Andhra HC (Pre-Telangana)
Antyakula Eswara Rao vs Gudla Kumaraswamy And Others on 5 October, 1999
Equivalent citations: 1999(6)ALD740, 1999(6)ALT644
JUDGMENT
1. Both the CRP and the appeal suit can be disposed of by a common judgment.
2. OS No. 23 of 1987 (Old No.OS No.7 of 1982) is filed under Section 14(2) of the Arbitration Act for direction to Defendants No. 1 to 5 (Arbitrators) to produce original Award dated 4-2-1982 into the Court and to make it a Rule of Law while OS No.25 of 1987 (Old No. OS No. 13 of 1982) was filed by defendant No.6 in OS No.23 of 1987 for partition of Plaint-A to E Schedule properties into 10 equal shares and for separate possession and for permanent injunction restraining defendant Nos.5 to 9 (Arbitrators) from passing an award in terms of Arbitration Agreement dated 6-10-1981. For purpose of clarity OS No.23 of 1987 is referred to herein as arbitration suit and OS No.25 of 1987 is referred to herein as a partition suit. While the CRP is filed against the judgment and decree in OS No.23 of 1987, appeal Suit is filed against the judgment and decree in OS No.25 of 1987.
3. For proper appreciation of the case, it is necessary to refer the facts leading to the filing of the CRP and AS.
4. It will be convenient to refer to the facts in OS No.23 of 1987 (arbitration suit). The plaintiff and defendants Nos.6 and 7 are the sons and defendant No.8 is the daughter of one Appala Swamy of Bobbili. They jointly executed an agreement on 6-10-1981 in favour of defendant Nos.1 to 5 to act as arbitrators (hereinafter referred to as arbitrators) for making an equitable partition of the joint family movable and immovable properties, the arbitrators accepted the terms of the agreement and passed an award on 4-2-1982. The arbitration suit was filed for making the award as rule of Court for effecting partition of the properties. The arbitrators remained ex parte. Defendant No.6 filed written statement stating that conequent on the death of their father Appala Swamy, defendant Nos.6 to 8 and his widow Ramayamma succeeded to the state of Appala Swamy and alleged collusion between the arbitrators, defendant No.7 and plaintiff to defraud defendant No.6 by taking undue advantage of absence from the place. Therefore, sensing he will not get justice in the hands of arbitrators, he filed a suit in OS No.13 of 1982 on 2-3-1983 which was renumbered as OS No.25 of 1987 for partition of the joint family properties. It is also stated that the award suffers for want of participation of the parties concerned and no notice of award was given and the award was in violation of the principles of natural justice amounting to misconduct on the part of the arbitrators under Section-30 of the Arbitration Act and it is liable to be set aside. Defendant No.7 filed written statement and defendant No.1 filed a memo adopting the said written statement stating that the alleged agreement dated 6-10-1981 was not a valid document. It is also stated that defendant No.6 issued notice on 28-10-1981 demanding the partition of the properties and cancelling the arbitration and therefore the arbitration proceedings ought not to have been proceeded with. The arbitrators colluded with the plaintiff and not properly determined the shares of the parties. In rejoinder filed by the plaintiff, it is stated that the arbitrators were appointed in pursuance of the agreement between the parties on 6-10-1981. But, however, defendant No.6 got issued notice on 28-10-1981 which was properly replied on 20-11 -1981. Thereafter, they have not taken any steps for cancellation of the agreement. The arbitrators after giving opportunity passed award on 4-2-1982 and got it registered. The arbitrators also intimated about the passing of the award to all the parties. Defendant Nos.6 to 8 did not file any petition under Section 33 of the Act to set aside the award within the statutory period, contending that the award was not true and valid and binding.
5. OS No. 25 of 1987 was filed by defendant No.6 for partition of the Suit schedule Property and for permanent injunction restraining defendant Nos.1 to 5 from passing awards in terms of the agreement dated 6-10-1981. A joint memo was filed by the parties in OS No.25 of 1987 and OS No.23 of 1987 and common evidence was led in OS No.23 of 1987 and both these matters were disposed of by a common judgment.
6. Two witnesses were examined for the plaintiff and three witnesses were examined for the defendants. Exs.A1 to A19 were marked for the plaintiff and Ex.B1 to B48 were marked for the defendants.
