Mithan Lal - (1.) I have heard learned counsel for the parties rather at some length. The point involved in this revision is whether the provisions of para 2 of Schedule I to the Indian Arbitration Act relating to the appointment of an umpire on the request of the arbitrators, is mandatory or merely directory; and whether in a case where no opportunity for taxing recourse to the provisions of Section 8 (1) (c) arose, the provisions of para 2 could be treated to be merely directory and failure to appoint an umpire should be treated to be a mere irregularity.
(2.) IN this case the parties entered into an agreement to refer their disputes to arbitration on the 20th October 1959. Four persons were named as arbitrators. There is nothing in the agreement for the appointment of an umpire. It also does not contain a Clause that the decision by the majority shall be binding on the parties. Reference to arbitration was made on the 20th November 1959 and the award was filed in court on the 16th December 1959. The plaintiff filed an objection praying for setting aside the award on the ground of misconduct of the arbitrators, as well as on the ground that there being no compliance with Para 2 of Schedule I to the Arbitration Act, the award was not a valid award and should not be made the rule of the court. The trial court upheld the objection both on the ground of misconduct of the arbitrators as well as on the ground of illegality due to non-appointment of an umpire. The lower appellate court did not give any specific finding on the misconduct of the arbitrators, but on the question of law it came to the conclusion on the basis of the authority of Jwala Prasad v. Amar Nath, AIR 1951 All 474, that no umpire having been appointed as required by Para 2 of Schedule I the award had been vitiated. It is against this finding that the defendant has come in revision.
(3.) PARA 2 of the First Schedule to the Arbitration Act lays down - "If the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire not later than one month from the latest date of their respective appointments." This para will show that it is open to the arbitrators to appoint an umpire within one month, but in this case they neither appointed any umpire nor any opportunity was given to the parties to take recourse to Sectionq8 (1) (c) for the appointment of umpire. Because after the reference on 20th November 1959, the award was given within one month and was filed in court on 16th December 1959. In cases where the arbitrators fail to appoint an umpire within the aforesaid period, it is open to the parties to make a prayer to the court for appointment of an umpire under Sectionq8 (1) (c). This opportunity never arose in the case because the prayer could only be made to the court if the arbitrators failed to appoint an umpire within one month, and as the award was also given within one month no party coma approach the court for appointment of an umpire as required by Section 8 (1) (c). The present case stands concluded by the Division Bench authority of AIR 1951 All 474. The facts of that case were similar, except that the award in that case was express provision to the contrary in the agreement, the abrasion Bench of this Court held that where reference is to an even number of arbitrators, then, unless there is an express provision to the contrary in the agreement, the arbitrators are under a statutory obligation under Schedule 1, para 2 to appoint an umpire not later than one month from the latest date of their respective appointments. The provisions of para 2 of Schedule 1 are of a mandatory character and it is clearly the duty of the arbitrators to appoint an umpire. In the absence of the appointment of the umpire, the award made will be invalid.;