W. H. BUS CO, LTD, Appellant, and S. M. HEEN BANDA , Respondent

084-NLR-NLR-V-57-W.-H.-BUS-CO-LTD-Appellant-and-S.-M.-HEEN-BANDA-Respondent.pdf

KERXAXDO, .T.—II'. //. /?«-* Co.. Ta>1. «. Hecn linn,In337
1955Present:Gratiaen, J., and Fernando, J.W.H. BU,S CO., LTD., Appellant, and S. M. HELM HAM DA,
Respondent
S. (J. [Inly.) 23—L). (J. Kandy J/. It. HfioG
Arbitration—I'locednrc—Section (il*l of Cicil. Procedure C'o'le— Contplutncc therewith—.Scope of terms of reference.
(i) Thepartiesto this action signed ati agivciueiit in which they expressly statedtheir desire to submit tlicir dispute to urhitration. In the same agreement t heyauthorised their proctoi-s to apply to theCourtfora referenee. This agreement wastiled in Court two days later, and, in the presonco both of proctors and counsel,the Court entered u minute that « joint motion was died, it being clear thatevery one had assumed either that there was in fact a joint motion or that theagreement already signed by the parlies constituted the necessary joint motion
Held, that there was substantial nnd sufficient compliance with the procedure.Prescribed by Section 07Li of the Civil Procedure Code.
AIcnike v. Ukku Amnia (i01 ■">j IS X. I-. It. 413, followed.
Afadasamy v. Amina (1031) 43 C. I.. IV. 40, not followed.
(ii) The arbitrator was required by the terms of reference to determine " allmat tors in dispute in this action and all other matters in dispute ”. At the stagowhen the reference was made, issues had not been framed between the parties norhad answer been filed. The matters in dispute were therefore those upon which(ho plaintiff relied in his plaint. Xotwithstanding that the arbitrator wasauthorised to determine other matters in dispute, every-issue suggested to thoarbitrator was one which arose upon tho averments in tho plaint, and thoonly matters ultimately determined by the award were matters arising uponthose averments.
Held, that in tho circumstances the validity of tho award could not be challen-ged on the grounds that no specific issues had been agreed upon for adjudicationby the arbitrator and that the reference related to matters outside the plaintiff’spleadings.
^^LPPEAL from an order of the District Court, Kandy.
If. V. Perera, Q.C., with II. 11,’. Ttonbiah and H. L. tie Silva, for theplaintiff appellant.
C. Thinyalinyatn, Q.C., with P. Soinalihthtun, for the defendantrespondent-.
Cur. tula. cull.
July 21, PJoo. Feuxaxdo, J.—
The plaintiff instituted an action against the defendant on lothSeptember, 1949, claiming certain declarations, orders and damages.Summons was served on the defendant, he failed to appear in responsethereto and the matter was fixed for ex-parte trial ; but subsequently"lfilvii<
of consent a date was given to file answer. The following entry (initialledby the District Judge) appears on the Journal for the date 12th December,1949..
“Joint motion filed referring all matters in dispute in this case
(and also some other matters) to the arbitration of Mr. Alfred Fernando.
Of consent, arbitrator’s fees arc to be paid direct by plaintilT in the
first instance fixed at Rs. GOO.
Issue commission to arbitrator re'blc 22 Feb. 1950. ”
Subsequently various orders were made of consent, extending the timefixed for the making of the award and increasing the amount of tlicarbitrator’s fees. The award of the arbitrator was ultimately filed onSth January, 1951, and after certain steps had been taken, the defendantfiled his objections as well as a motion that all orders had in the casebe vacated, expunged and otherwise rescinded for tlie following reasonsitiler alia :—
There was no application in wiiling to refer the matter to an
arbitrator.
There was no order in due form relating to the reference to
arbitration.
(1) The reference, if any, was in general terms and did not stale theparticular matters in difference between the parties; alsosuch reference related to matters outside the plaintiff's pleadingsin this case.
The arbitrator had no jurisdiction to act. The entire proceedingsarc null and void.
It was argued before the learned Judge on behalf of the plaintilT thatthe objections were made out of time but he held that they were in timeand can and have to be considered, lie considered those objections(I shall refer to them later), but ultimately held that the matter wasconcluded on the general grounds set out in the motion. He held ineffect that there was no written application by the parties to the actionfor a reference to arbitration, that the reference was therefore invalid,that the defendant's jmrticipation in the arbitration proceedings did notestop him from setting up the invalidity of the award, and directed thatthe next step was for the ease to proceed in Court in the ordinary courseand for the defendant to file answer.
