Patna High Court
Makeshwar Misra vs Laliteshwar Prasad Singh And Ors. on 17 February, 1967
Equivalent citations: AIR1967PAT407, AIR 1967 PATNA 407, 1967 BLJR 788 ILR 46 PAT 411, ILR 46 PAT 411
JUDGMENT U.N. Sinha, J.
1. This appeal has been referred to this Full Bench for hearing, in pursuance of an order passed by a Division Bench of this Court on the 3rd January, 1966 to the effect that in view of certain conflicting decisions of this Court, it is desirable that the question involved in the case should be finally resolved by a larger Bench.
2. The appeal has been filed by Makeshwar Misra, who was opposite party No. 1 to an application filed by Sureshwar Prasad Singh under Section 14(2) of the Arbitration Act, 1940(10 of 1940). Originally Sureshwar Prasad Singh was respondent No. 1 to this appeal, and, after his death, he is being represented by Ms heirs and legal representatives, who have been substituted in his place. From the records of the case, it appears that Sureshwar Prasad Singh has been described as the plaintiff and Makeshwar Misra as defendant first party, and, therefore, I shall refer to Sureshwar Prasad Singh as the plaintiff and Makeshwar Misra as defendant No. 1.
3. The facts of the case, in short, are as follows. The plaintiff alleged that, in the circumstances mentioned by him, a sum of Rs. 3,500 had been deposited with defendant No. 1 in four instalments, and the plaintiff was entitled to receive this money from him. After defendant No 1 had refused to return this money to the plaintiff, they had agreed to refer their dispute to certain arbitrators for their decision. A deed of reference to five arbitrators was executed by both the parties on the 15th November, 1956. These five arbitrators were opposite party Nos. 2 to 6 of the application filed under Section 14(2) of the Arbitration Act, and they are the other respondents to this appeal It was alleged that, in due course, the arbitrators took up the arbitration, appointing one of them rum ed Ramanandan Singh at the umpire. Both the parties had tiled their written statements before the arbitrators, and both the parties had appeared before them. After the plaintiff had adduced evidence before the arbitrators, defendant No. 1 did not take any further steps in the case, and an award was signed by the arbitrators in the 13th March, 1957. Thereafter, the award was prepared on stamp paper, and was duly executed by the arbitrators on the 30th March 1957. The award was registered on the 30th April, 1957, by the umpire. According to the award, defendant No. 1 was asked to pay the plaintiff Rs. 3,500, and it was alleged by the plaintiff that he had not done so. On these allegations, the plaintiff filed the application under Section 14(2) of the Arbitration Act, stating that the award was being filed on the direction of the arbitrators. The plaintiff prayed that a decree might be passed in terms of the award in favour of the plaintiff against defendant No. 1.
4. A written statement was filed by defendant No. 1, denying all the allegations of facts made by the plaintiff regarding the deposit of Rs. 8,600 with him. He denied having executed any deed of reference to arbitration, contending that, if any such document is produced, it must be a forged and fabricated document. He denied all knowledge of the arbitration proceeding. The award relied upon the plaintiff was described as a collusive document. On those allegations, the parties went to trial before the Munsif, 1st Court, Samastipur.
5. The learned Munsif decided all the points in favour of defendant No. 1. With respect to the plaintiff's allegation of the deposits amounting to Rs. 3,500 it was held that no such deposits had been made with defendant No. 1. The plaintiff's case about the execution of the deed of reference by defendant No. 1 was not accepted. The alleged arbitration proceedings were not accepted as true. It was held that all the arbitrators had perjured themselves in supporting the plaintiffs case. A question of limitation had also been agitated; but it was decided against the plaintiff on the ground that, as the award was not a genuine document, the defendant's objection was not barred by limitation under article 158 of the Indian Limitation Act. Thus, it was held that the plaintiff was not entitled to any relief claimed by him, and the suit was dismissed.
