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Hazi Rahmetulla v. Chaudhari Vidya Bhusan
Concise Analytical Summary of the Opinion (Mukerji, J.)
Factual and Procedural Background
The case arises from an arbitration agreement dated 15 August 1954 between the parties. An award was made on 17 January 1955 awarding the applicant Rs. 4,476-8-0. The arbitrators did not themselves file the award in Court pursuant to Section 14(2) of the Arbitration Act. On 3 February 1955 Haji Rahmatullah (the applicant) presented an application to the Court of the Munsif, Nainital, accompanied by a copy of the award, praying that the award be made the rule of Court and that a decree follow. Although that application was headed as being made under Section 14 of the Arbitration Act, the relief sought could properly be given only under Section 17 of the Arbitration Act. The Court of the Munsif returned the application on 8 March 1956 citing "want of jurisdiction"; the application was taken back and filed in the Court of the Civil Judge on 22 March 1956. The Civil Judge refused to make the award the rule of court; that order was subject of revision which was referred to a Bench by a Single Judge who framed three points for consideration.
Legal Issues Presented
- Whether where a party files the award along with his application, he can make an application under Section 17 of the Arbitration Act for making the award a rule of the Court without making a prayer for the filing of the award as required by Section 14(2) of the Arbitration Act.
- Whether Article 176 of the Limitation Act applies to such a case.
- If Article 176 (as framed by the Single Judge) applies, whether the filing of the petition in the Court of the Munsif amounted to prosecuting a remedy with due diligence under Section 14 of the Indian Limitation Act and whether the period should be condoned under Section 14 of the Limitation Act.
Arguments of the Parties
Applicant (Haji Rahmatullah)
- Filed the original award along with annexures in Court and sought that the award be made the rule of Court and that a decree be drawn for Rs. 4,476-8-0 with costs.
- The application he presented bore a heading indicating it was under Section 14 of the Arbitration Act (though the relief sought was proper under Section 17).
- He relied on the filing of the original award in Court (with evidence and annexures) as a basis for the Court to act under Section 17 and to pronounce judgment and decree accordingly.
- Subsequently, in the matter of limitation, he attempted to bring his case within limitation by invoking Section 14 of the Limitation Act (to condone delay), although the Court considered that this inquiry was unnecessary because the application was within three years even if Article 181 were held applicable.
Opposite-party (represented by Mr. B.N. Katju)
- Contended that when a party files an award in court, it is essential to allege specifically that he is filing it under the authority of the arbitrator; without such a specific allegation and a court finding of authority, the court could not act on that award.
- Relied on the Supreme Court decision in Kumbha Hawji v. Dominion of India (A.I.R. 1953 S.C. 313) for the proposition that authority to file must be specifically alleged and proved.
- Relied on Amod Kumar Verma v. Hari Prasad Burman (A.I.R. 1958 All. 720) to contend that an award could be taken notice of for the purposes of Section 17 only if an application within time was made under Section 14.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Amod Kumar Verma v. Hari Prasad Burman, A.I.R. 1958 All. 720 | Contended (by a party) to support the proposition that an award could only be noticed for Section 17 purposes if an application within time was made under Section 14. | The Bench found the case distinguishable on its facts and therefore did not express any opinion as to the correctness of decisions cited; it did not apply the precedent to deny relief in the present facts. |
| Radha Kishen v. Madho Krishna, A.I.R. 1952 All. 856 | Referenced in the context of other decisions dealing with similar legal points (Section 14/Section 17 interplay). | The Bench noted the decision but declined to express an opinion as to whether that decision or another was right, observing no real inconsistency between the decisions when applied to their particular facts. |
| Kumbha Hawji v. Dominion of India, A.I.R. 1953 S.C. 313 | Stated (by the Supreme Court) that authority to file awards in Court on behalf of an umpire or arbitrator must be specifically alleged and proved in the circumstances of that case. | The Bench observed that the authority-to-file issue is one of fact. It disagreed that the quoted observation is an absolute rule to be applied regardless of facts; on the present facts (no objection raised, arbitrators examined and supporting the award) the Court concluded the filing was with authority and could be acted upon. |
| Saha & Co. v. Ishar Singh Kripal Singh Co., A.I.R. 1956 Cal. 321, 341 | Quoted for judicial observations on the complexity and litigation-prone nature of arbitration law. | The Bench cited the passage to record sympathy with the view that arbitration law has become technical and prolific of litigation; used the quotation to emphasize the court's reluctance to permit technicalities to defeat arbitration awards without a showing of palpable injustice. |
Court's Reasoning and Analysis
The Bench proceeded by addressing each formulated question and the factual matrix as given in the record. The analysis unfolded as follows:
-
On the interplay between Section 14 and Section 17 of the Arbitration Act:
- The Court observed that Section 14 prescribes the methods by which an award may be placed on the court record (either by the arbitrator filing the award or by the arbitrator causing it to be filed, and the statute does not limit who may effect filing: sub-sec. (2) uses the words "cause the award to be filed in Court").
