Karnataka High Court
C.C. Subbaraya Setty vs C.V. Ananthanarayana Setty And Others on 3 August, 1995
Equivalent citations: AIR1996KANT41, ILR1995KAR2892, 1996(1)KARLJ35, AIR 1996 KARNATAKA 41, (1995) ILR (KANT) 2892 (1996) 1 KANT LJ 35, (1996) 1 KANT LJ 35
JUDGMENT
1. This appeal is filed by respondent-3 in Arbitration Case No. 1 / 73 on the file of the Civil Judge, Hassan, against his order rejecting his application under Section 30 of the Arbitration Act and passing a decree in accordance with the award.
2. The appellant and respondent-5 are the sons of fourth respondent. First respondent is the son-in-law of fourth respondent and brother-in-law of the appellant and respondent-5. Second respondent is the brother-in-law of fourth respondent. Third respondent is a cousin of first respondent.
3. Respondents 1 to 3 filed the petition before the lower court under Section 14(2) of the Arbitration Act (hereinafter referred to as 'the Act') stating that the appellant and respondent-4 and 5 had referred their dispute regarding partition of their family properties to them by means of a deed of submission dated 23-1-1972, that on 24-1-1972 they met the appellant and respondents-4 and 5 and collected particulars regarding their properties and liabilities, that on 23-5-1972 the fourth respondent wrote a letter to them requesting them to decide their disputes as per the deed of submission and that on 21-9-1972 they have passed an award on a stamp paper and got the same registered. They also stated that they have given formal information about the passing of the award to all the parties by registered post on 25-10-1972 and that as requested by the parties they are filing their award in court for passing of a decree.
4. The court issued notices on the above petitioners. Respondents-4 and 5 had no objection to the passing of the award. But the appellant filed an application praying that the award may be set aside. In his objections he denied that there was any reference for arbitration with regard to the dispute regarding partition or that the arbitrators inquired him in that regard. He alleged that his signatures were taken on some papers without disclosing their contents and that the respon-dents-1 to 3, in collusion with respondents-4 and 5, had forged his signatures and got up some documents. He asserted that all the properties of the family had not been included in the award and that the partition effected by the arbitrators is highly inequitable. He also contended that the award had not been filed in Court in time. He further alleged that on account of the conduct of the arbitrators he has been put to great loss and injustice and that as such the award should be set aside.
5. During the course of the inquiry the first respondent, fourth respondent and the appellant were examined. On the material on record the learned Civil Judge has held that the case of the appellant that his signature was taken on some documents without disclosing its contents or that his signatures have been forged had not been made out. He has held that the deed of submission has come into existence as stated by the arbitrators and that all the legal requirements for initiation of arbitration proceedings and factual existence of differences between the appellant and respondents-4 and 5 had been established. He has also held that that the arbitration proceedings were carried on as stated by the arbitrators and that the appellant had not proved any misconduct on the part of the arbitrators which would render the proceedings null and void. He has also negatived the contention raised by the respondents that the application filed by the appellant for setting aside of the award was barred by limitation. On these findings the learned Civil Judge has rejected the appellant's application and as a consequence he has passed a decree in accordance with the terms of the award.
6. In this appeal Sri V. Tarakaram, learned senior advocate, appearing for the appellant, did not seek to question the findings of the lower court that there was a valid reference made by the appellant and respondents-4 and 5 with regard to their dispute pertaining to the partition of the family properties or that the arbitrators have conducted the proceedings in accordance with law. He mainly urged two grounds in support of the appellant's prayer for setting aside of the award. He firstly contended that the arbitrators have not passed the award within 4 months from the date on which they entered on the reference as required under para 3 of the I schedule of the Act and that as such the award is void. He pointed out that admittedly the arbitrators entered on the reference on 23-1-1972 itself and on 24-1-1972 the arbitrators had also prepared the list of properties allotted to each party and as such the award had to be passed on or before 23-5-1972, whereas it is passed on 21-9-1972, by which date the arbitrators had become functus officio. The second ground urged by him is that the award itself discloses that the arbitrators have collected their fee and other expenses only from respondents-4 and 5 and that this conduct of the arbitrators in accepting the remuneration only from 2 parties amounts to misconduct which vitiates the award. Though this objection has not been taken either in the objections filed in the lower court or in the memorandum of appeal he contended that the appellant could be permitted to raise this plea now as it is apparent from the award itself and it does not require any further investigation. During the course of the arguments an application has also been filed on behalf of the appellant seeking permission to raise this ground.
