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Case Number

A.F.A.D No. 922 of 1966

Attorney(S)

S.B. Sanyal and Choudhary
S.N. Mishra
Radhey Shyam Chatterjee and Bindeshwari Prasad Singh

Judges

H. Mahapatra, J.

Acts

Section 39, Clause (i), Sub-clause (vi) of the Arbitration Act. No doubt, Section 39
SECTION 17 ARBITRATION ACT
Section 14(2) of the Arbitration Act, 1940,
Article 158 of the Limitation Act (Old)
Section 39(1)(iv).

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The plaintiff (appellant) initiated proceedings under Section 14(2) of the Arbitration Act, 1940 on 14 March 1959. Pursuant to a court order, the arbitral award was filed on 22 April 1959, and notice was given to the defendants (respondents). The defendants filed a written statement on 8 June 1959 containing multiple allegations, including that there had been no reference to arbitration and that two documents (Exs. 5 and 5.a) evidencing an arbitration agreement had been fabricated by the plaintiff.

The trial court initially delivered judgment on 28 February 1962 against the appellant, holding there was no reference to arbitration and that the two documents had not been executed by the defendants for that purpose. The appellant's first appeal (Title Appeal No. 63/15 of 1962/63) succeeded: the judgment below was set aside and the matter remanded. On remand the learned Munsif entered judgment for the appellant and drew up a decree in accordance with the award on 26 February 1966. The defendants then appealed and succeeded in that appeal, prompting the present second appeal by the plaintiff.

Legal Issues Presented

Whether the defendants' appeal against the decree pronounced in accordance with an arbitral award (under Section 17 of the Arbitration Act, 1940) was competent.
Whether the written statement filed by the defendants, containing objections to the award and allegations as to non-existence of arbitration and fabrication of documents, could be treated as an application under Section 33 (and therefore effectively an application to set aside the award) even though no formal application was filed.
Whether a party's failure to appeal earlier against an order for filing the award (under Section 14) or to use Section 39(1)(iv) remedies precludes the court from treating the written statement as an application under Section 33.
Whether the lower appellate court erred in failing to consider important findings and inferences made by the trial court (particularly relating to amendment and the timing of insertion of a name and the implications for the authenticity of Exs. 5 and 5.a), thereby requiring remand for fresh consideration.

Arguments of the Parties

Appellant's Arguments

The defendants' appeal against the decree drawn under Section 17 of the Arbitration Act was not competent because Section 17 bars appeals from a decree entered in accordance with an award except on the limited ground that the decree is in excess of, or not otherwise in accordance with, the award.
Reliance on the case Minalal Mundhra v. Smt. Anchi Devi (AIR 1965 Pat 66) to challenge the proposition that a written statement could be treated as an application under Section 33; argued that the observations in that case were context-specific.
Contended that when the court ordered filing of the award under Section 14, the defendants could have appealed that order under Section 39(1)(iv); having failed to do so, they should not be allowed to have the written statement retrospectively treated as a Section 33 application.
Argued that the trial court had given cogent, elaborate reasons rejecting the defendants' objections (notably regarding how Exs. 5 and 5.a came into existence and the amendment filling in a name long after filing), and that the lower appellate court did not adequately consider those reasons, warranting reversal or remand.

Respondents' (Defendants') Arguments

In their written statement the defendants alleged there was no reference to arbitration and that two documents (Exs. 5 and 5.a) had been fabricated by the plaintiff.
They asserted that the thumb impressions on Exts. 5 and 5.a were given on two blank sheets at the instance of a person to whom they wanted to refer a different dispute; the identity of that person was left blank in the original written statement and later filled by amendment with the name "Rohan Gope" on 23 August 1965 after he had been examined as their witness.
By raising such facts and objections in the written statement they effectively sought to have the award set aside.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Madan Lal v. Sundar Lal, AIR 1967 SC 1233	Supporting the proposition that, where necessary materials and allegations are contained in a pleading filed within the prescribed time, that pleading (here, the written statement) may be treated as an application under the Arbitration Act (Section 33) to set aside an award.	The court relied on this authority to conclude that the defendants' written statement — filed within the 30-day period prescribed by Article 158 (old) of the Limitation Act — could properly be treated as an application to set aside the award.
Minalal Mundhra v. Smt. Anchi Devi, AIR 1965 Pat 66	Discussed in the context of competency of appeals under Section 17; observations in that case were noted as fact-specific and not determinative of whether a written statement can be treated as a Section 33 application in the present facts.	The court distinguished that decision on its facts, observing that what constituted an application under Section 33 was not the point decided in Minalal Mundhra; it did not prevent the court here from treating the written statement as an application under Section 33.