6. The plaintiff appealed to the court of appeal below, and, by judgment and order passed by the learned Additional Subordinate Judge, Samastipur, the appeal was allowed, and a decree was ordered to be passed on the basis of the award. The learned Additional Subordinate Judge has reversed the findings of the trial Court, accepting the facts alleged by the plaintiff. The deed of reference, dated the 15th of November, 1956, has been held to be genuine, and the learned Additional Subordinate Judge has accepted the plain-tiff's case about the arbitration proceeding. The evidence of the arbitrators examined in the case has been accepted as true, and the award has been held to be legal, valid and binding upon defendant No. 1. On the question of limitation, the matter has been decided thus. It has been held that, so far as the objection of defendant No. 1 had fallen within the purview of Section 33 of the Arbitration Act, challenging the validity of the reference, there was no question of limitation barring the objection; but, on the ground that there was a valid award binding upon the defendant, the objections filed against the award have been held to be barred by limitation under Article 158 of the Indian Limitation Act.
7. It has been contended by Sri Satyanand Kumar, appearing for the appellant, that no appeal lay in the Court of appeal below against the judgment and order passed by the trial Court, and hence the judgment under appeal ought to be set aside. Reference has been made to Section 39 of the Arbitration Act to show what orders passed under this Act are appealable orders, and it is urged that the order of the trial court was not subject to an appeal in the court of appeal below. For this argument, reliance is placed on the case of Abdul Karim v. Mst Maniran, AIR 1954 Pat 6 and the case of Basant Lal v. Surendra Prasad, AIR 1957 Pat 417. The substance of the argument is that, when defendant No. 1 had challenged the arbitration agreement and this case was accepted by the trial court, no question of setting aside the award had strictly arisen, and, therefore, there was no provision under the Arbitration Act for referring an appeal in the court of appeal below. It is contended, that the objection of defendant No. 1 had fallen within the purview of Section 83 of the Arbitration Act, and an order accepting this contention, was not an appealable order. In order to appreciate the contentions raised on behalf of the appellant, the provisions of Sections 33 and 39 of the Arbitration Act are reproduced below:--
"33. 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 either 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."
"39. (1) An appeal shall He from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the court passing the order:--
An order-
(i) superseding an arbitration:
(ii) on an award stated in the form of a special case:
(iii) modifying or correcting an awards:
(iv) filing or refusing to file an arbitration agreement.
(v) staying or refusing to stay legal proceedings where there is an arbitration agreement:
(vi) setting aside or refusing to set aside an award:
"Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court.
"(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
8. The argument of Shri L.K. Chaudhary, appearing for the plaintiff-respondent, is that, on the allegations made by defendant No 1, the trial Court had, in effect, set aside the award filed by the plaintiff, and therefore, the order of the trial court was an appealable order.
9. For the reasons given below, I am of the opinion that the contentions raised by Shri Kumar are not valid, and that an appeal did lie in the Court of appeal below as the trial Court had, in effect, set aside the award filed in this case by the plaintiff in a proceeding under Section 14 of the Arbitration Act. As a matter of fact, the objections preferred by defendant No. 1 in the trial Court were two-fold; he had challenged the existence of a valid arbitration agreement on one hand, and on the other he had also challenged the award itself on the ground that the arbitrators had misconducted themselves and the proceedings making the following prayer:
"It is, therefore, prayed that your honour be pleased to declare the reference and the award alleged by the applicant to be fraudulent, illegal, void and inoperative and, if considered necessary, to set aside the award and dismiss the application with cost."
