LexHARI SHANKAR, LAL versus SHAMBHUNATH PRASAD AND OTHERS
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1961
Moy,'·
720 SUPREME COURT REPORT[l962J
·HAR! SE;ANKAB, LAL
SHAMBHUNATH PRASAD AND OTHERS
(B:P. SINHA, C.J., K. l;\uBBA R . .\o, RAGRUllAR
DAYAL and ,T. R. MuDROLKAR, JJ.)
Arbitration-Rcfcre.nce-l:{ofice in tvriting by party to arbi-
tration to act-Tim.q within u;hich aniarrl must be 1nade-Arbitra·
tion Act, 19f0 (16 of 194~), l'ir•t Scfiedu!e r. 3.
The appe)lant, the respondents land -2 and their·mother re-
ferred their dispute to arbitration by a registered agreement.
Within 10 d,ays;thereof the arbitrators entered on the rJ>ference.
After. about a year \he mother of the parties died ~nd the
arbitrators 'did not proceed with the enquiry.
About a year
thereafter the appellant gave a notict; to the arUitrators request·
ing them to proce"ed with the refrrence and give their award.
The arbitrators made an award. The appellant filed an ,applica-
tion iti the Court prayipg for filing of the award and making.
it a rule of the coutt. The 1cspondents I and 2 as defendants
raised objections, one of \vhich was that the award v.·as not
given 'within the time prescribed by law.
The Civil Judge
rejected· the objections and made a decree.
On appeal the
High "Court found that the award was made after the limitation
period and set aside the decree of the Civil Judge and dis-
missed the suit.
Appellant's case was that r.3 of First Schedule to the
Arbitration Act provided for alternative periods for arbitrators
to make their award. Under second alternative an award
could be made withia 4 months from date of notice to arbitra-
tors to act and hence award was \vithin tim~. ~
The question \Vas whether the notice to act if given
subsequent to the arbitrators entering on reference, the period
should be computed from the former date or from the latter
date.
Held, (per Sinha, C. J., Subba Rao and Mu~holl~•ir, JJ.),
that r. 3 of the First Schedulp to the Arb1trat10n Act,
1940, is mandatory, the object being to prescribe a time limit
in the interest of expeditious disp?sal of arbitratioi; proce-
edin~s. It imposes a duty on the arbitrators to make their award
within one or other of the three alternative, periods mentioned
therein. The party can only ask the arbitraior to actjfhe is
legally bound t\) act under the reference. A·Ifotice to act can
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2 S.C.R. SUPREJYIE COURT REPORTS
721
only be given when an· arbitrator is not acting i.e. he has rcfu.
sed or negl,ected to discharge his duty.
·'
The worc\s u.enterRon the reference" occurring in r. 3 of
First Sch·edule are not synonymous with the words ''to actu.
The words· "to act" is more con1prehensive and 6f ~ wider
import thcin the words ''to enter on the ·reference.. u
A notice to act may be given before or after the arliit·
rators enter~d upon tht 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 t9 act within A- months after: the arb{.
trators entered upon the reference, the arbitrardrs ca.n make an
award \Vithin 4 months from the date of such notice. And jn
that event,_ after the expiry of the sai~ 4 moD.th~ the arbitrators
become functus ojficio unless the period is extended by .court
under s. 28 of the Act; such period np y also be ex tended by
the court, thongh the a\vard ha~ hecn faL:tualJy inadd, other-
wise 'the document rlescribeci as an nward \voulcl be treate1d
as non e.st.
'
Per Raghnbar Daynl,.J.-The J?~riod of 4'months under
T.1'3 Of First Schedule is to rfln fron1· the date of arbiti-ator
entering on the reference~or from the .date oI) which .atbitrator
is called upon to act bY..nn~ice in '\vriting from a:ny part)>. If
arbitrator has entered on reference, ~er.iod of 4 months begiri's
to run from the q~i:e of entering "On .. 1"efei:ence. Any hoticC
subsequently given calling upon to act v..Jill not rr!ake the period
of 4 months start afresh and suc-h notice is nor cOnrempiatecf by
r. 3 and it 'vould be ineffective. .It is not necessary to .consider
whether the notice servec.l after expiry of 4 months is a good
notice or nQt.
But in yie\v of s .. : 28 of the Act, So long as the
power vested in the arhiYratnrs to tjeyi<le the dispt\te is not
\v'ithdrawn, they continue to be cb1npCtent to acf 6n expecta-
tion that period for I'l:laking a\vard \VOuld be extended by cotti't.
Arbitrators ~'<!nter on ·a reference as ~oon as they. accept, their
appointment and con1::-aunExcerpt shown. Read the full judgment & AI analysis in Lexace.