Court's Reasoning and Analysis

The court's reasoning progresses chronologically and by statutory interpretation of the Arbitration Act, 1940 and applicable limitation law:

Statutory framework and sequence: The court explained the interaction of Sections 14, 17 and 33 of the Arbitration Act. Section 14 contemplates filing of the award and notice to parties; Section 33 provides the means for parties to challenge the existence/validity of the arbitration agreement or the award; and Section 17 contemplates that where the court refuses to remit or set aside an award it shall allow time for making an application to set aside the award (i.e., the court must allow a party an opportunity to seek setting aside before pronouncing judgment and issuing a decree in accordance with the award). The court concluded that the statutory sequence requires any objection to be determined prior to pronouncing judgment and decreeing in accordance with the award.
Competency of the defendants' appeal: The court recognized that generally a decree that follows a judgment pronounced according to the award is not appealable except on limited grounds under Section 17 (i.e., if the decree is in excess of, or not in accordance with, the award). However, the court observed that the trial court, instead of passing a discrete order refusing to set aside the award and thereafter pronouncing judgment and drawing the decree, delivered a composite judgment which both refused to set aside the award and directed entry of a decree. Because that composite judgment effectively included an order refusing to set aside the award, the defendants could not reasonably be precluded from appealing that component.
Whether the defendants made an application under Section 33: Admitting there was no formal, separate application to set aside the award, the court considered whether the written statement — which contained timely objections and asked effectively for setting aside — could be treated as such an application. The court noted that no particular form is prescribed for an application under Section 33, and that Article 158 (old) of the Limitation Act provided 30 days from service of notice of filing of an award to make such application. The written statement was filed within that period.
Reliance on precedent and distinction of contrary authority: The court relied on Madan Lal v. Sundar Lal to support treating the written statement as an application under Section 33 when the necessary materials and allegations appear therein. The court considered but distinguished Minalal Mundhra v. Anchi Devi, observing that the latter's remarks were fact-specific and did not decide the precise question of what constituted an application under Section 33.
Objections about alternate remedies and procedural election: The appellant argued that the defendants should not be allowed to treat the written statement as an application since they could have earlier appealed the order for filing the award under Section 39(1)(iv). The court rejected the contention that the failure to take that earlier appeal precluded the defendants from having their written statement treated as a Section 33 application.
Appellate review and omission of trial court's pivotal findings: The court examined the substance of the trial court's findings — notably the inferences drawn from the timing and manner of the amendment that inserted the name "Rohan Gope" into para 15 of the written statement long after the original filing — and concluded that the lower appellate court had not adequately adverted to those important aspects. The court held that where a reversal is sought, the appellate court must adequately consider all material aspects that influenced the trial court's decision; failing to do so justified setting aside the appellate judgment and remanding for fresh consideration.

Holding and Implications

Core Ruling: Appeal allowed; the appellate court's judgment set aside and the case remanded for fresh hearing and disposal according to law.

Direct consequences:

The earlier appellate court's decision is set aside and the case is remanded to the court of appeal below for re-hearing of the parties and proper disposal in accordance with law.
Costs were directed to abide the result (i.e., costs to follow the outcome of the further proceedings).

Broader legal implications: The opinion applies established authorities (notably Madan Lal v. Sundar Lal) to hold that a timely written statement containing necessary materials and allegations may be treated as an application under Section 33 to set aside an arbitral award. The court also clarified procedural sequencing under Sections 14, 17 and 33. The opinion did not purport to establish a novel precedent beyond application and distinction of cited authorities.

Disposition stated in the opinion:

Appeal allowed.
Case remanded to the lower appellate court for fresh hearing.

