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Rajamanickam Pillai And Others v. Swaminatha Pillai (Died) And Others
Structured Summary of the Opinion
Factual and Procedural Background
This appeal challenges an order of remand made by the learned District Judge of South Arcot. The underlying suit was brought by the uncle of the present first appellant seeking possession of certain properties, claiming title under a sale deed executed by the mother of the present first appellant (the 5th defendant in the suit). The defendants contended that the sale deed was nominal and sham and conferred no rights on the plaintiff.
The present first appellant filed an additional written statement asserting that the suit was barred because there was an award between him and the respondent and, in view of that award, the plaintiff/respondent could not competently claim title and possession in the suit court. The learned District Munsif, although finding that the respondent had title and possession, held that the suit was incompetent by reason of the award and dismissed the suit on that ground.
On appeal by the respondent, the learned District Judge concluded that the appellate court could not decide upon the existence or validity of the award and remanded the suit to the lower court, directing that the 5th defendant should seek determination of the existence and validity of the award under the relevant provisions of the Indian Arbitration Act. The present appeal is directed against that remand order.
Legal Issues Presented
- Whether, on the pleadings and facts of the case, it was open to the first appellant to set up an arbitration award in defence to the suit claiming title and possession.
- Whether it was proper for the appellate court to remand the suit and direct that the defendant apply under the Arbitration Act to obtain relief regarding the existence and validity of the award, instead of deciding the matter on the record before it.
Arguments of the Parties
Appellant's Arguments
- The appellant relied on the decision in Suryanarayana Reddi v. Venkatareddi, where it was held that Section 32 of the Arbitration Act does not preclude a defendant from pleading the existence of an award in answer to a plaintiff's claim for title and possession. The appellant's counsel argued that a defendant may raise an award in defence and that S.32 should not be read as preventing such a defence.
- The appellant pointed to the existence of an award (documented as Ex. D.29) which, according to the trial court findings, stated that the panchayatdars considered the plaintiff's purported purchase from the mother of the 5th defendant not valid, and that the award had been acted upon and accepted.
Respondent's Arguments
- The respondent's counsel contended that there was no award between the parties and that there was no evidence that any award had been acted upon.
- The respondent relied upon a decision in Venkatasubbayya v. Bapudu (Raghava Rao, J.) which, as read by respondent's counsel, purportedly explained or limited the scope of Suryanarayana Reddi. The respondent also raised a point that the award might not be admissible in evidence because it had not been registered as required by the amended Section 17 of the Registration Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Suryanarayana Reddi v. Venkatareddi | Held that Section 32 of the Arbitration Act does not preclude a defendant from pleading the existence of an award in defence to a plaintiff's claim for title and possession; S.32 should be read as precluding suits seeking relief available under the Act but not defensive pleas. | The court expressly agreed with the principle laid down in this authority, found the facts of the present case to be on all fours with it, and relied upon it to conclude that the remand order could not be sustained and that the appellate court should decide the appeal on the merits based on the existing record. |
| Moolchand Jothajee v. Rashid Jamshed Sons & Co. | Concerned with a suit where plaintiffs sought to enforce an award; discussed whether relying on an award constitutes seeking a decision upon its existence, effect or validity. | The court observed that Moolchand Jothajee is not inconsistent with the view that S.32's inhibition is confined to a plaint by which such decision is sought; it was used to support the proposition that a defence based on an award is not barred by S.32. |
| Venkatasubbayya v. Bapudu | Contains an explanation by Raghava Rao, J., interpreted by respondent's counsel as limiting Suryanarayana Reddi; relates to circumstances where an award has been acted upon and defendant discharged duties. | The court considered this decision but concluded that it did not assist the respondent on the facts of the present case; the opinion states that Venkatasubbayya is not of much avail given the facts here (where the award was found to have been accepted and acted upon). |
| Surayya v. Anandayya | An earlier decision by Raghava Rao, J., cited by appellants; relevance to treatment of awards in suits. | The court noted this decision was brought to its notice but observed that the respondent did not rely on it, and that it does not carry the point in controversy further. |
Court's Reasoning and Analysis
The court's analysis centered on the construction and scope of Section 32 of the Indian Arbitration Act and its relation to Sections 31 and 33 and earlier sections of the Act, as discussed in the cited authorities. The court proceeded by:
- Identifying the precise statutory language: noting Section 32 states that "no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act."
- Considering authoritative interpretation: the court examined the decision in Suryanarayana Reddi v. Venkatareddi, which held that reading S.32 literally would be too broad and that it is to be read as precluding suits that seek relief provided under S.33, but not as prohibiting a defence which involves the existence, effect or validity of an award.
