Orissa High Court
Pravakar Baral vs Lakhimidhar Naik And Ors. on 23 June, 1986
Equivalent citations: AIR1987ORI100, AIR 1987 ORISSA 100, (1987) 1 ARBI L.R. 331 (1987) 1 CURCC 323, (1987) 1 CURCC 323
Author: D.P. Mohapatra
Bench: D.P. Mohapatra
ORDER D.P. Mohapatra, J.
1. This civil revision petition is directed against the appellate order of the Additional District Judge, Puri, reversing the decision of the trial court and refusing to make the award passed by the Arbitrators a rule of the court.
2. The facts stated in a nutshell are : The lands forming the subject-matter of the suit belong to two brothers, Markanda Naik and Murali Naik. Markand died leaving his daughter Narakhari Dei and Murali died leaving his two sons Laxmidhar Naik and Fakir Naik, the opposite parties 1 and 2. According to the petitioners both the brothers Markand and Murali were separated from each other and owned and possessed their lands separately. Markand Naik sold to the petitioner Ac. 1.45 decimals of land by a registered sale deed dt. 1-10-1936 for Rs. 100/-and since then the petitioner became the owner in possession of the same. After death of Markanda his daughter Narakhari sold to opposite parties 5 and 6 (defendants 4 and 6) Ac 0.05 decimals by registered Kabala dt. 12-8-1957 for Rs. 1300/-and since then the purchasers became the owner in possession of the same. On the same day, i.e., on 12-8- 1957 the said Narakhari sold Ac 0.01 decimal of homestead land to Judhistir Naik (opposite party 11), Duryodhan Naik (opposite party
12) and Dibyasingh Naik, the predecessor-in-
interest of opposite parties 7 to 10 for Rs. 200/-
Subsequently to the aforesaid purchase opposite parties 1 and 2, sons of late Murali Naik filed T. S. No. 188/62 claiming the properties purchased under the two sale deeds could not be sold by Markand and his daughter, Narakhari, as the properties belong to the joint family consisting of Markanda and Murali. The litigation continued up to this Court. After disposal of the second appeal by the Court when the matter was pending at the stage of leave to file appeal against the j decision of the second appeal (A. H. O.), an agreement was executed by all the parties, i.e., the petitioner, the opposite parties 1, 2 and 5 to 12 or their predecessors-in-interest whereby three persons, namely, Baidhar, Pradhan (O. P. 3), Hadibandhu Jena (O. P. No. 4) and Nimai Charan Swain (since dead) to act as arbitrators to decide the following disputes : --
(a) If the properties purchased by defendant 3 (petitioner) from Markanda would go to him of to defendants 1 and 2 (opposite parties 1 and 2) or if the same would be divided between them, how much each party would get or in the alternative, the amount to be received by each party in case no land is given to any party.
(b) If the properties purchased by defendants 4 to 6 (opposite parties 4 and 5) and defendants 7 to 9 (opposite parties 7 to 12) would go to them or if the same would be divided between them and defendants 1 and 2, how much each party could get or in the alternative, the amount to be received by each party in case no land is given.
(c) If the parties would get the cost of litigation disposed of or pending between them.
3. In pursuance of the aforesaid arbitration agreement the arbitrators took up adjudication of the disputes, recorded the statements of defendants 1, 2, 3 and 7 (Ext. 4) and in the sitting held on 27-7-1972 passed an award on plain paper (Ext. 6) giving their signatures thereto. Thereafter the arbitrators issued notices to the parties by registered post about the signing of the award. After receipt of the said notice defendants 1 and 2 (opposite parties 1 and 2) filed objection expressing their disinclination to abide by the award. On the other hand, one of the defendants requested the arbitrators to get the award registered after engrossing it on requisite stamp paper. He volunteered to pay the cost of registration. He further requested the arbitrators to file the award in court to make the same a rule of the court. Accordingly, the terms of the plain paper award (Ext. 6) were engrossed on requisite stamp paper and it was registered on 8-12-1972. The registered award is Ext. 10 in the case. It is pertinent to mention here that of the three arbitrators only two signed on the award engrossed on the stamp paper while the third Arbitrator attested the same as a witness.
