SHAW WALLACE AND CO Vs. KMSUBBIER AND SONS

JUDGEMENT

(1.) This is an appeal from a judgment of Kumaraswami Sastri, J. dismissing a suit brought by the plaintiffs, Messrs. Shaw Wallace & Co., against the defendants to enforce an award on two grounds, (1) that the arbitrators were not duly appointed, and (2) that even if they were, they were guilty of technical misconduct, though acting bona fide, when they refused to adjourn the arbitration to allow of an application being made to set aside their appointment under Section 9 of the Indian Arbitration Act, 1899. The facts may be very briefly stated. The contract between the plaintiffs, who are referred to as the merchants, and the defendants, who are referred to as the dealers, contains a very wide Clause (5) protecting the merchants from responsibility for late shipment in consequence of events beyond their control and also an arbitration Clause (12) in the following terms:--" Should any dispute arise as to the interpretation of this contract or any matter in connection therewith or with the carrying out thereof the same shall be submitted at the option of the merchants either to the arbitrament of an arbitrator to be appointed by the Secretary or other officer or officers of the Madras Chamber of Commerce entitled to make such appointment according to the practice of the Madras Chamber of Commerce or to the arbitrament of two European merchants or their European assistants one to be appointed by each party or in the event of disagreement between such arbitrators of an umpire to be appointed by them. Should either party omit to nominate an arbitrator within 7 days of the receipt of a notice calling on him so to do the other party shall be at liberty to nominate both arbitrators. The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1899 save that the 1st and 2nd proviso to the 1st schedule thereto shall not apply. The decision of the arbitrators or of their umpire shall be conclusive and binding on both the parties. The arbitrators to state by whom the cost of arbitration is to be paid."

(2.) On the 30th April, 1919 the plaintiffs wrote to the defendants asking them to join in a reference to the arbitration of the Chamber of Commerce of a dispute regarding the late shipment of 44 bales. The defendants through their Vakil returned an evasive answer on May the 7th, and after waiting another month, the plaintiffs purporting to act under Clause 12 of the contract wrote to the defendants on the 9th June calling on them pursuant to Clause 12 of the contract to nominate a European merchant or his assistant to act as arbitrator on their behalf, and notifying them, that in the event of their failing to do so within 7 days the plaintiffs would nominate both arbitrators. The defendants did nothing, and the plaintiffs nominated two arbitrators on the 27th June and informed the defendants by their solicitor s letter of the 1st July. The arbitrators then gave the defendants notice of the place and time of hearing (July 9th) and the letter was forwarded to the defendants by the plaintiff s solicitors on July 5th. On the 8th July the day before the hearing, the defendants wrote to the arbitrators taking exception to their appointment, and asking for an adjournment to enable them to apply to the High Court after the re-opening on the 14th July to set aside the appointment. The award sets out that in view of the fact that ample time had been given the dealers to appoint an arbitrator, the arbitrators had replied that they could find nothing in the correspondence which warranted the postponement of the hearing and that it would be held on the day fixed. They accordingly proceeded in the absence of the defendants and found that in the circumstances of the case the plaintiffs were protected by Clause 5 of the contract from responsibility for the late shipment.

(3.) The parties to a contract are at liberty to make any agreement they like as to the appointment of arbitrators and as to what is to be done if one of the parties omits to appoint an arbitrator as provided in the contract. Because, however, contracts may fail to provide what is to be done in such an event, Section 9 of the Indian Arbitration Act, which substantially reproduces a section of the Common Law Procedure Act, 1854 and of the English Arbitration Act, enacts that " where a submission provides that the reference shall be to two arbitrators, one to be appointed by each party, unless a different intention is expressed therein" then Clause (b), " if one party fails to appoint an arbitrator within 7 days after the other party having appointed his arbitrator, has served the other party with a written notice to make the appointment, the party who has appointed anarbitrator may appoint that arbitrator to act as sole arbitrator in the reference. " This section in my opinion has no application where, as in the present case, the parties by their contract have provided that a different course should be adopted in the event of one of the parties failing to nominate because the section is not to apply where a different intention is expressed in the contract. In the present case the contract provides : " Should either party omit to nominate an arbitrator within 7 days of the receipt of a notice calling on him to do so the other party shall be at liberty to nominate both arbitrators", in other words, in the event of a dispute arising, either party to the contract is to be at liberty in the first instance to call upon the other to nominate an arbitrator within 7 days of the receipt of the notice calling upon him to do so, and if the other party fails to do so then to nominate both arbitrators himself. Not only is he to appoint both arbitrators but the nomination of both is to be after the failure of the other party to appoint. There is therefore no room for the application of the section which provides that " unless a different intention is expressed, " a party desiring arbitration is first to appoint his own arbitrator then to give notice to the other party to appoint an arbitrator and on his failing to do so, appoint the arbitrator he had himself appointed to be the sole arbitrator. That is an entirely different procedure which is excluded by the terms of the contract with the result that Section 9 which was intended to supplement and not to override the contract of the parties has no application to the present case. Where the contract provides otherwise an appointment cannot be made under Section 9 Clause (b) and it, also, follows that the proviso enabling the court "to set aside any appointment made in pursuance of Clause (b)" has no application. Similarly in Gumm v. Hallet (1872) L.R. 14 Eq. 555 it was held, with reference to the corresponding Section 13 of the Common Law Procedure Act, 1854, that it had no application to a contract which provided that either party should appoint one arbitrator and a third be chosen by the two so appointed. The learned Judge appears to have been influenced by the proviso in Clause 12 of the contract that the arbitration is to be conducted in accordance with the provisions of the Indian Arbitration Act, but this is not to be read as varying the express provision of the contract as to the appointment of arbitrators especially, as under the Act itself the provisions of Clause (b) of Section 9 do not apply where a different intention is expressed in the contract.