7. The lower Court held that unreasonable and unjustifiable conduct of the arbitrators in giving only a life estate to Ramayamma and allotting vested interest in favour of the plaintiff in the arbitration suit vitiates the award amounting to misconduct on the part of the arbitrators. It was also found by the lower Court that the arbitrators did not properly allot the shares to the parties and hence they have misconducted themselves. The lower Court further found that giving possession of some property to the plaintiff in arbitration suit, pending arbitration award is also misconduct on the part of the arbitrators. According to the arbitrators, they have not taken note of the notice issued by one of the party and after giving notice they proceeded with enquiry, as the agreement constituting the arbitration committee cannot be revoked except with the permission of the Court. This fact was accepted by the lower Court. But, the lower Court found that when a notice was issued expressing lack of confidence in the arbitrators by one of the parties, they ought not to have been proceeded with the enquiry and this amounts to misconduct under Section 30 of the Act. The Court below held that the award is not valid and binding and it has not become final. The Court dismissed the arbitration suit and decreed the suit for partition.
8. With regard to the filing of the arbitration award, it was found that notice of award was issued by the arbitrators on 6-2-1982 about the passing of the award on 4-2-1982. It was received by the plaintiff in arbitration suit.
9. It was contended that the partition suit was not maintainable and the only course left open for the parties is to challenge the award under the provisions of the Arbitration Act and therefore the suit itself was not maintainable. The lower Court rejected the contention on the ground that the parties need not file application under Section 33 of the Act as DW1 had already filed the Suit in OS No.25 of 1987 even before filing of the Suit in OS No.23 of 1987 for partition and other reliefs. Further, it held that in the written statement filed by DW1 in arbitration suit OS No.23 of 1987 DWs.1 to 3 had questioned the validity of the award and prayed for setting aside the same and therefore no separate application was necessary under Section 33 of the Act, on the basis of the decision rendered by the Supreme Court in Madanlal v. Swderlal, . Therefore, it held that no separate application was necessary and that the award was refused to be made rule of law.
10. Aggrieved by the judgment and decree in partition suit, the 1st defendant filed an appeal in AS No.612 of 1989. Similarly, aggrieved by the judgment and decree in arbitration suit, the plaintiff therein filed CRP No. 3692 of 1989.
11. Before going into the respective contentions, it is necessary to trace out certain facts for proper appreciation at the time of discussion of issues.
12. The plaintiff, defendant Nos.6 to 8 are the children of late Appala Swamy. The said Appala Swamy died on 9-4-1981 intestate leaving behind number of properties. After his death differences arose among the heirs regarding the partition of the joint family properties and in order to sort out the differences among them an agreement dated 6-10-1981, Ex.A1 was entered between them to refer the matter to the arbitrators (defendant Nos. 1 to 5) for effecting partition of the joint family properties. They also furnished the details of the properties to the arbitrators. On 28-10-1981, defendant No.6 got issued notice alleging collusion between the arbitrators and other sharers to which the plaintiff got issued reply on 20-11-1981, Ex.B3 and no further proceedings were taken either by defendant No.6 or defendant Nos.7 and 8 for cancellation of the agreement. The arbitrators issued notice Ex.A5 dated 11-12-1981 to plaintiff and defendant Nos.6 to 8 asking them to attend the meeting of enquiry on 17-12-1981. Thereafter, the arbitrators passed an award on 4-2-1982, Ex.A14 and notice was issued to the parties by the arbitrators on 6-2-1982, Ex.A3. The defendant No.6 and others filed suit in OS No. 13 of 1982 (later it was numbered as OS No.25 of 1987) on 2-3-1982 for partition of joint family properties. Thus, by the date the partition suit was filed, the arbitration proceedings were concluded and notice of award was also issued by the arbitrators on 6-2-1982. The plaintiff in arbitration suit filed the suit under Section 14(2) of the Arbitration Act for direction to the arbitration to produce the original award dated 14-2-1982 into Court and make anile of law. The filing of the suit by the plaintiff in OS No.23 of 1987 for making the rule of the Court and partition suits are almost on the same day i.e., 2-3-1982.
13. The learned Counsel for the petitioner/appellant Mr. C. Subba Rao on behalf of Mr. C. Poornaiah submits that the partition suit is not maintainable as the entire matter was encircled by the provisions of the Arbitration Act. If the parties to the arbitration agreement want to resile from the arbitration agreement, they have to necessarily seek recourse under the provisions of the Arbitration Act. But, they cannot file a separate suit for partition and in the said suit, they cannot challenge the award of the arbitrators. The learned Counsel also submits that if the parties to the arbitration agreement are aggrieved, they can only file an application for setting aside the award under Section 33 of the Act challenging the same on the grounds stipulated under Section 30 of the Act. Admittedly, in the instant case, no such application or suit was filed for setting aside the award and therefore the lower Court ought not to have set aside the award in the absence of any specific petition having been filed by the aggrieved party. The learned Counsel further contends that the arbitration proceedings have to be respected by the parties to the arbitration and they cannot throw the blame on the parties or attribute motives to the arbitrators. The arbitration award was considered to be an instrument of partition also and thus the sanctity of the award has to be maintained.
