VALLABH PITTE Vs. NARSINGDAS GOVINDRAM KALANI

JUDGEMENT

(1.) THIS appeal raises the much vexed question as to the validity of an award given in a case by arbitrators where the jurisdiction of the arbitrators is challenged. The short facts are as follows; The appellant is a firm carrying on business at the Cotton Exchange Building, Kalbadevi Road, Bombay. The firm is a member of the East India Cotton Association Ltd. Kalani and Co., a firm of which the respondent was a partner employed the appellants in about 1954 to act as their agents to effect transactions in cotton in accordance with the rules, regulations and bye-laws of the East India Cotton Association Ltd. Neither the respondent-firm nor any of its partners were members of the Association. A large number of transactions were carried through at their request by the appellants. For transactions prior to 13th May 1955 there was no dispute between the parties, but the dispute related to transactions effected after that date. As the Respondent refused to honour his obligations which arose as a result of the alleged transactions, the machinery of the East India Cotton Association for arbitration was sought to be put into motion by the appellant. On the 19th of August 1955, the appellant appointed an arbitrator and it called upon the respondent to do likewise. As the respondent failed to appoint an arbitrator, the Chairman of the Association as required by the rules of arbitration, appointed an arbitrator on behalf of the respondent. The respondent denied that he had entered into any contract with the appellant and, therefore, denied the arbitration agreement itself. As soon as the Association appointed the arbitrators, and the arbitrators gave notice to the respondent, the respondent tiled a petition in the City Civil Court on the 25th November 1955 being petition No. 208 of 1955 for a declaration that there was no valid arbitration agreement and, therefore, the arbitrators had no jurisdiction to make any award. During the pendency of this application, the arbitrators, did not complete the arbitrations. When the petition came up for hearing on 24th April 1957, the respondent remained absent as a consequence of which it came to be dismissed for default.

(2.) AFTER this the appellant again moved the Association for arbitration. Two arbitrators were appointed as required by the rules and notices were given to both the parties to appear before them. The respondent failed to appear. AFTER hearing, the arbitrators made an award on the 11th of January 1958 awarding a sum of Rs. 20,000/-to the appellant. This award was filed in Court by the arbitrators. On notice being served, the respondent filed the petition for setting aside the award under Section 33 of the Arbitration Act.

(3.) THE appellant contested this petition affirmatively alleging that the contract had in fact taken place, that proper notices were given and there was no misconduct on the part of the arbitrators. It also contended that the dismissal of the earlier petition No. 208 of 1955, was a bar under Order 9 Rule 9 to the present petition for setting aside the award, and in any case the respondent had waived his contention that there was no agreement.