The plaintiff lias appealed against this order and the main questionfor decision is whether or not there was a valid reference to arbitration' on 12th December, 1949. On that day, apart from the oral representa-tions which must have been made to the Judge by counsel for bothparties, there was before the Court a writing dated 10th December, 1949,signed both by the plaintiff and by the defendant which stated thatthe parties “arc desirous that all matters in dispute in this action andall other matters in dispute between us be referred to the final decisionof Mr. Alfred Fernando, Proctor, as arbitrator, and we bind ourselvesand agree to accept the award of t he said arbitrator ’’ and further 1 hat 1 he
KKRN'AN'DO, J.—11*. 11. this Co., Tul. v. I/ecn Hatuht
.rtrt
parties "do hereby specially authorise our respective Proctors, that isto say, Messrs Liesching and Lee on the part of the said Plaintift-C'om jinny and Mr. V. M. CSuruswamy and his assistant Mr. M.lA. M.Xahcemon the part of the said defendant-, to apply to the said Court for an orderof reference accordingly It lias been argued in appeal that this docu-ment of 10th December, 1049, which was admittedly filed in Court,together with the matters orally before the Court upon which the Journalentry was founded, together constitute sufficient compliance with therequirements of section 070 of the Code.
The section provides as follows :—
Valter inili (Terence inmi actionlimy byconsent- ofpnrties boreferred toarbitration.
Voile ofsi i bill ission.
Trail the parties to an action desire that any matter
in difference between them in the action be referredto arbitration, they may at any time before judg-ment is pronounced apply, in person or by theirrespective proctors, specially authorised in writingin this behalf, to the Court for an order of reference.
Kvery such application shall be in writing, and shall
state the particular matters sought to be referred,and the written authority of the proctor to makeit shall refer to it, and shall be. filed in Court at thetime when the application is made, and shall bedistinct from any jiower to compromise or to referto arbitration which may appear in the proxy cons-tituting tiic proctor's general authority to representIt is client, in the action.
Section 676 requires firstly, that all the parties must apply to the Courtfor an order of reference either in person or by their respective proctors,each specialty authorised to make the particular application. The impor-tance of this special authorisation was stressed in the case of Gonsales v.Holsinger 1 where it was held (inter alia) that a general power of attorneygiven to a proctor authorising him in general terms to refer the matter insuit to arbitration if necessary did not constitute the special authorisationrequired by section 12 of the Arbitration Ordinance of 1S6G (whichcorresponded to the present section G76 of the Code). The applicationthen, for a reference, must be made cither by each party in person or bytheir respective special agents ; and section 676 (2), which purports to dealwith the “ mode of submission ”, requires that the application shall be in'icriting and that when it is made by the agent his special written authorityshall be filed wit Ji the application. Many decisions have stressed the needfor literal and rigorous compliance with the section, for such a compliancewould ideally demonstrate to the Court the deliberate decision of all theparties both to proceed to arbitration and to move the Court for therequisite order.
As dc Satnpayo J. said in tlie Alim Will Case 2 at p. 406, “ Where theCourt is seised of a cause, its jurisdiction cannot be ousted by a private andsecret act of the parties, and if they, after having invoked the authority
1 {1885) 7 S. C. C. 101.1 {1920) 21 X. L. R. 405.
3'KHKANUO, J.— lr. II. Bits Co.. I.hi. »•. Hern ll.mth,
3J0
of the Court and placed themselves under its superintendence, desire toalter the tribunal and substitute a private arbitrator …. tlievniust move in the same suit for an order of reference ”.
Section 670 underlines the principle that the subject’s light of recourseto the established Courts cannot be abandoned or be construed to havebeen abandoned except on the clearest possible material demonstratingthat he has freely and voluntarily consented to abandon it, and exceptupon that consent being communicated to the Court in person or by aspecially authorised representative. And once a Court becomes seisedof the jurisdiction to determine a suit, the Court cannot, be relieved of orrelieve itself of that jurisdiction, unless all the parties to the suit have inthe manner to 'which I have just referred communicated to the Court theirfree and voluntary consent, to the transfer of the subject matter of the suitto the determination of some other tribunal. Indeed, it is even doubtfulwhether there can be complete abandonment, and the device of a referenceto arbitration merely suspends the jurisdiction of the Court- which conti-nues to remain vested with the right to supervise, and control the acts ofthe arbitrator and to declare his ultimate award ineffective in certaincircumstances.