14. The learned Counsel for the contesting respondents Mr. E. Ella Reddy and Mr. K.V. Subrahmanya Narsu submits that there is no bar for filing a suit for partition for original cause of action de hors the arbitration proceedings and the same is permissible under law. He also submits that when a notice was issued by defendant No.6 catling upon the arbitrators not to proceed further, they ought not to have proceeded in the matter. He also submits that the arbitrators have misconducted themselves on account of various acts. Therefore, the award is vitiated by collusion and fraud played by the arbitrators and the plaintiff in arbitration suit. He also submits that the respondents need not file a separate suit challenging the award inasmuch as in the arbitration suit the contesting defendants have clearly stated that the arbitration award was not sustainable in law and that it was tainted by fraud and material irregularities. Further defendants also prayed in the written statement filed in the arbitration suit to set aside the arbitration award. Therefore, in view of the judgment of the Supreme Court in Madanlal's case (supra), no specific application was necessary and therefore the lower Court was justified in setting aside the award in the absence of any specific petition in this regard.
15. The learned Counsel for the parties advanced elaborate arguments in respect of the aforesaid contentions.
16. The questions that calls for consideration are:
(1) Whether the partition suit is maintainable when the arbitration proceedings culminated in the Award?
(2) Whether the arbitration award can be challenged in a suit for partition?
(3) Whether in a suit for making the award rule of the Court, the opposite party can seek setting aside the award without filing a separate application?
And whether the award was valid and binding?
(4) Whether the judgment and decree for partition is legal and valid?
17. For proper appreciation of the case, it is necessary to refer to some of the provisions of the Arbitration Act, 1940 (No.X of 1940) (hereinafter called the 'Act'). Section 14 deals with the filing of the award which reads thus:
"14. Award to be signed and filed :--
(1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.
(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.
(3) Where the arbitrators or umpire state a special case under clause (b) of Section 13, the Court, after giving notice to the parties and hearing them, shall pronounce its opinion thereon and such opinion shall be added to, and shall form part of, the award."
Section 32 creates bar to suits contesting arbitration agreement-or awards, which is extracted below:
"32. Bar to Suits contesting arbitration agreement or award:--Notwithstanding any law for the time being in force, no suit shall lie on any ground, whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or an award, nor shall any arbitration agreement or award be enforced, set aside, amended, modified or in any way affected otherwise than as provided in this Act."
The arbitration agreement is also liable to be contested by the parties by filing an application under Section 33 of the Act, which reads as follows:
"33. Arbitration agreement or award to be contested by application :--Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of cither determined shall apply to the Court and the Court shall decide the question on affidavits :
Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit."
18. Under Section 34, power is vested to stay the legal proceedings where there is an arbitration agreement. Section 34 reads thus:
"34. Power to stay legal proceedings where there is an arbitration agreement:--Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings."
19. Under Section 30, the award of arbitrator can be challenged only under three grounds namely that the arbitrator has misconducted either himself or the proceedings, that the award was made after the order of the Court superseding the arbitration or the proceedings have become invalid under Section 35 or the award was improperly procured or otherwise invalid. Therefore, a combined reading of the aforesaid provision would indicate that once the matter is seized of by the arbitrators all the proceedings arising out of arbitration have to be initiated under the provisions of the Act and the suit was barred. Section 32 is very specific that no suit shall lie for a decision upon the existence, effect or validity of an arbitration agreement or an award nor can it be set aside, modified or amended otherwise than provided under the Act. Thus, if a party contends that there is no existing arbitration agreement at all or existing arbitration agreement has no effect or to challenge the validity of arbitration agreement, he can only do so under Section 33 of the Act.
20. The learned Counsel for the petitioner thus submits that in pursuance of the arbitration agreement dated 6-10-1981, the parties have referred the matter for the arbitration of five arbitrators. Therefore, if anyone of them desires to challenge the existence or validity of an agreement is required to apply to the Court and Court shall decide the issue. Admittedly, in the instant case, no such proceedings were initiated by the defendants in the arbitration suit and therefore a partition suit impugning the arbitration award was barred by Section 32 of the Act. Mr. Subba Rao, stating that great sanctity has to be given to the arbitration proceedings and the award, submits that the award cannot be interfered with either on error of fact or error of law. It is only error of law which is apparent on the face of the record. May be interfered with by the Court. He relies on the judgment of the Supreme Court reported in N. Challappan v. Secretary, Kerala State Electricity Board, observed thus:
"Where the Umpire as the sole arbitrator has awarded a sum to the contractor on account of certain claims made by the contractor after considering the argument of the Board for disallowing it, but without expressly adverting to the question of limitation the award is not vitiated on account of any mistake or error apparent on the face of the award. The umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. (Champsen Bhara & Co. v. Jivraj Batto Co. Ltd., AIR 1923 PC 66 and Union of India v. Bongo Steel Furniture (P) Ltd., , applied.)"