In the body of the objection petition, it was alleged that defendant No. 1 had never executed the alleged arbitration agreement on the 15th November, 1956, and it was stated that he had never received any notice from the arbitrators in respect of the making, signing and delivery of the alleged award. It was stated that the so-called arbitrators had never given defendant No. 1 any opportunity to make any statement in writing or orally or to examine any witness or to produce any document. Thus, it is clear that the latter allegations fell within the purview of Section 30 (a) of the Arbitration Act, and all these allegations were accepted by the trial court on the evidence adduced by defendant No. 1. Although the trial Court, in dismissing the case (numbered as a title suit) did not use the expression that the award was set aside, yet the effect of the order was that the award, which was in court then, was set aside
10. The first decision, reported in AIR 1954 Pat 6, relied upon by Shri Kumar does not really support his contentions on the facts of the instant case In Abdul Karim's case, AIR 1954 Pat 6 what had happened was as follows: One Maula Bux had a son named Abdul Aziz, and after their death, some dispute arose in the family regarding the partition of their properties. A deed of agreement was entered into by the family members, and Bibi Maniran, one of the wives of Abdul Aziz, signed this deed for herself and as guardian of her minor children, desiring that the dispute may be referred to the arbitration of certain persons named therein Thereafter, some members of the family filed an objection under Section 33 of the Arbitration Act, contending that, as Maniran was not the guardian of her minor sons and daughters under the Mohamedan law, she was not the guardian of the properties of her minor children, and the deed of agreement was illegal and void The prayer made was that the deed of agreement might be declared to be illegal and null and void. The learned Subordinate Judge, who heard this matter, held that the reference to arbitration on behalf of the minors was invalid; but he also held that it was not invalid in so far as the other parties were concerned. The persons who had filed the application under Section 33 came up to this Court in appeal, and it was contended that the entire reference to arbitration should have been held to be null and void. A preliminary objection was raised to the effect that no appeal lay in this Court. It was held by this Court that no appeal lay against the order in question, and the case was converted into a civil revision. It is clear from the facts of Abdul Karim's case AIR 1954 Pat 6 that the applicants before the Subordinate Judge had not prayed that any award be set aside. No doubt, the learned Subordinate Judge had held that the award of the arbitrators should be filed, adding that, if the award affected the minors and cannot be severed from the other provisions, the award will be liable to be set aside; nevertheless, the only question agitated before the learned Subordinate Judge was whether the alleged arbitration agreement was valid or not.
In Abdul Karim's case, AIR 1954 Pat 6 reference was made to a decision in Radha Kishen v. Bombay Co. Ltd AIR 1943 Lab 295, and that decision was with respect to an objection to an arbitration agreement, without reference to an award at all Therefore, in my opinion. Abdul Karim's case. AIR 1954 Pat 6 cannot be called in aid by Shri Kumar for his contentions that no appeal lay in the instant case.
11. The second decision relied upon by Shri Kumar in AIR 1957 Pat 417 does not also support his contentions. No doubt in Basant Lal's case AIR 1957 Pat 417 on a previous application filed under Section 14 (2) of the Arbitration Act a judgment had been pronounced in terms of an award on which a decree had followed, but, the case under consideration arose due to an application subsequently filed by one Basant Lal under Section 33 of the Arbitration Act for a declaration that an alleged arbitration agreement was invalid, forced and fabricated, and, consequently, the decree, which was then under execution, had been fraudulently obtained. The decree based on the award was prayed to be set aside. The trial Court allowed the case, holding that the arbitration agreement had not been signed by Basant Lal, and, as such, the reference to arbitration was invalid. It was held that, consequently, the award and the decree were void and without jurisdiction. The aggrieved party carried an appeal before the District Judge, who allowed the appeal on certain preliminary grounds. He held that the application under Section 33 was not maintainable because Basant Lal had alleged that be was not a party to the agreement, and he also held that, because a decree had already been passed in terms of the award, the application under Section 33 was not maintainable Basant Lal, thereafter, preferred a miscellaneous second appeal in this Court, which was dismissed by a learned single Judge, although on grounds different from those found by the learned District Judge.
On the question of maintainability of the appeal in the Court of appeal below, it was held that no appeal lay; and it was held that, in those circumstances, a second appeal did lie in this Court He however, held that the application made by Basant Lal under Section 33 was not maintainable as the award had merged into judgment and decree. Another finding given by the learned single Judge was that the application filed by Basant Lal was barred by limitation under article 158 of the Indian Limitation Act. The main conclusions arrived at by the learned Judge for dismissing the appeal were reversed by the Letters Patent Bench. The appeal was allowed, and the judgment of the trial Court was restored. The view taken by the learned single Judge that the first appeal did not lie before the District Judge was held to be correct. From the facts stated in Basant Lal's case AIR 1957 Pat 417 and the decision arrived at, it cannot be said that the Letters Patent Bench had held that the trial Court had set aside the award. In the proceeding, which was being conducted on an application under Section 33, the award could not have been said to be in Court for the purpose of setting it aside. I have already referred to the prayer that had been made by Basant Lal, and, in that connection, the Letters Patent Bench stated that, when it is found on an application presented under Section 33 that no arbitration agreement had existed at all, which, could have authorised the arbitrator to make an award, and which could empower the Court to pass a judgment and decree, the very foundation of these proceedings vanishes, and the judgment and decree can have no binding effect.
