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Citation Codes
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citation codes
Case Number
Attorney(S)
  • Lakshman Saran Sinha and Lalnarain Sinha, for the appellants.
  • Kazi Nazrul Hasan and L.M Ghosh, for the respondent.
Judges
  • Imam
  • Ramaswami, JJ.
Acts
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Lakshman Saran Sinha and Lalnarain Sinha, for the appellants.
  • Kazi Nazrul Hasan and L.M Ghosh, for the respondent.
Judges
  • Imam
  • Ramaswami, JJ.
Acts
See more information ...
Smart Summary

Judgment Summary (Ramaswami, J.; with concurrence by Imam, J.)

Factual and Procedural Background

The plaintiff alleged that he had advanced Rs. 230 to the defendants on the basis of an unregistered ijara; he obtained possession of land mortgaged to him and subsequently alleged that the defendants looted the paddy crops he had grown. The parties referred the matter to arbitrators who, the plaintiff claimed, made an award entitling him to recover Rs. 280 with interest. The defendants denied any reference to arbitration or the making of an award, alleged that any award was fraudulent and collusive, and contended that the award could not be enforced because there was an agreement to stifle prosecution and the consideration was illegal.

At trial the learned Munsif accepted the defence case and dismissed the suit. On appeal the learned Subordinate Judge held there was no agreement to stifle prosecution and entered a decree for the plaintiff enforcing the award. A further proceeding was taken to this Court; a preliminary jurisdictional objection was raised as to competency of a second appeal and, at the request of the appellants, the second appeal was treated as an application in revision under section 115 of the Civil Procedure Code.

Legal Issues Presented

  1. Whether the suit was of a nature cognizable by a Small Cause Court and consequently whether a second appeal under section 102 of the Civil Procedure Code was competent.
  2. Whether, in view of section 32 of the Arbitration Act, 1940, the learned Munsif had jurisdiction to entertain and decide a suit that raised questions regarding the existence, effect or validity of an arbitration agreement or award.

Arguments of the Parties

Respondent's Arguments

  • A preliminary objection: the suit was of the nature cognizable by a Small Cause Court and therefore a second appeal was not competent under section 102, Civil Procedure Code. Reference was made to Mizaji Lal v. Partab Kunwar as authority that a suit to recover money due under a private award is cognizable by a Small Cause Court.
  • Reliance on older authorities (e.g., Kirkwood v. Maung Sin and Section 30 of the Specific Relief Act) to contend that a suit could be brought to set aside an award.