21. He also relies on the decision of the Supreme Court reported in M/s. Hindustan Tea Co. v. M/s. K.Sashikant & Co., , wherein the Supreme Court held that under law, the arbitrator is made the final arbiter of the dispute between the parties. The award was not open to challenge on the ground that the arbitrator has reached a wrong conclusion or failed to appreciate the facts.
22. He also relies on the decision of the Supreme Court reported in The President, Union of India v. Kalinga Construction Co. (P) Ltd, , wherein the Supreme Court held that in proceedings to set aside the award, appellate Court cannot sit in appeal over the conclusion of the arbitrator, by re-examining and by re-appreciating the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator was wrong. In the instant case, it is a non-speaking award. Therefore, the case stands on a better footing than the case where the arbitrator had given the reasons.
23. Mr. Subba Rao relied on the judgment of the learned single Judge of this Court reported in Zaheer Bin Saleh v. Mohan & Mohan Financiers Rep. by its Proprietor Dr. T. Bhoja Reddy, 1998 (6) ALD 189 = 1998 (5) ALT 898, wherein the learned Judge held that even though the petitioner did not participate in the arbitration proceedings, it cannot be said that the arbitration award was without jurisdiction. The learned Judge held as follows:
"Even though the revision petitioner has denid the existence of the Hire-Purchase Agreement under which the dispute was referred to the Arbitrator for decision, the arbitrator cannot be said to be without jurisdiction to conduct the arbitration proceedings. It is only for the Court, on an appropriate petition to be filed by the aggrieved party under Section 33 of the Arbitration Act, 1940, that the validity of the Award that might be passed by the Arbitrator on the ground of non-existence of the arbitration agreement, can be decided.
Simply on account of the denial of the existence of the agreement by one party, the Arbitrator cannot lose his jurisdiction to enter into arbitration and that whether the award that might be submitted by the arbitrator is to be considered as a nullity on the ground of non-existence of the arbitration agreement, can be decided only by the Court on an application to be filed under Section 33 of the Arbitration Act by the aggrieved party who denies the existence of such agreement. Therefore, the contention for the revision petition that the Arbitrator acted without jurisdiction when the existence of the arbitration agreement was denied by the revision petitioner, cannot be accepted. Such contention regarding the jurisdiction of the Arbitrator on account of the denial of the existence of the agreement and regarding the validity of the Award passed by the Arbitrator under such circumstances, can be considered only by the Court on an application filed under Section 33 of the Arbitration Act."
24. In Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, , the Supreme Court held that the arbitration can give lumpsum award. Aware of both fact and law is final and there is no appeal from this verdict. The Court cannot review his award and cannot correct any mistake of adjudication unless objection to the legality of the award is apparent on the face of it.
25. On the other hand, the learned Counsel for the respondent Mr. Subrahmanya Narsu submits that immediately after the agreement was concluded, defendant No.6 has issued a notice imputing the motives to the arbitrators and demanding the arbitrators not to proceed further. Inspite of it, the arbitrators proceeded with the matter. Therefore, in such circumstances it cannot be said that the suit was barred restraining the arbitrators from the arbitration proceedings. He further submits that it was always open for the plaintiff in the arbitration suit to have obtained stay of alt further proceedings in the partition suit, as contemplated under Section 34 of the Act and no such proceedings were taken by the plaintiff in the arbitration suit and therefore the suit is maintainable. He further submit that a suit is always maintainable on original cause of action de hors the pendency of the arbitration proceedings.
