State of Kerala and Another vs K.V. Abraham

K.S. Radhakrishnan, J.—all these cases Counsel appearing for the claimants raised a preliminary objection with regard to the maintainability of these appeals and hence all these cases are disposed of by a common Judgment.

M.F.A. 482/98 arises out of O.P. (Arb.) 132/88 of Sub Court, Kollam. Arbitration O.P. 132/88 was filed by the claimant u/s 17 of the Indian Arbitration Act, 1940 for passing Judgment and Decree in accordance with the arbitration Award passed by the sole Arbitrator on 29th September 1988. The State of Kerala and the Superintending Engineer had also preferred I.A. 2554/88 for setting aside the Award u/s 30 of the Act with a petition for condonation of delay. Petition for condonation of delay was dismissed on 13th September 1993. Consequently I.A. 255t/88 was also dismissed and the Sub Court passed a Judgment and Decree for Rs. 2,86,600 on 29th October 1993 in full and final settlement of all claims and also declared that the claimant is entitled to get the security deposit released. It also ordered that the claimant would be entitled to get interest at 12 per cent per annum from the date of award till the date of decree and also at the same rate till realisation. State has filed this appeal against the Judgment and Decree of the court below u/s 39 of the Act and also seeking to set aside the Award, dated 26th September 1998 paying court fee under Schedule II, Article 4 of the Kerala Court Fees Act. No appeal has been preferred against the order, dated 13th September 1993 dismissing the application for condoning delay as well as the dismissal of the application for setting aside the award.

M.F.A. 647/96 arises out of O.P. (Arb.) No. 130/88 on the file of Additional Sub Court, Kollam. The work in question relates to K.I.P., R.B.C. formation of Paranthal Distributory from C.H. O.M. to 5130 M. Part II from C.H. 975 to 2000 M. including C.D. works. Contract agreement was dated 3rd January 1984. Superintending Engineer (retired) was appointed as the sole Arbitrator. After considering all aspects of the matter Arbitrator awarded Rs. 1,93,800 with 12 per cent interest per annum from the date of award till the date of decree and also future interest at the same rate. Claimant preferred O.P. (Arb.) 130/88 u/s 17 of the Act, for passing a decree and Judgment in terms of the Award. Before the Sub Court State preferred a petition praying for setting aside the award with a petition I.A. 1015/91 for condonation of delay. Petition for delay condonation was dismissed on 13th September 1993. Consequently the petition for setting aside the award was also dismissed. State has not filed appeal against the said order. This appeal has been preferred by the State u/s 39(vi) of the Arbitration Act paying court fee under Schedule IT, Article 4, Sub-clause (ii)(c) as amended as per Section 52 of the Court Fees Act against the Judgment and Decree in O.P. (Arb.) No. 130/88, dated 29th October 1993.

M.F.A. 1385/93 arises out of O.P. (Arb.) 237 of 1988 filed by the State u/s 39(1) of the Act to set aside the award and the Judgment and Decree and paid only Rs. 100 as court fee purporting to be under Schedule TI, Article 4 of the Kerala Court Fees Act, 1960. Further Award under challenge is a nonspeaking Award.

When the matter came up for hearing learned Government Pleader advanced arguments for setting aside the Award u/s 30 of the Arbitration Act, 1940. We are of the view all these appeals are incompetent and not maintainable. We have already indicated that the court below has already dismissed the applications preferred by the State for setting aside the Award of the Arbitrator against which they have not filed appeal u/s 39(vi) of the Act. u/s 39(vi) of the Act State is attempting to challenge the Judgment and Decree passed by the court below. We are of the view such an order passed by the court below making the Award rule of the court by passing: the Judgment and Decree could be challenged only on the grounds available u/s 17 of the Act. Section 17 reads as follows:

Judgment in terms of Award.--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 inaccordance with the Award.

Since State has not filed appeal against the Judgment and Decree on the-grounds available u/s 17 of the Act these appeals are not maintainable. These appeals are not maintainable on Anr. ground as well. Appeal u/s 39 is maintainable only against those orders mentioned therein. In the instant case the State has not challenged those orders dismissing the petition for condonation of delay and the order dismissing the application for setting aside the Award. Though court fee was paid in M.F.A. 482/98 and M.F.A. 647/96, no challenge was made against the order dismissing the application for condoning delay and the order refusing the application for setting aside the Award. In this connection we may refer to some of the Judgments pronounced on the point. The Calcutta High Court in Union of India v. N.P. Singh AIR 1936 Cal 1, considered a similar issue. The Court held as follows:

Where the grounds of appeal do not suggest that the Decree is either in excess of or not in accordance with the award but on the contrary the grounds urge that the Decree is in terms of the Award which is bad, then such an appeal is not entertainable u/s 17 of the Act. u/s 17 of the Act aground of appeal which goes to challenge an Award on the very same ground on which an application to challenge an Award u/s 33 has already failed is, barred both by the express language of the conditions mentioned in Section 17 of the Act as well as by Section 39 of the Act.

