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PETITIONER: UNION TEXTILE TRAIDERS,

       Vs.

RESPONDENT: SHRI BHAWANI COTTON MILLS LTD.

DATE OF JUDGMENT: 15/09/1969

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C.

CITATION:  1970 AIR 1940            1970 SCR  (2) 429  1970 SCC  (1)   1

ACT:     Indian  Arbitration Act, 1940 (10 of 1940), ss.  5,  11, 30--These  sections  whether violated by r.  III(3)  of  the Rules  of  Arbitration  of the Indian  Chamber  of  Commerce Calcutta--Said  Rule  empowering Registrar  of  Tribunal  of Arbitration  not to disclose names of arbitrators  appointed by   Chamber   to   a   party  who   was   not   member   of Chamber--Appointment of  arbitrator whether not complete  if name   of  arbitrator  not  disclosed  to   party-Commercial practice of not disclosing names--Justification for.

HEADNOTE:     A  contract was entered into between the  appellant  and the  respondent in 1964 for sale of 200 bags of  Cone  yarn. The  contract  inter alia  conrained the condition  that  in case of any dispute arising out of the contract "the  matter in  dispute  shall  be referred to the  arbitration  of  the Indian  Chamber of Commerce whose decision shall be  binding on  both   the parties".  The appellant was not a member  of the said Chamber of Commerce; the respondent was  On dispute arising  between  the  parties and  being  referred  to  the Chamber for arbitration the appellant wrote to the Registrar of the Tribunal of Arbitration of the Chamber to intimate to it the names of the persons constituting the court to enable the appellant to ascertain whether they were independent and disinterested persons. The Registrar refused to disclose the names on the ground that under the rules of the Chamber they could  not  be  disclosed to a  non-member.   On  persistent refusal  to  disclose  the  names  the  appellant  filed  an application under s. 33 of the Indian Arbitration Act,  1940 before   the  Calcutta  High  Court  the   application   was dismissed,  whereupon appeal by special leave was  filed  in this  Court.   It was urged that the non-disclosure  of  the names of the arbitrators by the Registrar was violatire  not only of the rules of natural justice but also infringed  the provisions  of  the Arbitration Act. It was  contended  that there  was  a  conflict between r. III(3) of  the  Rules  of Arbitration  of the Chamber of Commerce and ss. 5 and 11  or s. 30’ of the Act. HELD: The appeal must be dismissed.      (  i) The power given to the Registrar not to  disclose

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names of the members of the arbitration court to non-members is  discretionary  ’and  he is not bound in  every  case  to refuse  to disclose the names.  At any rate as soon  as  the proceedings commence the parties will know the names of the. arbitrators and objection can be taken at that stage.  Under s.  5  of the Arbitration Act it is not essential  that  the authority   of   an   appointed  arbitrator  should  be  got revoked   before   the  commencement  of   the   arbitration proceedings.    Section 11  contemplates a stage  subsequent to the arbitrator entering on the reference.  There is  thus no conflict between r. 111(3) of the Rules of Arbitration of the Chamber and ss. 5 and 11 and 30 of the Act.  These Rules do   not  interfere  with  or  take  away  the  powers   and jurisdiction  of the court under the  aforesaid  provisions. The appellant itself had agreed to submit to the arbitration of  the  Chamber which meant that it was bound  by  all  the Rules  of  Arbitration of the said body.  No  illegality  or invalidity  could  be projected into the  agreement  by  the presence of r. III(3). [434 C-F]. 430     (ii)  The statement in Russel on Arbitration (17th  Edn. p. 207) that the appointment of an arbitrator by a party  is not complete without communication hereof to the other party could  be of no avail to the appellant since in the  present case the appointment of the arbitrator, namely, the  Chamber of Commerce, was in every sense complete. [434 G-H]     (iii)  The rule objected to by the appellant is part  of the  long standing practice of Chambers of Commerce in  this country  its  justification  being the  elimination  of  all possibility  or  chance of a party trying to  influence  the members  of the Arbitration court before they enter upon  or proceed with the reference. [435 C-D]     Unreported  judgment  of Calcutta High  Court  in  Suraj Ratan  Birany v. Hindustan Motors Ltd. decided  onApril  10, 1964, disapproved.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1658 of 1966.     Appeal  by  special leave from the judgment  and  order. dated November 19, 1965 of the Calcutta High Court in Matter No. 213 of 1964. D.N. Mukherjee, for the appellant. A.N. Sinha and B.P. Jha, for the respondent. The Judgment of the Court was delivered by     Grover,  J.  This is an appeal by special leave  from  a judgment  of the Calcutta High Court dismissing  a  petition filed under s. 33 of the Indian Arbitration Act, hereinafter called the Act.     A contract was  entered into between  appellant and  the respondent on January 28, 1964 for sale of 200 bags of  Cone yarn.  The contract inter alia contained the following terms and conditions:                      "(a) In case of any dispute arising out               of  this contract the matter in dispute  shall               be  referred to the arbitration of the  Indian               Chamber  of  Commerce whose decision shall  be               binding on both the parties.                   (b)  The Court  at Calcutta alone  and  no               other court whatsoever shall have jurisdiction               to  entertain and try suits in respect of  any               claim or disputes arising out of or under this               contract or in any way relating to the same". Certain  disputes arose between the parties relating to  the