Appellants' Arguments

  • Reliance on Kunja Behary Bardhan v. Gosto Behary Bardhan to support the contention that a suit to enforce an award may, in essence, be a suit for specific performance and thus excluded from Small Cause Court jurisdiction under the relevant Schedule articles; however, other High Courts had held differently (cited cases included Erachshaw v. Dinbai, Mg Ni v. Mg. Aung and Simson v. McMaster).
  • The principal contention (the main argument addressed on their behalf) was that, under section 32 of the Arbitration Act, the learned Munsif had no jurisdiction to entertain the suit because the suit raised questions as to the existence and validity of the alleged award and arbitration agreement.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mizaji Lal v. Partab Kunwar Held that a suit to recover money payable by the terms of a private award was not excepted from jurisdiction of Small Cause Court (Lindsay, J.). Cited by respondents to support that the suit was cognizable by a Small Cause Court; the Court accepted that the Small Cause Court had jurisdiction in the present case and therefore a second appeal was not competent.
Kunja Behary Bardhan v. Gosto Behary Bardhan Considered that a suit to enforce an award was in essence a suit for specific performance and was excluded from cognizance of a Small Cause Court under the relevant article. Cited by appellants to argue exclusion from Small Cause Court jurisdiction; the Court distinguished this view and treated it as inconsistent with a later catena of decisions, noting the Calcutta decision may be explained by its special facts.
Erachshaw v. Dinbai; Mg Ni v. Mg. Aung; Simson v. McMaster These High Courts held that a suit to enforce an award (for recovery of money payable under an award) was not a suit for specific performance and hence was cognizable by a Small Cause Court. The Court treated this catena of authorities as stating the correct rule and relied on it to conclude the Small Cause Court had jurisdiction in the present case.
Kirkwood v. Maung Sin Referenced in support of the contention that a suit to set aside an award was maintainable under section 30 of the Specific Relief Act. Cited by respondent counsel but the Court held such pre-1940 authorities could not override section 32 of the Arbitration Act, 1940, which bars suits challenging awards except as provided in that Act.
Sassoon & Co. v. Ramdutt Ramkissen (Judicial Committee) Held that a suit lay to set aside an award on the ground that an arbitrator had acted wholly without jurisdiction (decision based on law prior to Arbitration Act, 1940). The Court noted this decision rested on pre-1940 law and held that the Arbitration Act, 1940 (section 32) altered the law so that such challenges must be brought under the Act rather than by suit.
Moolchand Jothajee v. Rashid Jamshed Sons & Co. Interpreted the Arbitration Act, 1940 to restrict suits in respect of awards and arbitration agreements, supporting the construction of section 32. Used as supporting authority for the Court's construction that section 32 bars suits disputing existence or validity of awards and arbitration agreements.
Deokinandan v. Basantlal One of the decisions supporting the interpretation that section 32 excludes suits and requires challenges to be made under the Arbitration Act. Cited by the Court as part of the supporting line of authorities for its construction of section 32.
Ratanji Virpal v. Dhirajlal Manilal Held that under the Arbitration Act, 1940, no proceedings can be taken on an award until it has been filed in Court; until filing, parties cannot file petitions to set aside the award in Court (Chagla, J.). Quoted at length by the Court to demonstrate that the 1940 Act makes the filing of an award in Court the threshold for proceedings and that section 32 bars suits challenging awards before the procedures of the Act are followed.

Court's Reasoning and Analysis

The Court proceeded in stages:

  1. Jurisdiction under the Civil Procedure Code: The Court considered the preliminary objection that the matter was cognizable by the Small Cause Court and that therefore a second appeal under section 102 CPC was not competent. The Court concluded that the suit was not excepted by Article 15 or Article 24 of the Second Schedule and that a Small Cause Court had jurisdiction to try the suit; accordingly, a second appeal would not have been competent. At the request of the appellants, however, the Court treated the second appeal as an application in revision under section 115 CPC.
  2. Applicability of Arbitration Act (sections cited): The Court examined the Arbitration Act, 1940 provisions relevant to the handling and enforcement of awards: section 14 (award to be signed and notice given; filing on request), sections 15–17 (power to modify, remit, and to pronounce judgment on an award after the time for applications expires), and sections 31–32 (jurisdictional and exclusionary provisions).
  3. Construction of section 32: The Court emphasized section 32's clear wording that "no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award" and that awards or arbitration agreements shall not be set aside except as provided in the Act. The Court explained that the Arbitration Act, 1940 was intended to and did alter the prior law by channeling such disputes into proceedings and remedies provided by the Act rather than by an ordinary suit.
  4. Interaction with the Specific Relief Act: The Court rejected the submission that section 30 of the Specific Relief Act could operate to permit a suit to set aside an award, holding that section 32 of the Arbitration Act applied "notwithstanding any law for the time being in force" and thus could not be overridden by the Specific Relief Act provisions which pre-dated the 1940 Act.
  5. Reliance on authorities: The Court relied on a series of decisions (Moolchand Jothajee; Deokinandan; Ratanji Virpal) to support the view that, under the 1940 Act, proceedings to challenge awards must be brought under the Act and not by a suit. In particular, the Court quoted Chagla, J.'s reasoning in Ratanji Virpal that no proceedings can be taken on an award until it has been filed in Court and that the Act confines challenges to the procedures and forum it provides.
  6. Conclusion on jurisdiction: Having applied section 32 and the authorities, the Court concluded that the learned Munsif had no jurisdiction to entertain the suit because the suit squarely raised questions as to the existence and validity of the award and arbitration agreement, matters which are excluded from suit proceedings by section 32 of the Arbitration Act.