I do not think that Basant Lal's case AIR 1957 Pat 417 can be of any assistance to Shri Kumar in his contention that on the facts and circumstances of the instant case, no appeal lay in the Court of appeal below. On the other hand, there are certain decisions of this Court from which if must be held that the first appeal, in the circumstances of this case, did lie.
12. The case of Gauri Singh v. Ramlochan Singh, AIR 1948 Pat 430 is one of such cases. What had happened in this case was as follows. An award had been given by some panches in a dispute between the parties, and the award was registered. Thereupon, Gauri Singh instituted a suit, praying that the award be filed and a decree prepared in accordance with it. The suit was decreed by the first Court in terms of the award, and the defendants appealed. The appellate Court held that the plaintiff had failed to prove that the defendants had agreed to reconvey some property to him or that there was a dispute which had been referred to the arbitrators. The award was held not to be binding on the defendants, and the suit was dismissed. Thereupon, a civil revision was filed in this Court by Gauri Singh The question arose as to whether an appeal lay in this case or not. Meredith, J. stated that an application to set aside an award can be made under Section 33, and that the written statement filed by the parties in that case could be considered as an application under Section 33, and an appeal would lie under Section 39 (1) (vi) against the order of the trial Court which had amounted to an order refusing to set aside the award. If the order passed by the trial Court in Gauri Singh's case AIR 1948 Pat 430 was interpreted as an order refusing to set aside the award then if the Court had dismissed the suit, the order would certainly have amounted to one setting aside the award. In my opinion, the true test was laid down by Meredith, J. in Gauri Singh's case AIR 1948 Pat 430 in the following words:
"In the light of all the above, let us next consider the nature of the proceeding with which we are concerned. No suit of the sort suggested would lie at all. No attempt was made to pay the court-fees upon such a suit, nor were any such demanded. The relief asked for was not the enforcement of the award, but filing it--the expression used in the Act. It is quite true the application was not strictly in accordance with the provisions of Section 14 (2) because the award was filed with the so-called plaint, and the Court was not asked for a direction upon the arbitrators to produce it. The parties were also spoken of as plaintiff and defendants. It is also true that, if my interpretation is correct, as an application under Section 14 (2) it was no more fit to succeed then as a suit. Nevertheless. I think, upon the whole it must be treated as a misconceived application under Section 14 (2). Having regard to the view I have taken of the law as enacted in the Arbitration Act of 1940, the Court could not entertain the matter except as an application under Section 14 (2). That being so, the written statement, as I have already held, incorporates an application to set aside the award, and the miscellaneous appeal was a competent appeal, under Section 39 (1)(vi)."
In the instant case also, the application under Section 14 (2) was termed as a title suit, on payment of a Court-fee of Rs. 1/2/- only, and the prayer was, as stated earlier, that the award might be ordered to be filed, and a decree passed in terms thereof. The award was also filed along with the application. The trial Court entertained this application as one under Section 14 of the Arbitration Act, and, as stated earlier, the written statement filed by defendant No. 1 did pray that the award might be set aside. It is clear, therefore, that, on the basis of this decision, an appeal did He in the Court of appeal below.
13. Another decision of this Court in Jagdish v. Sundar, AIR 1949 Pat 393 supports this view, although, on some other points, this decision has not been approved by a Full Bench of this Court in the case of Seonarain Lal v. Prabhu Chand, AIR 1958 Pat 262 (FB). It may be noticed that this case had also commenced with an application filed under Section 14 of the Arbitration Act, praying that the arbitrators may be directed to file the award. The defendant's case was one challenging the arbitration agreement itself. The application having been dismissed, an appeal had been filed in this Court. It was held that an appeal did lie under Section 39 (1) (vi).
14. Another decision of this Court in the case of Deep Narain Singh v. Mt. Dhaneshwari, AIR 1960 Pat 201 may be noticed, although this particular question under discussion was not decided there. The facts of Deep Narain Singh's case, AIR 1960 Pat 201 were as follows In order to resolve certain dispute between the parties pending in a title suit, there was a reference to arbitration, and the arbitrators had given an award which was registered. The plaintiff presented an application under Sections 14 and 17 of the Arbitration Act, praying that one of the arbitrators in the case, who had the arbitration agreement and the original award in his custody, may be directed to file the award in Court, and a decree in terms of the award may be passed The defendants had challenged the existence and validity of the arbitration agreement and also the validity of the award based upon the invalidity of the reference They had also attacked the validity of the award on the grounds of want of notice, absence of hearing and misconduct of the arbitrators. The trial Court held that the arbitration agreement and the award were not genuine, valid and legal, and the award was set aside as void, and the suit dismissed The plaintiff came up to this Court in an appeal from original order, and the question as to whether there was any agreement at all to refer the dispute to arbitration was considered amongst other matters The conclusions of the trial Court were accepted by this Court, and the appeal was dismissed, and it is significant to note that no objection was taken before the Bench of this Court to the effect that an appeal did not lie.
