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Madan Lal Haveliwala v. Sunder Lal And Another
Factual and Procedural Background
The appellant and respondents, who are brothers, had differences which they agreed on 20-5-1955 to refer to arbitration by three arbitrators: Daya Kishan, Bishambhar Dayal, and Moti Lal. During proceedings, on 14-1-56, Daya Kishan withdrew alleging unfair conduct and undue influence by the other arbitrators. An award was made on 19-1-56, signed by only two arbitrators with a note that Daya Kishan refused to sign. The respondents filed the award in the Civil Court on 7-9-1957, which issued notice to the parties, served on the appellant on 30-9-1957, though the appellant refused to accept it. The appellant filed a document styled as an "objection" on 5-11-1957, which was in form a written statement attacking the award but contained no prayer or relief. The Civil Judge made the award a rule of the court and passed a decree accordingly. The appellant appealed against this order.
Legal Issues Presented
- Whether the appellant could prevent the award from being made a rule of the court and a decree passed on its terms without applying under Section 33 of the Arbitration Act within the prescribed limitation period.
- Whether a written statement styled as an objection without a prayer and filed after the limitation period can be treated as an application under Section 33 for setting aside the award.
- The scope and effect of Sections 14(2), 15, 16, 17, 30, and 33 of the Arbitration Act and Article 158 of the Limitation Act in relation to arbitration awards.
Arguments of the Parties
Appellant's Arguments
- The objection filed was defensive, aimed at preventing the award from being made a rule of the court rather than setting it aside under Section 33.
- Section 33 applies only when a party attacks an award by applying for its setting aside, while Section 30 applies when a party defends against the award being made a rule of the court.
- A party can urge against the award being made a rule of the court on grounds in Section 30 without applying under Section 33.
- The time fixed by the Court for hearing (16-11-1957) is not the limitation period for applying under Section 33, which is fixed by the Limitation Act and cannot be extended.
- The written statement, though not formally an application under Section 33, should be considered as such.
Court's Response to Arguments
- The Arbitration Act does not contemplate any defence to an application for decree on an award because no such application is required; the Court itself pronounces judgment if the award is not remitted or set aside.
- Any application must be attacking in nature, made under Section 33, and contain a prayer for relief; a written statement without a prayer and filed after limitation cannot be treated as such.
- Section 33 is procedural and prescribes the sole procedure for setting aside an award on grounds in Section 30; no alternative remedy exists.
- The limitation period of 30 days from service of notice under Section 14(2) is mandatory and cannot be extended by the Court.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ram Alam Lal v. Dukhan, A.I.R 1950 Alld. 427 | A written statement filed within limitation containing a prayer can be treated as an application under Section 33. | The Court distinguished the instant case, noting the appellant’s document lacked a prayer and was filed out of time, thus not constituting an application under Section 33. |
| Shri Ram v. Shri Pat Singh, 1956 A.L.J 637 | Within thirty days of notice under Section 14(2), any party may apply to set aside an award under Section 33. | Supported the Court’s view that the limitation period is mandatory and that applications under Section 33 must be within this period. |
| Chandu Lal v. Ram Autar, A.I.R 1962 All. 357 | An award can be set aside under Section 30 only on the specific grounds enumerated therein. | The Court noted this precedent did not address the procedural issue before it but confirmed the substantive grounds for setting aside an award. |
| Firm Nanak Chand v. Lala Pannala, A.I.R 1963 All. 68 | Section 33 prescribes the procedure for setting aside an award; Section 30 confines the grounds on which it can be set aside. | The Court agreed that the two sections must be read together and an application under Section 33 is necessary to invoke Section 30 grounds. |
| Bangarayya v. Ramabhadriraj, A.I.R 1947 Mad. 315 | An objection containing a prayer to set aside and grounds was treated as an application under Section 33 if filed timely. | The Court distinguished this case due to the presence of a prayer and timely filing, unlike the instant case. |
| Mahadeo Prasad v. Kamala Varma, A.I.R 1956 All 51 | Challenge to an award under the Arbitration Act is inadmissible without an application under Section 33. | Supported the Court’s position that no challenge is valid without an application under Section 33. |
| Mangal Singh v. Nawab Singh, A.I.R 1962 All. 219 | Section 33 is the only section under which an application challenging the existence or validity of an award can be made. | Reinforced the exclusivity of Section 33 for challenging awards. |
| Om Prakash v. Union of India, 1962 A.L.J 1006 | Section 33 is the sole provision giving a party the right to apply to the court to challenge an award. | Supported the Court’s interpretation that no other route exists for challenging an award. |
| Saha and Co. v. Ishar Singh, A.I.R 1956 Cal. 321 | Applications under Section 33 may be for setting aside, modifying, correcting, or remitting an award based on Sections 15, 16, or 30. | Clarified the procedural framework and the interrelation of Sections 15, 16, 30, and 33. |
| A.R Savkur v. Amritlal Kalidas, A.I.R 1954 Bom. 293 | Section 33 lays down the procedure for making applications to set aside an arbitration agreement or award. | Confirmed that if no application is made within time, the party in whose favour the award is made is entitled to a decree. |
Court's Reasoning and Analysis
The Court analyzed the statutory framework governing arbitration awards, focusing on the Arbitration Act and the Limitation Act. It observed that upon filing an award in court, the Court must notify the parties (Sec. 14(2)), but this notice does not compel any action; rather, it enables parties to decide whether to challenge the award. The Court explained that the Arbitration Act provides specific remedies for defects in an award: correction or modification (Sec. 15), remission to arbitrators (Sec. 16), and setting aside (Sec. 30). However, the procedural mechanism to invoke these remedies is exclusively through an application under Section 33, which must be made within 30 days from service of the notice under Section 14(2), as prescribed by Article 158 of the Limitation Act.
The appellant's filing was styled as an objection but was in substance a written statement lacking any prayer for relief and was filed after the 30-day limitation period. The Court held that such a document cannot be treated as an application under Section 33. Since no valid application was made within the limitation period, the award became immune from challenge and the Court was bound under Section 17 to pronounce judgment and pass a decree on the award. The Court rejected the appellant’s argument that a defensive objection could prevent the decree without applying under Section 33, emphasizing that no procedural provision exists for a defence to a decree application based on an award. The Court also noted that the limitation period is fixed by statute and cannot be extended by the Court’s scheduling of hearing dates.
Precedents were examined and distinguished on grounds of timing, presence of prayers in applications, and procedural compliance. The Court affirmed the principle that the right to challenge an award is statutory, exclusive under Section 33, and strictly time-bound.
Holding and Implications
DISMISSED
The Court dismissed the appeal with costs, holding that the appellant could not prevent the award from being made a rule of the court and a decree passed on its basis without filing a timely application under Section 33 of the Arbitration Act. The decision enforces the strict procedural and temporal framework for challenging arbitration awards, confirming that failure to comply with these requirements results in the award becoming final and binding. No new precedent was established; the ruling reaffirmed existing legal principles concerning arbitration award challenges and the finality of awards once the limitation period expires.
Desai, C.J:— This is an appeal from an order passed by a Civil Judge making an award a rule of the court and passing a decree in terms of it.
2. The appellant and the respondents are brothers. On 20-5-1955 they agreed to refer certain differences that had arisen amongst them to the arbitration of three persons, (1) Daya Kishan, (2) Bishambhar Dayal and (3) Moti Lal. The arbitrators started arbitration proceedings. On 14-1-56 Daya Kishan addressed a letter to the parties and the other two arbitrators alleging that the arbitration proceedings were conducted unfairly, that he being in a minority had been unable to do anything and that undue influence was being exerted upon him by the other arbitrators and informing them that he had withdrawn from the arbitration and would not take part in the arbitration proceedings. On 19-1-56 an award was made; it purported to have been made by all the three arbitrators but was signed by only two of them and contained a note to the effect that Daya Kishan, the third arbitrator, had refused to sign it. The respondents filed the award in Court of the learned Civil Judge on 7-9-1957. He ordered a notice of it to be issued to the parties and the notice was served upon the appellant on 30-9-1957. Actually the appellant refused to accept the notice. The notice is not on the record and we do not know what exactly it required the appellant to do. The learned Civil Judge fixed 16-11-57 as the date for the hearing of the case and on 5-11-1957 the appellant filed a written statement. It must be emphasised at this stage that it was styled as “objection” and was in all respects a written statement. It contained grounds of attack of the award, contained no prayer and did not seek any relief of any kind. The last words of it were:—
“(43) That the so called award with respect to the matters beyond the scope of reference is inseparable from the award given on matters within the scope of reference.”
3. A written statement is exempt from payment of court fee while an application 33 of the Arbitration Act for the setting aside of an award is to bear a court-fee of Rs. 18-12-0, vide Art. 18(1) of Sch. II of the Court Fees Act. The document was not stamped at all and obviously it was treated as a written statement. The learned Civil Judge passed the order under appeal making the award a rule of the Court and passing a decree on its basis. He held that the award was not bad, that the appellant's objection was not maintainable because his remedy was to apply under Sec. 33 for the setting aside of the award, that there was nothing in the Act like objecting, to an award otherwise than by applying under Sec. 33, that if an award is not set aside or remitted a decree must be passed in terms of it, that an application under Sec. 33 became time-barred after 30-10-57 and that consequently the objection filed on 5-11-1957 could not be treated as an application under Sec. 33. We have heard counsel only on the question whether the appellant could prevent the award being made a rule of the court and a decree being passed on its terms when he did not apply under Sec. 33 and the limitation for applying under it had expired. If we answer this question in the negative, we must hold that the judgment of the learned Civil Judge was correct and it will not be necessary to go into other matters.
4. When an award is filed in court it has to give notice to the parties of the filing of it, see Sec. 14(2) of the Arbitration Act. The notice is simply of the fact of the filing of the award; it is not to require the parties to do anything, because it is for them to do what they desire to do. What the court can do to an award filed before it is to modify or correct it under Sec. 15, or remit it to the arbitrators under Sec. 16, or set it aside, or pass a decree in terms of it under Sec. 17. “Where the Court sees no cause to remit the award …. 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 award, and upon the judgment so pronounced a decree shall follow; Sec. 17. The law, therefore, does not contemplate a situation in which an award has not been remitted or set aside and no decree also on its basis has been passed. It requires that if an award is not remitted or set aside a decree on its basis must be passed; there is no alternative to it. Sec. 30 lays down the grounds, on which an award can be set aside and Sec. 33 lays down that “any party to an arbitration agreement….desiring to challenge the existence or validity of an arbitration agreement or an award….shall apply to the Court and the Court shall decide the question.” The period for such an application is, vide Art. 158 of the Limitation Act, 30 days computed from the date of service of the notice given under Sec. 14(2) of the filing of the award. These are the relevant provisions in the Arbitration Act. It is clear from them that, when a notice of the filing of an award is given, a party that desires to have the award set aside on any of the grounds mentioned in Sec. 30 must apply to the Court within the prescribed period and the Court is bound to decide the application. If a party wants to have the award remitted or modified or corrected in accordance with the provisions of Secs. 15 and 16 it should make an application for this purpose to the Court. If it does not make any such application and consequently the Court sees no reason to remit the award or to set it aside it is obliged by Sec. 17 to pass a decree on its basis. Here the appellant did not apply for the award being remitted or being set aside. The objection did not contain any prayer for any relief and could not be treated as an application under Sec. 33. There cannot be an application without a prayer for a certain relief. Moreover, the objection had been filed more than 30 days from 30-9-1957 and it could not be treated as an application under Sec. 33. The right to apply under Sec. 33 expired on 30-10-57 and the award could not possibly be set aside on an application made after that date. The only right of a party aggrieved by an award suffering from any of the defects mentioned in Sec. 30 was to apply under Sec. 33. The words used there are “shall apply” indicating that he has no alternative remedy. An award can be impugned only on the ground of certain defects mentioned in Secs. 15, 16 and 30. If some of them exist it can be modified or corrected; if some others exist it can be remitted and if the remaining exist it can be set aside. Not only is a particular remedy provided when a certain defect exists, but also no defect not mentioned in the three sections can be taken notice of by the Court. The appellant impugned the award on some of the grounds mentioned in Sec. 30 and, therefore, his sole remedy was to apply under Sec. 33. When the time for so applying expired the award became immune from the liability of being set aside and, when concededly there was no case for remitting it, it had to be made a rule of the Court.
5. It was argued by Sri Hyder Husain that the objection of the appellant was defensive and not aggressive in nature, its object being not the setting aside of the award but prevention of its being made a rule of the Court, that Sec. 33 applies when a party attacks an award by an applicant for its being set aside, while Sec. 30 applies when a party in reply to a notice issued under Sec. 14(2) wants to defend himself against the award being made a rule of the Court and that a party can, without having applied under Sec. 33, urge that the award should not be made a rule of the Court on the grounds mentioned in Sec. 30. We are unable to accept these contentions. In the Arbitration Act there is nothing like a defence to an application for a decree on the basis of an award for the simple reason that it does not contemplate any such application at all. The only application that is contemplated in respect of an award is that it should be filed in court; no application is required to be made by a party accepting an award for an order under Sec. 17 upon it. Whatever applications are to be made are to be made by the parties when the court gives notice of the filing of an award. Since it is the duty of the Court itself to pronounce judgment according to the award and pass a decree upon the judgment, if it does not remit or set aside the award the only application that is required is for remitting the award or setting it aside. Since there is no necessity for an application for pronouncing judgment upon the award etc., there is no question of any defence to such an application. Every application has to be of an attacking nature; it must attack the award on any of the grounds mentioned in Secs. 15, 16 and 30. There is no onus upon any party to prove that the award is free from all defects and, consequently, there cannot be any question of any defence. It is for the party that assails it to show that it is bad and it can assail it only by an application under Sec. 33, if it wants it to be set aside, or by pointing out any of the defects mentioned in Secs. 15 and 16 and requesting the court to modify or correct or remit it. Anything like a written statement is thus completely out of place in a proceeding under the Arbitration Act.
6. Sri Hyder Husain further argued that Sec. 33 is procedural and S. 30 substantive. We do not know how giving these adjectives to the provisions of the two sections helps him. Even if Sec. 33 is said to be procedural it provides for the only procedure to be followed by the appellant if he sought the relief of the award being set aside on any of the grounds mentioned in Sec. 30; he could not get the relief except by applying under it.
7. Sri Hyder Husain next contended that the court could not possibly pronounce judgment on the award if the appellant had established the existence of any of the grounds mentioned in Sec. 30. Those grounds are available or relevant only for setting aside an award and, once the award becomes immune from the inability of being set aside by lapse of time, the grounds lose all relevancy and Sec. 30 becomes a dead section. When there is no question of setting aside an award it is irrelevant to consider on what grounds it can be set aside. Sec. 30 does not lay down that no judgment can be pronounced upon an award under Sec. 17 if it suffers from any of the defects mentioned in it. There was nothing to bar the learned Civil Judge's pronouncing judgment on the award even if it suffered from any of those defects actually he should have refused to consider whether any of them existed or not.
8. Sri Hyder Husain also argued that the appellant's right to apply under Sec. 33 did not become barred by time because he filed the objection before 16-11-1957, the date fixed by the Court in the proceeding. The date was fixed by the Court not for filing an application under Sec. 33 but for deciding what order to pass on the award. On 16-11-1957 it was to decide whether to remit the award or to set it aside or to pronounce a judgment upon it. The time within which the appellant could apply under Sec. 33 was fixed by the Limitation Act and could not be altered or extended by the Court. If the appellant had applied within the time the Court could on 16-11-57 set aside the award.
9. Sri Hyder Husain was right in saying that no form is prescribed for an application under Sec. 33 and that even the words “under section 33” need not be written in the application. But it is quite a different thing to say that a written statement simplicitor containing no prayer at all bearing no court fee and filed after the expiry of the period of limitation for an application can still be treated as such an application.
10. Sri Hyder Husain referred us to a number of decisions of this and other Courts but we do not think that any of them lends support to his contentions. Great reliance was placed upon Ram Alam Lal v. Dukhan A.I.R 1950 Alld. 427 to which one of us was a party, but what was decided there was that an order passed under Sec. 17 in the circumstances of the case involved an order refusing to set aside an award from which an appeal could lie under Sec. 39. The written statement filed in response to a notice issued under Sec. 14(2) attacked the award as unenforceable and prayed for the relief that the application under Sec. 14 be dismissed. This Court held that the written statement could be treated as an application under Sec. 33 and observed at page 429:
“The law does not require any objection under Sec. 33 to be filed in addition to the written statement in such a case. It does not require any written statement to be filed at all. All that it requires is that a notice of the filing of the award should be given to the parties and it is for the parties to decide whether to challenge the award under Sec. 33 or not. If they wish to challenge it, they can do so in any manner they like; Sec. 33 does not prescribe the manner in which the challenge should come. The written statement serves the purpose of the objection challenging the validity of the award.”
11. The written statement filed could be treated as an application because it contained a prayer and if it was filed within thirty days of the service of the notice under Sec. 14(2), it could be treated as an application under Sec. 33. The written statement in the instant case could not be treated as such an application for the reasons already given. There is nothing in the decision to support the contention that a written statement filed in such a proceeding obviates the necessity of an application under Sec. 33 regardless of circumstances. Shri Ram v. Shri Pat Singh 1956 A.L.J 637. is rather against the appellant than in his favour. Agarwala and Beg, JJ. observed that within thirty days of the receipt of a notice under Sec. 14(2) any party can make an application for setting aside the award and that thereupon the court will hear it and either remit the award or set it aside or pronounce judgment on the award and that the only application to be made by a party desiring a decree on an award is that it should be filed in court. This exactly is the view that we have taken.
12. Chandu Lal v. Ram Autar A.I.R 1962 All. 357. did not deal with the question under consideration at all. Mithan Lal, J. observed at page 358:
“The only point which has been canvassed in this case is that an award can be set aside under Sec. 30 only upon the three specific grounds given in that section.”
13. The award was alleged to be invalid on the ground that the arbitration agreement itself was defective and the learned Judge held that it was not essential to apply under Sec. 33 for a finding that the arbitration agreement was invalid and that the award could be challenged on the ground that the agreement was invalid. The learned Judge did not at all decide whether an award can be set aside without there being any application for the same within the period of limitation prescribed for an application under Sec. 33.
14. All that Asthana, J. held in Firm Nanak Chand v. Lala Pannala A.I.R 1963 All. 68. is that Sec. 33 relates to procedure which has to be adopted for getting an award set aside, while Sec. 30 confines the power of the court to set it aside on the grounds mentioned in it. Nobody disputes this. When the learned Judge said that “the two sections have to be read together” he meant that Sec. 30 will not have to be considered unless there is an application under Sec. 33 for the setting aside of an award.
15. The facts in Bangarayya v. Ramabhadriraj A.I.R 1947 Mad. 315. were quite different; it was conceded that an application to set aside the award should have been filed, an objection containing the prayer that the award be set aside and giving the grounds for it was treated as an application under Sec. 33 and the party filing the objection was found to have been misled by an order of the court.
16. We may notice the decisions relied upon by the respondents. In Mahadeo Prasad v. Kamala Varma A.I.R 1956 All 51., James, J. noticed that though Art. 158, Limitation Act, prescribes a period of thirty days for making an application to set aside an award, no such application was made even within eight years and observed that “the provisions of the Arbitration Act make it abundantly clear that such a challenge is inadmissible without an application.”
17. Uniyal, J. stated in Mangal Singh v. Nawab Singh A.I.R 1962 All. 219. at p. 221:
“Sec. 33 is the only section under which an application can be made challenging the existence, or validity of……the award.”
18. Bishambhar Dayal and Katju, JJ., observed in Om Prakash v. Union of India 1962 A.L.J 1006. at page 1013:
“Sec. 33 is the only section under which a party has been given the right to apply to the court to challenge….the award.”
19. The law contained in Secs. 15, 16, 30 and 33 was explained by Chakravarti, C.J in Saha and Co. v. Ishar Singh A.I.R 1956 Cal. 321.. The points that he made were that applications of various kinds are conceivable as applications under Sec. 33, that Sec. 33 does not speak of any particular kind of application and does not specify the form of the relief that may be prayed for, that the validity of an award may be challenged under Sec. 15 or under Sec. 16 or under Sec. 30, that none of these sections provides for the making of an application and the authority for making an application in any of these cases is derived ultimately from the general provision contained in Sec. 33. Chagla, C.J and Dixit, J. explained the law as follows in A.R Savkur v. Amritlal Kalidas A.I.R 1954 Bom. 293. at page 294:—
“Sec. 33 is the procedural section which lays down the procedure to be followed in making an application…for the purpose of setting aside an arbitration agreement…….
……After an award has been filed an opportunity is given to the party challenging or disputing the award to file an application to set aside the award and the application has got to be filed within the period of limitation. If no application is filed, the party in whose favour the award is made is entitled to a decree upon the award, or if the application is filed and has been dismissed on merits, then also the party….is entitled to a decree. It is only when
“an application to set aside an award having been made in time and the application having succeeded that the party….is not entitled to a decree in terms of the award.
20. If an award is on the file of the Court, unless steps are taken to have that award set aside a certain definite result must follow and that definite result is the result indicated….in Sec. 17.”
21. We are in full agreement with these decisions.
22. We hold that the award could not be set aside or attacked in any other way through an application made after the expiry of thirty days from the date on which the notice issued under Sec. 14(2) was served and that if the award was not set aside and was not remitted judgment had to be pronounced upon it.
23. The learned Civil Judge rightly pronounced judgment upon the award and passed a decree according to the judgment.
24. We, therefore, dismiss the appeal with costs.
25. Appeal dismissed.
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