Holding and Implications

Holding: The Court allowed the application in revision and set aside the decree of the lower appellate court; the suit was dismissed.

Implications and direct effects:

  • The Munsif had no jurisdiction to entertain the suit because the claim went to the existence and validity of an arbitration award and arbitration agreement, matters barred from suit by section 32 of the Arbitration Act, 1940.
  • The decree pronounced in favour of the plaintiff by the Subordinate Judge was set aside by this Court.
  • The applicants (the successful parties in the revision) were awarded their costs; specifically the hearing fee was two gold Mohars as stated by the Court.
  • No broader new legal principle was announced beyond the application and construction of section 32 of the Arbitration Act, 1940 and reliance on existing lines of authority; the decision enforces the existing rule that challenges to awards must proceed under the Arbitration Act rather than by ordinary suit.

This summary reflects only the facts, issues, arguments, authorities and reasoning explicitly contained in the provided opinion text. No information has been added beyond that source.

Show full summary ...

    Ramchander v. Munshi

    Ramaswami, J.:— In the suit which is the subject of this appeal the plaintiff alleged that he had advanced Rs. 230 to the defendants on the basis of an unregistered ijara, that he obtained possession of the land mortgaged but on a subsequent date the defendants looted the paddy crops which he had grown. The parties referred the matter to arbitrators who made an award. The plaintiff claimed that according to the award he was entitled to recover a sum of Rs. 280 with interest from the defendants. The ground of defence was that there was no reference to arbitration and no award was made by the alleged arbitrators. The defendants alleged that the award even if made was fraudulent and collusive and in any case could not be enforced since there was an agreement to stifle prosecution and the consideration was illegal. The learned Munsif accepted the defence case and dismissed the suit. But in appeal the learned Subordinate Judge held that, there was no agreement to stifle prosecution and the plaintiff was entitled to enforce the award. The learned Subordinate Judge accordingly pronounced decree in favour of the plaintiff.

    On behalf of the respondent a preliminary objection was raised that this suit was of the nature cognizable by Small Cause Court and no second appeal was competent under section 102, Civil Procedure Code. Learned advocate made reference to Mizaji Lal…(Petitioner); v. Partab Kunwar…(Opposite Party).* in which the plaintiff had sued to recover money due under the terms of a private award. The suit was tried by a Munsif laying Small Cause Court jurisdiction and a decree was passed in favour of the plaintiff. The defendants appealed in revision to the High Court under section 25 upon the ground that the suit was not one cognizable by Small Cause Court. Lindsay, J. held that article 24 of the second schedule was not applicable and a suit to recover money payable by the terms of the private award was not a suit which was excepted from the jurisdiction of Small Cause Court. For the appellants reliance was placed upon Kunja Behary Bardhan v. Gosto Behary Bardhan in which the learned Judges considered that a suit to enforce an award was in essence a suit for specific performance of a contract and was excluded from cognizance of a Small Cause Court under article 15. But the other High Courts have held that a suit to enforce an award, namely, for recovery of money payable under an award was not a suit for specific performance of a contract and hence was cognizable by a Small Cause Court [Erachshaw v. Dinbai, Mg Ni v. Mg. Aung and Simson v. McMaster]. In my opinion the correct rule is stated in this catena of authorities. The Calcutta decision may, however, be explained on the special facts of that case. For in that case the learned Judges had held in the alternative that the suit must fail upon the ground that the award which the plaintiff sought to enforce could not be enforced as a whole in a Small Cause Court as it involved the partition of immovable properties. In the present case. I am of opinion that the suit instituted by the plaintiff is not excepted by Article 15 or Article 24; that the Small Cause Court had jurisdiction to try it; that in consequence a second appeal to this Court is not competent.

    At the request of the appellants we proceeded to treat second appeal as an application in revision under section 115, Civil Procedure Code.

    The main argument addressed on their behalf was that under section 32 of the Arbitration Act the, learned Munsif had no jurisdiction to entertain the suit.