A Division Bench of the Allahabad High Court in Ram Babu Vs. Lakshmi Narain and Another, , has considered the scope of Sections 17, 39(2) and 41 of the Act and held as follows:

Section 41 of the Arbitration Act makes the provisions of the CPC applicable to proceedings under the Arbitration Act and the result is that a Decree passed u/s 17 of the Arbitration Act could be challenged by a first appeal u/s 96 of the CPC and on appropriate grounds in a second appeal u/s 100 of the Code of Civil Procedure. Section 17, however, places some limitations on this right of appeal by laying down that ''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.

This clause contained in Section 17 thus recognised that a Decree passed u/s 17 is subject to right of appeal by the party aggrieved but places a limitation on that right. The right is curtailed to the extent that an appeal can be filed only on the grounds mentioned in this clause, viz., it is in excess of or not otherwise in accordance with the Award. If such grounds do not exist, the right of appeal, which otherwise exists, is taken away by this clause. The right of appeal which is recognised in this clause of Section 17 of the Arbitration Act, is clearly the right conferred by Part VII of the CPC and, consequently, proceeded to lay down the limitation in Section 17 on that right of appeal. The language of the clause contained in this section is clearly in the form of a limitation on an existing right of appeal and does not by itself create any independent right of appeal. If the Legislature had intended that a Decree passed u/s 17 of the Arbitration Act was not to be appealable u/s 96 of the CPC and a special provision should be made for an appeal against such a Decree, the language instead of being in the negative form would have been in the positive form conferring a right of appeal.

Punjab and Haryana High Court in Union of India v. Shibboo Mal and Sons AIR 1989 P&H has also considered the scope of Sections 39, 30, 33, 14 and 17 of the Arbitration Act and held as follows:

Section 39 of the Act provides that all orders of the nature specified in the section will be open to appeal irrespective of the fact whether they are final orders in the case and dispose it of finally, or are merely interlocutory. Against an order u/s 17 of the Act passing a Decree in terms of the Award no appeal lies u/s 39 of the Act but it lies under the last part of Section 17 on only two grounds viz. (i) that the Decree is in excess of the Award; and (ii) that the decree is not in conformity with the Award. In the instant case, I do not find that the learned Subordinate Judge has not passed the Decree in conformity with the Award or that is an excess of the Award. Clauses A to C of Section 30 of the Act set out the grounds on which an Award could be set aside; and Section 33 further adds that the challenge could be also with reference to the existence of the validity of an Arbitration Agreement or an Award. If no steps are taken to set aside the award under Sections 30 and 33 of the Act an unassailable reason must follow u/s 17 of the Act and a Decree is not open to challenge except by way of an appeal under the two grounds mentioned in the said section; whatever may be the ground of in peachment it has got to be agitated under Sections 30 and 33 of the Act and if there is an omission to do so one cannot avoid the bar created by Section 17 of the Act. Resultantly, I hold that the appeal is not competent.

Almost identical question came up for consideration before Andhra Pradesh High Court in Hindustan Steel Works Construction Ltd. v. N.V. Chowdary and Anr. 2001 (1) ALR 291. The court considered the scope of Sections 14, 17, 30 and 39 of the Arbitration Act and held that a reading of the above provisions it is discernible that Sub-section (1) of Section 39 of the Act provides for an appeal before the Division Bench against an Order passed by the learned Single Judge, if the order appealed against, falls within the six categories enumerated thereunder. The court found that the impugned Award passed by the learned Single Judge under Sections 14 and 17 of the Arbitration has not been enumerated under any of the above six clauses provided u/s 39(1) of the Act. Consequently the appeal was dismissed as not maintainable. While dealing with the scope of Section 39 the apex court in State of West Bengal v. Gourangalal Chatterjee 1993 (2) ALR 95, held that the Order passed by the learned Single Judge does not fall in any one of the sis categories of appealable orders u/s 39(1). Consequently appeal was found not maintainable.

The above-mentioned judicial pronouncements would positively indicate that if a party is aggrieved by the Judgment and decree passed by a Sub Court making the Award Rule of the Court the same could be challenged only u/s 17 of the Act. Appeal has to be filed u/s 17 on specific ground mentioned therein. If party is aggrieved by an order dismissing an application for setting aside the Award the same has to be challenged u/s 39(vi) of the Act. We have found in this case State preferred M.F.A. 482/98 and 647/96 challenging the Judgment and decree passed by the Sub Court making the Award Rule of the Court. Appeal was filed u/s 39 of the Act and paid court fee also. State failed to challenge the order dismissing the delay condonation petition as well as the consequent dismissal of the application for setting aside the Award. That order was not challenged by the State though court fee has been paid. Instead of challenging the said order State has mistakenly challenged the Judgment and Decree making the Award Rule of the Court u/s 39. Procedure adopted by the State is illegal. This shows the callous manner by which arbitration cases are being filed and conducted. Since the challenge is against the Judgment and Decree of the court below grounds available u/s 17 alone could-be raised even if it is stated there is a misquoting of this section. Under such circumstance these appeals are not maintainable.

We therefore dismiss all these appeals as not maintainable.