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Showing contexts for: reference to arbitrator in Shambhu Dayal And Ors. vs Pt. Basdeo Sahai on 1 January, 1970Matching Fragments
11. I may now pass on to the charge of misconduct based on the arbitrator's acceptance of a remuneration in- excess of the amount fixed by the Court It cannot be disputed that the arbitrator, who was an advocate, was entitled to reasonable remuneration for acting as such. Even if the fee of arbitrator had not been fixed by the Court before making a reference, the arbitrator could have claimed a fair and reasonable amount of fee for the performance of the task entrusted to him. In Llandrindad Wells Water Co. v. Hawksley, (1904) 20 TCR 241 it was observed that where the parties have chosen their own arbitrator they must be taken to have intended to pay him at the rate ordinarily charged by reason of his experience and they must pay his fees unless it is proved that the charges are extortionate. This case was cited in Girdharilal v. Surendranath Mukerjee, AIR 1934 Nag 199 and followed in Bulchand Khimandas v. Thakurdas Udhavdas, AIR 1933 Sind 300. It will be noticed that the Arbitration Act, 1940 does not provide for the fixation of the fee of the arbitrator by the Court at the time of making reference to arbitration nor at any time prior to the award, presumably because it is not possible for the Court to have a correct idea of the magnitude of the task which the arbitrator is called upon to perform or 'the quantity of work which he would be required to do. The arbitrator too is not in a position to know before hand the time and the labour which the arbitration proceedings would demand and his fair and proper remuneration for conducting them. It is only when the proceedings are over and the award has been made that a proper assessment of the remuneration of the arbitrator can be made and that seems the reason why the Act makes provision for assessment of the fee of the arbitrator by the Court after the making of the award. Section 14(1) of the Act provides that when the arbitrator has made his award he shall sign it and shall give notice to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and the award.
16. Further, the question whether an arbitrator has been guilty of misconduct Is, in my opinion, clearly a question relating to a jurisdictional fact, and Section 23 of the Arbitration Act, 1940, seems to be conclusive on this point. It runs as follows:
"Section 23(1). The Court shall, by order, refer to the arbitrator the matter in difference which he is required to determine, and shall in the order specify such lime as it thinks reasonable for the making of the award.
(2) Where a matter Is referred to arbitration, the Court shall not, save in the manner and to the extent provided in this Act, deal with such matter in the suit."
Once a matter has been referred to arbitration under Sub-section (1) of Section 23 the jurisdiction of the Court to adjudicate upon that matter ceases, and Sub-section (2) of the section precludes the Court from adjudicating upon it unless it regains the jurisdiction to do so under the provisions of the Act. That regaining of jurisdiction by the Court over the subject-matter of the reference can be brought about only by supersession of the reference or setting aside of the award given by the arbitrator. An order setting aside an award is, therefore, an order which has the effect of revesting jurisdiction in the Court in regard to the subject-matter of the reference, a jurisdiction of which the Court had been divested on account of the reference and which it cannot again acquire except as a result of supersession of the reference or setting aside of the award. It is true that even after the making of a reference the Court retains jurisdiction over the suit and it is the Court which has to finally dispose of the suit in accordance with the award. But the distinction between the jurisdiction to dispose oi the suit and the jurisdiction to decide that particular matter which had been referred to arbitration should not be lost sight of While the Court retains jurisdiction over the suit even after a reference has been made under Section 23(1), the jurisdiction to decide the matter of reference is transferred to the arbitrator and the Court cannot get seized of the latter jurisdiction unless the reference is superseded or the award is set aside. If an award has been made and has not been set aside the Court has no power to decide the matter which formed the subject-matter of reference and it has to pronounce judgment according to the award. It is, therefore, manifest that in determining whether an arbitrator has been guilty of misconduct and his award has consequently to be set aside the Court determines a jurisdictional fact. The Court certainly possesses jurisdiction to decide whether or not an arbitrator has committed a misconduct but the decision that he has committed a misconduct and the. award should on that account be set aside has the effect of reconferring upon the Court the jurisdiction to decide a matter which but for the setting aside of the award, it could not have been competent to decide. That being so, the Court exercises a jurisdiction not vested in it by law if it decides wrongly the question whether an arbitrator has been guilty of misconduct and his award should on that account be set aside.
21. In a regular civil suit the parties made an application for reference of the dispute to an arbitrator. The Court referred the dispute under Section 23 of the Arbitration Act to the arbitrator. The arbitrator gave an award. The plaintiff filed objections to the award and, inter alia, took the plea that the arbitrator had misconducted himself and the proceedings and urged that the award be set aside, The trial Court did not accept this objection and passed a decree in terms of the award 'dismissing the suit. The plaintiff went up in appeal and the lower appellate Court held that the award was liable to be set aside on the ground that the arbitrator had misconducted himself in accepting from the parties a fee in excess of that which was payable to him by the parties to the reference under the order of reference made by the Court by which the dispute was referred to Sri Mathura Prasad Kakkar. The lower appellate Court also held that the arbitrator had not decided the question about the adoption of Sattu by Makund and it went to the root of the matter and amounted to mis-conduct of proceedings by the arbitrator: On these findings the appellate Court allowed the appeal and set aside the award and- remanded the case to the trial Court for decision according to law. The defendant has filed a revision against the appellate order passed under Section 39 of the Arbitration Act. The revision was referred to the Full Bench for decision.