SHREE MEENAKSHI MILLS LTD Vs. PATEL BROTHERS

JUDGEMENT

(1.) In September 1940, a dispute arose between the parties to this appeal as a result of transactions in which they had been engaged in the cotton markets of Bombay, Liverpool and New York. An agreement between the parties provided for arbitration under the by-laws of the East India Cotton Association, Ltd. Two arbitrators were appointed in accordance with those by-laws, and there is now no dispute about the validity of their appointment. On 19 March 1941, the arbitrators made an award whereby they awarded to the respondents the sum of Rs. 34,508-6-5 with interest. The appellants were dissatisfied with this award. The by-laws of the East India Cotton Association gave them a right of appeal to the Board of the Association "within 10 days from the date of publication of the award," and they gave a proper notice of appeal within the prescribed period. The by-laws define "the Board" as meaning "the Board of Directors" of the Association "acting through at least a quorum of their number at a meeting of that Board duly called and constituted." The articles of association provide that six shall form a quorum. Nine members of the Board were convened to hear the appeal. During the argument of counsel for the appellants one of the nine went away and did not return. His departure and his absence appear to have escaped the notice of counsel. The appeal was fully heard by the remaining eight members, who, by a majority, decided that the sum awarded to the respondents should be reduced to Rs. 12,508-6-5. This decision was published on 21 June 1941. It was signed by the chairman and the secretary, who had been authorised to sign it on the Board's behalf. On 11 July 1941, the award of 19 March 1941, and the decision on appeal were filed in the office of the Prothonotary of the High Court, who gave notice of such filing to the appellants on 18 July 1941.

(2.) The appellants thereupon petitioned the High Court of Bombay, praying "that the alleged awards dated 19 March 1941 and 21 June 1941, be declared to be invalid and set aside and taken off the file of the records of this Honourable Court." The petition was heard by Chagla J. The learned Judge was of opinion that when once the Board had been constituted for the purpose of hearing the appeal, the nine members who had been convened were to be regarded as joint arbitrators. Taking that view he held that the appellants were entitled to an adjudication by all nine arbitrators acting together, and that the decision of 21 June 1941, which purported to be the decision of the Board, was invalid. The learned Judge expressed the opinion that all the members of the Board who adjudicated should have signed the award but if it had been necessary to decide the point he would have considered that this was an irregularity which could be cured, and would have remitted the award to them for their signatures. The conclusion at which the Judge arrived was that "the award must be set aside." As he had made no finding adverse to the validity of the award of the arbitrators, dated 19 March 1941, this mode of expression might have left it uncertain whether he intended to do more than set aside the decision on appeal, but the formal order of the Court put the matter beyond doubt, stating as it did in terms that both the decision of Board and the award of the arbitrators were to be set aside and taken off the file of the Court.

(3.) The respondents then in their turn appealed to the High Court in its appellate jurisdiction, contending that the decision of the Board was valid and regular, and that the order of Chagla J., was wrong. The appeal was heard by Sir John Beaumont C. J., and Somjee J. The Court affirmed the decision of Chagla J., on the main issue. They held that in the circumstances the decision of the Board was a nullity, and must be set aside. They further held, however, that there was no ground for setting aside the award of the arbitrators. The learned Chief Justice, in whose judgment, Somjee J., concurred, expressed the opinion that "the so-called appeal" was "not really an appeal but.......a continuation of the arbitration" so that one award had been made "on two different dates, and in two different parts, by two different sets of arbitrators." The position thus was that one part of the award had been validly made, but the other part had so far not been made. "If that is so" said the learned Chief Justice, "I think we can remit that portion of the award" (viz., the decision of the Board) "under S. 16, Arbitration Act, and in my view that is really the only course which is open to this Court." The Court accordingly made a declaration that the appeal against the original award had never been heard by a properly constituted Board, and ordered that the order of the Board should be set aside, and that the notice of appeal should be "remitted back" to the Board "to be dealt with in accordance with law." Against this order the present appeal is brought. The appellants naturally do not question the correctness of so much of the decision of the High Court as declared that the proceedings before the Board of Directors were a nullity, and since there was no cross appeal, their Lordships are not called upon to express any opinion upon that part of the decision, and must not be understood to express either approval or disapproval of it. Should the same question arise for decision hereafter, it will be necessary to consider whether the well-established principle that, in the case of a reference to two or more named arbitrators, all the arbitrators must act together, can properly be applied when the reference is not to individuals but to a body, such as a committee or a board, whose corporate powers are regulated by its constitution. It is perhaps desirable to add that their Lordships must not be taken to assent to the opinion expressed obiter by Chagla J., that an award made by the Board ought to be signed by all the members of the Board who have adjudicated. Their Lordships do not desire to express any opinion on that point.