7. The learned counsel for the respondents contended that as the fourth respondent had written a letter to the arbitrators on 25-3-1972 requesting them to give their decision the arbitrators had time to pass the award within 4 months from that date and that as the award has been passed on 21-9-1972 it is in time. He relied on the decision of the Supreme Court in Hari Shankar Lal v. Shambhunath Prasad in support of his contention.
With regard to the new ground of misconduct sought to be raised by the appellant the learned Counsel for the respondents contended that this plea is not purely a legal plea and it cannot be allowed to be raised at this stage. According to him the mere fact that the fee is accepted by the arbitrators from respondents-4 and 5 would not by itself amount to misconduct that if this plea of misconduct had been raised by the appellant in the lower court the respondents would have had an opportunity to plead and prove that it "was by mutual agreement between the parties, the fee and expenses were paid by Respondents-4 and 5 and that as respondents had no occasion to meet this ground and to adduce evidence in that regard this Court should not allow that plea now. It was also contended that a new plea of misconduct cannot be allowed to be raised after the expiry of the period of limitation of 30 days within which time an application for setting aside of the award had to be made.
8. The learned counsel for the respondents while supporting the findings of the lower court on other points however disputed the correctness of the finding of the learned Civil Judge that the application under Section 30 filed by the appellant was in time. He sought to make out that the letter Ex. P14, written by the appellant and which is admitted, clearly shows that he knew of the filing of the award in Court as well as the date of hearing fixed by the Court much before the service of notice by registered post and that as he has not filed the application within 30 days from the date on which he came to know about the proceedings, the application is barred by time.
9. Before taking up the grounds urged by the learned counsel for the appellant it would be better to deal with the respondents' contention that the appellant had not made the application for setting aside of the award within 30 days and as such it is barred by time.
10. Section 14(2) of the Act stipulates that after the filing of the award in court, the court shall give notice to the parties of the filing of award. In the instant case the notice of filing of the award sent by the court by registered post was served on the appellant on 9-6-1973 and the application is filed by him on 6-7-1973. It is for this reason the learned Civil Judge has held that the application is filed in time. The learned Counsel for the respondents relies on Ex. P14, a letter admittedly written by the appellant on 21-4-1973 to his brother-in-law, the first respondent complaining about the injustice done to him. In that letter he has mentioned that the case has been posted for hearing on 2-6-1974. It has been elicited in his cross-examination that except this arbitration case there was no other litiation pending between him and the respondents. He has further admitted that in that letter he has stated that this case was posted for hearing on 2-6-1974. Though he denies that there is a mistake in "mentioning the year as 1974 instead of showing it as 1973 it is obvious that it is a mistake, as by 21-4-1973 on which date the letter was written this case could not have been posted to 2-6-1974 and it had also not been posted to that date. On the other hand the case had been posted to 2-6-1973. As such there cannot be any serious doubt about the fact that the appellant when he wrote Ex. P14 had knowledge about the proceedings which had been initiated by the arbitrators before the Civil Judge and he also knew that the case stood posted to 2-6-1973. The question is whether on this basis it can be said that the application filed by the appellant on 6-7-1973 was barred by time.
11. The period of limitation for filing the application to set aside the award does not start from the date the party gets knowledge of the filing of the award into court. It is now well settled that it is only from the date the party gets notice or information from the court about the filing of the award the period of limitation starts to run.
