Ashok Singh and Another vs Jugeshwar Singh and Others

Hari Lal Agrawal, J.—This is an appeal by the plaintiffs against the order of the court below rejecting their application for making an award the rule of the Court. Briefly stated, the relevant facts are these:--

Both the parties are descendants of common ancestor and own considerable properties. They now form five branches. Differences, however, seem to have arisen between them over partition of their properties and accordingly they decided to get the partition done by a board of arbitrators. Accordingly, they entered into an agreement (Ext. 5) on 2.6.1970 by which each branch agreed to appoint one arbitrator of its own and to abide by the majority decision of the said arbitrators. The arbitrators gave their award on 15.10.1971 and the same was registered on 24.1.1972.

The appellants then filed an application on 4.4.1972 in the court below u/s 14(2) of the Arbitration Act praying for a direction to the arbitrators to file the award in Court and then after giving notice to the parties of the filing of the award, to make the same rule of the Court. In their petition the appellants had stated that although they had learned that the award was registered by the arbitrators, no formal notice had been served on them for making the award. The award was filed in Court on 21.7.1972 and notice was issued to the respondents which was served on them on 12.4.1973. On 2.5.1973 respondents first party who were opposite party nos. 1 and 2 and who alone contested the appellants entered appearance and applied for time to file their written statement. They, however, filed their objection, after several adjournments, on 28.11.1973. They opposed the application for passing a decree in terms of the award, inter alia, on the following grounds:

(i) The arbitrators misconducted themselves in the proceedings. A number of instances were given of the irregularities committed by them,

(ii) The arbitrators did not give notice regarding the giving of the award to the parties concerned.

(iii) The award was given much after the period of limitation.

(iv) The arbitrators had gone beyond the reference. Besides these allegations it was also alleged that the arbitration agreement was itself Invalid and illegal and could not be enforced. The execution of the agreement (Ext. 5), however, was not disputed by them. No other party opposed the prayer; rather, they supported the award and joined hands with the appellants.

The trial court framed a number of issues and came to the following conclusions:

(a) The agreement for arbitration was vague with respect to the subject matter of the dispute.

(b) All the parties interested in the subject matter in dispute had not been represented in the agreement to arbitration.

(c) The arbitrators misconducted and did not conduct the arbitration proceeding properly.

(d) The award in question was beyond the prescribed period of limitation.

In view of the above findings, the learned Subordinate Judge rejected the application of the appellants and accordingly they have come to this court.

Mr. A.K. Roy, learned counsel for the contesting respondents, raised a preliminary question that this appeal itself was not maintainable Inasmuch as it was not covered by any of the provisions of Section 39. Mr. Lakshman Saran Sinha, appearing for the appellants, on the other hand, argued that the appeal was directly covered by Clause (6) of Sub-section (1) of Section 39 as the award of the arbitrators was set aside by the court below. I find force in this contention. The argument of Mr. Sinha must be accepted inasmuch as the order of the court declining to make the award rule of the court, in essence, amounts to setting aside of the award. I would accordingly hold that the preliminary objection has got no force. I find support for this view from the case of (1) Makeshwar Misra Vs. Laliteshwar Prasad Singh and Others, .

Mr. Sinha, however, argued that inasmuch as the application for setting aside the award filed by the contesting respondents was itself beyond the prescribed period of limitation, the court below has committed an error in law in not rejecting the same in limine and, in absence of any other infirmity in the award, not pronouncing the judgment according to the award.

The arbitration in question was without the intervention of a court and the relevant provisions for such kind of arbitration is contained in Chapter II of the Act which consists of seventeen sections from Sections 3 to 19. Some of the relevant provisions of this type of arbitration may be briefly noticed. Section 13 provides for powers of the arbitrators and Section 14 for the award to be signed and filed. When the award is filed the court has to give notice to the parties of the filing of the award u/s 14(2). u/s 15 the court is given power to modify and correct the award and u/s 16 to remit the award for reconsideration upon such terms as it thinks fit on the grounds mentioned in the above sections, but once the dispute is found to be within the scope of the arbitration clause, it is no part of the province of the court to enter into the merits of the dispute. The powers of the court are limited to accepting the award, if there be no objection in passing decree in accordance therewith, or superseding a reference or revoking or modifying the award or remitting it for further consideration. However the mere fact that an objection was not filed by any of the parties to the award, does not altogether absolve the court of its responsibility to decide whether there was competent reference and whether the award was a valid award on the face of it. There may be some matter which may really go to the root of the award and irrespective of any objection by the parties the matter has to be decided by a Court before a decree could be passed on the basis of the award. Section 16(1)(c) of the Act Itself provides for such cases, namely, where an objection to the legality of the award is apparent on the face of it, wherein the Court may remit the award or may supersede it and proceed to decide the suit on merits. But as provided in Section 17 "where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon judgment so pronounced a decree shall follow, and no appeal shall lie, from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."