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supply of  goods  and  the  respondent  demanded  a  payment of Rs.  25,658.90 as price of the goods alleged to have been supplied.  The appellant maintained that the said goods were not according to the contract and had been rightly rejected. 431     The  appellant  did  not happen to be a  member  of  the Indian Chamber of Commerce, Calcutta, whereas the respondent was  a  member.  The dispute having  been  referred  to  the Chamber the appellant wrote to the Registrar of the Tribunal of  Arbitration of the Chamber of Commerce to  intimate  the names  of the persons constituting the court to  enable  the appellant  to  ascertain whether they were  independent  and disinterested  persons.  The Registrar sent a  reply  saying that  the  names of the arbitrators constituting  the  court could  not  be  disclosed  to the  appellant  as  it  was  a nonmember.   Later  on  a list  of  the  office-bearers  and committee  members was sent but according to  the  appellant the  names  of  the  arbitrators  were  not  disclosed.   In September  1964 the Registrar intimated that the meeting  of the court of the arbitrators would be held on September  24, 1964.  There was further correspondence..  The  appellant’s. attorney again  sought  information regarding the names  and particulars   of  the  arbitrators  but   without   success. Ultimately the appellant filed an application under s. 33 of the Act.  The case of the appellant was that the arbitration agreement contained in the contract was void and ineffective as  clauses  (a) and (b) reproduced above were  in  conflict with  each  other  and that the Rules  of  the  Tribunal  of Arbitration  of the Indian Chamber of Commerce were  illegal and  void.   The  High Court repelled  all  the  contentions raised before it and dismissed the application.     The  main  emphasis before us has been laid  by  learned counsel  for  the  appellant  on R. III  of  the  Rules   of Arbitration   of  the  Indian  Chamber  of  Commerce  which, according to him, comes into conflict with the provisions of the Act.  That Rule provides that the Tribunal shall consist of  such persons as may be selected by the Committee of  the Chamber from time to time.  Sub-Rule ( 3 ) reads:                   "The Committee  may, at any time if   they               think  proper so to do, add to the  said  list               the  names  of  other  persons  qualified   as               aforesaid.   A  list  of the  members  of  the               Tribunal complete for the time: being shall be               kept  by  the Registrar, and shall  always  be               open for inspection by members on  application               and  at the discretion of the Registrar,  also               by persons other than members". It  is  urged that the non-disclosure of the  names  of  the arbitrators  by the Registrar is violative not only  of  the rules of natural justice but also infringes the   provisions of  the Act.  Before  the High Court and before us  reliance has  been placed on an unreported judgment of  the  Calcutta High Court in Matter No. 95 of 1963 (Suraj Ratan Binany   v. Hindustan Motors Ltd.)(1).  In that Decided on C--4-964. 432 case  a similar contention had been raised and it  was  held that  if the names of the arbitrators were not known to  the parties  until the award was filed the parties would not  be in   a  position  to  know  whether  the   arbitrators   had misconducted themselves entailing removal under s. 11 of the Act or a case had’ arisen for moving the court under s. 5 of the  Act for leave to revoke the ,authority of an  appointed arbitrator.   In  the judgment under appeal,  however,  that view  was  not  followed  and it  has  been  held  that  the