12. In Nilkantha Shidramappa Ningashetti v. Kashinath Somanna Ningashetti it has been held that the communication by the Court to the parties or their counsel that an information that an award had been filed was sufficient to comply with the requirements of sub-section (2) of Section 14 of the Arbitration Act and that notice does not necessarily mean communication in writing. It has been held that such intimatipn need not be given in writing and could be communicated orally. In Indian Rayon Corpn. Ltd. v. Raunaq and Co. Pvt. Ltd. the same legal position is reiterated and it is further stressed that the intimation must be from the registry of the court to the parties concerned. Following these two decisions this Court in Pavi Electrical Industries v. B.D.K. Alloy Pvt. Ltd. has held that that notice from arbitrator Or From any other source other than the court cannot be said to be a notice from the court and that the service of notice by the court is important and not the method or manner of service. As such it is not sufficient if the respondents are able to show that the appellant had knowledge about the filing of the award even before the actual service of notice from the court. They must establish that the information about the filing of the award had been received by the appellant from the court, though that information may not be in writing.
13. The learned counsel for the respondents pointed out that the order sheet maintained by the lower court shows that the court had ordered issue of notice to the appellant on 17-3-1973, that on 7-4-1973 as the notice had still not been returned it was adjourned to 2-6-1973 and that by 2-6-1973 the notice was returned with an endorsement that it was served on the house of the appellant. He contended that the very fact that the appellant had come to know the date of hearing as 2-6-1973, shows that he must have got information from the notice affixed on his house and that that notice is suifficient to start the running of time. He referred to the above decisions of the Supreme Court to contend that when once it is found that the appellant got the information about the filing of the award from the court that would be sufficient compliance with Section 14(2) and it does not matter even if that notice had not been personally served on the appellant.
14. The above argument of the learned counsel for the respondents proceed on the basis that the notice issued by the court on 17-3-1973 was for the hearing 2-6-1973 and that the notice which was affixed on the house of the appellant indicated the date of hearing as 2-6-1973. But a perusal of the order sheet shows that the court ordered issue of fresh notice to the appellant by 7-4-1973. As such the notice had been issued for the hearing dated 7-4-1973 because that notice was not returned on 7-4-1973 the court posted the case to 2-6-1973 for awaiting notice. The respondents have not got the copy of that notice marked in evidence nor have they examined the process server to show that the notice was affixed on the appellant's house. In fact the report of the process server regarding the affixture of the notice had not been sworn and as such the court declined to accept it and ordered issue of fresh notice by registered post. As such on the material on record it cannot be said that a notice issued by the court affixing the dale of hearing as 2-6-73 had been affixed on the appellant's house or that that was the source of the information of the appellant regarding the date of hearing of the case. Though on the material on record it is possible to hold that the appellant had knowledge about the filing of the award in court and also about the case have been adjourned to 2-6-1973 much prior to the service of notice on him, as there is no material to hold that the appellant got that information from the court or its registry, it cannot be said that the application filed by him within 30days from the date on which he was actually served with notice is barred by time.
15. Regarding the contention of the learned counsel for the appellant that the award has not been passed in time and as such it is void, there is no dispute about the facts that the reference was made on 23-1-1972 and that the arbitrators collected particulars of the assets and liabilities of the family as well as the valuation of the properties from the 3 members who gave separate lists and that a common list was prepared by the arbitrators showing all the properties and the valuation thereof. It is also not disputed that on 24-1-1972 lists of properties allotted to each member were prepared. It is also now not disputed that on 23-5-1972 the fourth respondent who is the father of appellant and fifth respondent wrote a letter as per Ex. P12, wherein he pointed out that the arbitrators had not given their decision till that time though they had given their statements regarding their assets, etc., and requested the arbitrators to give their decision as early as possible and help them. The learned Civil Judge relying on the decision Hari Shankar Lal's case has held that the award which is passed within 4 months from the date of that letter is in time.
16. Para 3 of Schedule I of the Act stipulates that the arbitrators shall make their award within 4 months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitrators agreement or within such extended time as the court may allow. The Supreme Court, in Harishankar Lal's case , interpreting the above provisions, has held as hereunder:
"A notice to act may be given before or after the arbitrators entered upon the reference. If notice to act is given before they entered upon the reference, the four months would be computed from the date they entered upon the reference. If a party gives notice to act within 4 months after the arbitrators entered upon the reference, the arbitrators can make an award within 4 months from the date of such notice. And in that event, after the expiry of the said 4 months the arbitrators become functus officio unless the period is extended by court under Section 28 of the Act; such period may also be extended by the Court, though the award has been factually made, otherwise the document described as an award would be treated as non est."