The question which the Courts have had to determine in several easesunder section 676 is whether an order of reference is void on the groundt hat no application in writing for the reference was made either by the res-pective parties or by their proctors acting with the special writtenauthority, and in many of them the decisions were for avoidance. But itis necessary to examine the- facts of those cases in order to appreciatethe ratio decidendi..
In Ramaswamy Kangani r. Aiya Cully Kangani 1 there was a Journalentry “ on a joint motion, referred to the arbitration of X The entrybore no signature (not even of the Judge) nor was there any signedmotion. It was held that there was no valid reference to arbitration, andthat no valid appointment having been made, the parties had not byappearing before X “ waived all objections and irregularities ” in connec-tion with his nomination. I note (without comment, for the present) thisobservation of Dias J. :—
‘‘ If the parlies had signed the entry of Sth August, probably a sufficientcompliance with the provisions of the Ordinance might be held to havesubstantially tal.-en place.”
* usro) 2 s. c. c. so.
' (JS70) 2 S. C. C. So.
In J>. C. Clalle J2,d00 2 there was a minute signed by the Judge :parties present with their proctors ; referred to arbitration by consentof parties to X Here again there was neither an application in writingnor the signature of the parties to the minute. Dias J. in delivering thejudgment of the Court (in a later ease referred to as the “ fully constitutedCollective Court ”) pointed out a difference from the circumstances in theearlier ease namely, that the minute had been signed by the Judge. Buthe nevertheless said that the Legislature required that the reference toarbitration should certainly be the act of the parties themselves and that
:nirjsnjfAxno. j.—ii*. it. n<o> c»„ iicen n*n<ia
therefore the signature of the Judge did not cure the absence of an appli-cation In writing by the parties or their proctors. The learned Judge didnot however either re-affirm or modify his observation in the earlier caseas to the probable effect of the signature of the entry by the parties.
The next ease of Punchirala v. Medduma Banda 1 was decided byClarence J. sitting alone. That was a ease between the plaintiff and fivedefendants ; the reference to arbitration was made upon a written motionsigned by the plaintiff and his proctor, byr the 1st defendant, by the 3rddefendant for himself and as curator for the 5th defendant as well as by theproctors for the 1st, 3rd, 4th and oth defendants. In regard to the 4thdefendant, he did not sign the motion but he subsequently signed a jointapplication to enlarge the time for the award. The award was ultimatelymade in favour of the plaintiff against the 1st, 3rd, 4th and 5thdefendants but absolving the 2nd defendant. On these facts it was heldthat the objection to the award failed, Clarence J. not being “ disposedto favour parties who contentedly waived technical objections to theproceedings of arbitrators until they discover that the award isagainst them ”,
In Be Fonseka v. De Fonseka- there was again .a written entiy signed bythe District Judge that the questions at issue are by consent referred toarbitration. Cayley G.J. referred to the fact that the Ordinance (No. 15 of1SSG) contemplated the use of a form of application given in the scheduleand stressed the importance of insisting upon this formal application.Objection was also taken that there was no formal order of reference tosatisfy the provision that the order should be in writing and fix the timefor the delivery of the order. But he nevertheless upheld the validity ofthe order of reference in the following terms:— “ In the present ease thereis an order duly entered and signed by the Judge. This order, if obtainedirregularly or if defective in a 113' particular, might have been appealedagainst and set aside, or amended. But a party, when he has full know-ledge of an irregularity in the reference, and a proper legal course open tohim for getting such irregularities corrected, cannot be permitted to lie byand take his chance of the award, and then finding it made against himtry to escape from it on the ground of the irregularity (see Big nail v. Gale,
M and G. S30). ” He distinguished the ease of Ramasioamy Kangani v.Aiya Cully Kangani3 on the ground that .there, there was not only nowritten application but also no order. Clarence J. in dealing with the samepoint also thought that the defendant- “is estopped from now setting upthe objection to the irregularity of the reference ”.
(1SS3) 7 S. O. O. 99.
