Gujarat High Court
Sardar Jogindersingh Goolry vs Sardar Jasbirsingh Sohelsingh And Ors. on 2 May, 1998
Equivalent citations: (1998)3GLR2114, AIR 1999 GUJARAT 13
JUDGMENT R. Balia, J.
1. The appeal is against the order of learned City Civil Court, Ahmedabad, dated 20-12-1989/5-1-1990 on Misc. Civil Application No. 144 of 1984.
2. The Misc. Civil Application No. 144 of 1984 was registered as application under Section 14(2) of the Arbitration Act vide which the sole arbitrator Sardar Jasbirsingh Sohelsingh has filed the original award along with record and proceedings of arbitration before the Court.
3. The appellant along with respondent Nos. 2 to 9 were carrying on business in partnership in the name and style of M/s. Jogindersingh Paramjitsingh in the City of Ahmedabad. Disputes have arisen among the partners. The partners vide their agreement dated 1-1-1980 referred their disputes to the arbitrator respondent No. 1 Sardar Jasbirsingh Sohelsingh as a sole arbitrator, who published his award on 7-6-1980. Objections to the award were filed even before the same was. produced in the Court, and were separately registered as Misc. Civil Application No. 479 of 1980. It was during those proceedings that the sole arbitrator presented the award before the Court. The other objections to the arbitration raised in Misc. Civil Application No. 479 of 1980 were dismissed by order dated 8-8-1983 and thereafter by making a fresh registration of Misc. Civil Application No. 144 of 1984 the proceedings under Section 14(2) of the Arbitration Act were commenced by the learned City Civil Judge. The respondents raised multiple objections to the making of the award; which included (1) alleged misconducts on the part of the arbitrator; (2) the award being non-speaking one; (3) the award having been published beyond four months of the making of the reference, was beyond the time-limit prescribed for making the award under Rule 3 of Schedule 1 appended to the Arbitration Act, 1940 and no extension having been obtained was nullity and that (4) award resulted in affecting the immovable property Rs. 100/- was to be compulsorily registered but since it was not registered it cannot be made basis for proceeding under Section 14(2) of the Act.
4. To the first objection, the trial Court disposed of by recording its conclusion as under:
In this case, all the plausible grounds available under law, challenging the award, have been raised by the opponents vide Exh. 36. Similarly, every possible and available allegation is made against the arbitrator so as to bring his act within the compass of legal misconduct, as defined under Section 30 of the said Act. The objections in respect of failure to give notice for holding the arbitration meeting, documents on record not relied upon, acceptance of hospitality, break-up of the amount award not given, showing partiality, violation of principles of natural justice, the award being vague incapable of execution, etc., have no substance because Mr. V.G. Shelat, the learned Advocate for the opponents, has not been able to point out from the record and therefore, it deserves no consideration on merits.
About the second objection, the trial Court was of the view that the arbitrator was not obliged to give reasons for his order unless he was called upon by the agreement, therefore, merely because the award is unreasoned it cannot be vitiated. With this conclusion, the trial Court has also on reading the award came to the conclusion that the findings recorded by the arbitrator being purely a question of fact on appreciation of evidence no objection thereto can be raised in these proceedings.
The last objection regarding the requirement of registration has not been decided by the trial Court in view of its finding on the third objection narrated above, namely, the award having been made after expiry of the period and there being no order of extension by consent, renders the award void and amounts to misconduct on the part of the arbitrator.
5. This objection found favour with the trial Court by assuming that arbitrator be deemed to have entered reference on the date when the agreement was made, in the absence of any particular about the date of actually entering the reference, held that the award published on 7-6-1980 was beyond time as there was nothing on record to show that the time for publishing the award was enlarged with consent of the parties.
6. While the appellant has challenged the finding about the award given beyond the time is no award in the eye of law. The respondents have by way of cross-objection, challenged the findings on the first two objections and has also challenged that the trial Court erred in not deciding the objection as to the requirement of registration.
7. Learned Counsel for the appellant has urged that once the trial Court has come to the conclusion that there was no misconduct on the part of arbitrator and there was no evidence as to the actual date on which the arbitrator has entered into reference the trial Court ought to have exercised suo motu power to extend the time, as the power does exist in the Court under Section 28 of the Arbitration Act. For this purpose, he placed reliance on decision of This Court in Ravindra Motilal Shah v. Ms. Chinubhai Chimanlal Dalal and Ors. (1976) XVII GLR 758.
8. Learned Counsel for the respondent on the other side has urged that there being no application on the part of any of the parties to extend time, there was no occasion for the Court to have exercised the power to extend the time for making of an award. In other words, the Learned Counsel for the respondents urges that the Court could not have extended time suo motu.
9. It cannot be doubted that in view of the provisions of Section 28(1) of the Arbitration Act that Court may if it thinks fit whether the time for making an award has expired or not and whether the award has not been made or not enlarge the time from time to time in making of the award. Sub-section (2) while prohibits conferment of authority on the arbitrator to extend the period for making an award, it envisages that without reference to the Court with the consent of all the parties to the agreement the period for making the award can be enlarged.
While the trial Court has mentioned that the period for making of an award with the consent of all the parties has not been enlarged, it has failed to consider the provisions of Section 28(1) which empowers the Court to extend the period even after the expiry of the period for making such an award and even after the award has been made. Thus, the plea that award made after the expiry of the period but before the extension of time would be a nullity as it has been made during the period the arbitrator was functus officio cannot be accepted.
If that be the position, and there being no specific provision in the statute which requires making of an application a pre-requisite before the exercise of power, the learned City Civil Judge was not right when he ignored the decision of This Court brought to his notice in Ravindra's case 1976 (XVII) GLR 758 which laid down that:
The Court when making an order under Sections 14 and 17 of the Act, if it finds fit to enlarge the time for making the award, is empowered to enlarge it.