26. He strongly relies on the Division Bench judgment of Allahabad High Court reported in State of U.P. v. M/s. Thakur Kundan Singh, . In the said case, the plaintiff filed suit for recovery of certain amounts in respect of the work done in a contract. He filed a suit during the pendency of the arbitration proceedings. However, the suit was decreed and the the contention that the suit was barred by Section 34 of the Arbitration Act was rejected. The matter was carried in first appeal by the State, ft was one of the contentions of the Government that the suit itself was barred under Section 32 of the Arbitration Act, as by the date of filing of the suit, the proceedings before the arbitrators were pending and therefore the lower Court ought to have dismissed the suit as not maintainable. That contention was repelled by the Division Bench stating that the suit was clearly not one inviting the decision upon the existence, effect or validity of any arbitration agreement or award. The suit was simply for recovery of an amount due on the original cause of action. The plaintiff had not sought for any declaration either in respect of the arbitration agreement or the award thereon. Section 32 can therefore have no application whatsoever to the case. Thus, it is clear that the suit was not filed for inviting a decision upon the existence, effect or validity of any arbitration agreement or the award. But, in the instant case, it has to be remembered that as on the date when the partition suit was filed the arbitration award was already passed by the arbitrators and the respondents have not filed any application under Section 33 to set aside the award and partition suit itself was filed for partition of the suit schedule properties and to grant permanent injunction restraining the arbitrators from proceeding further with the arbitration proceedings in pursuance of an arbitration agreement. Thus, the partition suit itself was based on the principal averment that the arbitrators were conducting in a manner prejudicial to the interest of the parties and the award if any would not be binding on the parties. Thus, it is indirectly admitting that the award is being challenged in the partition suit. But, in the case dealt with by the Division Bench of the Allahabad High Court, the award was never challenged nor any decision was invited with regard to the existence, effect or validity of the arbitration agreement or the validity of the award. Under these circumstances, the Division Bench opined that the suit based on a original cause of action, was not barred on mere ground that the dispute forming part of the cause of action of the suit was referred for arbitration and the arbitration proceedings pursuant to the reference are pending on the date of the suit. More over, in the instant case, after the award was passed, notice of passing the award was issued by the arbitrators to the parties concerned and one of the party to the arbitration agreement had already filed a suit in OS No.23 of 1987 under Section 14 for making the award of the arbitrators rule of the Court. Section 34 can be invoked only when the arbitration proceedings are pending and when the other party commences any legal proceedings. As on the date when the partition suit was filed, no arbitration proceedings were pending. Therefore, the question of taking the stay of partition suit would not arise. Under Section 35, no reference nor award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject-matter of the reference, but when legal proceedings upon the whole of the subject-matter of the reference have been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of proceedings is granted under Section 34, be invalid. But, that situation is not available in the instant case. When the partition suit was filed, the arbitration proceedings have already concluded and the award was already passed. Without filing an application to set aside the award, the respondents in arbitration suit filed partition suit stating that the arbitration proceedings are not binding and that the suit for partition was maintainable. Merely giving notice by one of the parties (defendant No.6) requesting the arbitrators to stop the further proceedings would not prohibit the arbitrators proceeding further unless such questions are decided by the Court having jurisdiction. In the case on hand, the arbitrators after issuing notice to the parties passed award and issued notice to the parties concerned about the passing of the award. Thus, the facts in the case reported in M/s. Thakur Kundan Singh's case (supra), are not applicable to the facts of the present case.
27. It is further sought to be argued by the learned Counsel for the respondents Mr. Subrahmanya Narsu that even though the arbitrators passed the award, it has no effect unless it is made rule of the Court and since it was not made the rule of the Court, the parties can exert their respective rights in a civil suit. But, this contention though appears to be appealing does not stand to legal scrutiny. Admittedly, in the instant case, one of the party had already filed a suit for making the award the rule of the Court and in such an event, it is open for the respondents to challenge the arbitration award on the grounds mentioned under Section 30 and admittedly, they did not do so. On the other hand, they filed a suit for partition giving a go bye to the arbitration proceedings. It is not as if none of the parties have carried the matter further for making the award the rule of the Court. In fact the arbitration suit and the partition suit were filed on 2-3-1981 almost on the same day. The Supreme Court in Satish Kumar v. Surinder Kumar, , held that even though award had not been made the rule of the Court and even though the same may not operate as a bar to the maintainability of the suit, the same could in any way be set up by way of defence in the suit. It is true that when the award is not made the rule of the Court, the parties may not exert their rights. But, however, such an award cannot be overlooked altogether. It can be taken as a defence by the defendants. But, we are not faced with such a situation in this case as one of the parties had already taken the steps to make the award the rule of the Court by filing the suit.