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Prasad Gope v. Makhan Gope And Another

1. Plaintiff is the appellant. He initiated a proceeding under Section 14(2) of the Arbitration Act, 1940, on the 14th March, 1959. In pursuance of an order passed by the court, the award was filed on the 22nd April, 1959. The defendants-respondents appeared and filed a written statement on the 8th June, 1959, in which they had made several allegations against the plaintiff and the award. One of the contentions raised there was that there was no reference to arbitration and the two documents showing arbitration agreement had been fabricated by the plaintiff. Ultimately the court passed judgment on the 28th February, 1962 against the appellant holding that there had been no reference to arbitration and the two documents (Exs. 5 and 5.a) had not been executed for that purpose by the defendants.

2. There was an appeal against that by the present appellant in title appeal no. 63/15 of 1962/63 in which the judgment of the court below was set aside and the case was remanded for fresh disposal. This time the learned Munsif passed a judgment in favour of the appellant and drew up a decree in accordance with the award on the 26th February, 1966. Against that the defendants took an appeal in which they succeeded. That is why the present second appeal has been filed by the plaintiff. Learned counsel appearing for the appellant first raised a point that the defendants' appeal in the court below was not competent, inasmuch as, decree having been passed in accordance with the award, no appeal could be preferred against that as provided under Section 17 of the Arbitration Act. Section 17 states:

“Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration 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 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.”

3. Clearly enough, the defendants' appeal directed against the decree passed under Section 17 of the Act was not maintainable as the decree followed the judgment which was according to the award and as there was no allegation by the defendants in the court below that the decree was in excess of, or not otherwise in accordance with, the award. But in the present case that will not end the controversy.

4. Section 14 of the Act provides that “the arbitrators or umpire shall, at the request of any party to the arbitration agreement ……… or if so directed by the Court ……… cause the award or a signed copy of it together with any depositions and documents ……… to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award”. In the present case on an application made by the appellant the court directed the arbitrators to file the award and when the award was filed notice was issued to the defendants. At that stage it was open to the defendants to apply to the court challenging the existence or validity of the arbitration agreement or the award and to have the effect of either or both of them to be determined by the court. Section 33 of the Act provides for that. In Section 17 we find that the court before whom a proceeding under Section 14 is brought has to allow time for making an application to set aside the award after it decides not to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award suo motu. This indicates that a party who wants to challenge the award can have an opportunity to come before the same court to do so in a proceeding under Section 14, and if any such objection is filed, that will have to be disposed of by the court before proceeding to pronounce judgment according to the award and the decree following such judgment. The objection against the award if filed, will have to be rejected before such judgment and decree can be passed. That appears to be the sequence of Section 17.

5. In the present case, objections against the award were raised in the written statement that was filed by the defendants-respondents and in that they had virtually asked for setting aside the award. They had given several grounds, one of them being that there was no reference to arbitration by them. The trial court considered those objections in the final judgment that was passed in the first instance on the 28th February, 1962 and in the second instance after remand, on the 26th February, 1966. Strictly speaking, the court should have passed an order refusing to set aside the award as asked for by the defendants and thereafter should have proceeded to deliver the judgment accord in to the award and then the decree was to follow the same. In this case, a composite order in the shape of a judgment was delivered by the court containing therein the refusal to set aside the award and direction to make a decree in accord-lance to the award. In such circumstances, the defendants cannot reasonably be precluded from having the opportunity, of appealing against the order refusing to set aside the award.

6. The question that arises in this connection for consideration is whether the defendants had made an application to set aside the award, and if they did not make such an application, then they were not entitled to an order refusing to set aside the award and the court was only to wait for 30 days after service of the notice on the defendants before pronouncing the judgment accepting the award and making that the basis of the decree of the court.