In the above decision it has also been held that the words "enter on the reference" occurring in Rule 3 of the I Schedule are not synonimous with the words "to act" and that the words "to act" are more comprehensive and of a wider import than the words "to enter on the reference".
17. In the present case there is no dispute with regard to the fact that the arbitrators entered on the reference on 24-1-1972 itself. The letter by the fourth respondent has been witten to the arbitrators requesting them to pass the award within 4 months from that date. The award has been passed within 4 months from the date of that letter. But it is contended by Sri Tarakaram that the question of a party calling upon the arbitrators to act would arise only where they had not acted and that as in this case the arbitrators had not only inquired the parties and collected all the particulars but had also prepared lists of all the properties to be allotted to each member, there was no occasion for the fourth respondent asking the arbitrators to act and that Ex. P12, letter, cannot therefore be construed as a notice to act, which is contemplated in Rule 3. He relied upon the decision in Ghasilal Todi v. Biswnath Kerwal, to contend that once the time for making the award starts running by the arbitrators entering upon reference or by a party giving a notice to the arbitrators to act it does not get extended eithe by the issue of a notice by the party in the former case or by the arbitrators entering on the reference in the latter case and that the award has to be passed within 4 months. In view of the clear decision of the Supreme Court in Hari Shankar Lal's case it cannot be said that once the arbitrators enter on reference they have to make the award withn 4 months from the date of entering on the reference and that a notice given by a party to the arbitrators to act within 4 months from the date on which the arbitrators entered on the reference would not extend the time cannot be accepted. In fact the decision in Ghasilal Todi's. case also does not support such contention which runs counter to the dictum of the Supreme Court. In Ghasilal Todi's case a letter dated 24-7-1961 was written by the party requesting the arbitrator to enter upon the reference and the arbitrator actually entered on the reference on 17-3-1962 and passed the award on 23-5-1962. It was held that as 4 months expired after the arbitrator called upon to act, the arbitrator did not have jurisdiction to enter upon the reference at any time thereafter and make a valid award within 4 months from the date of entering upon reference. In fact at page 469 the learned Judge, after referring to the decision of the Supreme Court in Hari Shankarlal's case, has observed that if within the period of 4 months of being called upon to act the arbitrator had entered upon the reference then as per the view of the Supreme Court the limitation would have begun to run not from the previous date but from the date on which the arbtirator entered upon the reference. Because in that case the arbitrator entered on reference more than 4 months after the issue of notice by the party to act, the Calcutta High Court has held that the arbitrator had no jurisdiction to pass the award and it was invalid.
18. A Full Bench of Calcutta High Court has dealt with the same question in Ramanath Agarwalla v. M/s. Goenka & Co. . In that decision what are all the acts which would come within the expression "to act" has been explained in para 28 as hereunder:
"We have already observed that an arbitrator under the provisions of the Arbitration Act is required to act as an Arbitrator. His acting as arbitrator includes (a) entering on reference, (b) proceeding with the reference, and (c) making an award. It follows that the expression 'acting as an Arbitrator' is wider than 'entering on the reference'. Now, the dictionary meaning of 'to enter on', in the context in which the expression has been used in the Arbitration Act, is "to take the first step upon or in' or 'to begin to deal with (subject) : vide Shorter Oxford English Dictionary, Vol. 1. p. 464".
