Gaja sinhva Rao and another vs Sujat Ali

Naik, C.J.—This is an appeal against an order of the District Judge of Secunderabad; whereby the application for filing an award has been dismissed. The award, which is dated July 30, 1949, has given the appellant a sum of Rs. 17,666-13-5 against the respondent. Altogether four grounds were urged by the respondent for not passing a decree in terms of the award. Two of them were not pressed in the lower Court. One of the remaining two has been disallowed and the other sustained as sufficient reason for dismissing the application. The appellant challenges the correctness of the decision rejecting the award and the respondent, while maintaining the legal soundness of the judgment on this point, disputes the validity of the rule on which the Court below has disallowed his other objection. In order to appreciate their respective arguments, it is necessary to give in some detail the facts of the case.

It appears that a partnership consisting of three persons, Ananthan Krishna Rao, Malhar Rao and Narsing Rao had obtained a contract in the name of Malhar Rao from the Forest Utilisation Officer for the supply of timber to A.B.E., Park, Secunderabad. Towards the end of 1942, another contract was entered into between the partnership and the respondent; under which the partners were to advance money to the respondent to enable him to purchase and instal a saw mill, he was to saw timber supplied by them and for the work was to receive twelve annas per cubic foot of sawn timber, such charges were to be set off against the amount advanced and was to deliver in the shape of sawn timber 50 per cent. of the quality of logs delivered to him, sufficient quantity of timber were to be supplied to keep the Saw Mill engaged, otherwise he would be at liberty to accept work from other persons. It is admitted that Rs. 30,958-8-9 were advanced and Rs. 28,190-1-4 repaid. It is further admitted that 36,179-6-1 cubic feet of round logs of wood were supplied and 14,779-0-0 cubic feet of sawn timber delivered.

Disputes and differences having arisen between the parties to the contract, they were referred to the arbitration. At the time of the reference, Anantha Krishna Rao was dead and the reference which is dated January 19, 1949, is signed only by two persons, Gajasimha Rao, a son of the deceased Krishna Rao and the respondent. It mentions that G. Eshwariah and P. Yagana Narayana have been nominated as arbitrators by Gajasimha Rao as well as Y. Laxmiah and T. Ramalingam have been appointed as such by vine respondent. These four persons nominated Blum Rao as ''Sur Punch.'' The document containing the reference ends as follows:

After hearing the case (Regarding Timber Supply and sawing for war-work during 1943-1945) whatever the decision the aboyementioned ''punch'' delivers, we both the parties, promise to abide by it.

The Court below has rejected the respondent''s objection that as Malhar Rao, Narsing Rao and the other son of the deceased, Anantha Krishna Rao, were no parties to the reference, the agreement was void. Notwithstanding the rejection, it was urged before us as an additional reason for disallowing this appeal.

The arbitrators gave the award on July 30, 1949, in which they say that as Narsing Rao does not admit the payment of Rs. 1,172/- as ''bakshish'' it is disallowed and the respondent is liable to repay Rs. 2,768-7-5 on capital account. Then, rejecting the argument by the respondent that as the logs were supplied very late after cutting it was not possible to supply fifty per cent due to wastage, they held him liable to return 6,821-6 cubic feet of round logs or their money value of Rs. 14,898-6-0. The award does not deal with any other dispute, although one of the arbitrators, Gundeshwariah, deposes in the case that during the enquiry, both the parties told them about various matters, which the arbitrators heard and decided. He was asked in his cross-examination whether there was any award on certain allegations of the respondent enumerated in his written-statement before the arbitrators and he was forced to reply that there was no decision on them.

The learned District Judge framed several Issues in the case and has held that so far as the procurement of the arbitration agreement by misrepresentation and fraud was concerned, as no evidence was lead, no finding could be given in favour of the respondent, and the question of Court''s jurisdiction was given up. He has also held that notwithstanding the other son of the deceased partner, Malhar Rao and Narsingh Rao being no parties to the arbitration agreement, it was still valid and enforceable; but as the arbitrators have only adjudicated on the question of shrinkage and quantity of sawn timber and not on the other claims made by the respondent, they left undecided some of the cardinal issues in the case, and the award was bad, and the application should be dismissed.

I think it is well-established principle of law that an award which omits to decide all the questions of differences referred is bad and unenforceable. The English rule on this point has been summarized in Halsbury''s Laws of England, (Haillsham''s Edition) at page 663 as follows:

The award must determine all the differences which the parties by their submission referred to arbitration; and, on the other hand, it must not purport to determine matters which were not comprised in the submission. An award which does not decide the differences referred to arbitration is bad and unenforceable.