- Section 17 is the provision under which, when the Court sees no cause to remit or set aside the award, it proceeds to pronounce judgment and follow with a decree.
- In the present case, the original award and annexures were, in fact, filed in court by Rahmatullah. Although his application was headed as being under Section 14, the relief prayed for was that consequential to Section 17 (making the award the rule of court and entering a decree).
- The Court therefore framed the issue whether a court could act under Section 17 when the award had come before it by a party's filing (rather than by specific proceedings under Section 14). The Bench held that where the award is on the record (irrespective of the heading of the application), the court can consider it for the purposes of Section 17, provided there is no defect in the filing that would preclude consideration.
-
On the question of authority to file the award:
- The Court recognized that whether a party had authority of the arbitrator/umpire to file the award is a question of fact to be determined on the evidence in each case.
- The opposite-party relied on the Supreme Court dictum in Kumbha Hawji to urge that authority must be specifically alleged and proved. The Bench accepted that in that case such an allegation was required by the facts, but rejected the submission that the dictum establishes a universal rule applicable irrespective of context.
- In the present instance, the arbitrators' original award together with records of the arbitration proceedings were filed by Rahmatullah; no objection was raised by the opposite-party that the award was improperly or surreptitiously filed or that Rahmatullah lacked authority; the arbitrators gave evidence supporting the award; and no suggestion was made below that the filing was unauthorized. On these facts the Court concluded that the award had been filed with the authority of the arbitrators and could be acted upon.
-
On limitation:
- The Court analyzed Article 178 of the Indian Limitation Act (quoted in the opinion) which prescribes a period of ninety days for "filing in Court of an award" under the Arbitration Act—measured from the date of service of the notice of the making of the award.
- The Bench held that Article 178 (referred to in the opinion) applies only to an application for the filing of the award (i.e., an application under Section 14 by which the court directs the arbitrator to file the award) and does not apply where the award is already on the court record because it has been filed by a party.
- The mislabeling of Rahmatullah's application as one under Section 14 caused confusion on limitation; the Court considered that nothing in the Arbitration Act or the Limitation Act prescribed a specific period for an application, such as the present, which sought the court to act under Section 17 once the award was on record.
- For completeness, the Bench assumed (without deciding) that Article 181 might apply and observed that even under that Article the application was within three years of the date when the right to apply accrued (the award date being 17 January 1955), so any limitation point would not bar the application in this case.
- The procedural events (return on 8 March 1956 for "want of jurisdiction", refiling on 22 March 1956) were noted; the Court found that the Civil Judge's raising of limitation based on the March 22 re-filing was not decisive given the preceding facts and the three-year window.
-
On remedial disposition and deference to arbitration:
- The Bench emphasized judicial reluctance to allow mere technicalities to overturn the parties' agreed arbitration result in the absence of palpable injustice. The Court reviewed the Civil Judge's consideration of alleged misconduct and found the lower court had decided against the losing party on those points; nothing indicated injustice that would require setting aside the award.
Holding and Implications
Core Ruling: Revision allowed; the order of the court below refusing to make the award the rule of court is set aside, the award is ordered to be made the rule of court, and a decree shall follow in accordance with Section 17 of the Arbitration Act.
Consequences and implications:
- The lower court's refusal to make the award the rule of court was set aside and the award must now be treated as the basis for judgment and a decree under Section 17.
- The successful applicant (Rahmatullah) was awarded the costs of the revision and the costs incurred in the court below; the Court considered the opposition to the award to have been an unjustified contest that led to unnecessary expenditure.
- The opinion makes clear that where an award is on the court record and there is no objection to the manner of filing, the court may act under Section 17 even if the originating application was inaptly headed under Section 14. The question whether a party had authority to file remains fact-specific and must be resolved on the evidence in each case.
- The Bench did not purport to lay down a new broad precedent overruling prior authorities; it distinguished and discussed precedents in the context of the facts and explicitly refrained from expressing opinions on matters not necessary for the decision.
Final Disposition: Revision allowed.