As already pointed out even the Supreme Court has indicated that the expression "to act" is a very comprehensive expression. It is in this background we have to consider whether in this cases there was any scope for fourth respondent to issue a notice to the arbitrator to act. Though the arbitrators had entered upon reference and initiated the proceedings and had even prepared lists of the properties to be allotted to each party, the proceedings had not come to an end. It is only after a formal award is made the proceedings would come to an end. If the award still remained to be passed, then a notice by a party asking the arbitrators to pass the award would be a notice to act as passing/of an award would also come within the expression "to act". Even if the arbitrators have entered on reference, which also would come within the ambit of the expression "to act" and had done something for the progress of the arbitration but had not yet made the award, then a notice issued by a party asking them to give the decision would be a notice to act as contemplated under Rule 3. The only limitation is that such a notice must be issued within 4 months from the date on which the arbitrators entered on the reference. If such notice is issued after the expiry of period of 4 months from the date on which the arbitrators entered on the reference then it would be ineffective. In the present case-as the notice issued by the fourth respondent is within 4 months from the date on which the arbitrators entered on the reference and as the award itself is made within 4 minths from the date of that notice it cannot be said that the award is void.
19. Coming to the new ground of misconduct raised by the learned counsel for the appellant we have to first consider whether this plea can be allowed to be raised now when no such plea had been taken in the objections field by the appellant before the lower court. Sri Tarakaram relied on the decision of the Supreme Court in Rajeswariamma v. Joseph and a decision of this Court in Commr. of Income-tax v. Sundaram ILR (1974) Kant 1459 : (1975 Tax LR 890) in support of his contention that new plea which is purely a question of law or which does not require any further investigation of facts could be allowed to be raised even at the time of arguments. In Rajeswariamma's case, in an execution petition filed by three decree holders an order for delivery of property had been passed by the executing court and that order was challenged in appeal to which only two decree holders had been made parties. Though an objection about the non-joinder of the third decree holder had not been specifically raised before the High Court the Supreme Court allowed that question to be raised as it was purely a question of law. In the other case of this court a new ground which had not been set out in memorandum of appeal was allowed to be raised in the miscellaneous second appeal as it did not require further investigation into the facts.
20. Generally if the new plea sought to be raised is purely a question of law or arises out of undisputed facts such plea would be allowed to be raised though the same had not been raised in the lower court or in the memorandum of appeal. But a new allegation of misconduct against the arbitrators for the purpose of challenging the award can never be said to be a pure question of law. Law requires an application for setting aside an award to be filed within a particular time and the grounds on which an award could be challenged are also prescribed under Section 30 of the Act. As such a party has to specify all the grounds on which he challenges the award within the period of 30 days from the date on which he was served with the notice under Section 14(2). A totally new ground to challenge the award cannot be allowed to be raised after the period of limitation. The very purpose of specifying the grounds on which an award could be set aside and prescribing a period of 30 days from the date of service of notice of the filing of the award, for an application to set aside the award, is that the parties who with the intention of resolving their disputes expeditiously make a reference to an arbitrator should not thereafter avoid the award passed by the arbtirator raising all types of objections and at whatever time they like. When a party challenges the award on particular grounds within the stipulated period, he cannot at a later stage, when he realises that he may not succeed on the grounds urged by him, try to put forth another new ground by way of amendment. Allowing such an amendment would virtually amount to permitting the party to challenge the award after the expiry of the period of limitation and it would defeat the very purpose and object of arbitration proceedings.
21. In this regard the following passage in S.D. Singh's "Law of Arbitration" tenth edition at page 492 may be referred to:
"The Limitation Act, prescribes a period of thirty days for filing objections against an award. A party must, therefore, raise all objections that it may have against the award before the trial Court within the same period even though the objections are raised in the form of an application under Section 33, A new objection, whether it is an objection as to a point of law or fact, cannot be permitted to be raised for the first time at the time of hearing if the thirty days period for filing objection has already expired or in appeal. The cosnideration by the appellate Court of such an objection to the legality of the award is a material irregularity in the exercise of appellate jurisdiction."