28. The learned Counsel for the petitioner Mr. Subba Rao submits that even though the award was not made the rule of the Court, yet, it is binding on the parties and a fresh suit on the basis of the original cause of action is barred. He relies on the judgment of Bombay High Court reported in Akbar Ali v. Mumtaz Hussain, AIR 1987 Bom. 39. The learned single Judge of Bombay High Court (Nagpur Bench) held that where the parties referred their dispute to an arbitration and an award is made, it is binding on the parties and though the award is not filed in Court and rule is not made by the Court in terms of the award, a fresh suit on the basis of original cause of action is barred under Section 32. He relied on the decision of Satish Kumar's case (supra). The learned Judge, however, dissented from the decision of this Court reported in F. Sanjeevamma v. Yerram Purnamma, . In Satish Kumar's case (supra), the award passed by the arbitrator was filed in the Court under Section 14 of the Act for being made a rule of the Court, to which certain objections were raised under Section 30 of the Act. One of the objections raised was that the said award was not admissible in evidence for want of proper stamp duty and registration and therefore it could not be made the rule of the Court. It was this objection which was considered by the Supreme Court. But, in the instant case, the award was duly stamped and registered and a suit was already filed for making the rule of the Court. The Supreme Court only observed in Satish Kumar's case (supra), that the award which is not registered before being made the rule of the Court does create any right in the property, but those rights cannot be enforced until the award is made the decree of the Court and that the award was not a mere waste, but it is a legal efficacy and would operate to create or declare rights within the meaning of Section 17(1)(b) of the Registration Act. It is, however, true that the Supreme Court did not make clear the issue whether the award which is not made rule of the Court would bar a suit on a original cause of action, finally, the learned Judge held thus:
"Where parties after their dispute to an arbitration and an award is made, it is binding on parties and though the award is not filed in Court and rule is not made by the Court in terms of the award, a fresh suit on the basis of original cause of action is barred under Section 32. , Dissented from.
Although in express terms it is not staled in Section 32 that a suit on the original cause of action would be barred, the scheme of Sections 30, 31(2) and 32 would be that a suit on the original cause of action would be barred because what is provided therein is that no suit can lie on any ground whatsoever for a decision upon the existence, effect and validity of an award and no arbitration award can be enforced, set aside, amended, modified or in any way effected otherwise than as provided in the arbitration Act. Although, therefore, the suit may not directly be framed to set aside the award as such or to vary its terms, the effect of the filing of a suit on the basis of the original cause of action for adjudication of the rights of the parties would be the same. Therefore, the suit on the original cause of action stands barred by the provisions of Section 32 of the Arbitration Act."
Thus, it is clear from the judgment of the learned single Judge that when once the award is passed, it binds the parties as it is a final adjudication of the rights of their respective rights even though the award was not made the rule of the Court. But, in the instant case, when the suit was filed for making the award the rule of the Court, simultaneously a suit was filed for partition. The facts in Akber Ali's case (supra) are almost identical to the facts of the present case. There, the parties by an agreement referred the dispute to the arbitrator and the arbitrator passed his award on 19-11-1979. But, however no steps were taken by any of the parties to file the same in the competent civil Court to make it the rule of the Court. But, on the other hand, one of the parties filed a suit on 18-2-1980 on original cause of action on the ground that the award passed by the arbitrator was in excess of the terms of the contract and therefore was a nullity. The preliminary issue was framed whether the jurisdiction to entertain the suit was barred under Section 32 of the Arbitration Act which was held in affirmative. The case stands on better footing as the suit was already filed for making the rule of the Court and at the same time the other side filed the suit for partition. The learned Counsel for the respondents Mr. Narsu submits that no steps were taken by the plaintiff for staying the partition suit, but on the other hand, a joint memo was filed to club both the suits and to try them jointly. If the plaintiff had intended to take jurisdictional objection should have taken in the first instance. Having failed to take such an objection, plaintiff in the arbitration suit is precluded from raising such an objection. He relied on the decision of this Court reported in Marrepu Venkata Ramana Murthi v. The Deity of Sri Rama Mandiram, . The Division Bench was dealing with the Second Appeal Suit was filed by the trustees of a public temple for possession of the temple properties and the defendant who have been removed from the trusteeship by the Endowment Board and the suit was decreed. In the appeal, it was confirmed. The matter was carried in the second appeal. One of the contentions raised before the Division Bench was that the Civil Court has no jurisdiction to entertain the suit. In the context, the Division Bench held that an objection as to the jurisdiction must be raised at the earliest possible stage, so that the other party if so minded, might abandon the proceedings in the civil Court and approach the appropriate forum. By allowing such objections by the aggrieved party, it would be prejudice the right of the other party. But, this decision is of no avail to Mr. Narsu as one of the issue itself framed in the suit was whether the partition suit was maintainable? Even though the Bombay High Court held that the suit is barred and dissented from the decision of the Division Bench of this Court in Sanjeevamma's case (supra), yet, the decision of the Division Bench is binding on this Court and therefore this Court need not follow the decision of the Bombay High Court. There is no dispute about this proposition that the Division Bench judgment is binding on this Court. In the decision of Sanjeevamma's case (supra), the Division Bench held that an award passed and filed into the Court by the arbitrator, but not made a rule of the Court was not capable of creating rights in immovable property. But, however, on perusing the entire judgment, it can be noted that the said observation was made in different context. A suit was filed for declaration of title to the suit schedule property and for recovery of the possession of the property. The award which had been passed and filed into the Court by the arbitrator but was not made a rule of the Court, it was held that the award was incapable of creating or extinguish the rights in the movable properties which the plaintiffs claimed to have acquired by reason of registered will. It was also held that such an award is not admissible in evidence as it was not registered.