It will be seen that while the cases last cited from the 3rd volume of theSupreme Court Circular decided in effect that the recording by the DistrictJudge of the reference to arbitration together with the subsequent atten-dance by the parties before the arbitrator was held to have cured thefailure to file a written application, the earlier case of D. C. Galle 42,400 *was to the contrary effect. In tills state of things the matter came upagain before three Judges in Binibarahami v. Kirihanda Muhandiram 3
where the earlier cases were all reviewed. Here too the minute(signed only by the Judge) was that “ the parties consent to this casebeing referred to the arbitration of X. Let it be referred accordingly ”.Deferring to the ease of D. G. Guile, 1 ns a decision of “ the fully consti-tuted Collective Court ”, Fleming A.C.J. pointed out that “ in that caseit was distinctly held that the absence of an application in writing to referthe matters to arbitration as required by the Ordinance was not cured bya minute of the District Judge ”. He felt bound as well as inclined tofollow the decision of the Collective Court, and held that there was novalid ap}}ointment and that the objection to the award was one which, nosubsequent conduct of the parties can ivaive or cure. The ease of Raina-swamy Kangani v. Aiya Cutty Kangani – was approved, but the Court,which included Dias J., made no reference to his observation as to the pro-bable effect of the signature b}- the parties to the entry as to the reference.
The c-ase of Gonsales v. Hol-singer was also one where there was only aminute signed by the Judge. The same Bench that decided Bimbarahamiv. Kiribanda Muhandiram decided this case also and on the same day ;and in setting out the brief facts relating to the reference it is significantthat Fleming A.C.J. said that although the note as to the referencewas signed by the Judge, “ It is not pretended that it- was signed by theparties ”.
Casim Lebbe Marikar v. Samal Dias 5 is yet another case of a signedminute by the Judge without any writing by the parties or their proctorsand it was held that the reference to arbitration was void. Bonser C. J.said “ It is not sufficient that the parties being present in Court shouldsignify their assent to the District Judge and that lie should make a minuteto that effect ”.
In Pilche Tamby v. Fernando G Wood Kenton J. held to he invalid anaward made upon an application not signed by all the parties. Althoughthe appellant himself had signed the application, lie was not estoppedfrom disputing the validity of the reference on the ground that some of therespondents had not themselves signed it. The learned Judge pointed out“ how vitally important it is that the provisions of the Civil Procedure.Code in regard to arbitration should be rigorously and literally complied!with ”.
An examination of the facts in alltlie cases to which Iiiavcsofarrcfcrrcclreveals that in each of them the reference to arbitration had been madeeither upon an application wliich had been signed by some but not all ofthe parties, or else merely in pursuance of an entry made by the Judgewhether signed bjr liim or not. But in none of them was there an entryby the Judge countersigned by the signature of the parties or of theirrespective special agents. The first case of this description to which wchave been referred was that of hlcnike t'. Ukku. Amina7 decided in 1015.The entry was to the effect that “ the parties agree ■ to refer all mattersin dispute to the arbitration of X whose award shall he final ”. Thisagreement was “ allowed ” by the Judge, and thewhole entry wasauthenticated by the marks of the parties to whom the entries were statedto have been explained by the Interpreter Mudaliyar. Having referred tothe two cases I have last cited (which themselves refer back to the earlieraut horitics in 7S. G. C. and 3S. C. C.) the Court held that " the allowanceby the Commissioner of Requests of the agreement of the parties and theauthentication of that agreement not merely by his signature but by themarks of the parties themselves, seem to me jbo constitute good evidencethat there was here stick an application to the Court as will satisfy even theletter, and certainly the spirit, of section 676 of the Civil Procedure CodeI should add that this observation was made by Wood Renton C.J.who had in his brief earlier judgment stressed the need for rigorous aiulliteral compliance.
An oral application to the Court for a reference to arbitration, followedby the signature of the parties to a minute of consent was held by Dalton J.to be sufficient compliance with section 676. (Appuhamy v. DingiriMahatmaya *.)
The case of Arachchi Appu v. Mohoiti Appu – is not in point sincethere, what purported to be a joint motion was found actually to have beensigned only by the proctors for the plaintiffs. In this case too, the questionof estoppel was raised, but Bertram C.J. felt compelled to yield to the cur-rent of opinion in earlier cases where the plea of estoppel had been rejected.
Despite certain observations to the contrary which were made obiter byWood Renton J. in PitcheTamby v. Fernando 3, Maartensz J. also thoughtthat the plea of estoppel “could not be now raised”—(Asia Ummav.Abdulla 4). Although the term estoppel itself does not occur in the judg-ments reported in the 7th volume of the Supreme Court Circular, I think itis clear that the three judges who decided those cases intended to decidethat if an order of reference is void for the lack of the necessary applica-tion, then participation by a party in the arbitration proceedings does notestop him from subsequently challenging the order. As will presentlyappear, it is not necessary for us to rc-consider that decision, even if it beopen to a Bench of two Judges to do so..