Mukerji, J.:— This Civil Revision has been referred to a Bench by a learned Single Judge. The order of the learned Single Judge indicates that he has made the reference to a larger Bench for the disposal of the revision, even though he has formulated three points which, in his view, merited consideration for the purposes of the determination of the revision on the merits.
2. The three questions which the learned Single Judge formulated were, to quote his words—
“1. Whether in a case, where a party files the award along with his application, it can make an application under Sec. 17 of Arbitration Act for making the award a rule of the Court, without making a prayer for the filing of the award as required by Sec. 14(2) of the Arbitration Act?
2. Whether Art. 176 of the Limitation Act applies to such a case?
3. If it does, whether in the present case the filing of the petition in the court of the Munsif amounted to prosecuting a remedy with due diligence under Sec. 14 of the Indian Limitation Act and the period should have been condoned under Sec. 14 of the Indian Limitation Act?”
3. In order to appreciate the points which the learned Single Judge stated, it is necessary to know a few facts. On the 15th of August 1954 there was an arbitration agreement between the parties of this revision. That arbitration agreement also provided that in the event of there being a difference between the arbitrators appointed the difference was to be referred to an umpire, who was to be appointed, for his decision. On the 17th of January 1955 an award was made and in that award the applicant was to get a sum of Rs. 4476-8-0. This award however, was not filed by the arbitrators in the Court, nor did any of the parties to the arbitration agreement or the award make an application to the Court in accordance with the provisions of Sec. 14(2) of the Arbitration Act. On the 3rd of February 1955 Haji Rahmetullah made an application to the Court of the Munsif, Nainital along with a copy of the award which was made on the 17th of January 1955, referred to above, with a prayer that the award be made the rule of the court and that a decree for a sum of Rs. 4476-8-0 be made along with cost of the application. This application the revisionist purported to make under the provisions of Sec. 14 of the Indian Arbitration Act for just before the recitals in the application what was recorded on the application was this: “Application under Sec. 14 of Indian Arbitration Act”. Prima facie this was not correct for Sec. 14 did not provide for granting the relief which was sought by this application. The appropriate section for the relief which was sought apparently was provided for by Sec. 17 of the Indian Arbitration Act. Sec. 17 of the Arbitration Act is in these words:
“Where the Court sees no cause to remit the award or any of the matters referred to arbitration for consideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the accused and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award.”
4. The first question that had: to be determined in this case was whether the award which was before the court could be made the rule of court under the provisions of Sec. 17 of the Indian Arbitration Act, when the award had not come before the court as a result of any specific proceedings being taken under the provisions of Sec. 14 of the Arbitration Act. This question was pointedly raised before the learned singled Judge and this question has also been pointedly raised before us. Sec. 14 of the Arbitration Act provides for the methods by which an award can come on the record of the court as a preliminary step to giving the court jurisdiction to make a decree on the basis of that award. The award can, as the provisions of Sec. 14 indicate, come ion the record on an application by a party to have the arbitrator file the award along with the necessary enclosures to the award on the direction of the court. The award can also come to the court on the arbitrator taking action in respect of the filing of the award suo motu. Under the second category, the arbitrator could place the award before the court through the agency of one of the parties because the section does not lay down that it is only the arbitrator personally that can file the award nor is any particular method of filing the award prescribed. Indeed, sub-Sec. (2) of Sec. 14 uses the words “cause the award to be filed in Court.” In this particular case we know it for a fact that the original award, along with all the necessary annexures to it, namely, evidence etc., which the arbitrators took before making their award, was filed in court by Rahmatullah, the applicant before us. The application that he made he purported to make under the provisions of Sec. 14, though he prayed in that application for taking action which the court could take only under the provisions of Sec. 17 and not under Sec. 14.
5. Reliance was placed on Amod Kumar Verma v. Hari Prasad Burman A.I.R 1958 All. 720. for contending that an award could only be taken notice of for the purposes of Sec. 17 if an application within time was made under Sec. 14. This case was clearly distinguishable and therefore we were not called upon to express any opinion as to whether the decision in Radha Kishen v. Madho Krishna A.I.R 1952 All. 856 or the decision noticed earlier was right. We may, however, mention that we did not see any real inconsistency between the two decisions, for each expressed the law in relation to the facts of that particular case.
6. When notice was issued to the opposite-party no objection was raised on behalf of that party that the award had not been properly filed by Rahmatullah in court, nor was it even hinted that when Rahmatullah filed the award he filed it surreptitiously or that there was no authority of the arbitrators with Rahmatullah to file the award. So that, there were no circumstances which could even remotedly indicate that the award had been improperly filed or that there was anything in the terms of Sec. 14 of the Arbitration Act which could preclude the court taking into consideration the award for purposes of acting under the powers conferred on the court under Sec. 17.