- Reconciling Moolchand Jothajee: the court observed that Moolchand Jothajee dealt with a plaintiff seeking to enforce an award and did not negate the view that S.32 is confined to plaints seeking substantive relief under the Arbitration Act; thus it was compatible with allowing a defendant to raise an award in defence.
- Applying the facts: the court found the present case factually similar to the authorities relied upon. The award (Ex. D.29) expressly found the plaintiff's purchase invalid; the trial court had found that the award had been accepted and acted upon. Given these findings, the court rejected the respondent's contention that there was no award or that it had not been acted upon.
- Evaluating the remand: the court concluded that the District Judge erred in restricting himself to the question of S.32's applicability and directing the defendant to apply under the Arbitration Act for relief. Instead, the appellate court should have considered the findings of the trial court and disposed of the appeal on the evidence already recorded.
- Preserving unresolved issues: because the trial court had left open the question whether the award was admissible in evidence for want of registration under the amended Section 17 of the Registration Act, the court declined to decide that point and left it for the District Judge to consider on remand when disposing of the appeal on merits.
Holding and Implications
Holding: The appeal is allowed. The remand order of the learned District Judge directing that the defendant should apply under the Arbitration Act was set aside; the District Judge is directed to restore the appeal to his file and dispose of it on merits and upon the evidence already recorded and the findings given by the learned District Munsif.
Implications:
- Direct effect: The remand order is quashed and the appellate court must decide the appeal on the record; the District Judge is to consider the evidence and findings already on file and determine the matter on merits. The question of admissibility of the award under the Registration Act (S.17) remains open for consideration by the District Judge.
- Costs and further remedies: The costs of this appeal are ordered to abide the result of the decision by the lower appellate court. The application for leave to file a Letters Patent Appeal was rejected.
- Broader precedent: The court based its decision on existing authorities (notably Suryanarayana Reddi v. Venkatareddi) and did not purport to lay down a new principle of law; the opinion applies and reinforces the view that S.32 does not preclude a defendant from pleading an award in defence where appropriate facts and findings exist.
Prepared strictly from the material contained in the provided opinion. No information has been added or inferred beyond the opinion's text.
This appeal is against the order of remand made by the learned District Judge of South Arcot directing that the appellants before him should apply under the Indian Arbitration Act to obtain relief under the relevant provisions of that Act relating to the award which was set up by them in the Court of first instance. The suit itself was by the uncle of the present first appellant for possession of the suit properties as belonging to him under a certain sale deed executed by the mother of the present first appellant, the 5th defendant in the suit. The defence to the action was that the sale deed by the mother of the first appellant was only a nominal and sham one and no rights passed under that to the respondent. An additional written statement was also filed by the present first appellant in which he contended that the suit by the plaintiff was barred and was not competent for the reasons that there was an award between him and the respondent and in the face of that award the plaintiff respondent was not entitled to file the suit claiming title and possession of the properties. The learned District Munsif while finding in favour of the respondent that he had title to and possession of the properties however held on the issue as to whether the suit was barred and was incompetent by reason of the award set up by the 1st appellant, that the suit was not competent and therefore dismissed it. On appeal by the respondent the learned District Judge holding that it was not open to the Court to give a decision even about the existence and validity of the award, remanded the suit to the lower Court directing that all that could be done was that the 5th defendant should get a determination under the proper provisions of the Arbitration Act about the existence and validity of the award. Against this order of remand the present appeal has been preferred.
The point that arises for consideration is whether in the circumstances of the case as appear from the pleadings it was open to the first appellant to set up in defence to the suit an award and whether it was proper on the part of the trial Court to hold that the existence of the award pleaded by the first appellant was sufficient answer to the claim by the plaintiff respondent. The learned Counsel for the first appellant relies upon the decision of a Bench of this Court in Suryanarayana Reddi v. Venkata Reddi(1), where Happell and Govindarajachari, JJ, have held that S. 32 of the Arbitration Act does not preclude the defendant from pleading the existence of an award in answer to the claim from the plaintiff for title and possession of properties. S. 32 is as follows:
“Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, affect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act.”
After discussing the scope of Ss. 31, 32 and 33 as also the previous sections of the Act, the learned Judges have observed at page 117 that.
“It would therefore Seem as if S. 32, notwithstanding its apparently wider language, had to be read only as precluding a suit praying for the reliefs for which an application is provided under S. 33.”
They again observe that
“Apart from this, however, and taking the language of S. 33 as it stands, it is difficult to hold that the words ‘no suit shall lie’ should be read as prohibiting a defence which involves a decision upon the existence, effect or validity of an award.”