The next case wc have been referred to was that of Girigoris v. Punch!.Singho 3 decided in 19-49 by Basnayakc J. The entry reciting the con-sent to the reference to arbitration in that case was signed by four of theeight plaintiffs and the four defendants, but was not signed either on thatday or subsequently by the other four plaintiffs. In view of the fact thatthe entry was not signed by all the parties, the 1915 case of Menike v.Ukku Amma 6 was, if I may say so with respect, rightly distinguished,and would have been of no assistance to those parties who desired tosustain the validity of the reference.
De Silva v. Perera 7 a judgment of two judges, is of no assistanceto Mr. Thiagalingam. There was a motion filed on 29th September, 19-49,signed by the plaintiff and the defendant in person as well as by their proc-tors, in which the parties agreed to refer all matters arising in the action
> (192S) 30 N. L. R. 254.* (1926) 23 N. L. R.391.
* (1922) 23 N. L. R. 500.4 (1949) 40 C. L. IF. 25.
3 (1910) 14 N. L. R. 73.• (1915) IS -V. L. R.413.
1 (1950) 44 C. L. IF. C9.
runNAXDO, j.—ir.n>,s Co., u,i. v. Hccn n<mthi
344
to the sole arbitration of Messrs. Satchithananda, Schokman and de Silva,Chartered Accountants of Colombo. The learned District Judge made thefollowing order : “ Allowed, issue commission returnable 22/12/49 ”,"When the case came up in appeal it was held that “ the proceedings make itclear that neither the application for reference to arbitration nor the orderof Court has been made in accordance with the provisions of the Codeand the order of reference was quashed. But clearly there was in thatcase a, written application signed by the parties which fully complied witht he literal requirements of section 076 , and the irregularity which avoidedboth the application and the order was that, in the opinion of the Court,the reference being one made to three arbitrators, there should have beenprovision made for a difference of opinion in accordance with therequirements of section GTS of (he Code.
The only case brought to our notice which goes direc-tly counter tothat of Menike v. Ukku Amnia1 is Madasamy v. Amina 2 which wasdecided by Basnayake J. sitting alone. The Journal entry which recordsthe agreement for arbitration was signed by the plaintiff and bore the leftthumb impression of the defendant. It was held that “ a li-s may be takenaway from the jurisdiction of the Courts to an arbitrator only in strict con-formity with the prescribed procedure ” and that ‘‘ the absence of theapplication in writing contemplated by section 676 (2) rendered the refer-ence void ”. Although no express mention is made in the judgmentto the 1915 case 1 it seems clear from the observation which had pre-viously been made obiter by Basnayake J. in Girigons v. P-unchi Singho 3that-he was unwilling to follow the 1915 decision of Wood Kenton C. J. andde Sampayo J. That decision of two eminent- judges had apparently notbeen questioned in this Court until 1949. and was presumably followed inCourts of first instance during a long period. But that is far from beingihe principal reason for my opinion that the decision must be approved.It should be apparent from the examination of the authorities that therehad been no case before 1915 in which the contrary view was expressed.In fact, this Court had never until then had occasion to consider thevalidity of a reference mail e in pursuance of an oral agreement, the purportt,f which was recorded by tlie Judge in an entry subsequently signed both byhimself and by all the parties. The possibilities of such a situation washowever expressly referred to in Hamasicamy Kangnny v. Aiya CuttyKangani 4 where it was viewed with favour by .Dias J., who subsequentlydelivered the judgment of the Collective Courts in D. C. Galle 42,400 5and who was a member of the Collective Court which decided botli thecases reported in the 7th volume of the Supreme Court Circular.
The remark of Fleming A.C.J. in the second of the latter cases—“It is not pretended that (the Judge’s note) was signed by the parties ” —was superfluous and misleading, unless the learned Judge thought that theaffixing of the signatures would, or at least might, have made a difference.These observations of Dias J. and Fleming A.C.J. made as they were byJudges who were insisting upon strict compliance with the formal require-ments of section 67G, must undoubtedly have influenced the minds of
> [Hilo) is -V. L. Jt. -til.5 {.1949) 40 C. L. IP. 25.
– (1061) 45 C. L. II". 40.J (tST'J) 2 S. C. C. 59.
‘ (1S79) 2 S. C. C. So.
Wood Kenton C.J. and dc Sampayo J. •when the contemplated circums-tances came up for consideration for tho first time in 1915 ; nor couldWood Kenton J. be fairly said to luivc ignored his own observation as to.strictness which was marie in Pilche Tamby v. Fernando '.