The same rule has been adopted by the American Courts in a series of decisions. I need cite only one case of ''Smith v. Potter'', 65 American Decisions 198, where at page 200, the following observation appears:

The award seems to us fatally defective. The arbitrator did not make a full and final award upon all the matters submitted to him. And if any defect is fatal to an award of arbitrators, it is this. The authorities are uniform in regard to it. The award does not come within the submission. For NON CONSTAT that the party against whom the award is would have submitted, the part awarded upon without the other; It is not certain the same or a similar award, or one for the same party, would be made if all the matters submitted had been passed upon

In this country, the Privy Council has laid down the law in similar terms in the case of ''Makund Ram v. Saliq Ram'', 21 Ind App 47, that the ground upon which an award which does not dispose of all the matters is held to be invalid is that there is an implied condition that it shall do so. Again Walsh, A.C.J., in ''Khub Lal v. Bishambar Sahai, 22 All L J 919 observes:

It is agreed, on the one hand, that if an arbitrator chooses to undertake the decision of a variety of matters with the consent of the parties, and he deliberately, or by an oversight without the consent of the parties omits from his decision anything really material, it is sufficient to destroy the award. The reason for that is obvious. We are discussing, be it observed, an arbitration without the intervention of the Court. The tribunal derives its authority only from the consent of the parties and from the moment when it goes outside that consent, either by omitting to decide what they have submitted to him, or by deciding something which they have not submitted to him, he ceases to be clothed with the legal authority from which alone he derives his jurisdiction. About that there has been controversy before us.

The Calcutta High Court in an earlier caseof ''Ganes Narain v. Malida Koer'', 13 Cal L J 339, observes:

It is well settled that an arbitrator must be careful to see that his award is a final decision on all matters requiring his determination. The obligation so to decide depends upon the question whether the submission requires that all or only some of the matters in dispute are to be determined by him.

The authorities relied upon by the learned Advocate for the appellant do not decide anything to the contrary. They do decide that an award need not expressly decide each point; but they do not hold that it need not cover the whole case. If it can be inferred that award had incidentally decided all the questions in dispute, that is sufficient. The proposition, if anything supports the rule that the decision on all disputes is necessary even though that be done incidentally. Therefore, the only point which requires adjudication in this appeal is how far the decision of the lower Court that arbitrators in this particular case failed to adjudicate upon all the points is correct.

It appears from the arbitrators'' file, which has been produced in this case that the respondent has put in a written statement, which is dated May 15, 1949. It is a long document and among, other things contains three counterclaims. They have been summarised by the lower Court and I. shall, quote that summary in extenso:

(a) The plaintiffs were not supplying logs regularly as agreed to, and because of this, with the consent of Mr. V. Narsing Rao, defendant had been sawing timber of others including A. B. E. Park, Secunderabad, without prejudice to the plaintiff''s work. Mr. Narsingh Rao behind the back of defendant stopped this work by making: representations to F. U. O. (Forest Utilisation Officer) that they (himself and the plaintiffs) were the owners of the Saw Mill and that A. B. E. Park was thrusting sawing work upon them and that it was difficult to execute two jobs at a time. As a result of this action of Narsingh Rao, the defendant suffered a loss of about Rs. 20,000/-. (b) After these facts came to defendants'' knowledge, Narsingh Rao appeased him by saying that he would supply sufficient quantities of regular supplies and that the defendant could claim Rs. 200/- per diem when the Saw Mill was idle. (c) When this promise also did not fructify the defendant wanted to sell the Saw Mill for Rs. 18,000/- for which he had received a firm offer, but Narsingh Rao prevented the defendant from selling the same on the assurance that he would supply sufficient timber to keep the Mill going, but these hopes were not fulfilled whereby the defendant had lost Rs. 10,000/- which he would have made as profit.

The respondent thus requested the arbitrators to consider all these matters and get him a sufficient portion of the losses he has suffered. Going through the award, it is obvious that it had not dealt with any one of the points so raised. It has only dealt with the amount of the capital advanced being still due from the respondent and the assertion of the delivery of sawn wood being according to the agreement. Nowhere in the award, any adjudication on the three claims of the respondent referred to above appears. Eshwariah, one of the arbitrators, in his evidence says that during the enquiry both the parties brought various matters pertaining to the transaction, they heard and decided them; but had to admit that no award was given to them. The terms of reference are wide enough to include these matters. Thus there has been adjudication of the appellant''s claim alone and there is no attempt at any adjudication of the respondent''s claim. In these circumstances, I am of opinion, that the decision of the learned District Judge is correct and this appeal should be disallowed with costs.

I need not deal with the other questions in the case; for any decision on this point is unnecessary for the disposal of the appeal, the decision of the lower Court in disallowing the suit having been found correct. The appeal is dismissed with costs.

M.A. Ansari, J.

I agree.