    Section 14(1) of the Arbitration Act states that when the arbitrators have made their award, they shall sign it and give notice of the fact in writing to the parties. Sub-section (2) requires that the arbitrators shall, at the request of a party, cause the award to be filed in Court, and when this is done, the Court shall give notice of its filing to the parties. Sections 15 and 16 empower the Court to modify the award or to remit it to the arbitrators for further consideration. Section 17 enacts that when the Court sees no cause to remit the award for reconsideration, it shall, after the time for making an application to set it aside has expired, or when such an application has been made and refused, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow.

    Sections 31 and 32 of the Act are also relevant. Section 31 reads:

    “(1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.

    (2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed and by no other Court.

    (3) All applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been, or may be, filed, and to no other Court.

    (4) Notwithstanding anything contained elsewhere in this Act, or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court, alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court.”

    Section 32 enacts:

    “Notwithstanding any law for the time being in force, 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.”

    Learned advocate for the respondent made reference to Kirkwood v. Maung Sin in support of his contention that a suit to set aside an award was maintainable under section 30 of the Specific Relief Act. In Sassoon and Co. v. Ramdutt Ramkissen the Judicial Committee held that a suit lay to set aside an award on the ground that an arbitrator had acted wholly with out jurisdiction. But these decisions were based on the law existing prior to the passing of the Arbitration Act of 1940. Section 30 of the Specific Relief Act merely states that the provisions of Chapter II as to contracts shall mutatis mutandis apply to award's and to directions in a will or codicil to execute a particular settlement. It is manifest that this section cannot override section 32 of the Arbitration Act, 1940, which applies “notwithstanding any law for the time being in force”. The governing section is section 32. Arbitration Act. The Act of 1940 was intended to and did alter the law, and one of the main objects of the Act was to provide that claims to set aside arbitration, awards or challenge arbitration agreement should be made by application to Court and decided on affidavits or on other evidence if deemed expedient by the Court and not by means of a suit. In the present suit the question at issue clearly relates to existence and validity of the award made by the arbitrators. In paragraphs 8 and 17 of the written statement the defendants specifically asserted that they had never referred the alleged matter in dispute to any arbitrators and that no award was made. The defendants maintained that even if the award was genuine the plaintiff was not entitled to enforce the award since it was illegal, invalid and inoperative. Upon these pleadings it is manifest that, the suit raised the question as to the existence and validity of the award and such a suit, is expressly prohibited by section 32 of the Arbitration Act. The construction I have adopted is supported by three decisions: Moolchand Jothajee v. Rashid Jamshed Sons and Co., Deokinandan v. Basantlal and Ratanji Virpal v. Dhirajlal Manilal. In the last case it was held that under the Arbitration Act, 1940, till the award had been filed in Court it was not competent to a party to an arbitration to file a petition to set aside the award. Chagla, J. states: “Further, under the present Act no proceedings can be taken on the award till after it has been filed, and I fail to see how a party can possibly be prejudiced by the existence of an award which has not been filed in Court. Under the old Arbitration Act it was competent to a party who obtained an award without filing it to file a suit thereon. Further, the award became enforceable as a decree as soon as it was filed. But under the present Act all proceedings with regard to the arbitration agreement or the award have to be taken as provided by the Act and before the tribunal indicated by the Act. Section 32 specifically provides 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 the said Act, and under section 17 of the Act the Court has to pronounce judgment according to the award and a decree follows. It is only this decree that can be executed.”

    It is manifest that in view of the bar imposed by section 32 of the Arbitration Act the Munsif had no jurisdiction to entertain the suit.

    Accordingly I would allow this application and set aside the decree of the lower appellate court. The applicants are entitled to their costs. Hearing fee two gold Mohars.

    V. Ramaswami.

    Imam, J.:— I agree to the order proposed. Speaking for myself, it is immaterial whether a second appeal lies or a civil revision in this case, having regard to the fact that in any event the suit was barred and could not be heard by a court, whether of. Small Causes or a civil court, under the provisions of the Arbitration Act, 1940.

    K.D
    Suit dismissed.

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    Comments

    Ramchander v. Munshi
    (May 5, 1949)