Kapur - (1.) THIS is an appeal against an order passed by Mr. Chhaju Ram, Senior Subordinate Judge, Delhi, dismissing the objections filed by the appellant against an award given by Mr. Shiv Charan Singh arbitrator.
(2.) ON the 12th of August 1942, the Government of India asked for tenders for eyelets and the tender of Messrs. Shankar Dass-Rup Lal was accepted. Deliveries were to be made by them in three instalments, i.e., on the 30th of September 1942, 31st of October 1942, and 30th of November 1942. The contract between the parties contained an arbitration clause which is given as paragraph 20 of the conditions attached to the invitation for tender, Exhibit P. 23, and ft was in the following terms : "20. ARBITRATION: In the event of any question or dispute arising under these conditions or any special conditions if contract or in connection with this contract (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the Chief Controller and an arbitrator to be nominated by the contractor, or in the case of the said arbitrators not agreeing then to the award of an Umpire to be appointed by the arbitrators in writing before proceeding on the reference and the decision of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940, and of the Rules thereunder and any Statutory modification thereof shall be deemed to apply to and be incorporated in this contract." Due to the tenderers not being able to supply the goods the contract was cancelled on the 3rd of April 1943. In pursuance of arbitration clause matters in difference were referred to the arbitration of one P.D. Bhargava and Tara Chand Malik. It appears that Tara Chand Malik resigned on the 4th of November 1946, and on the same day Brij Lal, a partner of the appellant firm, wrote to the Chief Controller that Mr. Shiv Charan Singh be appointed as the sole arbitrator. ON the 3rd of December 1948, this suggestion, on behalf of the firm, was accepted by the Government through N. N. A. Qureshi, Assistant Director of Supplies. The contents of this letter are as follows; "I am directed to acknowledge your letter dated 4-11-1946, addressed to the Chief Controller of Purchase,Department of Supply, New Delhi, stating that your Arbitrator Malik Tara Chand had resigned and that you were pleased to appoint Bakhshi Shiv Charan Singh. P.C.S., Officer on Special Duty in the Department of Supply as sole Arbitrator and that his decision would be binding upon you. You hoped that Government would also agree to his being appointed as sole arbitrator. I am now directed to advise you that Government's arbitrator in the above-mentioned case. (Mr. P.D. Bhargava Advocate) has also resigned from the Arbitratorship and Government is therefore, pleased to accept your suggestion that Bakhsht Shiv Charan Singh, P.C.S., O.S.D., in the Director-General of Industries & Supplies may be accepted as the sole Arbitrator for the purposes of present arbitration proceedings. 2. Please acknowledge receipt." On the 9th of December 1946, the appellants wrote to the Assistant Director of Supplies acknowledging the receipt of the letter of the 3rd of December in regard to the approval of the Government to the suggestion of appointing Mr. Shiv Charan Singh as the sole arbitrator. On the 13th of December 1946, N. N. A. Qureshi wrote to the appellants: "Reference your letter dated 9/12/1946. With reference to your above letter please contact Bakhshi Shiv Charan Singh, P.C.S., the sole arbitrator, for the date of hearing in the above case." Copies of this letter were sent to Mr. Shiv Charan Singh and to Mr. Mohammad Sadiq. It may here be "remarked that on the 29th of November 1946, P.D. Bhargava had also resigned. On the 7th of December 1946, Mr. Shiv Charan Singh sent a notice to the appellant firm stating that he had been appointed sole arbitrator in the case and had fixed the arbitration proceedings on the 19th of December 1946; at 3 p.m. Acknowledgment of the receipt of this notice is on the file and is signed on behalf of the appellant firm, and as it is through post it must have been served on the appellant firm. On the 24th of April 1947. Mr. Shiv Charan Singh gave an award in favour of the Government for Rs. 14,120/-against the appellant with costs, which he assessed at Rs. 250/- only.
(3.) ON the 23rd of March 1948, objections were filed on behalf of the appellant firm through Ram Lal, a partner, to the effect that: (1) the appointment of the sole arbitrator was not made by the firm or by its partners and one partner alone had no authority to make the appointment and (2) the arbitrator was guilty of judicial misconduct, because (a) the Government sustained no loss and the arbitrator had not applied his mind to the conditions of the contract; (b) the award was not supported by any evidence the arbitrator had taken the 3rd of April 1943, to be the date of the breach and had assessed damages as on that date without there being any proof as to the rates prevailing on that date and (c) the award was vitiated by a patent error of Law. Three issues were stated which were: (1) Whether the appointment of Bakhshi Shiv Charan Singh as sole arbitrator to decide the dispute between the parties is illegal and 'ultra vires' for the reasons given in the grounds of objections? (2) Whether the respondent is estopped by his acts and conduct from raising this objection? (3) Whether the arbitrator has misconducted himself or the proceedings? The learned Judge held that the appointment of Mr. Shiv Charan Singh was not illegal; at any rate, because the partners of the firm had not taken any objection to the proceedings and their Advocate had been appearing before the arbitrator, they should be taken to have given their consent to the arbitration proceedings; that even if the initial reference was without authority of the other partners their conduct showed that they had acquiesced in the reference and that no misconduct had been proved. Against this order the firm has come up in appeal to this Court. The first objection raised by Mr. Puri was that there was no valid submission, and this he based on two grounds, firstly, that there was no reference, because that could only be done under Section 175 of the Government of India Act of 1935, expressly in the name of the Governor-General and secondly, that all the partners of the firm had not agreed to the reference, which was on that ground illegal.;