While an actual written application signed by the parties or by theirproctors acting in pursuance of a special authority filed of record wouldbe the ideal mode of compliance with section 070, the cpicstion which hasso often arisen is whether the ideal is the only mode of compliance. Theobvious intention of the Legislature was that the Court is authorised torefer the dispute involved in a pending suit to arbitration only if—
the minds of the parties have been clearly directed to the course of
arbitration ;
they voluntarily agree to the adoption of that course, and,
their agreement is evidenced in the record in a manner which leaves
no doubt that conditions (re) and (b) are satisfied..
I think that in the 1915 ease decided by Wood Kenton C.J., all theseconditions were fulfilled.
The ease before us, while not on all fours with that ease, is perhaps astronger one. The parties on 10th December, 1949, sign an agreement inwhich they expressly state their desire to submit the dispute to arbitrationby a named arbitrator, and they proceed to give effect to that desire byspecially authorising their proctors to apply to the Court for a reference.This agreement is filed in Court two days later, and, in the presenceboth of proctors and counsel, the Court enters a minute that ajoint motion is filed, it being clear that every one had assumedcither that there was in fact a joint motion or that the agreementalready signed by the parties constituted the necessary joint motion.Upon facts somewhat similar to those existing in the case decidedby "Wood Renton C.J, there might conceivably be scope for thosuggestion that the agreement of the parties was made on thospur of the moment in Court and therefore did not represent the freeand voluntary decision of all the parties. Indeed, the judges whodecided Pi mbara-hami v. Kiribanda J[uhandiram – as well as Casim Lebbev. Samal Dias 3 (both of which were cases of entries unsigned by the parlies)were much influenced by the observation of Cayley C.J. in Dc Fonsekav. Dc Fonseka 4 that “ there is so much proneness on the pari of the legalpractitioners in this country to refer pending cases on the day of trial toarbitration, that it is of great- importance that the consent of the partiesthemselves should be formally, expressly and deliberately given ”, Suchan observation, however, just at the time it was made and approved,could not pcrlmps be made with equal justification at the present time ina case where parties orally agree to arbitration in the presence of the Courtand subsequently sign a minute to that effect. But such an observationwould be quite out of place in a case like the present one where the partieshave executed a document in the terms set out in the writing of 10thDecember, 1949.
' trjjo) it .v. l. r:j.* (isunj j ,v. l. u. j/.v.
1 usso) r ,y. c. v. m.* [tsso) s s. c. o. in.
The Indian case of Singh v. Mai Dhadha,1 decided by the Privy Councilis of much interest in this connection. There had been (as iu the casebefore us) a written agreement by all the parties that the question in dis-pute in the suit bo referred to arbitration ; the agreement was signed inperson by each party to the suit, save that the guardian ad litem of oneminor party signed on his behalf. Thereafter (as stated in the PrivyCouncil judgment) “The parties appeared before the Trial Judge andproduced the agreement and applied for an order of reference. Theguardian ad litem, was present in Court and was a party to the application.The Trial Judge thereupon made an order of reference Objection wassubsequently taken to the award on the ground that the application forthe reference was not signed by the guardian ad litem of the minor party.In rejecting this objection Viscount Haldane said :—“ In the first placethe Second Schedule to the Code of Civil Procedure, which provides, by s.l,that, where the parties to a suit have agreed that the matter in differenceshall be referred to arbitration they may apply in writing to the Courtfor an Order of Reference, does not require that the writing should ofnecessity be signed. As the guardian in this case was in Court and assentedto the application it is plain that no injustice has arisen. They (theirLordships) think, therefore, that there is no substance in the technicalobjection relied on “. The statement of the facts indicates that therewas probably only an oral application in Court for the reference ; buteven if it be assumed that the application was actually made in writing,the fact that it was unsigned was not held to constitute a material defect.As pointed out by the Chief Commissioner whose order was ultimatelyupheld at the appeal, t he objection was not a good one “ having regard tothe fact that the agreement itself was signed by all the parlies co?icerned ”.If there is no prior signed agreement, and the parties themselves wish toapply for a reference, then clearly their signatures to a written applicationor else to an entry on the record would be essential in order to establishthe fact of their consent. But where, as in the present case, there is botha signed agreement and a signed authorisation of the proctors, the factof consent is already established ; and if thereafter (as held by the PrivyCouncil) an unsigned motion is a sufficient compliance, can an oral motionby the authorised proctors be said not to be sxifTicient 1 An oral statement-made to the Court by a specially authorised agent is surely better evidenceof his intention to move the Court than a mere writing which bears nosignature.
