Jagdish Singh vs State or Bihar and Others

Bart Lal Agrawal, J.—This appeal has been filed by the plaintiff u/s 39(1) (vi) of the Arbitration Act against an order of the court below refusing to set aside an award. A preliminary objection was raised on behalf of the respondents that the appeal itself was not maintainable in view of the provisions contained in section 17 of the Act. I shall answer this question after stating the facts of the case in brief.

The appellant entered into a building contract with the Collector of Gaya acting on behalf of the State of Bihar in the year 1950 containing an arbitration clause. Since a dispute arose in the settlement of the bills of the appellants, he filed an application u/s 20 of the Act in the court and in due course reference was made by the court below to the Superintending Engineer, Rural Engineering Organisation, Patna Circle. The award was submitted on 27.6.1978 by the Arbitrator, to which the appellant filed objection.

The court below by the impugned order overruled all the objections raised by the appellant and refused to set aside the award and ''disposed of the suit accordingly. Thereafter the decree followed in terms of the award.

The learned Government Pleader No. V on reference to the case of Girdhar Prasad and Others Vs. Ambika Prasad Thakur and Others, , submitted that since the court below had already passed a judgment and decree in terms of the award, the appeal did not fall within clause (vi) of section 39(1) and the appeal was barred.

The preliminary objection raised by the learned Government Pleader is entirely erroneous and misconceived. In Girdhar Prasad''s case (supra) no application to set aside the award on any of the admissible grounds mentioned in section 30 of the Act, within the period of limitation vide Article 158 of the Limitation Act, was filed and, therefore, the court below has nothing before it not to accept the award and pass the decree in terms of the award. In these circumstances, it was held that the order could not be treated as an order refusing to set aside the award.

I may do better to extract section 17 hereunder;

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) the 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 the 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.

Where no party files any objection praying for the setting aside of the award, no question of refusing to set it aside can arise and obviously no appeal is maintainable u/s 39(1) (vi) of the Act, which provides for an appeal against an order refusing to set aside an award or against the order of the court ordering that the award be filed, as was also observed by the Supreme Court in the case of Nilkantha Shidramappa Ningashetti Vs. Kashinath Somanna Ningashetti and Others, .

At one stage of the hearing some confusion arose as to how it could be that while an appeal is provided against a directory (interlocutory) order refusing to set aside an award, when as a result of that order a judgment or a decree was passed, those became non-appealable by virtue of the bar created u/s 17, except on the ground that it is in excess of or not otherwise in accordance with, the award. But on a closer scrutiny of the scheme of sections 17 and 39, the answer becomes obvious and that is that if the order refusing to set aside an award is upset by the higher court on appeal, the decree will automatically stand cancelled. Thus, there is no necessity of filing an appeal against the decree as the aggrieved party has to file the appeal against the order itself within the period of limitation and not to wait till the stage of either the judgment or the decree.

The point raised on behalf of the respondents by way of preliminary objection as indicated above, has been conclusively decided by a long line of decisions that the right to appeal under the specific provisions of section 39 cannot be defeated if the court has also incorporated into the order a direction that a decree be passed in terms of the award, or even if a decree has been passed in the mean time. If the appeal is allowed the decree will become ipso facto inoperative. This principle follows from the following cases: (1) Sondamino Ghose v. Gopal Chandra Ghose (A.I.R. 1915 Cal. 745)(2) Shaikh Muhammad Khalil Vs. Shaikh Abdul Rahim and Another, (3) Sheocharan Mahton and Others Vs. Sanichar Mahton and Others, , and (4) The Indian Minerals Co. v. The Northern India Lime Marketing Association ( AIR 1958 Allahabad 692). In two other cases of this Court, namely, Mathura Prasad Gupta and Another Vs. Mosammat Manohri Kuer and Others, and Prasad Gope Vs. Makhan Gope and Another, , it was very clearly observed that it was not proper to apply the doctrine of merger in cases where the order refusing to set aside an award and a decree are passed simultaneously. This principle was also indicated in Sheocharan Manton''s case (supra).

Before adverting to the other question, I may observe, relying on the observations made by Mahapatra, J. in Prasad Gope''s can (supra), that in such cases the court in the first instance should pass an order refusing to set aside an award as asked for by the party concerned and thereafter should proceed to deliver judgment according to the award and then decree should follow.

After clearing the initial hurdle, learned counsel for the appellant submitted that the court below had committed various mistakes including the omission to look to the supplementary agreement.

In reply the learned Government Pleader referred to a chart showing the items of claim disallowed by the Arbitrator with his reasons at page 59 of the paper book. Learned counsel for the appellant tried in vain to take me through the merits of his claim without appreciatig that the grounds for setting aside an award ere very limited and the court while considering the objections by the aggrieved party to the award cannot convert the court into a court of apeal. The grounds for setting aside award being very much limited, the court, though may differ from the findings of the Arbitrator, cannot set aside the award unless in exceptional cases the finding is shown to be established as perverse (see State of Orissa and Another Vs. Kalinga Construction Co. (P) Ltd., ).

It is, therefore, not possible for the court to examine the correctness of the award on its merits outside the scope of section 30 of the Act. While sections 15 and 16 of the Act set forth the circumstances under which an award can be corrected, modified and remitted, section 30 sets forth the grounds on which an award can be set aside. There is no provision in the Act under which a court can ignore the award even when all the parties to the award desire it to be cancelled. The jurisdiction of the Civil Court to set aside the award of an Arbitrator or to remit it for further hearing is, therefore, circumscribed by the provisions of sections 30 and 16 as well as in a proceeding u/s 33 of the Act. Unless it can be shown that: (1) the arbitrator hat committed legal misconduct or (2) that the award has left undetermined any of the matters referred to for arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matter referred to or (3) where the award is so indefinite as to or incapable of execution or (4) where an objection to the legality of the award is apparent on the face of the award or (5) where the award has been improperly procured or is otherwise invalid, the court has not option but to past judgment in terms of the award as provided in Section 17 of the Act.". The appeal, therefore, must fail and is accordingly dismissed, but in the circumstances I shall leave the parties to bear their own costs.

Yadunath Sharon Singh, J.

I agree.