The arbitrator filed the award in the court of the Munsif, Puri, with a prayer to make it a rule of the court. The said proceeding was registered as Original Suit No. 298 of 1972-1 wherein the three arbitrators were arrayed as plaintiffs and the parties to the proceeding were arrayed as defendants 1 to 9. On being noticed by the court the parties appeared and filed their written statement. While defendant 3 (petitioner) and defendants 4 to 9 (opposite parties 5 to 12) in their separate written statements supported the award, defendants 1 and 2 (opp. parties 1 and 2) challenged the award on various grounds. They denied having executed any arbitration agreement in favour of the plaintiffs. They urged that the disputes allegedly referred to the arbitrator for decision were the subject matter in the civil suit which had terminated in their favour and as such there was no occasion for them to refer the matter to the plaintiffs for arbitration. They even denied that defendant 1 Laxmidhar Naik made the statement, Ext. 1 before the arbitrators. They further urged that the suit was barred by limitation and was not maintainable.
4. The learned Munsif, on a consideration of the evidence on record, came to hold that the contesting defendants 1 and 2 were parties to the arbitration agreement and as such they were bound by the award. He further found that the award was valid in all respects and that the suit was not barred by limitation. Accordingly, the suit was decreed in terms of the award.
5. The aforesaid decision of the trial court was challenged by defendants 1 and 2 (opp. parties 1 and 2) in appeal T. A. No. 43/117 of 1978-77 (sic). It was disposed of by the Additional District Judge, Puri, by his judgment dt. 4-8-1979 reversing the decision of the trial court and dismissing the suit. The lower appellate court concurred with the findings of the trial court on all points excepting the point that the Arbitrators having passed an award on a plain paper and having signed the same had no jurisdiction to copy out the terms of the plain paper award on a stamp paper and register the same subsequently since they became functus officio after executing the plain paper award. The lower appellate court took the view that Ext. 10 was inadmissible in evidence and no decree could be passed on the basis of such an award. Since the award, Ext. 6 was compulsorily registrable no decree could also be passed on the said plain paper award too. This decision of the appellate court is under challenge in this revision petition.
6. Shri G. C. Jena, learned counsel for the petitioner has urged the following points : --
(1) The award Ext. 6 did not create or extinguish title of the parties and hence it was not compulsorily registrable ;
(2) In view of the stipulation in the arbitration agreement that after the arbitrators pronounce the award, if any of the parties is willing to abide by it the arbitrators shall take action in accordance with law, the lower appellate court should have held that the arbitrators were competent to engross the award on stamp paper and get the same registered even after passing the award Ext. 6.
Sri L. Mohapatra, learned counsel for the opposite parties, while refuting the contentions raised on behalf of the petitioners contended that the award created and extinguished the rights of the parties in respect of the property the value of which admittedly is more than Rs. 100/- and as such it was compulsorily registrable. The unregistered award was inadmissible in evidence and could not be acted upon. The learned counsel further contended that the lower appellate court rightly held that after executing the award on a plain paper the arbitrators became functus officio and they were not competent to take further steps for registration of the award after copying out the terms thereof on stamp paper.
7. On analysis of the facts and the submission noticed in the foregoing para, it is clear that the lower appellate court negatived all the grounds on which defendants 1 and 2 opposite parties 1 and 2, challenged the award excepting the ground that the arbitrators having signed an unstamped and unregistered award (Ext. 6) became functus officio and therefore could not copy out the award subsequently on a stamped paper (Ext. 10) and get it registered. As such, the dispute in the present revision petition hinges on the decisions on this point.
The Supreme Court in the case of Rikhabdass v. Ballabhdas, AIR 1962 SC 551, while considering the question whether the court had power to remit the award to the arbitrators directing them to re-write it on a stamped paper, answered the question in the negative. The Court held that such an order could not be supported by Section 14(1), 13(d), or 15, Arbitration Act, or by Section 151, Civil P.C. Refering to Section 14(1), Arbitration Act, the Court observed thus : --
"It only says that the arbitrator shall inform the parties of the fees and charges payable. Even assuming that the word 'charges' includes duty payable for the stamp to be affixed to the award, at best, this section would support an order directing the arbitrators to supply this information. It would not justify an order requiring the arbitrators to inscribe the award afresh on a stamped paper and resubmit it to Court, As at present advised, we have grave doubts if the fees and charges mentioned in Section 14(1) include the stamp duty payable on the award Section 17, Stamp Act, requires that stamping should be at the time of execution Under Section 14(1), Arbitration Act, it is only after the signing of the award that is, its execution, that the arbitrators are required to supply the information about the fees and charges. It is, of course, no part of the duty of the arbitrators under the Act or otherwise to find the costs of stamp themselves. Therefore, it is difficult to appreciate how the word 'charges' mentioned in this section includes stamp. But on this question it is not necessary for us to express any final opinion in this case."