Since I am relying on a Privy Council judgment in an Indian case on thesubject-of a reference to arbitration, I have thought it necessary to consultthe Privy Council decision in Government of the Province of Bombay v.Pestonji Ardeshir Wadia el al. 2 which was cited in the judgment inMadasamy v. Amina3 as authority for the statement that “provisionsof Civil Procedure arc imperative ”. Some error appears to have creptinto the citation, beeaxise I find it is not borne out by the report of the case.The case was one instituted against the Bombay Government by thetrustees of a certain trust. In compliance with section SO of the IndianCivil Procedure Code, the two persons who were trustees served notice of
1 (JOlo) A. 1. 11. (/’. O’.) 70.'■ A. I. It. {SG). JO to (P. C.) 1J3.
,3 (10-jJ) Jo C. L. If. JO.
action on the Government in October, 1033. But one of them died inDecember, 1933, and two other persons were appointed trustees in hisplace, so that the suit which was ultimately filed in April 1034 was by threetrustees as plaintiffs. It was held that the trust is not the plaintiff, asthe Code does not permit trustees to sue in the name of the trust-, and thatas the notice given did not specify the names and addresses of all the threetrustees who were the plaintiffs, tho condition precedent to the filingof the suit was not fulfilled. This view of tho High Court was approvedby their Lordships of the Privy Council, who stated that “The provisions ofsection SO of the Code are imperative and should be sjtrictly complied withbefore it can be said that a notice valid in law has been served on theGovernment Ido not think that the 1949 decision (which containedno general observation as to the imperative nature of proceduralprovisions) in any way qualifies the judgment of the Privy Council in theearlier case of Singh v. Mai Dhadha l.
For reasons which I have thought it proper to discuss at some length,
I would hold that there has been in the present case substantial andsufficient compliance with section 670 of the Code and that the order ofreference was therefore valid, and I would further respectfully agree withthe decision in Menike v. Ukku Amma -.
There remain for consideration the other objections to the validity ofthe award which were taken by the defendant. At the hearing before thelearned District Judge it was contended —
That due notice of the filing of the award was not served on the
defendant.
That no specific issues had been agreed upon for adjudication by the
arbitrator and that the reference related to matters outside theplaintiff’s pleadings.
issues liad not been framed between tlie parties nor bad answer been filed.Tlie matters in dispute in the action were therefore, all the matters uponwhich the plaintiff relied in his plaint. Notwithstanding that tliearbitrator was authorised to determine other matters in dispute, lie wasnot even requested 113- tlie parties to consider any other specific matter.Issues were suggested to him by counsel for both parties and every- issuesuggested was one which arose upon the averments in the plaint. Accor-ding^’', the only matters ultimately determined by the award werematters arising upon those averments. It is’not necessaiy therefore forthe plaintiff even to rel3’ on severabilit3'. I note also that, in the easelast referred to, the objection that the reference contained extraneousmatter was first taken before the arbitrator himself, but was disallowed b3'him. But in this ease, the objection was 011I3- takcii after the award wasfiled. Tlie inclusion in the reference “ of other matters in dispute ” didnot have the result that other matters were even mentioned at the hearingbefore the arbitrator. I think therefore that this part of the second men-tioned objection must fail. As to the other part of it, namely that tliereference did not specif3' tlie particular matters to be determined, I thinkthe objection is purely a technical one. If issues had been framed, and“ all the matters in dispute in the action ” had been referred, the referencewould have been tantamount to a specific recital of the issues as framed.But as no issues were framed, the reference was in m3’ view tantamountto a specific recital of all the matters arising upon the plaintiff’saverments. That being so, this part of the second objection must fail.
As to the objection thirdly mentioned, the record indicates that theJudge lias found that there was no legal misconduct on the part of thearbitrator, and we were not invited to review the correctness of thatfinding.
Kven assuming (hat the objections were taken in due time (which theplaintiff did not concede), they have all failed. No ground has been madeout for correcting, remitting or setting aside the award. The appealmust- therefore be a-Ilowed and the order of the learned District Judge setaside.
The case will now go back to the District Court-, where, t: on a daj- ofwhich notice shall be given to the parties” (section 692). the Court will pro-ceed to give judgment according to the award. The defendant must payto tlie plaintiff the costs of the arbitration proceedings and of the subse-quent proceedings in the District Court, as well as the costs of this appeal.
Gkat/aen*, J.—
M3' brother Fernando lias admirably distinguished the facts of thisparticular ease from those which came up fur consideration in the earlierdecisions.. He lias In- this means found a just solution to the problembefore us without doing violence to t he rules ofslarc decisis, and I agree tothe order proposed In’ him.