15. It may be noticed that Ramaswami, C. J. was a party to Basant Lal's case, AIR 1957 Pat 417, and he was a party to Deep Narain Singh's case, AIR 1960 Pat 201. If Deep Narain Singh's case AIR 1960 Pat 201 was governed by Basant Lal's case, AIR 1957 Pat 417 surely the question of maintainability of the appeal would have been taken up. Therefore, in my opinion, there is no contradiction in principle between the decisions of this Court with respect to the question under consideration, regarding the maintainability of an appeal In the circumstances of the present case.
16. A Division Bench of the Allahabad High Court in the case of Syed Hasan Ali Khan v. Askari Begam, AIR 1959 All 777 has followed the decision in AIR 1949 Pat 393 on the question of maintainability. It was said there:
"Having heard learned Counsel for the respondent, we are of opinion that the order in the present case is an appealable one. It is admitted that an application under Section 14 of the Arbitration Act was given in the trial Court. It is further admitted that the award was filed in Court as a result of that application, and objections to the said award were invited. Thereafter the respondent filed objections and the Court adjudicated on those objections after going into the matter. The Court finally dismissed the application for filing the award. The order of the trial Court, therefore, amounts to an order setting aside the award and would, therefore, be appealable. Reference in this connection may be made to a decision of the Patna High Court in AIR 1949 Pat 393."
Although, in the Allahabad case, the trial Court had held that the award had been given beyond time, the Allahabad High Court held that the order had amounted to one setting aside the award, that is to say, the effect of the order of the first Court was taken to be the true test of appealability.
17. In my opinion, the contentions raised in this appeal may no longer be open, in view of the facts and circumstances upon which their Lordships of the Supreme Court decided the case of Waverly Jute Mills Co. Ltd. v. Raymon and Co. (India) Pvt. Ltd. AIR 1963 S. C. 90. What had happened in that case was this. The arbitrators had made an award in favour of the appellants before the Supreme Court, and that was filed in the Calcutta High Court on its Original side under Section 14 (2) of the Arbitration Act. Notice was issued to the respondents, and they filed an application, which was termed by the Supreme Court as "an application presumably under Section 33 of the Arbitration Act", for a declaration that the contract, on which the arbitration had taken place, was illegal, and that the award based thereon was a nullity. The learned Judge, who decided the case on the Original Side of the Calcutta High Court dismissed the case and passed a decree in terms of the award. Against both the judgment and the order of the trial Judge, the respondents before the Supreme Court preferred appeals to the High Court, which were heard by a Division Bench. The contract relied upon by the applicants was held to be Illegal, and the award was set aside. Thereupon, the matter went to the Supreme Court under Article 136 of the Constitution of India. The Supreme Court went into the merits of the case, and allowed the appeals. It is difficult to conceive that if the judgment passed by the learned single Judge of the Calcutta High Court on its Original side was not an appealable judgment, this point would have been overlooked by their Lordships of the Supreme Court. If the Calcutta High Court could not have entertained an appeal, surely the matter would have been agitated in this case.
In the instant case, if the objection taken by defendant No. 1 and had failed, the result would have been an order by the trial Court refusing to set aside an award. Defendant No. 1 would, in that event, have been in a position to appeal from the order and, therefore, in my opinion, the order dismissing the suit in this case by the trial Court was in the nature of an order setting aside the award. Accordingly, in my opinion, the contention raised by Sri Choudhary should be accepted holding that the appeal in this case did lie in the court of appeal below.
18. For the reasons given above, this appeal must fall and it is not necessary to deal specifically with the question of maintainability of a second appeal. The appeal is dismissed with costs.
Narasimham, C. J.
19. I agree R.K. Choudhary, J.
20. I agree