Tellapragada Surya Narayana Rao vs Tellapragada Sarabhaiah

Charles Arnold White, Kt., C.J.—The question referred to us appears to assume that an award made in the circumstances stated in the

question would not be a valid award. In the course of the argument the question was raised whether, under the provisions of the Code of Civil

Procedure, an award made in the circumstances stated would not be valid, notwithstanding the refusal of two of the arbitrators nominated by the

parties to act, and the fact that the court had appointed arbitrators in the place of those who had refused to act without the parties ""desiring"" (see

Section 507 of, the CPC of 1882) that the nomination of fresh arbitrators should be made by the court. As to this I am not prepared to dissent

from the view taken by this Court in Pugardin v. Moidin ILR (1889) M. 414 and Bala Pattabhirama Chetti v. Seetharama Chetti ILR (1882) M.

498, and by the Allahabad High Court in Fayazudin v. Amiruddin (1909) 6 A.L.J. 351 and in Bepin Behary Chowdry v. Annoda Prosad Mullick

ILR (1891) C. 324. In his judgment in the Allahabad case Stanley C.J. refers to the statement of the law in RUSSELL on Arbitration, (see Edition

9, p. 92) that the acceptance of the office by an arbitrator seems necessary to perfect the appointment. But the question of course is, not whether

the original appointment of arbitrators who refuse to act was good, but whether an award given in the circumstances stated in the question is a

good award. I share the doubts expressed by Banerji J. in the Allahabad case, but, as I have said, I am not prepared to dissent from the cases to

which I have referred. Accordingly, I deal with the case on the footing that the award was bad.

The general right of appeal which would otherwise exist from a decree given in pursuance of an award is expressly cut down by Section 522,

which provides that no appeal shall lie from a decree following a judgment under that section except in so far as it is in excess of, or not in

accordance with, the award. There is thus a double limitation - a limitation as to the ground of appeal, and a limitation as to the extent of the scope

of the appeal where an appeal lies. Even when the decree is in excess of the award, there is only an appeal against so much of the decree as is in

excess of the award. The intention of the legislature seems to be clear that, where there is a reference to arbitration and an award, if the court sees

no cause to remit the award, and there is no application to set aside the award, or an application to set aside the award has been refused, the

validity of the award cannot be impugned. The grounds on which an award may be remitted are set out in Section 520. It seems clear that under

this section an alleged defect in the tribunal which gave the award is no ground for remitting it. It also seems clear that this is no ground for setting

aside the award u/s 521. As I read the provisions of the old code it seems to me that if there was no appeal u/s 522 on the ground there was no

award in law, there were no means of impugning an award (except where there is an application to file an award u/s 526) on the ground that the

award was bad in law. This being so one would be disposed if possible to construe Section 522 so as to supply these means. This, in effect, in the

numerous decisions to which we have been referred, is what the courts in this country have done. They have held that ''award'' in Section 522

means a good ''award'' but the very object of Section 522 seems to have been to prevent that question being raised when matters have reached

the stage of judgment according to the award.

The question came before the Privy Council in Ghulam Khan v. Muhamad Hassan ILR (1901) C. 167. In that case their Lordships observed :

Those words"" (the words in Section 522 limiting the right of appeal) ""appear to be perfectly clear. Their Lordships would be doing violence to the

plain language and the obvious intention of the code, if they were to hold that an appeal lies from a decree pronounced u/s 522, except in so far as

the decree may be in excess of, or not in accordance with, the award. The principle of finality which finds expression in the code is quite in

accordance with the tendency of modern decisions in this country. The time has long gone by since the courts of this country showed any

disposition to sit as a court of appeal on awards in respect of matters of fact or in respect of matters of law."" In the earlier Privy Council case, Raja

Har Narain Singh v. Chaudhrain Bhagwant Kuar ILR (1891) A. 300, the award was made after the period allowed by the court had expired. The