The above position is now made clear by the Supreme Court in its decision in Bijendra Nath Srivastava v. Mayank Srivastava, . In that case after the period of 30 days, an application had been filed for amendment of the objections and by way of amendment a new ground of mis-conduct on the part of the arbitrators was sought to be raised. That amendment had been permitted by the lower Court. The Supreme Court has held that it is not permissible to introduce by way of particulars a plea of fraud or miscconduct other than that raised in the pleadings and that the amendment should not have been allowed. When a party cannot be allowed to put forth a new plea of mis-conduct by amending his plea after the period of limitation it necessarily follows that such a plea cannot be allowed to be raised for the first time in the appeal. In view of the legal position a new plea of mis-conduct even if it can be spelt out of the material on record cannot be allowed to be raised after the expiry of the period of limitation for filing the application to set aside the award.
22. The contention that this plea of misconduct can be made out from the award itself and that there is no need for any investigation into facts cannot also be accepted. The award no doubt shows that the remuneration of Rs.450/- of the arbitrators and the stamp paper and registration expenses should be shared by 3 parties equally and that as respondents 4 and 5 had paid that amount to them they are entitled to recover the proportionate share from the appellant. This would at best show that the remuneration of the arbitrators and the expenses had been paid by respondents 4 and 5. Sri Tarakaram, learned Senior Counsel, relying on the decision Sheppard v. Brand (1734-60) 1057 which has been followed by this Court in C.R.P. 844/77 contended that acceptance of remuneration by the arbirator from one of the parties itself amounts to misconduct. In Sheppard's case the arbitrators to whom dispute between 'A' and 'B' had been referred, before making their award demanded 3 guineas from each of the parties in respect of their charges and expenses. 'A' paid the money but 'B' did not. On those facts it was held that where arbitrators take money from one of the parties singly, whether for charges or anything else, before making their award, that is sufficient cause to set aside the award. This Court in C.R.P. 844/77 after taking note of the fact that the dicta laid down in Sheppard's case has been followed by English Courts and by the High Court of Calcutta in Akshoy Kumar Nandi v. S.C. Pass & Co., AIR 1935 Cal 359 has held that the principle enunciated in Sheppard's case (1734-2 Barnard 463) and which is followed in Akshoy Kumar Nandi's case is a salutary legal principle and in the absence of an authoritative ruling of the Supreme Court or this Court to the contrary, commends and calls for acceptance. In that particular case the arbitrator issued a notice requiring one of the parties to deposit with him a sum of Rs. 10,000/- towards his fee and Rs. 1,000/- towards expeses within a particular time. It was contended that the arbitrator by demanding fees and expenses exclusively form one of the parties and receiving Rs. 2,000/- towards the same from that party has committed a legal misconduct justifying his removal. It was contended that demanding and accepting fee from one of the parties without knowledge of the other amounts to legal mis-conduct. That contention was accepted by this Court.
23. In Akshoy Kumar Nandi's case (AIR 1935 Cal 359), which has also been relied on by this Court, it has been held as hereunder:
"All the same however, in my judgment, the principles underlying the decision in 2 Barnard 463(5) still hold good and it is imperative that arbitrators should always scrupulously avoid any course of action which even remotel bears the complexion of their having put themselves into a position where it might be said aginst them that they had received a pecuniary inducement which might have had some effect on their determination of the matters submitted to their adjudication."
In the above case it was held, on the material on record, that the whole matter of payment of arbtirators fee was one of mutual arrangement between the contending parties and as such it was not a case of mis-conduct.
24. In Ardeshar Irani v. State of M.P., which was also relied on by the learned Counsel for the appellant, the arbitrator demanded exhorbitant fee from the parties. One of the parties proceeded and referred the dispute about the fees to the court. The other party offered to pay the entire fee and even when the petition was pending before court the arbtirator accepted the entire fee from that party and passed an award in which the entire fee was levied as costs against the other party. On facts his conduct was held to be mis-conduct.
25. The decision in Akshoy Kumar Nandi's case (AIR 1935 Cal 359) would show that if by mutual arrangement one of the parties pays fee of the arbitrators and other expenses, then that would not amount to misconduct. It is pointed out by the learned counsel for the respondents that even in the affidavit filed by the appellant along with the application seeking permission to raise the new plea, the appellant has no where asserted that the respondents 4 and 5 paid the arbitrators fee and expenses without his knowledge, that the respondents in the counter have asserted that all the parties had agreed that anyone could pay the fee and expenses and later recover the same from the others and that if the appellant had raised this objection the respondents would have adduced evidence to show that it is by mutual arrangment respondents 4 and 5 paid the remuneration and expenses to the arbitrators. He therefore contended that without this plea having been raised in the objections the appellant cannot be permitted to raise it at this stage.