The learned Judges have examined the scope of the decision in Moolchand Jothajee v. Rashid Jamshed Sons & Co., (2), and observed that
“as held in that suit a person who relies on an award may be said to be seeking a decision upon its existence, effect or validity; but the question that arises is whether the inhibition in S. 32 is not confined merely to a plaint by which such decision is sought. We are inclined to think that it is so confined. There is nothing in Moolchand Jothajee v. Rashid Jamshed Sons and Co., inconsistent with this view, that decision, as already stated being concerned with a suit in which the plaintiffs sought to enforce the award.”
The learned Judges further observe at page 119 to the following effect:
“However, the point in this case turns entirely on the construction of S. 32. As previously indicated, its language does not, in our opinion, extend to a defence as opposed to the filing of a suit. The argument on behalf of the plaintiff would involve our holding that even in a case where both parties to an award are satisfied with it and it is fully carried out and there in therefore no need for getting a decree passed in its terms and none is passed, one of the parties can subsequently change his mind and enforce the original cause of action and the defendant cannot resist the suit. It seems to us that the provisions of the Act do not entail such a result.”
I must state that the facts of the present case are on all fours with the decision in those authorities cited by the learned Counsel for the appellant and I agree with the principle laid down in the authorities cited. In my opinion the language of S. 32 which says that no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, does not contemplate that any defence set up by any defendant to a claim which ignores the existence of the validity of an award is not competent. This section only lays down the positive rule that no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement and does not shut out the possibility of a defence being raised when a suit was brought by one of the parties to the arbitration agreement or award, that there exists an award between the parties which is binding on both and also raising the plea that such an award has been acted upon and accepted by the parties. In the present case under appeal there has been a reference to an arbitration by 19 persons and subsequently the number of arbitrations has been by agreement reduced to 5 and the five arbitrators have given an award. That award is found in Ex. D.29 and it states that the panchayatdars consider that the sale taken by the plaintiff from the mother of the 5th defendant was not a valid one. It is this award that has been relied on by the first appellant to non-suit the respondent.
The argument in defence by learned Counsel for the respondent is that there is no award between the parties and there is no evidence that the award has been acted upon. I do not think that I can agree with this contention. As I have already observed, the award is found in Ex. D.29 and the findings of the lower Court are that the award had been accepted and that it settled the points in controversy between the parties. It is therefore futile to contend now that there is no award or that the award has not been acted upon in the face of the findings of the trial Court. The learned District Judge on appeal has not considered any of these findings nor has he expressed any opinion for or against these findings. He has confined himself only to the point as to whether S. 32 of the Arbitration Act applied to the facts of the case and has come to the conclusion that the proper thing would be for the first appellant to apply to the Court under the provisions of the Arbitration Act. I do not think that the learned District Judge has acted correctly in having directed that the first appellant should approach the Court and apply under the provisions of the Arbitration Act to get the relief under the award. I do not agree that this was the proper approach or the procedure that should have been followed by the lower appellate Court.
The learned Counsel for the respondent has however invited my attention to a decision in Venkatasubbayya v. Bapudu, wherein Raghava Rao, J., has tried to explain the decision of the Bench in Suryanarayana Reddi v. Venkatareddi. The judgment of Raghava Rao, J., has been read in extenso by both Counsel and I do not think that decision helps the respondent to any extent on the facts of this case. It would appear from a reading of the judgment of my learned brother that where there is an award which has been acted upon and the defendant has discharged his duties under the award S. 32 would not preclude the defendant from pleading the existence of an award. In the present case as already observed there is not merely an award existing but the findings are that award had been accepted and acted upon. It would therefore appear that the decision of Raghava Rao, J., relied on by the learned Counsel for the respondent is not of much avail. There is also an earlier decision of Raghava Rao, J., in Surayya v. Anandayya(3) which has been brought to my notice by learned Counsel for the appellants; learned Counsel for the respondent however does not rely on this decision and I do not think that decision carries the point in controversy any further. On the whole, as I am inclined to agree with the principle enunciated by Happell and Govindarajachari, JJ., in Suryanarayana Reddi v. Venkatareddi, I think that this remand order cannot be sustained. The learned District Judge will therefore be directed to restore the appeal to his file and dispose of the same on merits and on the evidence already recorded and the findings given there by the learned District Munsif. In the view I have taken of the matter, I do not think it is necessary for me to consider the further point raised by learned Counsel for the respondent that the award is not admissible in evidence for the reason that it has not been registered as required in the amended S. 17 of the Registration Act. This question has been left open by the trial Court and has not been touched upon by the learned District Judge, and it will be open to the learned District Judge to go into it as well and come to a decision after hearing the parties. In the result the appeal is allowed and the costs of this appeal would abide the result of the decision by the lower appellate Court. I do not think there is justification for me to grant leave to file a Letters Patent Appeal on the facts of this case. The application is rejected.
V.C.S
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