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Arbitration Rules of the Chamber of Commerce did not  offend any  of the sections of the Act as the powers of  the  court under  ss.  5 and 11 remained unaffected  by  the  aforesaid Rules.     In  our judgment there is no merit in  the challenge  to the validity of the arbitration agreement on the ground that the  Rules of the Indian Chamber of Commerce which is to  be the  arbitrator,  enable the Registrar of  that  Chamber  to withhold disclosure of the names of the Arbitration Court to a party which does not happen to be a member of the Chamber. The power given to the Registrar is discretionary and he  is not bound in every case to refuse to disclose the names.  At any  rate,  as soon as proceedings  before  the  arbitrators commence  both parties are in a position to know  the  names and  particulars  of  the arbitrators and if  there  is  any objection  on  well known grounds to  their  conducting  the arbitration the same can be taken at that stage.  Under s. 5 it  is  not  essential that the authority  of  an  appointed arbitrator should be got revoked before the commencement  of the  arbitration  proceedings.  Section  11  contemplates  a stage   subsequent  to  the  arbitrators  entering  on   the reference.  We can see no conflict between Rule III (3 )  of the  Rules of Arbitration of Chamber of Commerce and  ss.  5 and  11 or s. 30 of the Act.  These Rules do  not  interfere with  or  take away the powers and the jurisdiction  of  the court under the aforesaid provisions. It must be  remembered that  the appellant agreed to submit to the  arbitration  of Indian Chamber    of Commerce which meant that it was  bound by  all  the  Rules of Arbitration of  the  said  body.   No illegality or invalidity can be projected into the agreement by the presence of Rule III(3). Our  attention has been drawn to a statement in Russell   on Arbitration, 17th Edn., at page 207 that the appointment  of an   arbitrator  by  a  party  is  not   complete    without communication thereof to the other party.  This Rule can  be of  no avail to the appellant because in the;  present  case the  arbitrator was known, the arbitrator being the  Chamber of  Commerce.  Under its Rules the Chamber is authorised  to delegate  its  power to a smaller body. As  the  Rules  were expressly or by necessary implication incorporated into  the contract  the  Chamber would have the power   to  appoint  a court,  by  its  Registrar,  to  decide  the  dispute.   The appointment  of  the arbitrator was thus complete  in  every sense in  433 the  present  case.   It could not  be said  that  it  would become complete only when the names of persons  constituting the  court of arbitration were communicated.  Those  persons only  discharge  the duty which lay on the  Chamber  in  the matter of arbitration.     It  is noteworthy that the Rules of Chamber of  Commerce in  various parts of the country contain provisions  similar to  the  one the validity of which has been  impugned.   For instance   Rule  V(4)  of the Rules  of  Bengal  Chamber  of Commerce  provides that the names or name of the persons  or person  constituting  the  court  shall  not  ordinarily  be disclosed  to the parties nor shall the parties be  entitled to  such in,formation as of right.  A similar rule is to  be found  in  bye-law 8 of the Bombay Chamber of  Commerce  and Rule  V(5)  of  Arbitration  Rules  of  Madras  Chamber   of Commerce.  It appears that the aforesaid Rule which has been framed  by all these bodies of long standing and  experience in the field of business is based on the elimination of  all possibility  or  chance of a party trying to  influence  the members  of the Arbitration Court before they enter upon  or

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proceed with the reference.  It is axiomatic that as soon as a  party appears before them or the arbitration  proceedings commence the names of the arbitrators can no longer remain a secret  and  it  is  always open to  a  party  to  initiate: proceedings  on the ground of bias or  prejudicial  interest even at that stage or after the award is made. The  appeal  fails and it is dismissed.  There  will  be  no order as to costs. G.C.                                      Appeal dismissed. 434