26. Sri Tarakaram, however contended that under Section 14(2) of the Act the arbitrators had to issue a notice to the parties calling upon them to pay the fee and charges due in respect of the arbitration and award and that admittedly no such notice has been issued by the arbitrators and as such the question of there being an agreement between all the three parties for payment of the fee and charges only by respodents 4 and 5 can never arise. He also pointed out that if after the issue of notice under Section 14(2) there is any dispute regarding the fee payable to the arbitrators the court is given the power to decide that matter under Section 38.
27. Section 14(2) cannot be taken to mean that the arbtirators can ask for their remuneration only after making of the award or that they can receive the remuneration only after issue of notice under Section 14(2). There is no bar for the parties agreeing about the remuneration payable to the arbitrators or payinig the same by mutual agreement even before the award is passed by the Tribunal. The Full Bench of the Allahabad High Court in Shambu Dayal v. Pt. Basdeo Sahai, has been held as hereunder with regard to the payment of Arbitration fee.
"..... In arbitrations the fixation, of the arbitrator's remuneration prior to his entering upon the arbitration may be done in two ways viz., by an agreement between the parties or by an order of the court. There is no specific provision in the Act for fixation of the arbitrator's fee by the court prior to the making of reference but the court has the power to ultimately determine reasonable fee in the event of an application made under Section 38(1). If, after the fixation of fee by the court, the parties choose to proceed with the arbitration and the arbitrator enters upon it, an agreement between the parties and the arbitrator is implied in their conduct. But the fixation of the fee at this stage cannot be regarded as final and is subject to variation both by subsequent agreement and by order of the Court. The agreement, if it is to operate as a bar to an application under Section 38(1), has to be in writing, but that does not mean that no other kind of agreement can either be made or taken into consideration by theCourt. It is open to the parties to the reference to fix or enhance the fee of the arbitrator just as it is open to the court to do so."
28. In Jeevan Industries (P) Ltd. v. Haji Bashiruddin Madhusudan Dayal, a Division Bench has dissented from the judgment of a single Judge reported in AIR 1856 Punj 239, which was relied on by the learned counsel for for the appellant, and has held as hereunder with regard to the mode of payment of fee:
"It is not correct to say that Sections 14(2) and 38 provide only two remedies for recovering arbitrator's fee because voluntary mode of payment is an accepted mode and the aforesaid provisions do not miltiate against voluntary payments made by parties to the arbitrator so long as they are not objected to and are reasonable and have not caused any bias in favour of or against any party."
The above authorities show that there is no bar for the parties voluntarily paying the fee to the abritrators by a mutual arrangement without reference to the provisions under Section 14(2) and 38. A question of misconduct would arise pnly when the arbitrator accepts fee from one of the parties without the knowledge of the other party or when there is some dispute in that regard. But if by mutual arrangement of the parties fee is paid by one of them and the arbitrator accepts the same then that would not amount to mis-conduct on the part of the arbtirator. Why I have referred to these aspects is to point out that from the mere fact that the award shows that respondents-4 and 5 have paid the remuneration of the arbitrators and the expenses for the document, it cannot straight away be held that the arbitrators are guilty of mis-conduct. The appellant had to plead that the arbitrators accepted the remuneration from the respondents-4 and 5 without his knowledge and without a demand being made on him in which event the respondens would have had an opportunity to plead and prove the existence of any agreement between the parties in that regard. Such a plea not having been taken by the appellant in his objections the same cannot be allowed to be raised, nor can it be held on the basis of the material on record that the arbitrators are guilty of misconduct by accepting their fee and expenses from respondents 4 and 5.
29. As both the grounds urged by the learned counsel for the appellant cannot be accepted this appeal has to fail and the same is dismissed with costs.
30. Appeal dismissed.