This judgment clearly indicates that before rejecting an application for making an award rule of the Court on the grounds of it having been made beyond the time prescribed the Court must apply its mind whether it is a fit case in which it should enlarge time ex debito justiciae.
Reference may be made in this connection to the case Thakkar Vithalbhai Hargovind and Anr. v. Kachhia Jagjivan Motilal (Decd.) by his heirs Bai Kashi and Ors. reported in (1969) X GLR 288. The question before the Court was whether the award was invalid because it was not given within four months after the date on which the arbitrator entered the reference, on the premise that award made after expiry of the period is a nullity. Referring to the provisions of Section 28, the Court observed:
Here again, although Section 28(2) of the Indian Arbitration Act provides that any provision in an arbitration agreement whereby the time for making the award is enlarged, is to be treated as void and of no effect, unless the parties agree or consent thereto. Power is given to the Court to enlarge the time for making the award. What is made void is a provision in the arbitration agreement. What is declared to be void under Section 28 is not an award. Further, it seems to us that the word 'void' is used in the sense of voidable because it is clear upon authorities that even if an arbitrator has given an award beyond the time which is mentioned, the Court has got the power to extend the time and the time can also be extended after the period has expired, and even post facto.
Thus it was concluded that even though the arbitrator has become functus officio and even though time was not extended, the arbitration given after that time can be validated from the inception, and cannot be treated as nullity or non est.
10. Be that as it may, the fact remains that the learned City Civil Judge has not properly appreciated the binding precedent in Motilal's case (supra) for considering the question of extending the period for making award ex post facto taking into consideration the facts and circumstances of the case including the objection if any which other side had to raise as to the extension of time.
11. The appeal, therefore, deserves to be allowed.
12. Ordinarily keeping in view the age of the case and other findings of the trial Court, This Court would itself examine the issue about extending the period of making an award in exercise of power under Section 28. There is no impediment on the appellate Court exercising the power. However, Learned Counsel for the respondents urged that had they been given notice that the Court intends to exercise the power for extending the period for making the award, before that can be done they are entitled to notice and they have a caveat to it. They also state that in fact they have also challenged the other findings reached by the trial Court and they also need be examined before the question of extension of period by the arbitrator is considered. Therefore, before deciding upon the course whether to examine the question of extension of period, the cross-objections filed by the respondents be considered.
13. It is apparent that in case the application for making the award rule of the Court is not to be dismissed solely on the ground that award was made by the arbitrator beyond the period for making such award fixed in the agreement or by statute, the fact remains that the trial Court has not examined the question of the award requiring registration and if so what is its effect in the proceedings.
14. While considering the finding of the trial Court quoted above rejecting the respondents' objection to the award being made rule of the Court, 1 find that the trial Court does not appear to have applied its mind to the specific objections raised in writing before it.
15. Specific objection has been taken on behalf of the opponent Amarjeetsingh M. Bajaj that arbitrator has not made any hearing in the presence either of the opponent Nos. 1 to 8 and did not afford any opportunity to opponent Nos. 2 to 8 to represent their case. Objection is also specifically raised that the arbitrator has allotted the godowns said to have been purchased from Mohan Land Corporation and from Ahmedabad Timber Merchant Co-operative Association, considering them to be properties of the firm, whereas in fact no such godowns have been purchased from those respective owners, though there had been an agreement to purchase which had ultimately fell out and the properties did not belong to the firm. In other words, the award for distribution of those 7 godowns has been made on non-existent material. It has also been urged that the award for specific sum of Rs. 1,40,000/-without there being any specific claim for it, was not permissible in law. It has also been alleged in the objections that the arbitrator has acted more on presumption and personal information rather material placed before it and in the absence of hearing in the presence of the parties, which amounts to misconduct on the part of arbitrator. These allegations cannot be said to be vague or uncertain, not calling for any consideration, so as to call no effort by the trial Court to examine the record of the proceedings submitted by the arbitrator and verify its veracity. The overruling of the objections in the summary manner, in my opinion, cannot be upheld.
16. An arbitrator, though not bound by technical rules of evidence or procedure, but is not absolved from observing basic rules of natural justice, viz., he cannot act on personal knowledge or that he ought not to hear or receive evidence from one side in the absence of other side. These acts may in given facts and circumstances amount to misconduct. When specific objection in this respect is made by any objection, the Court will not be justified to close its mind without making any attempt to consider the merit of objections by enquiring into it. So also the Supreme Court said in Dewan Singh v. Champat Singh and Ors. that the recital in the agreement between the parties that the arbitrators may decide the disputes referred to them in 'whatever manner' they think does not mean that the, arbitrators can decide those disputes on the basis of their personal knowledge. The proceedings before arbitrators are quasi-judicial proceedings. They must be conducted in accordance with the principles of natural justice.
17. Likewise, though it is true that the arbitrator is not under obligation to give a reasoned award, and award cannot be held to be bad for want of reasons or inadequate reasons, but if any reason of its findings has been assigned, it is not to be excluded from judicial scrutiny whether it is sustainable in law. The trial Court appears to have ignored this principle also. I am, therefore, of the opinion that the cross-objections also needs to be allowed, and matter is required to be examined by trial Court.
18. In that view of the matter, it will be only appropriate that the question as to the extension of period is also considered while considering the totality of the case in the presence of the parties by examining the material that has been placed before the trial Court in the first instance.
19. Accordingly, the appeal as well as cross-objections are allowed. The judgment of the trial Court is set aside and the case is sent back to the trial Court for deciding the question of law as stated above within a period of six moths.
Civil application is disposed of accordingly.
There shall be no orders as to costs.