7. Admittedly there was no application as such by the defendants to set aside the award. Under Sec. 33, two courses were open to them. They could have applied to the court if they desired to challenge the existence of the arbitration agreement or/and the award. As far as the challenge in regard to the existence or validity of the arbitration agreement, that itself was a ground for setting aside the award. In written statement, as I have already pointed out, that stand was taken by the defendants. In the Arbitration Act no form has been prescribed for making an application as contemplated under; Section 33 or under Section 17 challenging the award. In that context, if necessary materials and allegations were disclosed in the written statement itself, that may be taken as an application for setting aside; the award. Article 158 of the Limitation Act (Old) provides 30 days time for making such an application from the date of service of notice of filing an award in court. Admittedly the written statement filed by the defendants in this case was within that period. In such circumstances, the written statement was to be treated as an application for setting aside the award. (See the case of Madan Lal v. Sundar Lal, AIR 1967 SC 1233).

8. Learned counsel for the appellant, however, disputed this position and drew my attention to the case of Minalal Mundhra v. Smt. Anchi Devi, (AIR 1965 Pat 66). There the question that arose for decision was whether a second appeal would lie out of an appeal which was permissible under Section 17 of the Arbitration Act. What would be considered to be an application under Section 33 was not the point at issue in that case and observations made in that judgment are to be taken in the context of the facts of that case. If the judgment passed by the court on the 26th February, 1966, is to be taken as one including an order refusing to set aside the award, the defendants would be entitled to make an appeal against that under Section 39, Clause (i), Sub-clause (vi) of the Arbitration Act. No doubt, Section 39 speaks of appeal from orders passed under the Act, but that will equally apply to a judgment which is taken to contain an order setting aside or refusing to set aside an award.

9. Learned counsel pointed out from the memorandum of appeal filed by the defendants in the court below that it was directed against the decree passed under Section 17 also. The usual practice is to state in the memorandum of appeal that is directed against both judgment and decree. Mention of decree in that way will not change the legal character of the appeal. That was also directed against the judgment which contained the order refusing to set aside the award.

10. Another argument raised by learned counsel was that when the court passed an order for filing of the award under Section 14 of the Act and the arbitrators did file it, the defendants could and should have come in appeal against that order within the provisions under Section 39(1)(iv). They having failed to do so should not, learned counsel continued, be allowed by this Court the discretion of treating the written statement as an application under Section 33 of the Act. If statute provides the facility for an appeal not only against filing of the award but also against the order refusing to set aside an award, a party cannot be deprived of that for the mere reason that he did not avail of an earlier opportunity of contesting an earlier order about filing of the award. The preliminary objection against the appellate judgment thus fails.

11. Learned counsel next contended that the trial court had given very cogent and elaborate reasons for discarding the defendants' case and grounds of objection and upholding the award. The lower appellate court has not considered those reasons, more particularly the most important point which the trial court had pointed against the defendants. In the written statement the defendants stated that the two documents (Exts. 5 and 5.a) contained their thumb impressions but the thumb Impressions were given on two blank sheets of paper which were given to arbitrators in another dispute between the defendants themselves.

12. In Para 15 of the written statement they alleged that they had put their thumb impressions on two separate sheets of blank papers at the instance of a person to whom they wanted to refer for arbitration of their dispute. The name of that person was left blank in para 15 of the written statement which was filed on the 8th June, 1959. As late as the 23rd of August, 1965, that blank was filled up by way of amendment and the name of Rohan Gope was inserted at that blank space. This was obviously after Rohan Gope was examined in court as a witness on the side of the defendants. The court of first instance referred to this serious lacuna and drew an inference against the truth of the defendants' version as to how Exts. 5 and 5.a came into existence. The lower appellate court has nowhere given its attention to this, aspect to me it appears this is not an insignificant thing omission of consideration of which is not likely to affect the assessment of evidence on the defendants' side of the final conclusion on the merits of the case. No doubt, it was open to the appellate court to take a different view of the witnesses and their testimony, but that would only be justified if all important aspects that had gone to influence the trial court decision were considered adequately. In a case of reversal that is very much needed. I would, therefore, set aside the judgment and remand the case to the court of appeal below for hearing the parties fresh and disposing of the appeal according to law. Costs will abide the result.

TVN/D.V.C

13. Appeal allowed.

14. Case remanded.

Prasad Gope v. Makhan Gope And Another

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondents' (Defendants') Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Prasad Gope v. Makhan Gope And Another

Comments