Veeraswamy Chetty vs Varadialr Chetty and Others

Subba Rao, C.J.—This is an appeal against the order of the is Additional Subordinate Judge, Nellore, refusing to set aside an award and passing a decree in terms I''M the award.

The relevant facts may be briefly stated. The Appellant Veeraswami Chetty and first Respondent carried on business jointly in the six concerns described in the award made by the arbitrators. As disputes arose in regard to the settlement of accounts, both the parties referred the disputes lay executing a muchilika, dated 26th February, 1980. in favour of five named arbitrators. The arbitrators, after making the necessary inquiries by their award, dated 16th May, 1950, decided that a sum of Rs. 10,000 should be paid by the Appellant to Varadiah Chetty, i.e. the first Respondent herein.

They also created a charge for the said amount on the two houses mentioned in the award. The first Respondent filed the award award in Court along with a petition u/s 14 of the Indian Arbitration Act for passing a decree in terms of the award. The Appellant filed objections to the award and prayed for setting aside the award. The Appellant contended inter alia that the arbitrators were wrong in not settling the accounts in respect of the Vijaya Tobacco Company. The learned Subordinate Judge rejected all the objections raised by the Appellant except the aforesaid one. Accepting that contention, ne remitted the award to the arbitrators u/s 16 of the Arbitration Act for settling the accounts in respect of the Vijaya Tobacco Company.

The learned Judge also confirmed the award of the arbitrators creating a charge for a sum of Rs. 10.000 on the two houses of the Appellant. After the award was remitted to the arbitrators, they have settled also the accounts in regard to the Vijaya Tobacco Company and held that the Appellant was liable to pay in addition to the sum of Rs. 10,000 already fixed by them in regard to other business Anr. sum of Rs. 1,294-7-8. The Appellant filed objections to that portion of the award also. The learned Judge rejected the objections and passed1 an order making a decree in terms of the award. The appeal was filed against that order.

Mr. Ramachandra Rao, the learned Counsel for the Respondents, contends that no appeal lies against a decree passed in terms of an award, whereas Mr. Kotayya argues that the order made bv the Court below is really a composite one and that the appeal made by him on the basis of an order refusing to set aside the award is maintainable. To appreciate the arguments, the relevant provisions may be read:

Section 39 (1). An appeal shall lie from the following orders passed under this Act (and from no Ors. ) to the Court authorised by law to hear appeals from original decree of the Court passing the order:

An order:

(vi) setting aside or refusing to set aside an award.

Section 17: 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. Under the said provisions, an appeal does not lie against a decree passed in terms, of the award except on the specified grounds mentioned in section 17. But an appeal is provided against an order setting aside or refusing to set aside an award. If the order in question is nothing more than a decree, it cannot be disputed that no appeal lies against a decree, for it is not suggested that the decree is questioned on the two grounds mentioned in Section 17.

The learned Counsel for the Appellant therefore contends that though the order, dated 20th July. 1953 and the decree following the same do not in terms refuse to set aside the award, the said order is a part of that order. To appreciate this contention, it is necessary to ascertain the scone of the inquiry before the learned Judge. "The first-Respondent filed an application u/s 14 for directing the arbitrators to Me into Court an award made by them and for passing a decree as against the Appellant in terms of the award. The Appellant, instead of filing a separate application for setting aside that award, tiled objections. whereunder he specifically pleaded that for the reasons mentioned by him the award should be set, aside.

We may therefore treat the objections as an application for setting aside the award. The learned Judge, in his order, dated 20th July, 1953. did not accept any of the objections, and therefore, he directed the decree to be passed in terms'' of the award. If the Appellant Most a separate application for setting aside the award and the learned Judge while dismissing that application made an order directing a decree to be made in terms of that award, it cannot be argued that there was no order made by the learned Judge refusing to set aside the award.

The objection, as we already stated, though not in form but in substance was really an application for setting aside the award and the rejection of those objections, in our view, would amount to a dismissal of petition for setting aside an award. In this view, the order dated 20th July, 1953 is a composite order refusing to set aside the award and .also making a decree in terms of the award. The Appellant Med a Civil Miscellaneous Appeal against that order In so far it rejected his objections to the validity of the order.

A similar question arose under CPC in Bitaramaiya v. Pichaiya, 21 Mad LJ 1005 (A). where a Division Bench of the Madras High Court had to consider the question whether an appeal lay from a decree in terms of an award. There, the District Judge made an order directing that an award shall be Med and gave the Plaintiff a decree in accordance with that award. u/s 21(2) of the Code of Civil Procedure, "no appeal shall lie from such decree except in so far as the decree is in excess of or not in accordance with the award.

under Section 104(1)(f), Code of Civil Procedure. An appeal shall lie from an order filing an award.

In that case also, an appeal was Med against the decree. Court-fee was paid on the footing that the appeal was against the decree. It was contended before the learned Judges, as it is contended before us. that the judgment appealed from was not only a decree but it was also an order that the award be filed. The learned Judges accepted that contention and held in favour of the maintainability of the appeal. Sir Arnold White, Chief Justice, after noticing the arguments observed, at page 1006. as follows:

But the judgment appealed from is not only a decree but it is also an order that the award be filed; and I think we may treat this appeal, although the Appellant himself does not so treat it in the memorandum of appeal, as an appeal against an order filing an award.

