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ARBITRATION ACT, 1940 [REPEALED]

Ministry of Law and Justice

Act nº 10 of 1940


  • Chapter I
  • Chapter II
  • Chapter III
  • Chapter IV
  • Chapter V
  • Chapter VI
  • Chapter VII
  • Schedules
  • Act nº 10 of 1940

Preamble

THE ARBITRATION ACT, 1940

[Act, No. 10 of 1940]1

[11th March, 1940]

PREAMBLE

An Act to consolidate and amend the law relating to arbitration.

Whereas it is expedient to consolidate and amend the law relating to arbitration 2 [**]

It is hereby enacted as follows:

1. For the Statement of Objects and Reasons, see Gazette of India, 1939, Pt. V, pg. 142; for the Report of the Select committee, 1940, Pt. V, p. 35; THIS ARBITRATION ACT, 1940 HAS NOW BEEN REPEALED BY THE ARBITRATION AND CONCILIATION ACT, 1996 26 OF 1996, SECTION 86 W.E.F. 25th JANUARY, 1996.

2. The words "in the Provinces" omitted by the A.O., 1950.


Chapter I

Section 1. Short title, extent and commencement

(1) This Act may be called the Arbitration act, 1940.

(2) It extends1to the whole of India2[except the State of Jammu and Kashmir.]

(3) It shall come into force on the 1st day of July, 1940.

1. For the Statement of Objects and Reasons, see Gazette of India, 1939, Pt. V, pg. 142; for the Report of the Select committee, 1940, Pt. V, p. 35; THIS ARBITRATION ACT, 1940 HAS NOW BEEN REPEALED BY THE ARBITRATION AND CONCILIATION ACT, 1996 26 OF 1996, SECTION 86 W.E.F. 25THJANUARY, 1996.

2. Extended a Dadra & Nagar Haveli, vide Reg. 6 of 1963. SECTION 2 and Schedule I; to Lakshadweep, vide Reg. 8 of 1965, SECTION 3 and Schedule; to Goa, Daman and Diu by Act 30 of 1965; to Pondicherry, vide Act 26 of 1968, SECTION 3 and Schedule.


Section 2. Definitions

In this Act, unless there is anything repugnant in the subject or context,

(a) "arbitration agreement" means a written agreement to submit present future differences to arbitration, whether an arbitrator is named therein or not ;

(b) "award" means an arbitration award;

(c) "Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court;

(d) "legal representative" means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting ;

(e) "reference" means a reference to arbitration.

Chapter II

Section 3. Provisions in implied arbitration agreement

An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.

Section 4. Agreement that arbitrators be appointed by the third party

The parties to an arbitration agreement may agree that my reference thereunder shall be to an arbitrator or arbitrators to be appointed by a person designated in the agreement either by name or as the holder for the time being of any office or appointment.

Section 5. Authority of appointed arbitrator or unpire irrevocable except by leave of court

The authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a country intention is expressed in the arbitration agreement.

Section 6. Arbitration agreement not to be discharged by death of party thereto

(1) An arbitration agreement shall not be discharged by the death of any party thereto, either as respects the deceased or any other party, but shall in such event be enforceable by or against the legal representative of the deceased.

(2) The authority of an arbitrator shall not be revoked by the death of any party by whom he was appointed.

(3) Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person.

Section 7. Provisions in case of insolvecy

(1) Where it is provided by a term in a contract to which an insolvent is a party that any differences arising thereout or in connection therewith shall be referred to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such differences.

(2) Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purpose of, the insolvency proceedings, then, if the case is one to which sub-section (1) does not apply, any other party to the agreement or the receiver may apply to the Court having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be referred to arbitration in accordance with the agreement, and the Court may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly.

(3) In this section the expression "receiver" includes an Official Assignee.

Section 8. Power of court to appoint arbitrator of umpire

(1) In any of the following cases,-

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) in any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does nor show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;

any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.

Section 9. Power to party to appoint new arbitrator or in certain cases, a sole arbitrator

Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement,-

(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place;

(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent;

Provided that the Court may set aside any appointment as sole arbitrator made under Cl. (b) and either, on sufficient cause being shown allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit.

Explanation.-The fact that an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of Sec. 8 and this section.

Section 10. Provisions as to appointment of three of more arbitrators

(1) Where an arbitration agreement provides that a reference shall be to three arbitrators, one to be appointed by each party and the third by the two appointed arbitrators, the agreement shall have effect as if it provided for the appointment of an umpire, and not for the appointment of a third arbitrator, by the two arbitrators appointed by the parties.

(2) Where an arbitration agreement provides that a reference shall be to three arbitrators to be appointed otherwise than as mentioned in sub-section (1), the award of the majority shall, unless the arbitration agreement otherwise provides, prevail.

(3) Where an arbitration agreement provides for the appointment of more arbitrators than three, the award of the majority, or if the arbitrators are equally divided in their opinions, the award of the umpire shall, unless the arbitration agreement otherwise provides, prevail.

Section 11. Power to court to remove arbitrators or unpire in certain circumstances

(1) The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award.

(2) The Court may remove an arbitrator or umpire who has misconducted himself or the proceedings.

(3) Where an arbitrator or umpire is removed under this section, he shall not be entitled to receive any remuneration in respect of his services.

(4) For the purposes of this section the expression "proceedings with the reference" includes, in a case where reference to the umpire becomes necessary, giving notice of that fact to the parties and to the umpire.

Section 12. Power of court where arbitrator is removed or his authority revoked

(1) Where the Court removes an umpire who has not entered on the reference or one or more arbitrators (not being all the arbitrators), the Court may, on the application of any party to the arbitration agreement, appoint persons to fill the vacancies.

(2) Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the Court, or where the Court removes an umpire who has entered on the reference or a sole arbitrator or all the arbitrators, the Court may, on the application of any party to the arbitration agreement, either-

(a) appoint a person to act as sole arbitrator in the place of the person or persons displaces; or

(b) order that the arbitration agreement shall cease to have effect with respect to the difference referred.

(3) A person appointed under this section as an arbitrator or umpire shall have the like power to act in the reference and to make an award as if he had been appointed in accordance with the arbitration agreement.