Philip vs Mathai and Others

Khalid, J.—The Petitioner in Arbitration O.P. No. 15 of 1973 on the file of the Sub Court, Ernakulam, is the revision Petitioner before me. Respondents 1 and 2 filed Arbitration O.P. No. 6 of 1970 in the Sub Court, Ernakulam, for, a decree in terms of the award made by them as Arbitrators appointed by the Petitioner and the 3rd Respondent. The Petitioner''s case was that he had not joined the Arbitration Agreement appointing Respondents 1 and 2 as Arbitrators. The Petitioner received notice from court regarding the filing of the award by Respondents 1 and 2. He filed objections contending that he had not executed any arbitration agreement and that Respondents 1 and 2 had not conducted any arbitration proceedings and praying that the award be set aside. The Court refused to consider the objection on the ground that it was not submitted within 30 days of receipt of the notice of filing of the award in court and passed a decree in terms of the award. He filed an appeal before this court and this Court in A.S. No. 61 of 1974 confirmed the decree passed by the trial court in O.P. No. 6 of 1970. It was thereafter that he filed O.P. No. 15 of 1973 u/s 33 of the Indian Arbitration Act, for short the Act, for a declaration that he and the 3rd Respondent in this G.R.P. had not executed any arbitration agreement appointing Respondents 1 and 2 as Arbitrators. The court below dismissed the application holding that a decree had already been passed in terms of the award and as such the application was not maintainable.

Section 30 of the Act enumerates the grounds on which an award could be set aside. Section 33 of the Act enables a party to challenge the existence or validity of an agreement and the consequent award. The limitation prescribed for such an application is 30 days from the receipt of notice of the filing of the award in court, under Article 158 of the Limitation Act (old), corresponding to Article 119(b) of the new Act. According to the Petitioner, what he seeks is not to set aside the award under the grounds enumerated in Section 30 of the Act, but a declaration that the agreement does not exist and consequently that the award is a nullity. According to him, the case is not governed by Article 119 but is governed by the residuary Article 137, which provides for a period of three years. The Respondents on the other hand contend that the petition from which this appeal arises is barred by the decision of this Court in A.S. No. 61 of 1974 and that in any case the application u/s 33 is not maintainable when a decree in terms of the award has been passed.

There is divergence of opinion among various High Courts as to whether an application to set aside an award is to be made u/s 30 or u/s 33 of the Act. Some Courts hold the view that an application can be filed only u/s 33 and that Section 30 enumerates only the grounds on which an award can be attacked. Some other courts are of the view that Section 30 also enables a party to file an application. I shall refer to some of the decisions cited at the bar.

In United India Fire and General Insurance Co. Ltd. v. Bhagat Singh AIR 1954 Punjab 171 the aggrieved party had filed an application u/s 30 as also an application u/s 33. The application u/s 30 was for setting aside the award while the one u/s 33 was challenging the validity of the arbitration agreement. The application u/s 30 was held to be barred by time and the application u/s 33 was dismissed on the ground that only one application lay. The High Court, however, held that despite the dismissal of the application u/s 30 on the ground that the said application was barred by time it was incumbent on the courts to pronounce upon the application u/s 33 and to decide whether the arbitration agreement and the consequent award given in pursuance of that agreement existed or was valid. The learned Chief Justice who rendered the judgment impliedly accepted the case that separate applications could be filed both u/s 30 and Section 33, and also that the period of limitation of 30 days for an application u/s 30 was not applicable to an application u/s 33.

In A.R. Savkur Vs. Amritlal Kalidas and Others, a Division Bench of the Bombay High Court held that all applications to set aside an "award" have to be filed u/s 33 and not u/s 30 and to the only application so contemplated, Article 158 of the Limitation Act applied. The finding here therefore is that even for an application challenging the existence of the agreement the limitation would be 30 days as prescribed in Article 158 of the Limitation Act.

In Saha and Co. Vs. Ishar Singh Kripal Singh and Co., a Full Bench of five Judges had occasion to consider the question whether the Indian Arbitration Act, 1940, distinguishes between an application for setting aside an award and an application for adjudgment of the award as nullity, and does it contemplate an application to be made u/s 30 and an application u/s 33. The majority judgment gave the answer in the negative falling in line with the Bombay High Court. The question of limitation did not fall for consideration before the Full Bench.

In Basant Lal Vs. Surendra Prasad and Others, , the Patna High Court strikes a discordant note. In paragraph 36 it is stated that all applications contemplated under the Act are to be made u/s 33. But in paragraph 45 of the same judgment, it is observed that an application u/s 33 of the Act on the ground of non-existence of the arbitration agreement can be made even after judgment and decree are passed ex parte behind the back of the party wronged, u/s 17 of the Act, for the simple reason that such judgment and decree are void from the beginning to the end and are not binding on him. This judgment by a Division Bench while affirming the view that the only application contemplated under the Act is the one u/s 33 goes further and says that an application u/s 33 challenging the very existence of the agreement which is the foundation of all other proceedings can be made even after the award is passed into a decree by a competent court. This decision is a departure from the principle laid down by the other High Courts. It might be possible to salvage the principle laid down there, if we closely scrutinise the facts of that case. There, not only was the existence of the agreement challenged but even the decree passed in terms of the award was also challenged as a nullity, it having been passed behind the back of the aggrieved party and without notice.

In Prem Sagar v. Security and Finance Ltd. AIR 1968 Delhi 21, a Full Bench of the Delhi High Court held that an application u/s 33 challenging the validity of an award on the ground of non-existence of an arbitration agreement is not governed by Section 119(b) of Limitation Act. This judgment accepts the plea that the Act contemplates two applications but holds that though the period of limitation for an application u/s 30 is 30 days from the receipt of notice of the filing of the award, the period of limitation for challenging the factual existence of the agreement would not have run out, with the result that the aggrieved party may still make an application u/s 33.

In Ved Parkash and Others Vs. Ram Narain Goyal and Others, a learned single Judge of the Delhi High Court held that when an award is made a rule of court by consent of parties or after contest, an application thereafter u/s 33 is not maintainable. In Vineet Kumar Vs. Smt. Bhagwandei, it was held that when an award is made the rule of court and a decree is passed thereunder u/s 17 of the Act, an application u/s 33 thereafter to set aside the award would not lie. It was also held that a suit to set aside the decree under the award could be filed on the ground of fraud.

We are not very much concerned with the divergence of opinion as to whether an application could be filed u/s 30 or that all applications should be u/s 33 only. We are here concerned only with the question whether an application u/s 33 to set aside an award as a nullity on the ground of the nonexistence of the agreement could be filed after a decree has been passed in terms of the award. Regarding the question of limitation for an application u/s 33, I am inclined to agree with the view that Article 119(b) does not apply to such an application. But that will not help the Petitioner, for, according to me such an application has to be made before the award is made a rule of court. I agree with respect, with the proponderent view expressed by various High Courts that an application u/s 33 cannot be entertained to challenge an award which has already been made into a rule of court. With great respect, I find it difficult to agree with the view expressed by the Patna High Court in Basant Lal Vs. Surendra Prasad and Others, if the said decision held the view that an application u/s 33 to set aside an award for want of existence of an agreement could be filed even after a decree is passed in terms of the award. In this case, the O.P. is also barred by the judgment of this Court in A.S. No. 61 of 1974.

In the result, the C.R.P. fails and is dismissed with costs.