Gujarat High Court
Mahendrasinhji Zoravarsinhji Sandhu vs Kamal B. Deval on 3 March, 2000
Equivalent citations: (2001)1GLR89
JUDGMENT M.R. Calla, J.
1. This appeal is directed against the order dated 15th June, 1996 passed by the Civil Judge, Senior Division, Kachchh at Bhuj in Special Civil Suit No. 33 of 1983.
2, The brief facts giving rise to this appeal are as under :
The appellant and respondent No. 1 were managing the business of M/s. Devpal Hydrocarbons and Devpal Hydro Agencies for and on behalf of sole proprietor Smt. Prakashkunvarba respondent No. 2 herein who was an authorised agent for Indane Gas at Bhuj-Kachchh. A dispute arose between the appellant and respondent No. 1 and an arbitration agreement was entered into on 1st October, 1982 between the present appellant and respondent No. 1, respondent No. 1 being the first part and the appellant being the second part. The dispute between the parties was in respect of the mutual dealings for the period 1973-74 to 31st October, 1982 with regard to the business carried on as above to settle the goodwill and to settle the accounts for the period 1973-74 to 31st October, 1982, to verify the stock and cash at hand, to fix the present market value of the assets as well as goodwill for the same, and to ask one of the parties to give a bid for the business and to ask the other to make a choice to purchase or to sell the business at their bid. On this arbitration agreement entered into between the parties on 1st October, 1982 the signatures of both the parties were appended and the signatures of two witnesses were also appended thereon. As per this arbitration agreement, one Shri Pushpadan S. Gadhvi, Advocate was appointed as the sole Arbitrator with the agreement of both the sides. The sole Arbitrator Shri Gadhvi passed the award on 11th March, 1983 on which the present appellant, Smt. Prakashkunvarba, i.e. respondent No. 2, one Shri K. S. Ujwal and Shri Z. N. Sandhu appended their signatures. It was given out that the appellant as well as respondent No. 1 were the Power of Attorney holders of respondent No. 2 and there is no dispute about the factual position that the present appellant is the maternal nephew (Bhanja) of respondent No. 2-Smt. Prakashkunvarba whereas respondent No. 1 is her son. It may also be noted that while the matter was pending before the Arbitrator, an order was passed on Exh. 46 for joining M/s. Devpal Hydro Agency and four persons alleged to be partners of the firm to be parties to the proceedings and that order was made a subject-matter of challenge in revision before this Court by way of Civil Revision Application No. 622 of 1987 and this revision application filed by the present appellant was allowed on 16th February, 1993 and the impugned order was set aside by this Court. After the award was passed on llth March, 1983 as aforesaid, the appellant No. 1 filed Special Civil Suit No. 33 of 1983 before the Civil Judge, Senior Division, Kachchh at Bhuj, for making the award the Rule of the Court. The said suit was dismissed by the Civil Judge on I5th June, 1996. Aggrieved from this judgment and order dated 15th June, 1996, the present appeal has been filed.
3. Learned Counsel for the appellant has argued that the arbitration agreement had been entered into between the appellant and the respondent No. 1 and the appellant as well as the respondent No. 1 were the Power of Attorney holders on behalf of the respondent No. 2. His submission is that once the parties had agreed for arbitration, they appeared before the Arbitrator and the Arbitrator has passed the award, the same is binding upon both the parties. The Court was approached for making it Rule of the Court only for the purpose of the effective execution of the award. The trial Court has committed a serious error in dismissing the Civil Suit by saying that the award was uncertain and ambiguous. Learned Counsel for the appellant has submitted that the award could be set aside only if any of the grounds under Section 30 existed. Section 30 is reproduced as under :
"30. Grounds for selling aside award. :- An award shall not be set aside except on one or more of the following grounds, namely :-
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;
(c) that an award has been improperly procured or is otherwise invalid." This Section starts with a negative mandate that an award shall not be set aside except on one or more of the grounds mentioned therein. Mr. Anjaria has submitted that there was no question of setting aside the award, when none of the grounds mentioned in the Section existed to set aside the award, no application had been moved for setting aside the award under Section 30 by any of the parties as has been recorded in the order dated 16th February, 1993 passed by this Court itself in the following terms :
"....Before the Court in these proceedings, the respondent No. 1 did not file any objection against the prayer for passing the decree in terms of the award. Anyhow, the respondent No. 2 who was not a party to the arbitration agreement had filed the objection application to the decree being passed but later on subsequently, she had preferred to withdraw the above said objection and had agreed to the award and the subsequent decree which may be passed in terms of the award."
Mr. Anjaria has also pointed out that so far as respondent No. 2 is concerned, she herself had filed an affidavit dated 15th December, 1984 at Exh. 44 before the Civil Judge, Senior Division and the contents of para 1 to 4 of the same are reproduced as under :
"1. That the plaintiff is my sister's son while defendant No. 1 is my son. I was served with a notice of this matter and my son Kamal Deval took my signature on some of the papers without giving any chance of having glance of it.
2. I confirmed as certain disputes arose for our common business of Devpal Hydrocarbon at Bhuj and I agree to appoint Shri P. S. Gadhvi, Advocate as our Arbitrator. That I do concede that his award was passed after giving full opportunity to represent ourselves before him. I appeared before him several times along with my brother K. S. Ujjawal. I say that I have no objection if the decree in terms of the award is passed.
3. It has come to my knowledge that my son Kamal Dcval i.e. defendant No. 1 obtained my signature on the papers taking objections against the award before this Hon'ble Court. I say that I never give my consent with free mind to it. Now, I waive my said objections and I repeat and reaffirm that I do not press the said objections filed before the Hon'ble Court.