7. The question of limitation that was next raised for determination was raised possibly under a slight misapprehension of the true facts. The question of limitation that was raised was whether Art. 176 of the Indian Limitation Act applied to the application which was before the court and which had been made by Rahmatullah on the 3rd February, 1955. Art. 178 of the Indian Limitation Act reads thus:
“Under the Arbitration Act, 1940 for the filing in Court of an award. Ninety days The date of service of the notice of the making of the award.”
8. On the words of the Article quoted above it was manifest that the Article could only apply to an application for the filing of the award and that application could be only one under the provisions of Sec. 14 and that too when the prayer in that application was for a direction to the Arbitrator by the court to file the award. Art. 178 would not apply to a case where the award was already on the record of the court: when there could be no question of having the award to be filed. As we pointed out earlier, the application of Rahmatullah made on the 3rd February, 1955, had been wrongly headed as an application under Sec. 14, and the confusion in regard to the question of limitation arising in the case appears to have arisen, in our view, because of that error which was committed on behalf of Rahmatullah by heading his application of the 3rd February, 1955, as one under Sec. 14. There is authority for the view which we are taking in decisions of other High Courts, but we are of the view that it would be unnecessary for us to encumber our judgment by referring to those cases inasmuch as the point was perfectly plain on a reading of Sec. 14 of the Indian Arbitration Act and a reading of Art. 178 of the Indian Limitation Act.
9. The application which Rahmatullah made was, in substance and in respect of its prayer, not an application under Sec. 14 and, therefore, for such an application the Limitation Act did not prescribe any specific period of limitation, nor did the Arbitration Act prescribe any period of limitation. Therefore, no question of limitation could arise in respect of such application unless, of course, it was held that Art. 181 of the Limitation Act applied. We shall assume that it did for the purposes of our present investigation, for we find that even this Article applied, the application, which the court below came to consider was well within three years of the date when the right to apply accrued. The right to apply could only accrue to a party on the making of an award and not before it, and we know that the award in the instant case had been made on the 17th January, 1955. The question of limitation was slightly complicated in the court below because of, the procedure which, appears to have been resorted to for we find that the application which Rahmatullah made on the 3rd February, 1955 was made in the Court of the Munsif, Nainital. What application was subsequently ordered to be returned to Rahmatullah on the 8th March, 1956. This application was taken back by Rahmatullah on the 22nd March, 1956. We were unable to find a judicial order by the Munsif showing the reasons for the return, but we find that on the application some columns have been drawn and filled up by some ministerial authority of the Court of the Munsif, and in the last column we find recorded under the heading “Reason, of Return” this:
“For want of jurisdiction.”
10. In this column we find that there is somebody's signature and under that signature or intial there is a rubber stamp which reads “Munsif, Nainital”. This endorsement apparently is in pursuance of some rule in the General Rule (Civil) which governs the procedure of courts below in respect of civil cases. On return, the application of Rahmatullah appears to have been filed, we presume, in the Court of the Civil Judge on the 22nd March, 1956, for the Civil Judge decided that application and the question of limitation was raised before the Civil Judge because of its having been filed in that court on the 22nd March, 1956. Rahmatullah attempted to bring his case within limitation by invoking the provisions of Sec. 14 of the Limitation Act. In the view we have taken it was thoroughly unnecessary to determine this question, for if there was no period of limitation prescribed of if the period prescribed was three years, for making the type of application that Rahmatullah did file then it did not matter whether he could get the benefit of Sec. 14 of the Limitation Act or not for his application was certainly within three years of the date on which the right to apply accrued to him.
11. The question on which a good deal of controversy was raised on behalf of the apposite-party was whether the court could act on the award in the sense of making a decree on the basis of it when the award had been filed in court through the hand of one of the parties, namely, Rahmatullah. It was contended by Mr. B.N Katju that it was essential for a party when it filed an award in court to allege specifically that it was filing the award under the authority of the Arbitrator, and unless there was such a specific allegation and unless it was specifically found by the court that the award had been filed by the party under the authority of the Arbitrator, the court could not act on the award but it had to ignore it completely Mr. Katju relied for his submission on the Supreme Court decision in Kumbha Hawji v. Dominion of India A.I.R 1953 S.C 313. wherein their Lordships in the particular setting of that case observed as follows:—
“Where, as in this case, the originals are said to have been handed over to both the parties, it cannot be assumed that the mere handing over of the awards to the parties necessarily implies the authority of the umpire to file the same into Court on his behalf. That authority has to be specifically alleged and proved.”
