KARAM CHAND Vs. SANT RAM TARA CHAND

JUDGEMENT

(1.) THIS first appeal against order has arisen out of the following facts.

(2.) ON 21st of May, 1947, Karam Chand and Diwan Chand mortgaged certain property in favour of the respondents for Rs. 30,000/- by a registered mortgage deed of the same date. Clause 14 of this deed provided that any dispute arising between the parties out of this transaction would be referred to the arbitration of hari Kishan Dass who was known to the parties. On 17th of April, 1954 on account of certain disputes arising out of the transaction the mortgagees presented an application under Section 20 of the Arbitration Act (Act No. 10 of 1940) hereinafter to be called the Act, that the arbitration agreement be filed in Court. The mortgagor admitted the execution of the mortgage deed incorporating the agreement for reference to arbitration but maintained that Har Kishan Das the arbitrator named being father-in-law of Siri Kishen, one of the parties in the petitioners' firm, was not a fit person to act as an arbitrator. The Court framed the following issues : 1. Whether Shri Hari Kishen Das is not a fit person to arbitrate between the parries? 2. Relief. The learned Sub-Judge upheld the objection of the mortgagor. He, however, ordered the filing of the arbitration agreement. The present appeal by the mortgagor is directed against that order,

(3.) THE learned counsel for the appellant contends that after accepting the objection of the appellant the only course open to the Court was to dismiss the application for filing the agreement. The Court, according to him, had no jurisdiction to allow the filing of the agreement in absence of the intention of the parties to refer the dispute to the arbitration of any other person. The question for determination therefore is whether the arbitration agreement has become inoperative on account of the incapacity of the above-named arbitrator to act or can the Court keep the agreement alive under the Act? Section 20 of the Act under which the application is made refers to arbitration with intervention of Court where there is no suit pending. For the decision of the question raised the following subsections of Section 20 are relevant : "3. On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the lime specified in the notice why the agreement should not be filed?