4. I say that my above declaration is made without any undue influence, pressure and coercion."
Mr. Anjaria has submitted that respondent No. 2 therefore clearly expressed that she had no objection if the decree is passed in terms of the award. As per para 2, she has agreed to appoint Shri P. S. Gadhvi as Arbitrator and that the award was passed after giving full opportunity to represent themselves before him. Mr. Anjaria has also submitted that there was no ground for modification or even remitting back the award as in this regard, the scope was limited under Sees. 15 and 17 of the Arbitration Act. Mr. Anjaria has also placed reliance on a decision of this Court in the case of Thakkar Vithalbhai Hargovind & Anr. v. Kachhia Jagjivan Moiilal & Ors., reported in 1969 GLR 288. The relevant portion of this judgment from para 7 is reproduced as under :
"....The clear object of the provisions of the Arbitration Act appears to be that if a particular subject-matter is shown to be a matter which is agreed to be referred to arbitration, then a suit in respect of the same subject-matter is barred. When a party to an arbitration agreement has pushed the arbitration proceedings to an award, then the position appears to be that the particular dispute in reference to that cause of action is decided and determined by the award. It would seem, therefore, that the dispute has been merged in an award. Under Section 14(1) of the Arbitration Act the award when it is signed and when a notice is given of the making and signing thereof is complete. Such an award would determine would determine the dispute or lis and the cause of action would be merged in the award. It is not necessary before the award can be regarded as complete that it must be made a Rule of the Court. The wordings of Section 14(2) which provides that it is only at the request of any party to the arbitration agreement that the arbitrator will file the same in Court and give notice to the parties of the filing of the award, also makes it clear that it is not compulsory to file the award. Merely because a power is given under the Act to file an award in Court, it would not be reasonable to hold that an award which is not filed in Court would have no efficacy. The award will become a judgment and will have its full efficacy unless it is set aside."
4. On behalf of respondent No. 1, it was argued by Mr. D. C. Dave that no charge could be recovered from the respondent No. 1 out of his own properties as the dispute is with regard to the business of the two firms. However, I find that the Arbitrator has not made any mention about the personal properties. Learned Counsel for respondent No. 2 Mr. Joshi submitted that they had to retire from this brief and that the intimation in this regard had been given long back by Registered Post to the respondent No. 2, but no instructions whatsoever had been received thereafter. However, since they have not withdrawn as yet, in absence of instructions from respondent No. 2, Mr. Joshi has argued the matter on behalf of the respondent No. 2 also and has submitted that respondent No. 2 was not a party to the arbitration agreement, and therefore, no award could be passed against her.
5. I have considered the submissions made on behalf of both the sides and I find that so far as the arbitration is concerned, it was as per the arbitration agreement entered into between the parties on 1st October, 1982. Of course, it was an agreement entered into by the appellant and the respondent No. 1 only and respondent No. 2 was not a party, but it appears from the award that no award whatsoever has been passed against respondent No. 2 and on the contrary, the Arbitrator has observed that Smt. Prakashkunvarba would receive an amount of Rs. 1,00,000/- from the first party against the amount of goodwill for the business and this amount will be paid to her towards her share of goodwill. Thus, it appears that there is no award as such against the respondent No. 2. Moreover, the respondent No. 2 herself has filed an affidavit before the Court that she had no objection if the decree is passed in terms of the award. Even if it is taken that she is not a party to the arbitration agreement, in the affidavit which she filed before the Civil Judge, she has categorically stated in para 2 that she agrees to the appointment of Shri P. S. Gadhvi as Arbitrator and she had no objection if the decree is passed in terms of the award and in para 3, she has further stated that it had come to her knowledge that her son Kamal Deval, i.e. defendant No. 2 (respondent No. 1 herein) in the suit obtained her signature taking objections against the award before the Court and that she never gave any consent to the same with free mind. She has further stated that she waives the said objections and repeats and reaffirms that she does not press the said objections filed before the Court. In such a fact-situation, I find that the objections which have been raised on behalf of the respondents cannot be sustained.
6. The ground on which the suit has been dismissed by the Civil Judge, I find that the learned Civil Judge has based the entire order on the premise that the award was uncertain. Mr. Anjaria has pointed out that there is no ambiguity or uncertainty in the award except with reference to Clause 11 of the Award, i.e. "In respect of the profit of the two Agencies mentioned hereinabove, I the undersigned will lake the assistance of an Accountant of my choice for examining the books of accounts and statements in detail and will determine the final payable amount after examining me said accounts. Both the parties will be bound by it and the tentative amount paid in compliance as stated above will be adjusted against it. For expenses on this account, the first party shall deposit an amount of Rs. 1,000/- with one within 15 days from the date of this award."
It would have been better course for the Arbitrator to have undertaken this exercise before passing the award, but even if it has not been done, this part of the award is severable from the rest of the award, and Iherefore, except for the Clause 11 quoted as above the rest of the award could be and should have been made the Rule of the Court by the Civil Court instead of dismissing the suit as a whole. In this view of the matter, I find that this appeal deserves to be partly allowed and accordingly except for the Clause 11 of the Award, the rest of the award is made the Rule of the Court. The judgment and decree as has been passed by the Civil Judge, Senior Division, Bhuj-Kachchh in Special Civil Suit No. 33 of 1983 on 15th June, 1996 is hereby set aside and it is ordered that the award as had been passed by the Arbitrator on llth March, 1983 shall be the Rule of the Court as ordered above and the suit is decreed accordingly except for Clause 11 of the arbitration award. So far as Clause 11 of the Award is concerned, it is made clear that it will be open to execution.
However, the execution will be subject to the consent of the parties. In the facts and circumstances of this case, the parties are left to bear their own costs.
7. Appeal partly allowed.