TJic decisions in Bimbarahami's caso and Gonsnlcs' ease 2, thoughpronounced by a Collective- Court, do not strictly possess the conclusive
(/-y-v-i).v. c. v. jut.
authority which attaches to decisions of a Bench constituted under section51 of the present Courts Ordinance. Nevertheless, they have consistentlybeen followed ever since, sometimes without enthusiasm, in the laterrulings referred to by' my brother. It is therefore too late for a Bench oftwo judges to revive the controversy at- this stage. At the same time, ifthey be construed too narrowly', we would fall into error by forgetting thetrue principle which underlies the provisions of section G7G.
What then is the ratio decidendi which we must acknowledge as bindingon us ? The answer is to be found in the observations made 40 y ears agoby' Wood Renton C.J., with whom de Sampayo J. agreed, in Menike r.C'kku Amnia *. The learned Chief Justice there pointed out that “ themain object ” of section G7G was to ensure “ that there is on the face ofthe record affirmative evidence of the assent of both sides to a proposedreference to arbitration As Wood Renton C.J. had, on a previousoccasion, considered himself bound byr the ruling in Consoles’ casehis later clarification is of special value.
The principle of the thing is perfectly clear. Once a dispute is broughtbefore a Court of Justice, the legal rights of the parties must generally' bedetermined byr the regular tribunal vested with jurisdiction in the matter.An exception arises when the parties, having themselves mutually agreedthat the dispute should be referred to arbitration, invoke the jurisdictionof the Court to implement that agreement. Section 676 gives recognitionto tliis fundamental principle and also prescribes the procedure whichought to be followed in order to give effect to it. Here, as in England,it is the free consent of the parties which is the foundation of the Court’sjurisdiction to refer any' dispute in a pending action to the decision of anextra-judicial tribunal (which acts, however, under the general supervisionof the regular Court). But in Cey'lon, a fut-her precaution is taken toeliminate the temptation to repudiate agreements which arc not evidencedin writing. Accordingly, section 676 (2) requires that there should boincontrovertible proof on the face of the record (1) that all the parties (ortheir proctors specially authorised in the matter) had agreed that thereference to arbitration should be made, and (2) that they had formally'requested the Court to implement their agreement-. Provided that theconsent of the parties to divert the proceedings to an arbitrator hasbeen conclusively established, and provided also that the underlyingprinciple of section 676 (2) has been substantially' complied with, it isidle thereafter to challenge the authority of the Court to vest the arbi-trator with jurisdiction over the dispute. An order for reference is notreduced to the status of a “ nullity' ” merely because of some immaterialomission to cross a “ t ” or dot an “ i ” in the formal application.
Tn Menike’s case 1 it was held that if an oral agreement communicatedlo the Court by the consenting parties was reduced to writing (in the formof a journal entry) by the Judge and signed by the parties in Ins presence,there was sufficient- compliance with section 676 (2). As my brotherFernando observes, this is a much stronger case. The formal agreementdated 10th December, 1949, signed byr both parties, was tendered to theCourt- by their proctors who had been specially' authorised in the samedocument to make Iho application on their behalf under section 070.
1 {101.}) IS .V. L,. H. US.z (1SS}) 7 S. C. C. 101.
The Court treated the document so tendered as “ an applicaton in■writing ” within the meaning of section 67G (2), and both parties adoptedthat ruling as correct. It Mould therefore be monstrous to uphold theobjection that (after both parties had submitted to the arbitrator's juris-diction at every stage of the proceedings) the document was, for somelivpcr-technical reason, defective from a purist’s point of view.
Appeal allowed.
(3)That the arbitrator had been guilty of misconduct in that ho
had asked for and received fees from the plaintiff alone beforemaking the award.
– Ho arguments were urged in regard to other objections taken in the filedstatement of objections.
Upon the question of tho want of due notice, the learned Judge heldthat there was a valid notice to the effect that the award had been filed inCourt. Counsel for the defendant has not succeeded in persuading us thatthis finding was incorrect.
Upon the second mentioned objection we were referred to the case ofFernando v. Fernando 3. The judgment there indicates that the referencewas bad on its face because it purported to refer matters which wereclearly outside the matters in dispute in the action. In the present casehowever, there is no mention in the order of reference of any specificmatter falling outside the scope of the action. The arbitrator was requiredto determine “ all matters in dispute in this action and all other mattersin dispute between them At the stage when the reference was 'made,
* {1015) A. I. D. (P. C.) TO. '* (1915) 18 N. L. R. 413.
3 (1051) 53 N. L. R. -ISO.