The same view was expressed by Anr. Division Bench of the Madras High Court in V.N. Krishna Aiyar Vs. V.N. Subbarama Aiyar and Another, . The question there arose under Schedule II of Act v. of 1908. There also, the learned Subordinate Judge did not pass an order that the award be filed, but made a decree in terms of the award. under the relevant provisions, an appeal lay against an order that the award be filed, but not against the decree passed in terms of the award. The learned Judges held that the decree made involved the passing of an order that the award be filed. At page 700 (of ILR Mad): (at p. 466 of AIR) Anantakrishna Ayyar, J" observed:

The learned Subordinate Judge ought to have first passed an order that the award be Med under paragraph 21 of the second Schedule of the Code of Civil Procedure. He should then have proceeded to pronounce judgment according to the award; and a decree should follow the judgment so pronounced. In this case it does not appear that there was a separate order, as contemplated by paragraph 21; but that would not prejudice the party affected from filing an appeal against the order which should be deemed to have been passed by the lower Court in the circumstances.

The relevant provisions of the Arbitration Act are not in pari materia with that of Schedule II of the Code of Civil Procedure. Whereas under paragraph 21 of the second schedule, an appeal lay against an order Ming an award, under the Arbitration Act. no appeal is provided against such an order. Under the Code of Civil Procedure, an award had to be Med after the expiry of the time prescribed to set aside an award or after the dismissal of such an application is filed.

But under the Arbitration Act, an application to set aside an award can be entertained only when the award is Med in Court. u/s 17 of the Act, the Court has no jurisdiction to pronounce judgment in accordance with the award till it disposed of an application filed to set aside the award. In the circumstances, when the Court pronounced judgment without expressly dismissing a petition filed to set aside the award, the order made may reasonably be construed as a composite one involving a decision on the application to set aside the award also. In this view, the aforesaid decisions will equally apply to the case on hand. We therefore, reject the preliminary objection raised by the Respondents.

Mr. Ramachandra Rao then contends that even though the present appeal may be treated as one Med against an order refusing to set aside an award, the Appellant cannot question the order remitting the award on 15th November, 1951. That order was made u/s 16(1) of the Act and under the Act no appeal lies against that order. The present proceedings therefore should be treated, as a continuation of the previous order made by the learned Judge and in that view both the orders should be treated for the purpose of appeal as one order.

Coming to the merits, Mr. Kotayya contends that the learned Judge was wrong in remitting the award to the arbitrators for settling, the accounts in respect of the Vijaya Tobacco Company. A perusal of the record shows that the Appellant raised the contention before the learned Judge on the first occasion that the arbitrators erred in not considering one of the items referred to them for arbitration. The learned Judge, accepting the Appellant''s argument, remitted the matter to the arbitrators for giving him an opportunity to establish his case.

It is, therefore, not open to the Appellant to contend that the learned Judge was wrong in remitting the matter accepting his argument. Mr. Kotayya says that what was argued on behalf of his client was that as the arbitrators did not decide the dispute, the whole award was liable to be set aside, but the judgment does not show that any such argument was advanced before the learned Judge.

It is then contended that the award was not registered, and therefore, that part of the award creating a charge was inadmissible in evidence and therefore no decree could be made on the basis of that award. But the argument was not raised at any time during the prolonged litigation except before us for first time by Mr. Kotayya. That apart, the original award where-under charge was created -was registered. The award made, after it was remitted to the arbitrators, and which is not registered, (lid not create any charge on immovable property. In this view also, no question of registration arises.

Learned Counsel for the Appellant finally contends that the arbitrators omitted to take into consideration the Rs. 11/2 lakhs worth of tobacco stock in getting the accounts between the parties. But no attempt was made before the learned Judge to establish that the arbitrators designedly or mistakenly ignored the said item. Indeed, the learned Judge says in his judgment as follows:

The account books inspected by the arbitrators have been caused to be produced in this Court and a part of the delay in disposing of this petition is due to the steps taken for the production of the books. The sixth Respondent did not seek to make use of those account books." It is manifest from the aforesaid observations that though an allegation was made in the objections filed by the Appellant, no attempt was made before the learned Judge to establish before him the said fact by placing before him the relevant accounts, though as a matter of fact, the Respondents produced the accounts in Court. Mr. Kotayya says on instructions from his client that the said observation by the learned Judge is wrong, and as a matter of fact, the advocate appearing for his client placed before the learned Judge all the relevant entries in the account books.

When a Judge says in his judgment that the Respondent did not seek to make use of the account books, prima facie we must accept that statement as correct unless the Appellant by unimpeachable evidence established before us that that statement was wrong. In this case, though the judgment was delivered on 20th July, 1953 and though the appeal was filed on 17th September, 1963. no attempt was made by the Appellant to file an affidavit by the advocate who appeared for him in the Court below to the effect that the statement made by the learned Judge was wrong. We cannot obviously prefer the statement of the Appellant made to his advocate to the statement recorded by the learned Judge in nig- judgment.

No other question arises. The appeal fails and is dismissed with costs of the first Respondent.