Privy Council held that an appeal lay from a decree in pursuance of the award. Section 521 expressly provides that no award shall be valid unless

made within the period allowed by the court. In that case the tribunal which made the award was functus officio when the award was made and the

award was invalid by the express enactment of the legislature. That seems to me to be a different case from the present where the award is sought

to be impugned by way of appeal from a decree given u/s 522 on the ground that certain of the arbitrators were appointed by an order which the

court had no jurisdiction to make. In any case, we are governed by the later decision. In Raja Har Narain Singh v. Chaudhrain Bhagwant Kuar

ILR (1891) A. 300 the Privy Council no doubt express their entire approval of the judgment of the Allahabad High Court in Chuha Mal v. Hari

Ram ILR (1886) A. 548 and in that judgment the Allahabad judges made the general observation that as the award was invalid the decree was not

a decree in accordance with an award from which no appeal lies. But it seems to me the observation by the Allahabad judges and the approval of

their judgment by the Privy Council must be read with reference to the facts of the case in the Allahabad High Court, and not as a pronouncement

that in all cases where an award is bad in law there is a right of appeal notwithstanding the express limitation on the right of appeal contained in

Section 522.

The numerous authorities are collected and discussed in the order of reference. I do not propose to go through them. With all respect to the

learned Judges who have taken the view which is suggested by Krishnaswami Aiyar J. as the right view in the order of reference, in ray opinion the

question is governed by the decision of the Privy Council in Ghulam Khan v. Muhammad Hassan ILR (1901) C. 167 and I do not think we could

hold that there is a right of appeal in the circumstances related in the order of reference without doing violence to the express language of Section

522.

I think the case of Kanakku Nagalinga Naik v. Nagalinga Naik ILR (1909) M. 510 was rightly decided and I would answer the question which

has been referred in the negative.

It is satisfactory to note that the difficulties which have given rise to this order of reference have been removed by the new code.

Krishnaswami Aiyar, J.

I have had the advantage of reading the judgment of the learned Chief Justice. I entirely agree with him that no reason has been shown for

reconsidering the decision in Pugardin v. Moideen ILR (1883) M. 414 followed in Bala Pattabirama Chetti v. Seetharama Chetti ILR (1899) M.

498 and Bepin Behary Chowdhry v. Annoda Prasad Mullick ILR (1891) C. 324., which speaks of the arbitrator refusing to accept the arbitration

and requires the court to nominate a fresh arbitrator only when the parties desire that the nomination shall be made by the court, contrasted with

Section 510, which enables the court in its discretion, when the arbitrator named by the parties dies or refuses or neglects or becomes incapable to

act, either to appoint a new arbitrator or to make an order superseding the arbitration, leaves no room for doubt as to the correctness of the

decision in Pugardin v. Moideen ILR (1883) M. 414. It follows upon the facts stated in my referring judgment that the award in this case was

invalid, not having been made by the tribunal constituted in accordance with the agreement of the parties.

The question, however, remains whether a decree having been made in accordance with the award an appeal lies from the decree except in so

far as it is in excess of, or not in accordance with the award. In my order of reference I overlooked the fact that Section 522 had no application to

a case where the award was remitted for reconsideration and it became void on the reusal of the arbitrators to reconsider it. A decree passed in

accordance with an award which has so become void is not a decree u/s 522, and the limitation contained in it of the right of appeal has no

application. But the difficulty remains with reference to a decree passed in accordance with an award invalid under the last clause of Section 521

by reason of its not having been made within the time allowed by law. In such a case there could be no application to set aside the award as it

could not fall within Clauses (a)(b) or (c) of Section 521. It can hardly be contended that Section 522, Clause 1, deals only with cases to which

Section 520 and Clauses (a) (b) and (c) of Section 521 in terms apply. If it be so limited the cases of no submission, of no award in law and of

awards bad for any irregularity in the reference, would lie outside Section 522 and the decree passed in accordance with the award in such cases

would be appealable without reference to the limitation contained in the last clause of Section 522. If no application has, as a matter of fact, been

made to set aside the award as in Raja Har Narain Singh v. Chaudhrain Bhagwant Kuar ILR (1891) A. 300 whether the case be one in which

there is scope for such an application or not or if the court has refused an application to set aside the award, Section 522 seems to be applicable.