Dealing with the contention that even if the case does not come within Section 16(1)(c), Arbitration Act, the order could be supported under Section 151, C.P.C., the Court repelled the contention, holding as follows : --
"It is true that Section 41, Arbitration Act, makes the provisions of the Civil P.C. applicable to proceedings before a court under the Arbitration Act. But it is well known that after making his award the arbitrator is functus officio. To cite one authority for this proposition we may quote the observations of Mellish L.J. in Mordue v. Palmer, (1870) 6 Ch A 22 at p. 31.
'I think the result of the cases at law is that when an arbitrator has signed a document as and for his award, he is functus officio, and he cannot of his own authority remedy any mistake.' In the present case, ex hypothesi, the award has already been made and the arbitrator has therefore become functus officio. It is that award which requires stamp. Section 151 of the Code cannot give the court power to direct the arbitrator to make a fresh award; that would be against well established principle of the law of arbitration. It would again be useless to have another copy of the award prepared and stamped for the copy would not be the award and no action in a court can be taken on it. The order cannot therefore be supported by Section 151 of the Code. It is of some interest to read here the following passage from Russel on Arbitration (14th Edn.) p. 325 :
The usual practice in preparing an award is to have two copies made of it. Once the arbitrator signs, which then becomes the original award, and this is delivered to the party who takes up the award. The other copy is available for the other parties if they apply for it.' "The original award, before it is available for any purpose whatsoever, must be duly stamped, but there is no obligation upon the arbitrator to stamp it, and he does not usually do so.
We should observe here that the last para in the aforesaid quotation does not appear in the 16th Edition of Russel's work. Perhaps this is because in England an award is no more required to be stamped by virtue of Section 35, Schedule 8 of the Finance Act, 1949 which was passed after the 14th Edition was published."
The attempt to support the order under Sections 13(d) and 15 (b) and (c), Arbitration Act, was also negatived by the court with the following observations :
"A bare perusal of the provisions mentioned would show that the order made in this case cannot be based on any of them. Section 13(d) deals with correction of clerical mistakes or accidental slips in the award, neither of which we think an omission to stamp is. Furthermore, Section 13 is only an enabling Section giving certain powers to the arbil rator. The arbitrator cannot be compelled to exercise these powers. Section 15 deals with court's power to modify or correct an award. In the present case, the court did not purport to exercise that power."
From the observations of the Supreme Court quoted above, it is clear that after signing the award on a plain paper, the arbitrators became functus officio and they had no power/jurisdiction to re-write the same on a stamped paper and register it if registration was necessary under law. The court was also not entitled to remit the award to the arbitrators directing them to re-write the same on stamped paper and get it registered.
The Andhra Pradesh High Court in the case of Ariyur Mohammad Habeebur Rahman v. Ansuri Varamma, AIR 1974 Andh Pra 113 took a similar view relying on the aforementioned decision of the Supreme Court.
8. In the present case admittedly the three arbitrators had signed the award (Ext. 6) on a plain paper on 27-7-1972. Subsequently, they copied out the said award on a stamped paper and got it registered as per Ext. 10 on 8-12-1972. Applying the principle laid down by the Supreme Court in the case of Rikhabdass v. Ballabhdas, AIR 1962 SC 551 (supra), it has to be held that the award was invalid and could not form a decree by the court. The lower appellate court was, therefore, right in holding that the registered award, Ext. 10, was invalid in the eye of law and therefore no decree could be passed in terms thereof.
9. Another point raised by Mr. G. C. Jena, learned counsel for the petitioner needs to be considered. The learned counsel contended that the appeal before the lower appellate court was not maintainable since the decision of the trial court was not an appealable order under Section 39, Arbitration Act. According to him it was a decree which could not be interfered with in appeal except on the grounds stated in Section 17, Arbitration Act.
On careful consideration, I am of the view that the contention has no force, In the present case the plaintiffs and defendants, other than defendants 1 and 2, prayed to the court to pass a decree in accordance with the award while defendants 1 and 2 challenged the award and prayed to the court to set it aside. The trial court by a composite order rejected the prayer of defendants 1 and 2 to set aside the award and proceeded to make the award a rule of the court and to pass a decree on the basis of the award. Such a composite order comes within the purview of Section 39(1)(vi), Arbitration Act, and hence it is appealable. This view gains support from the decisions of this Court in the case of Roshanlal Thakur v. Kishanlal Kapoor, reported in (1976) 2 Cut WR 828. As such this contention raised by the learned counsel for the petitioner is also devoid of merit.
10. On the discussions aforesaid, the revision petition is devoid of merit and the same is dismissed but in the circumstances of the case without any order for costs of this proceeding.