The scheme of the provisions contained in Chapter II of the Arbitration Act, therefore, makes it clear that the Court has to pronounce the judgment in accordance with the award if it sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, and the Court has to wait for the time given to a party to make an application for setting aside the award and where such an application has been made, the Court has to decide it first. If it rejects it, the Court has to act in accordance with Section 17 and proceed to pronounce judgment according to the award. The validity of the award could be challenged u/s 15 which provides for its correction or modification by the Court or it might be challenged u/s 16 which provides for its remission for consideration or it might be challenged u/s 30 which provides for its setting aside. None of these sections, however, provides for making of an application and it is perfectly clear that the authority for making an application for any one of these cases is derived ultimately from the general provisions contained in Section 33. It was observed by a Bench of this Court in the case of (2) Basant Lal Vs. Surendra Prasad and Others, that the scheme of Section 17 was that after an award has been filed, an opportunity is given to the party challenging, or disputing the award, to file an application to set aside the award and the application has to be filed within the period of limitation. If a party to an award wants to challenge the validity of the award on any ground and desires that the award should be either modified or corrected u/s 15 or remitted for reconsideration u/s 16 or set aside u/s 30, he has to make an application in that behalf u/s 33 within thirty days of the service of the notice and it is only when an application to set aside an award has been made in time and the application has succeeded that the party in whose favour the award is made, is not entitled to a decree in terms of Section 17. Hence, the only proper interpretation to be given to Section 17 is that it content plates all applications to set aside an award and all applications have to be filed u/s 23, as Section 30 does not deal with applications to set aside award at all, it deals with what the powers of a court are when an application is made to set aside the award. But when a court wants to set aside an award and as to what procedure it should follow, then the court has got to turn to Section 33. The two Sections, therefore, have a certain resemblance and may to a certain extent, overlap, but it cannot be said that both have the same meaning, or that both cover the same field. u/s 33 the court has to decide whether there was an arbitration agreement, and if so, what is its effect. There is no apprehension in Section 33 far setting aside the award or for an order directing that a decree be passed in terms of the award. No doubt, it is true that the line between setting aside an award and declaring an award as invalid is rather thin, but at the same time there is a difference and it cannot, therefore, be said that the words "set aside" in Section 30 should be interpreted to include an order declaring an arbitration agreement to be non-existent or invalid. It is obvious that if an application u/s 33 is made contesting the award and it sets out all, or some of the grounds mentioned in Section 30 of the Act for setting aside the award, the court may entertain the application u/s 33 and allow or disallow it accordingly. If, therefore, a party accepts the validity of the reference but is aggrieved only in regard to the proceedings before the arbitrator, its case would be covered u/s 30.

The grounds on which an application for setting aside an award can be made are to be found in Section 30 and they are three in number reading as follows:

(a) that an arbitrator or umpire has misconducted himself or the proceedings.

(b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid u/s 35.

(c) that award has been improperly procured or is otherwise invalid.

The provisions contained in Section 30 seems to suggest that they are exhaustive of the grounds on which an award can be set aside. The words "is otherwise, invalid" in Clause (c) of Section 30 have vexed the courts times without number and there prevails a considerable conflict in the decisions of the various High Courts. According to some of the High Courts including the Patna High Court, the words are not ejusdem genres with the other cases, mentioned in this section but are meant to include all cases of invalidity on grounds other than mentioned and may include the awards that are nullities. In Basant Lal''s case (Supra) it was clearly laid down that these words do not include an objection impeaching the existence, or validity, of an arbitration agreement, or reference, upon which the award is founded. Nonexistence or invalidity of an arbitration agreement, or reference, are not contemplated by, and, included in the words ''or is otherwise invalid'' in Section 30(c), and are, as such, not grounds contemplated by, and, within the meaning of Section 30, on which an award can be set aside. The above case was then again followed by a Bench of this court in the case of (3) Bihar State Co-operative Bank Ltd. Vs. The Phosphate Company Limited and Another, and also was referred with approval by a Full Bench of the Delhi High Court in the case of (4) Prem Sagar Chawla Vs. Messrs Security and Finance (P). Ltd. and another, .

