MANGAL PRASAD Vs. LACHHMAN PRASAD

JUDGEMENT

(1.) THE following question has been referred to this Bench by our brothers Jagdish Sahai and Mithan Lal:" Whether an application under Section 20 of the Indian Arbitration Act can be made in a case like the present one where the arbitrator had started to function and had entered upon the reference but at a later stage could not proceed with the same?" A conflict among decisions dealing with this question necessitated this reference to a Full Bench". THE parties to this appeal are brothers and had disputes regarding partition of joint property. On 9-12-1955 they entered into an agreement to refer the question of partition of all their joint property to the sole arbitration of Sri Baij Nath Prasad. No time was fixed for his making an award and, therefore, under Section 3 of the Arbitration Act (which will henceforth be referred to as the Act) Clause 3 of the 1st Schedule attached to the Act applied and the arbitrator had to make his award within four 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 might allow. THE agreement was filed with the arbitrator and he entered upon and proceeded with the reference, but the appellant non-co-operated and the arbitrator thought that, he could not make an award. On 7-11-1958 the appellant filed a suit for partition of the joint property in the Court of the Civil Judge, Bahraich. THEreupon an application under Section 20 of the Act giving rise to this appeal was presented in the Court of the Civil Judge, Malihabad, by the respondent with the prayer that the agreement be filed in Court, that on order of reference to the arbitrator Sri Baij Nath Prasad be made and that on the award to be given by him a decree should be passed. THE application was opposed by the appellant, who pleaded that he had signed the agreement, under pre-sure, that the agreement became null and void because no award was made within four months, that the arbitrator was in collusion with the respondent, that the application was barred by time, that it was not maintainable because the arbitrator had already proceeded with the reference and that the agreement was not the one contemplated by Section 20. THE appellant's allegations were denied by the respondent in his replication and he asserted that the arbitrator had nearly completed the proceeding and could make an award within a fortnight. He admitted that the appellant had filed a suit and contended that he had applied under Section 34 of the Act for its stay. On 17-12-1958 the Court (e. g., that of Civil Judge, Malihabad) ordered the arbitrator to file the agreement and other papers in Court, which he did. THE respondent's application under Section 34 was rejected by the Civil Judge, Bahraich, and his order is under appeal in this Court. THE application under Section 20 was allowed by the Court and this appeal is preferred from its order. It seems that an award has been made by the arbitrator and its operation has been stayed by this Court during the pendency of the appeal.

(2.) SECTION 20, so far as is relevant, reads as follows: "( 1) Where any persons have entered into an arbitration agreement ............ and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court ............... that the agreement be filed in Court. (2) .................................... (3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement ......... requiring them to show cause ......... why the agreement should not be filed. (4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties .................. (5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act ,.............."

(3.) AN application under Section 20 (1) has to be for the agreement being filed in Court and the cause of action for making it accrues when a difference to which the agreement applies has arisen. On the agreement being filed the Court has to order the difference to be referred to the arbitrator. These provisions show that an application under Section 20 (1) has to be made before the arbitrator has entered upon the reference. If ha has already entered upon the reference there would be no necessity of the Court's ordering the difference to be referred to him; nothing more would be achieved by the simple fact that the Court has ordered the difference to be referred to him. What he can do after such an order can be done by him even without such an order. Such an order would be necessary only if he has not entered upon the reference. If he has already entered upon the reference but neglects or refuses to proceed further or fails to use all reasonable dispatch in proceeding with the reference be can be removed under Section 8 (1) or under Section 11 (1). I do not think that the words "instead of proceeding under Chapter II" necessarily indicate that the arbitrator has not entered upon the reference. There are some proceedings in Chapter II which apply even after the arbitrator has entered upon the reference, for instance those under Section 8 (2), Section 11 (1) and (2) and Section 12 (1). The words in italics themselves suggest that Section 20 (1) contemplates a case in which a proceeding can be taken under Chapter II, and do not support the contention that Chapter II applies when the arbitrator has entered upon the reference and Chapter III, when he has not.