12. Mr. Katju contended that the opinion of their Lordships quoted above was a general statement of law and had to be given effect to in every case. We are unable to agree with this contention of Mr. Katju, for in that very case their Lordships pointed out later that in the circumstances of that particular case it was clear to their Lordships that it was incumbent on the appellant to allege categorically that under the terms of sub-Sec. (2) of Sec. 14 he had the requisite authority of the umpire.
13. The question whether a party had the authority of the umpire or the arbitrator to file the award in court as his agent or on his behalf was a question of fact and, as all questions of fact, it had to be determined on the evidence and circumstances of each particular case. As we pointed out earlier, in this particular case, we find that the original award had been filed along with the record of all the proceedings taken before the Arbitrators by Rahmatullah in the Court. We also find that the other party never made any objection as to the competence of Rahmatullah to file the award in court. No question was raised as to there being any want of authority in Rahmatullah for his having acted in the manner in which he did act. The Arbitrators were examined in the case and it was never suggested to them that Rahmatullah had surreptitiously filed the award in court, or at any rate, he had done so without their specific authority. The Arbitrators came to give evidence and they supported the award. The opposite-party challenged the award on all possible grounds but not on this ground, namely, that the award had not been properly filed. Further, the point was neither raised before the Civil Judge nor before the learned single Judge who made this reference to us. Therefore, in such circumstances it could not but be held that the award when it was filed by Rahmatullah was filed with the authority of the Arbitrators and that the award could be acted upon by the court for the purpose of making a decree on its basis.
14. We feel we should not part with this case without recording the fact that we were reminded in this case of the observations of P.B Mukherji, J., in Saha & Co. v. Ishar Singh Kripal Singh Co. A.I.R 1956 Cal. 321, 341. where Mukherji, J. observed as follows:—
“The law of arbitration is the law of private courts. It was borne with high hope for simplicity but exists today in despair in a miscellaneous patchwork of complex decisions which no private arbitrator can be expected to master to avoid their mischiefs or obey their salutory commands. It suffers today under a fourfold curse. So far as the arbitrators are concerned, the situation is one of helplessness verging on resignation.
So far as the Court's are concerned, arbitration appears as a prolific source of litigation where commonsense always fights a losing battle with an increasingly technical jurisprudence. As for the disputants themselves before the arbitrators, the attitude is one of heads I win and tails you lose, and if the head does not go the way a party wants, he immediately takes resort to the public courts of the land to upset the appeal cart.”
15. We had, in this case, the same feeling which Mukherji, J. expressed in picturesque language. The substance of the matter is that the parties agreed to an arbitration by arbitrators of their own choice. The Arbitrators after a careful—we say very careful—investigation gave a very detailed award. The award unfortunately could not be in favour of both the parties, so it had to go against one party, and that party who lost before the Arbitrators attempted to undo what their own agreement wanted done, namely, a binding decision on the merits by a tribunal of their own choice. Courts should be chary and are chary to interfere with such decisions unless the conscience of the court is in any sense touched by a palpable injustice. No such injustice was, however, brought to our notice in the present case. Indeed, the learned “Civil Judge went into all those questions of misconduct, etc., which were raised by the party who lost in the arbitration, and his views were on all those points against the losing party. Therefore, there is a clear-cut decision of a court that there was no misconduct and that the award was obtained and made properly. Therefore, we have seen absolutely no reason to think that the opposite-party to this revision could ever succeed on technicalities, as even those technicalities which were raised had no merits.
16. As we pointed out earlier, the whole case has been referred to us for decision and, therefore, no question arose for us to answer any questions.
17. The questions, as we pointed out, were formulated by the learned single Judge for the purpose of focusing attention to the questions that called for determination in the case. We have considered those questions and have come to the conclusion that this revision must be allowed and that the order of the court below refusing to make the award the rule of court must be set aside and the award made the rule of the court, and a decree on the award should follow in accordance with the provisions of Sec. 17 of the Arbitration Act. We order accordingly.
18. The question arises whether we should allow the costs of the revision to the successful party. We consider that the fight that was raised by ??? the opposite-party against the award was an unjustified fight and it led to unjustified expenditure by the applicant. We, therefore, think and direct that the applicant should have the costs of this revision and the costs in to curred by him in the court below.
19. Revision allowed.
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