From the above discussions it is clear that the objection by the contesting respondents should have been filed for setting aside the award within thirty days under Article 119(b) of the new Limitation Act, from the date of the service of the notice on the party to the effect that the award had been filed on the court. If no such application is made, the award cannot be set aside on any of the grounds specified u/s 30 of the Act. It was observed by the Supreme Court in the case of (5) Madan Lal Vs. Sunderlal and Another, that even assuming that the Court has power to set aside an award suo motu, that power cannot be exercised to set aside the award on the grounds specified in Section 30 of the Act, for if that were so, the limitation provided under Article 158 of the Limitation Act (old) would be completely negatived. If this argument is once accepted, then the position would be reduced to this that in the eye of law there was no objection by the opposite party before the court below for setting aside the award of the arbitrators.

From the facts stated above, it is manifest that the court below did not find on its own any ground either to modify or to remit the award to the arbitrators for which it need not wait for any objection being filed and that the objection for setting aside the award was obviously barred by limitation. In these circumstances the Court was bound to accept the award and to make the same a rule of the Court instead of going into the various questions as indicated above.

Faced with this difficulty; Mr. A.K. Roy, sought to contend that the objection of the contesting respondents should have been treated u/s 33 of the Act inasmuch as there was a statement made in the same that the arbitration agreement was itself invalid and illegal and; therefore, the period of limitation of 30 days would not apply to the same. Section 33 permits a party to challenge the award on two grounds; namely, (1) non-existence of the arbitration agreement itself, i.e.; one of the parties may allege that he was not a party to arbitration agreement; and (ii) that although he was party to the agreement, the agreement itself was invalid and illegal.

The arbitration agreement entered into between the parties is already on the record as Ext. 5 and, therefore, it is not a case where the contesting respondents could say that they were not parties to the arbitration agreement, if at all they could urge that the said arbitration agreement was invalid in law. No specific issue on this question was framed in the court below, nor Mr. Roy has pointed out any material on which this court could hold that the arbitration agreement was in any way invalid or illegal. The trial court, no doubt has at one place held that all the parties interested in the subject matter in dispute were not represented in the arbitration agreement, Mr. Lakshman Saran Sinha challenged this finding as erroneous inasmuch as the arbitration agreement was duly entered and signed by the heads of all the five branches and the absence of the junior members of the family to which the court below referred was of no consequence. From the nature of the issues framed by the trial court and the evidence taken and the findings recorded by it also, it is apparent that it simply proceeded to examine the validity or otherwise of the award only on the grounds covered by Section 30 of the Act. It is, therefore, not possible to hold that the objection petition filed by the contesting respondents should have been treated as one u/s 33 which could be entertained by the court even having been filed after thirty days as prescribed under Article 109(b) of the Limitation Act.

Before parting with this case; however, I must also advert to some of the points which were taken into consideration by the trial court for rejecting the petition of the appellants. There are, as already seen earlier, (1) giving of the award by the arbitrators beyond the period of four months, and (2) vagueness of the reference. The other grounds touching the proceedings of the arbitrators could not be gone Into by the court at all on account of the bar of limitation.

It is, no doubt, true that the award was given beyond the period of four months by the arbitrators, but as held by a Full Bench of this Court in the case of (6) Bokaro and Ramgur Ltd. Vs. Dr. Prasun Kumar Banerjee, , it was not invalid or void merely on that account. Nothing was shown in the court below that any objection was taken by the respondents before the arbitrators in this regard. With respect to the ground regarding the vagueness of the arbitration agreement, it was submitted that it did not specify the properties which formed the subject matter of the partition. It is, no doubt, true that the arbitration agreement did not specify the properties, but it is clear that the properties sought to be partitioned by the arbitrators were the joint family properties of the parties and the parties could give the details later on to the arbitrators. Such a question was considered by a Bench of this court in the case of (7) Bahadur Singh Vs. Fuleshwar Singh and Others, . This court referred wit approval the case of (8) Radha Kishan and Another Vs. Sapattar Singh, where it was observed by a Bench of that court that "in arbitration agreements the actual points of dispute are seldom stated. Generally, reference are made to arbitration where disputes arise and the parties thereafter formulate when necessary, their disputes before the arbitrators and seek their decisions on those points of differences. The arbitration agreement in this case cannot be said to be so vague or uncertain as to be unenforceable. Section 29 of the Contract Act says that; ''Agreement, the meaning of which is not certain are void''. I find myself in complete agreement with the views expressed in the above decision. The inevitable result that must follow from the discussions in the foregoing paragraphs is that this appeal must succeed. I would accordingly allow the appeal, set aside the judgment and order of the court below and remit the matter back to it with a direction to make the award a rule of the court. In the circumstances, however, I shall leave the parties to bear their own costs throughout.

M.P. Varma, J.

I agree.