March 1952, long after the period prescribed by Bye‑Law

140. On that ground too the award becomes invalid. In view of these legal objections which must prevail it is not necessary to consider the other objections raised by the defendants regarding the non‑receipt of notice and other mis conduct on the part of the Arbitrators. I allow the objections and dismiss this application with costs. A.H. Application dismissed.