29. The Supreme Court in Satish Kumar's case (supra), observed that filing of an unregistered award under Section 49 of the Registration Act is not prohibited and what is prohibited is, it cannot be received in evidence so as to affect immovable property. That the award required registration was rightly admitted by both the parties. The Division Bench of this Court basing on the observations of the Supreme Court held that the award which has been passed and filed into the Court by the arbitrator would be incapable of creating or extinguishing the rights in the immovable property which the plaintiffs claimed to have acquired by reason of registered will dated 7-5-1981, and also for want of registration, such an award could not have been admitted as a piece of evidence at all. Therefore, the issue before the Division Bench was not directly arising under the provisions of the Arbitration Act. In an application for appointment of Receiver, an unregistered award was sought to be passed into service and in that context the Division Bench observed as aforesaid. But, it is also to be noted that the arbitrator himself after passing the award filed award into the Court and thereafter what happened was not clear. But, however, the Division Bench found that the award passed by the arbitrator was never made the rule of the Court nor was the award registered. But, in the instant case, the award was not filed by the arbitrator and on the other hand the suit was filed by one of the parties for directing the arbitrators to file the award and to make the award the rule of the Court. Therefore, the decision of the Division Bench has no application to the facts of the present case.
30. In Kripa Sindhu Biswas v. Sudha Sindhu Biswas, , the Division Bench of Calcutta High Court held that the award is equivalent to final judgment though not enforced. Even if it is not filed in the Court, it is not on that account invalid. The cause of action having merged in the award, the valid award constitutes any bar to any action on the basis of any original demand. It is further held that a valid award partitioning the joint family properties among the parties to the award can operate as instrument of partition within Section 2(15) of Stamp Act, so as to give life to the award. Where the award on the face of it does not show that the arbitrators misconducted the enquiry, criticism alone cannot take proof of misconduct. Such a serious charge must be proved by independent evidence. The Division Bench further held thus:
"Any objection going to the root of the award such as that the Arbitrator had no jurisdiction or that the matter was tainted with fraud could be pleaded in the suit to set aside the award but objection on the ground of irregularity not appearing on the face of the award is excluded by the law of Arbitration.
Where in an appeal against a preliminary decree for partition the defendant appellant sought to adduce certain sale deeds excluded by the plaintiff after the institution of suit, of which he had no knowledge till then and which were of much probative value in support of his claim, the Appellate Court in exercise of its powers under Order 41, Rule 27, Civil Procedure Code allowed the documents to be admitted in evidence and took them into consideration by way of subsequent events for a proper decision of the appeal in the ends of justice.
The Court has neither the right nor the duty to enquire into the merits of the award made by the arbitrator. Any defect or irregularity in the making of the award may be cured by the waiver implied from the act of the parry going in before the arbitrators and taking a chance of a favourable decision and thereafter acting on that decision to the injustice of the other side.
A party to a partition award which is acted upon throughout by the parties cannot resile from the award and bring a suit for fresh petition on the allegation that the award is not binding on him especially when it is impossible to restore the parties to their original position before the award."
31. Keeping in view the aforesaid decisions, and also the provisions of the Arbitration Act, it has to be necessarily held that when once the parties had agreed for arbitration, arbitrator seized of the issue, no separate suit lies regarding the existence, effect and validity of the arbitration agreement nor the award of the arbitrators and it has to be only challenged under the provisions of the Arbitration Act. Otherwise, the very sanctity of the arbitration agreement is polluted. The Arbitration Act is a piece of Legislation embodying the alternative dispute resolution process to put an end to the litigation and if the parties are allowed to give a go bye to the Arbitration agreement and award and again resort to suits in the guise of the original cause of action, the very object of the enactment is frustrated.
32. Therefore, under these circumstances, I am of the considered opinion that the suit for partition itself was not maintainable and there is a legal bar under Section 32 of the Act.
33. The learned Counsel for the respondents Mr. Subrahmanya Narsu however submits that the parties filed a joint memo to club both the suits and to led any evidence and now they cannot say that the partition suit is barred and not maintainable. This contention cannot be accepted as there is no estoppel against law. When the law itself prohibits, such a course of action, mere submission of the parties cannot convert an unenforceable claim as a valid claim under law. The suit itself is incompetent and not maintainable. Accordingly, I have to necessarily hold that the finding of the Court below that Section 32 is no bar for filing the suit is wholly misconceived and the said finding is set aside, and it is held that the partition suit is not maintainable. Accordingly, the partition suit stands dismissed.
