Jagjit Singh - (1.) ON February 6, 1963, Shri R. L. Sehgal, Commercial Subordinate Judge First Class, Delhi, ordered an award dated September 20, 1960 to be made the rule of the Court. Accordingly in terms of the award a decree was passed for Rs. 10,513.75, including Rs. 513.75 on account of costs of arbitration proceedings, in favour of Messrs Naaz Cinema and against Messrs Madhubala Private Limited. This appeal is against the order and decree of the Subordinate Judge.
(2.) ON March. 18, 1960 there was an agreement between Messrs Madhubala Private Limited, Delhi, and Messrs Naaz Cinema, New Delhi. Messrs Madhubala Private Limited are producers and distributors of cinematograph films and have hereinafter been referred to as "the.discributors". Messrs Naaz Cinema is a firm registered under the Indian partnership Act and is an exhibitor of cinematograph films. For facility of reference they are called hereinafter as "the exhibitors". The agrement between the distributors and the exhibitors provided for the former supplying to the latter a cinematograph film called "Mehlon-Ke-Khwab", on certain terms, from March 25, 1960. The picture was to be released simultaneously in Nazz and Golcha cinemas and the exhibitors were required to give 28 shows per week for a minimum . period of two weeks. Clause 7 of the agreement also provided for referring any dispute that may arise to arbitration and was in the following terms :- "That in case of dispute arising out of this agreement it shall be referred to the Motion Pictures Association, the decision of the same will be binding on both the parties." The distributors did not supply the prints of the picture to the exhibitors and, therefore, its release in Naaz Cinema from March, 25, 1960 had to be postponed. This led to a dispute between the exhibitors and the distributors. After some correspondence passed between then the exhibitors, on April 11, 1960 made a reference for arbitration to the Motion Pictures Association, Delhi. The Motion Pictures Association appointed Sarvshri L.D. Desai and Harbans Singh to act as aribitrators. The said arbitrators made an award on April 14 1960, which provided that the distributors shall supply their picture "MehIon-Ke-Khwab" to the exhibitors for simultaneous release in. Naaz and Golcha cinemas from April 15, 1960 or if the release was postponed from that date for any reason whatsoever then from any other date. , The distributors even failed to comply with the terms of the award dated April 14, 1960. The prints of the picture were only supplied by them to Golcha cinema and not to the exhibitors. There could, there fore, be no release of the picture in Naaz Cinema simultaneously with its release in Golcha cinema. On April 27, 1960 the exhibitors made another reference to the Motion Pictures Association, for Aribtration, claiming Rs. 50,000.00 as damages for "loss of business, goodwill and reputation" on the allegation that the distributors had dishonestly only released the picture in Golcha cinema from April 13, 1960. Once again Sarvshri L D. Desai and Harbans Singh were asked to act as arbitrators by the Motion Pictures Association. Later on Shri Desai was substituted by Shri JaganNath Pershad On September 20, 1960 Sarvashri Jagan Nath Pershad and Harbans Singh made an award the operative part of which was as under :- "We award that Messrs. Madhubala Private Ltd., Delhi shall pay a sum of Rs. 10,000.00 only to Messrs, Naaz Cinema, New Delhi alongwith a sum of Rs. 513.75 Np. only by way of costs of arbitration and award within aperiod of 30 days, from the date of the award in full and final settlement of their claim under reference." The exhibitors applied for the award dated September 20, 1960 being made a rute of the court, while the distributors raised various objections one of which v. as that the reference by the exhibitors being unilateral the resulting award was illegal. Objections were as well taken to the earlier reference dated April II, 1960 and the award dated April 14, 1960. The learned Commercial Subordinate Judge framed many issues in the case. So far as the issues relating to the reference dated April 11, 1969 and the award dated April 14, 1950 it was held by him that these could not be gone into in the proceedings before him. The reference made by the exhibitors on April 27, I960 and the award dated September 20, 1960 were found to be in no way illegal. The Said award was, therefore, made a rule of the court and a decree in terms thereof was passed. The only matter urged before us by Shri Ramchandra Rao, learned counsel for the appellants, was that the reference made by the exhibitors on April 27, 1960 being a unilateral one and the appellant not having assented to the terms of the reference the arbitrators did not come to be vested with the necessary jurisdiction and therefore, the award made by them was a nullity and it could not be made rule of the court.
(3.) THIS was not disputed by Shri Daya Krishna, learned counsel for the respondents, that the reference dated April 27, 1960 was only made by the exhibitors. The record of proceedings before the arbitrators, which was filed in the court of the Commercial Subordinate Judge, also shows that the reference on which arbitration proceedings were started was a unilateral one. Shri Daya Krishna, however, contended that the Managing Director of the distributors appeared before the arbitrators on July 26, 1960 for making a statement and thus the distributors submitted to the jurisdiction of the arbitrators and that it was not open to them to challenge the validity of the award by urging that both sides had not assented to the reference. On July 26, 1960 Shri A. C. Saxena, Manager of the exhibitors, filed before the arbitrators a revised statement of calculations in support of their claim for Rs. 50,000.00 by way of damages. On the same date Shri Khan Atta Ullaha Khan, Managing Director of the distributors, also made a statement refuting the claim made from the other side. He also closed the evidence on behalf of the distributors. On July 29, 1960, however, the producers sent a letter to the arbitrators in which a plea was specifically taken that no reference to arbitration could be made "on a unilateral complaint from a member". The arbitrators were also requested to "suspend further proceedings, ignore the complaint of Naaz Cinema and abstain from making any award or taking any step in relation to the alleged reference,'. The arbitrators without taking any notice of the letter of the distributors made the impugned award on September 20, I960. Shri Daya Krishna relied upon certain cases in support of his contention that consent of the distributors to the making of the reference can be inferred from the act of the Managing Director in appearing before the arbitrators on July 26, 1960 and making his statement. In the case of Union of India v. K. P. Mandal the relevant facts were that an arbitration clause in a contract with the Government of India for execution of certain work provided that except where otherwise provided in the contract all questions and disputes arising out of or relating to the contract were to be referred to the arbitration of the "Superintending Engineer of the Circle for the time being". Disputes arose and were referred to an arbitrator who was not competent to act as an arbitrator according to the qualifications prescribed by arbitration clause, The contractor not only submitted to the arbitration of the person appointed to act as arbitrator but also put forward a counterclaim against the Government for adjudication by the same arbitrator took part in the proceedings from the beginning to the end, agreed to extension of time for filing the award and only when the award went against him sought to set aside the award on the ground that the arbitrator was not comperent to act in that capacity. It was on those facts that Chief Justice Chakrawartti held that the rule of estoppel bound the contractor and prevented him from contending that the arbitrator was not qualifed under the terms of the agreement to arbitrate in the dispute. Obviously the tacis of .that case are distinguishable as in the present case the distributers even before the award was made asked the arbitrators not to proceed with the making of the award as the reference before them was a unilateral one. Similarly no assistance can he derived by the learned counsel for the respondents from the case of Union of Inaia v. h. Radhonoth Nanda. In that case the parties had participated in the proceedings before the arbitrator and what was held by the Orissa High Court was that any of the parties could not subsequently challenge the arbitrator's jurisdiction on the ground that he did not possess the qualifications required by the arbitration clause. ;