It would no doubt be an unmeaning formality for the court to wait until the period prescribed by Article 158 of the Limitation Act has expired as

provided by the second Clause of Section 522, if no application would lie u/s 521. This is perhaps a strong argument in favour of the view that the

case of an invalid award under the last clause of Section 521 is not intended to be dealt with by Section 522. I feel bound to hold that the decision

of the Privy Council in Raja Har Narain Singh v. Chaudhrain Bhagwant Kuar ILR (1891) A. 300 is unaffected by the later decision of the same

tribunal in Ghulam Khan v. Mahammad Hassan ILR (1901) C. 167. I think it unnecessary to repeat the reasons for this conclusion which I have

already given in the order of reference. I may add, however, that the judgment of the Privy Council in Hansraj v. Sundar Lal and Hansraj v.

Dwarka Das (sic) contains no word of disapproval or doubt with reference to the decision in Raja Har Narain Singh v. Chaudhrain Bhagwant

Kuar ILR (1891) A. 300 treated as perfectly good law in the judgment of the Chief Court of the Punjab (at page 655), from which the appeal

came to the Privy Council. Whatever difficulty there may be in reconciling the decision of the Privy Council in Raja Har Narain Singh v.

Chaudhrain Bhagwant Kuar ILR (1891) A. 300, with their Lordships'' view as to the meaning of the last clause of Section 522, there appears to

be no doubt as to their interpretation of that clause as applied to cases of arbitration in pending suits. It appears to be their Lordships'' conclusion

that, if the first two clauses of Section 522 are complied with) the decree passed in accordance with the award is final except as provided in the

last clause. It is perhaps a matter for regret that in their exposition of the law in Ghulam Khan v. Muhammad Hassan ILR (1901) C. 167, there is

no word dealing with the practically unanimous decision of the Indian High Courts See Husananna v. Linganna ILR (1895) M. 423, Amrit Ram v.

Dasrat Ram ILR (1894) A. 21, Kali Prosanno Ghose v. Rajani Kant Chatterjee ILR (1898) C 141 Mahomad Wahibuddin v. Hakiman ILR

(1898) C. 757 and Nandram Daluram v. Nemchand Jadavchand ILR (1892) B. 357 which held that there was a right of appeal though the decree

was in accordance with the award, if there was no submission or there was no award in fact or in law. I am, however, satisfied that the ratio

decidendi of their Lordships in Ghulam Khan v. Muhammad Hassan ILR (1901) C. 167, in cases of awards in pending suits, was that the language

of the last clause of Section 522 limited the right of appeal. As regards the other cases of application to file a submission u/s 523 or to file an award

u/s 525, the judgment of the Privy Council is clear that the order filing the agreement or the award or refusing to file it is a decree and appealable

u/s 540 without reference to anything in Section 522. If after such filing of the agreement or award, and in the first case after the award is delivered,

no objection is allowed u/s 520 or Section 521 and a decree is made in pursuance of the award, it would seem to follow that the last clause of

Section 522 applies as a matter of course. It is unnecessary to consider other difficulties under Sections 525 and 526 as to whether it would be

competent to the court to entertain objections not mentioned in Section 520 or 521. All that we are now required to decide is whether after the

decree in accordance with the award an appeal may be entertained except in so far as the decree is in excess of, or not in accordance with the

award. I agree, though with some hesitation, in the conclusion arrived at by the learned Chief Justice.

Ayling, J.

I concur in the view taken by the learned Chief Justice, and in the answer proposed by him.