34. Another contention raised by the learned Counsel for the respondents is that the Court below held that the award was vitiated by misconduct on the part of the arbitrators and therefore on this ground, the award is not sustainable in law. To this contention, the learned Counsel for the petitioner Mr. Subba Rao submits that the respondents did not file any application to set aside the arbitration award within the time stipulated under the statute and therefore they cannot plead for setting aside award of the arbitrators. On the other hand, the suit was filed by the plaintiff for making the award the rule of Court, in such a case, it is open for the Court to find whether the petitioner has established his case and if it is established, the decree has to be passed in terms of the award. Otherwise, the suit will be dismissed. But, the arbitration award cannot be set aside at the instance of the defendants in the suit for making the award the rule of the Court. The learned Counsel for the respondents, however submits that in the written statement which was filed within the limitation in the arbitration suit, the defendants specifically pleaded that the arbitration award was illegal and it is liable to be set aside as the arbitrators have misconducted themselves. There is no dispute that the written statement was filed by the defendants within 30 days from the date of notice.
35. The learned Counsel greatly relied on the judgment of the Supreme Court reported in Madan Lal v. Sunder Lal, (supra). That was a case standing on a quite different foundation. Application was filed for making the award a rule of the Court, but in the said case, the defendants filed written statement attacking the award since its inception inasmuch as 49 paragraphs. The Supreme Court observed in that connection as follows:
"It is clear, therefore, from the scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in Section 30 it must apply within 30 ays of the date of service of notice of filing of the award as provided in Article 158 of the Limitation Act. If no such application is made the award cannot be set aside on any of the grounds specified in Section 30 of the Act. It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But, if an objection like this has been filed after the period of limitation it cannot be treated as an application to set aside the award for if it is so treated it will be barred by limitation."
36. But, in the instant case, no such serious dispute has been made out. But, the usual pleading which are taken to see that the award is not made the rule of the Court, are only taken. There is a specific provision under the Act to file an application if party seeks to set aside the award on the grounds mentioned in Section 30 of the Act. The burden is on the party to establish that the arbitrators misconducted. Treating the written statement as an application for challenging the award, is only an exceptional circumstance and it cannot be taken as a general rule. The Supreme Court in a particular set of facts held that there was no prohibition for treating the written statement, as an application for setting aside the award. But, that cannot be applied as a general rule in all the arbitration cases. If that has to be accepted, no separate application will be filed for setting aside the arbitration award and only in the application filed making the rule of the Court, objections will be taken in the written statement and on the basis of those objections, the awards could be set aside. I am of the view that treating the written statement as an application for setting aside the award, is only to be considered in exceptional and rare cases and not in a general manner. Though the respondents alleged in the written statement that the arbitrators have misconducted themselves and attributed motive to them and at the same time nothing prevented them from filing separate application for setting aside the award as required under the law. The Supreme Court never intended to lay down the general principle. Therefore, the lower Court ought not to have gone into validity of the arbitration award on basis of mere written statement. On the other hand, it should have considered the award in accordance with the provisions of the Act and passed the orders.
37. Even otherwise, the judgment suffers with another serious infirmity. The Court below found that the arbitrator has found fault with the award on the ground that the share of the mother that only life interest in respect of some property was given to the mother and vested reminder was given to another son and that the arbitrators proceeded inspite of the protest by one of the parties to the agreement and that they did not distribute the properties equitably and in accordance with law. Thus, they misconducted themselves and the award is liable to be set aside. This contention cannot be accepted as the Supreme Court in time and again has been emphasising that the award of the arbitrators cannot be interfered with on question of fact or on question of law. Only when there are errors of law apparent on the face of the record, the award is liable to be interfered with (Refer: N. Challappan v. Secretary, Kerala State Electricity Board, , M/s. Hindustan Tea Co. v. M/s. K. Sashikant and Co., , The President, Union of India v. Kalinga Construction Co. (P) Ltd., , Zaheer Bin Saleh v. Mohan and Mohan Financiers, and Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, ). On this ground also, I am not persuaded to accept that the arbitrators had misconducted and I find that the conclusions of the Court below is erroneous and contrary to law.
38. For the aforesaid reasons, the CRP is allowed. Suit in OS No.23 of 1987 is decreed as prayed for. Appeal in AS No.612 of 1989 is allowed and the suit in OS No.25 of 1987 stands dismissed. But, in the circumstances of the case, the parties shall bear their own costs.