INDRAJIT SINGH Vs. MIRZA JALILUDDIN BAIG

JUDGEMENT

(1.) THESE are two Miscellaneous Appeals under Section 39 of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act) against the judgment and decree of the Subordinate Judge, Cuttack dismissing Title Suit No. 167 of 1975 by making the Award a Rule of the Court on 20-2-1979 in the circumstances stated hereunder.

(2.) SYED Maqusud Ali, appellant in Misc. Appeal No. 69/79 had filed as the sole plaintiff Title Suit No. 167 of 1975 in the Court of the Subordinate Judge, Cuttack for (i) dissolution of the partnership running in the name of "Suraj Talkies"; (ii) for rendition of accounts of the said business by defendants 1 and 2; and (iii) for an injunction restraining defendants 1 and 2 from managing the partnership business. The suit based on a deed of partnership was filed on 179-1975. Defendants Nos. 1, 2, 4 and 3 filed petitions under S. 34 of the Act on 18-9-1975, 25-9-1975, 24-10-1975 and 9-1-1976 respectively for staying further proceedings in the suit on the ground that the partnership deed contained an arbitration clause to the following effect:

(3.) IT is otiose to go into a detailed discussion of all the case laws cited at the Bar. Suffice it to say that these citations lay down two clear propositions of law. The first one is that if the appointment of the arbitrator and/or reference to him is a nullity then participation of the parties does not cure the inherent defect. Further if the agreement itself that embodies the arbitration clause is void for some reason, viz., being against the provisions of any statute, against public policy or against public morals, then the whole agreement perishes and along with it the arbitration clause and therefore question of participation or non participation, is immaterial. The second principle laid down as far back as in AIR 1920 PC 123 and consistently followed is that a defect in procedure as absence of notice under Section 9 (b) of the Act which would have been fatal to the authority of the persons appointed as sole arbitrator can be waived by failure to object in time. AIR 1976 SC 1745 is an authority coming under the former type that lays down the dictum that after appointment of Arbitrator under Section 8 (2) of the Act, the Court becomes functus officio and it has no further jurisdiction to refer the dispute to Arbitrator. Such reference made and awards passed is a nullity and therefore could be set aside under Section 30 (c) of the Act coming under the clause "otherwise invalid". The learned Advocate for respondent No. 1 also relied on this and referred to an observation where their Lordships while stating facts (in para 2) have observed: