Citation Codes

Equivalent Citations

citation codes

Case Number

Second Appeal No. 819 of 1972

Advocates

V. Sahai and M.H. Dayal
S.N. Verma and A.N. Verma

Judges

N.N Mithal, J.

Acts

SECTION 14 ARBITRATION ACT

See more information ...

Smart Summary

Structured Summary of the Opinion (Second Appeal concerning Arbitration Award)

Factual and Procedural Background

The appeal arises from a suit for recovery of an amount said to be due to the plaintiff under an award given by arbitrators in a partnership dispute between two brothers carrying on business as M/s. Kanhaiya Lal Ved Prakash at Kanpur. The arbitrators purportedly gave an award, and a written award dated 4-5-1966 bore the signatures of the parties. The award purportedly made Rs. 24,278.15 payable to the plaintiff, of which Rs. 16,300/- had been paid, leaving a balance plus interest totalling Rs. 8,532.80.

The plaint alleged, in addition to the money claim, that the defendant was not entitled to carry on business in the firm name and sought a permanent injunction restraining him from doing so. The defendant contended that no written award was made on 4-5-1966, that an oral award had been made on 20-4-1966 at Amritsar and acted upon, that the written instrument dated 4-5-1966 was not the award orally announced, and that the written award had not been made rule of the court and therefore could not be enforced by decree.

The trial court granted decree for the money claim (recovery of Rs. 8,532.80) and injunction. The defendant did not appeal the money part, but challenged only the injunction; the lower appellate court (first appeal) disagreed with the trial court and dismissed the injunction claim. The plaintiff (appellant) brought this second appeal challenging the lower appellate court's dismissal of the injunction relief.

Legal Issues Presented

Whether an award under the Arbitration Act can be made orally (i.e., whether an oral award is contemplated by the Arbitration Act, in particular Section 14).
Whether the arbitration award relied upon by the plaintiff was made orally on 20-4-1966 or was only the written award dated 4-5-1966.
Whether a party can enforce an arbitration award that has not been made rule of the court (i.e., whether an award not made rule of court can be enforced through an ordinary suit/decree).
Whether the findings of fact by the lower appellate court were perverse or unsupported by evidence.
Whether an inordinate delay (here, over 18 months between hearing and pronouncement) by the lower appellate court in delivering judgment is a ground for setting aside that decision.

Arguments of the Parties

Appellant's (Plaintiff's) Arguments

An oral award cannot be made under the Arbitration Act; Section 14 contemplates a written award that is signed and announced — therefore the only award is the written award of 4-5-1966.
Because the written award dated 4-5-1966 was not challenged (no proceedings to set it aside), it should be deemed to be a final award enforceable between the parties.
The findings of the lower appellate court were perverse and should be set aside.
The long delay (over 18 months) between hearing (14-5-1970) and judgment (December 1971) by the lower appellate court could be a ground for setting aside its decision.

Respondent's (Defendant's) Arguments

The arbitrators gave an oral award on 20-4-1966 and the parties acted on that oral award; the written document dated 4-5-1966 was not the original award and signatures on it were obtained on blank stamp papers.
The written award dated 4-5-1966 was never made rule of the court and therefore could not be enforced by decree; the award, if not made rule of court, is merely "waste paper" and cannot be utilised to enforce claims arising under it (reference made to AIR 1965 All 217).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
AIR 1965 All 217	Not specified in the opinion; the respondent relied on this case in support of the contention that an award not made rule of court cannot be enforced.	The opinion records that reference was made to this case by the respondent; the court treated the objection about enforceability of an unmade-rule award as a legitimate ground but did not elaborate the content of this precedent in the text.
AIR 1979 Bom 149	Referred to by the appellant; the specific rule or principle cited from this case is not detailed in the opinion.	The opinion notes the appellant referred to this case among others, but does not set out its content; it was not decisive for the court's ultimate disposition.
AIR 1977 Punj and Har 306	Referred to by the appellant; the opinion does not state the specific principle taken from this authority.	Listed as one of the cases relied upon by the appellant; the opinion does not record any distinct application of its holding.
AIR 1974 All 39	Referred to by the appellant; the opinion does not set out the rule or principle from this case.	Noted as cited by the appellant; not separately applied in the court's reasoning as recorded in the opinion.
AIR 1970 SC 833	Stated in the opinion to lay down that no party can enforce an award which has not been made rule of the court.	The court relied on the principle (as articulated by counsel and reflected in this cited authority) to support the conclusion that an unmade-rule award cannot be enforced; this formed the basis for rejecting the plaintiff's attempt to enforce the award by injunction.

Court's Reasoning and Analysis

The court's analysis proceeded along two principal lines: (a) the nature and form of an arbitration award under the Arbitration Act (Section 14), and (b) the question whether an award not made rule of court can be enforced by a party seeking injunctions or other relief.

On the question of oral awards, the court read Section 14 of the Arbitration Act and concluded that an award must be in writing, signed and announced to the parties; therefore an oral award, as such, is not contemplated by the Act and cannot constitute a formal award under the statute.

The court observed documentary and other evidence which suggested that some material terms of the award were known to the parties and acted upon prior to the date of the written award (for example, a term required the defendant to get property released from the bank by 29-4-1966, which implied compliance prior to the written award dated 4-5-1966). The lower appellate court had considered this evidence and concluded there had been knowledge or partial performance of terms before 4-5-1966.

Notwithstanding the above, the court indicated it was not necessary to resolve finally whether there had been an oral award on 20-4-1966 or whether the only award was the written instrument of 4-5-1966. Instead, the appeal was disposed by accepting the respondent's objection that the plaintiff sought to enforce the award dated 4-5-1966 though that award had not been made rule of the court. Relying on authorities cited (in particular AIR 1970 SC 833 as summarized in the opinion), the court held that an award not made rule of the court cannot be enforced by decree; signatures on the award were treated as acknowledgment of having notice of the award rather than constituting a contractual agreement giving independent enforceability.

The court reviewed the lower appellate court's findings of fact. Although it described some findings as cursory, the court concluded they were supported by evidence and thus could not be characterized as perverse or without any supporting evidence. The court also addressed the appellant's contention about the delay in pronouncement of the lower appellate court's judgment (over 18 months) but held that delay by itself was not sufficient to set aside the decision, while noting that long withholding of judgments is undesirable.

Holding and Implications

Holding: The second appeal is dismissed. The appellant's challenge to the lower appellate court's dismissal of the injunction claim fails.

Implications and direct effects:

The dismissal of the appeal leaves the lower appellate court's decision (which had dismissed the injunction) intact.
The trial court's decree for the money claim had not been appealed by the defendant and therefore remains final between the parties.
The court affirmed that, under the Arbitration Act as read with Section 14, an award must be in writing (signed and announced) and an oral award is not contemplated by the Act.
The court applied the principle (as reflected in cited authority AIR 1970 SC 833) that an arbitration award which has not been made rule of the court cannot be enforced by decree; therefore the plaintiff could not enforce the award by injunction or otherwise in the circumstances of this case.
No broader new precedent was announced by the court in this opinion beyond application of the existing principles described; the immediate legal consequence is that the plaintiff's injunction claim based on the award failed and the parties were ordered to bear their own costs of the appeal.

Disposition: Appeal dismissed. Parties to bear their own costs.

Show full summary ...

Satya Pal v. Ved Prakash .

1. This second appeal arises out of a suit for recovery of certain amount which was due to the plaintiff from the defendant under an award said to have been given by the Arbitrators in a dispute of accounts between the parties.

2. The suit of the plaintiff in brief was that the plaintiff and the defendant, who are brothers, were carrying on business in the name of M/s. Kanhaiya Lal Ved Prakash at Kanpur which was a registered firm. A dispute arose between the parties and, therefore, the matter was referred to the arbitration of Lalla Raliya Ram and Banarsi Das for deciding the matter through arbitration. The arbitrators went through the accounts of the firm and heard the parties and gave their award on 4th May, 1966. The award was accepted by the parties and in token of their acceptance they had put their signatures on the award. It is said that the award given by the arbitrators was in the nature of an agreement between the parties. According to the award, a sum of Rs. 24,278.15 became payable to the plaintiff by the defendant which was payable in instalments out of which Rs. 16,300/- was paid to the plaintiff on various dates, leaving a balance of Rs. 7,978.15 and Rs. 544.65 as interest for late payment of the instalments, totalling a sum of Rs. 8,532.80. It was further alleged in the plaint that according to the award the defendant was not entitled to carry on any business of the dissolved partnership in the name of M/s. Kanhaiya Lal Ved Prakash. Since the defendant did not comply with that term of the award and was still carrying on business in that name, the plaintiff filed a suit for permanent injunction restraining the defendant from carrying on any business in the name and style of M/s. Kanhaiya Lal Ved Prakash and also for the recovery of Rs. 8,532.80. The defendant contested the suit and according to him the suit was not maintainable and that there was no award by the arbitrators on 4-5-1966. According to the case of the defendant the arbitrators had given their award on 20th April, 1966 orally and in terms of the award the parties had started acting upon. It was under the oral instruction of the arbitrators that the defendant paid the amount to the plaintiff but not under the alleged award dated 4-5-1966. It was contended that the plaintiff was not entitled to enforce the award dated 4-5-1966 as the same had not been made rule of the court and could not be enforced through a decree of the court. It was also contended that the award dated 4-5-1966 was never given and the defendant's signatures had been obtained on blank stamp papers, that he was not present at Amritsar where the award was given on that date and that the written award dated 4-5-1966 was not the same as was orally told to the parties on 20-4-1966.

3. From the above narration of facts, it would be seen that the main contention between the parties was as to whether the award was made in writing on 4-5-1966 or there had been a prior oral award at Amritsar on 20-4-1966.

4. The argument of the learned counsel for the plaintiff-appellant was that an oral award cannot be made and in view of Section 14 of the Arbitration Act an oral award is not contemplated under the Arbitration Act. The only written award was made on 4-5-1966 and since the defendant did not take any proceedings to have it set aside, that can be deemed to be a final award enforceable between the parties.

5. The trial court decreed the suit for the recovery of Rs. 8,532.80 and also for the injunction. The defendant did not file any appeal against the money part of the decree but only filed appeal challenging the decisions so far as the trial court had granted an injunction against the defendant. The decision of the trial court, therefore, on the money part of the decree became final between the parties. In appeal, the lower appellate court disagreed with the trial court and dismissed the suit of the plaintiff for the relief of injunction. It is against this decision of the lower appellate court that the plaintiff has felt aggrieved and has come up before this Court in second appeal.

6. The short point raised by the learned counsel for the appellant in this appeal was that an award by the arbitrators cannot be oral. The award having been reduced to the form of a writing, the oral evidence about the contents of the alleged oral award cannot be looked into and that the findings of fact arrived at by the lower appellate court are perverse. It may also be stated here that the learned counsel for the appellant repeatedly pointed out that in this case the arguments were heard by the lower appellate court on 14-5-1970 and the decision was pronounced in December 1971 i.e more than 18 months after the hearing of the appeal and this by itself would be a ground for setting aside the decision of the lower appellate court. I do not think, this by itself can be a sufficient ground for setting aside the decision of the lower appellate court, although the practice of with-holding the judgements for a long period may not be appreciated at all.

7. On the first point, submitted by the learned counsel for the appellant, which was half heartedly contested, there cannot be an oral award under the Arbitration Act, a reading of Section 14 of the Arbitration Act, however, leaves no room for doubt that an oral award is not at all contemplated under the Act for the simple reason that an award is supposed to be signed and announced to the parties. Therefore, it is to be held that no award contemplated under the Act can be made orally and must necessarily be in writing.

8. It was next contended by the learned counsel for the appellant that no award had been given by the arbitrators orally on 20th April, 1966 and the only award given was the one given in writing on 4-5-1966. The lower appellate court has considered various documentary evidence on the record and on the basis of the same it has come to the conclusion that there was inherent evidence on the record to show that prior to 4-5-1966 an award had been given and had even been partly acted upon by the parties. In fact the award relied upon by the plaintiff itself laid down that the defendant shall get the property released from the Bank latest by 29th April, 1966 which by itself suggested that this was done before the signing of the award. If the award was given for the first time on 4-5-1966, it was impossible for the defendant to comply with this condition. There is evidence on the record to show that the defendants had complied with this condition and, therefore, the finding on this point, by the lower appellate court, cannot be said to be not based on no (any?) evidence at all. May be that the arbitrators, looking to the close relationship between the contesting parties, may have told them to carry out their directions even before declaring the final award. It is also possible that the arbitrators may have orally told the parties what they intended to do finally and in the meantime required the parties to comply with their directions so that there may not be any complication at the time of living the award and the arbitrators may have contemplated to give the award in writing. Be that as it may, the fact remains that the parties were aware of the award or at least some material terms thereof prior to 4-5-1966.

9. The learned counsel for the appellant has vehemently argued that the defendant cannot set up the oral award dated 20-4-1966, in the face of the written award dated 4-5-1966. However, it is not necessary to enter into this controversy whether any award had been given orally or the only award given was the one given on 4-5-1966. The appeal can be disposed of on another objection taken by the respondent. The learned counsel for the respondent has submitted that what the plaintiff seeks to do by the relief claimed by him was to enforce the award dated 4-5-1966. His contention is that the award dated 4-5-1966 even if it be assumed to have been made to the knowledge of the defendant, was not made the rule of the court and, therefore, the same is merely a waste paper and cannot be utilised for the purpose of enforcing the claims arising under the award. Reference in this respect has been made to a case in AIR 1965 All 217. The learned counsel for the appellant on the other hand, has referred to cases in AIR 1979 Bom 149 : AIR 1977 Punj and Har 306 : AIR 1974 All 39 and AIR 1970 SC 833. Without multiplying the rulings. It would be sufficient to mention the last case which lays down that no party can enforce an award which has not been made rule of the court. In that situation, the question for consideration arises as to whether the relief of injunction claimed by the plaintiff was based on the award or not. In fact, the plaint allegations, in paras 9 and 10 of the plaint, clearly amounts to an allegation that the plaintiff was enforcing the terms of the award. In fact, the plaintiff is seeking to enforce the terms of the award in two ways, firstly, on the basis of formed (sic) an agreement between the parties when they signed the award dated 4-5-1966. As I have already observed above, no claim under the award, which has not been made rule of the court, can be enforced under the Act. Even on the second ground, I do not agree with the contention of the learned counsel for the appellant because the signatures, which are obtained on the award are merely in token of the acknowledgement by the parties that the award has been declared and they have notice of the same. It is not by way of an agreement that the signatures are obtained on the award by the arbitrators. Under these circumstances, both the contentions of the learned counsel for the appellant fail.

10. Lastly, it was argued that the findings of fact arrived at by the lower appellate court were perverse. I have been taken through the various findings and it does appear that some of the findings are cursory in nature but the findings cannot be said to be unsupported by evidence however, cursorily they may have been arrived at.

11. The quality of judgement may not be up to the mark but still the same cannot be said to be illegal or vitiated in any manner.

12. In the result, I find that there is no substance in this appeal. It is accordingly dismissed. However, looking to the circumstance of the case, the parties are directed to bear their own costs of this appeal

13. Appeal dismissed.

Satya Pal v. Ved Prakash .

Structured Summary of the Opinion (Second Appeal concerning Arbitration Award)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's (Plaintiff's) Arguments

Respondent's (Defendant's) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Satya Pal v. Ved Prakash .

Comments