Case Note & Summary
The dispute arose from a contract for the supply of corn sacks entered into on August 29, 1951, which included an arbitration clause. Disputes regarding the contract were referred to the Bengal Chamber of Commerce for arbitration. An initial award made on April 17, 1952, was set aside by the High Court on May 25, 1953, due to misconduct by the arbitrators. Following this, the respondent sought to refer the matter for arbitration de novo, leading to the appointment of a new tribunal that issued a fresh award in favor of the respondent. The appellant challenged this second award, arguing that the reference to arbitration was exhausted after the first award was set aside, rendering the arbitrator functus officio without a new arbitration agreement. The court analyzed the provisions of the Arbitration Act, 1940, particularly Section 19, which grants the court discretion to either supersede the reference or allow it to continue even after an award is set aside. The court concluded that the reference had not been superseded, and thus, the arbitration agreement remained effective, allowing for further proceedings. The appeals were dismissed, affirming the validity of the second arbitration award.
Headnote
A) Arbitration Law - Function of Arbitrator - Functus Officio - Arbitration Act, 1940, Section 19 - The court held that while an arbitrator becomes functus officio after making an award, this does not preclude further arbitration proceedings if the award is set aside and the reference is not superseded. The discretion of the court under Section 19 allows for the continuation of arbitration proceedings depending on the terms of the arbitration agreement (Paras 1-2).
Issue of Consideration
Whether the reference to arbitration was exhausted after the first award was set aside and if a second reference to arbitration was permissible.
Final Decision
The Supreme Court dismissed both appeals, affirming the validity of the second arbitration award and clarifying the discretion of the court under Section 19 of the Arbitration Act, 1940.
Law Points
- arbitration
- functus officio
- reference to arbitration
- setting aside award
- discretion of court
