Bahadur Singh v. Fuleshwar Singh And Others

Shambhu Prasad Singh, J.:— This appeal by the plaintiff arises out of an application dated the 5th May, 1962 for making an award on a reference made outside the Court a rule of the Court, which was registered as a title suit.

2. According to the plaintiffs case, he and defendant no. 1 entered into a partnership business in which the plaintiff was to supply the capital and to have eleven annas share and defendant no. 1 was to have five annas share. In August 1959, they started a shop of stationery Roods in the town of Saharsa. In November 1961, there was a dispute between them and, on the 5th December, 1961, they entered into an agreement to refer the matter for arbitration by four arbitrators who were made defendants 2 to 5 to the suit. One of them, Manzar Alam, according to the plaintiff, was to act as the umpire. They executed two documents. Exhibits 1 and 1(a), separately showing that they agreed to refer the case for arbitration. It appears that on the 3rd April, 1962, the arbitrators pronounced the award and signed it. It was re-written on stamped paper on the 4th April, 1962 and was registered on the 5th April, 1962. A notice of the award was served on the plaintiff on the 7th April, 1962. Two more persons were made parties to the suit as defendants 6 and 7 who, according to the plaintiff, were merely his benamidars and had nothing to do with the business. After the notice was served upon him, defendant no. 1 appeared in court on the 16th June, 1962. The award was actually filed in Court on the 11th May, 1963. On the 12th June, 1963, defendant no. 1 filed an application before the Court below that the award had been filed and kept in safe custody and that he wanted to inspect it on the 11th January, 1964, he filed his objection, alleging inter alia, that there was no valid reference inasmuch as he was made to sign the agreement for reference under undue influence and coercion, that the award was invalid for the arbitrators had misconducted themselves, that defendants 6 and 7 had interest in the partnership and were not mere benamidars of the plaintiff and, as they were no party to the reference, the award could not be enforced, that the reference was void as it was vague, that the reference was also bad because it was in respect only of a part of the partnership business and not in respect of the canteen business owned by the partners in Sour Bazar in Saharsa and that the arbitration was bad because no umpire was, in fact, appointed. He alleged various misconducts on the part of the arbitrators which need not be referred to except three items, namely, that the arbitrators did not take into account the damaged articles of the shop and did not assess any value with respect to them, that they fixed the valuation of the other articles with the help of outsiders and that they re-wrote the award on the 4th April, 1962 after they had pronounced and signed it a day earlier.

3. The Court below has found in favour of the plaintiff on all points except on the questions of vagueness of the reference and three misconducts stated above. It has held that the reference was vague and the arbitrators did commit the aforesaid three misconducts and, accordingly, set aside the award and refused to pass a decree in terms thereof.

4. Mr. R.S Chatterji, appearing for the appellant has argued that, as the objection of defendant no. 1 (respondent no. 1 before this Court and to be referred to as the respondent hereafter) was filed beyond thirty days of the filing of the award it was time barred and that this fact should have been taken into consideration by the Court below and it should have passed a decree in terms of the award. There can be no doubt that the respondent came to know of the filing of the award on the 12th June, 1963 when he filed an application for its inspection and his objection was obviously beyond thirty days from that date. Article 158 of the Indian Limitation Act (Act IX of 1908) lays down that an application under the Arbitration Act (Act 10 of 1940) to set aside an award or to get an award remitted for reconsideration must be filed within thirty days from “the date of service of the notice of filing of the award”. It was contended by learned counsel for the respondent that, as no notice was served on the respondent in this case, there could be no question of limitation, and reliance was placed on a Bench decision of this court in Deep Narain Singh v. Mt. Dhaneshwari, AIR 1960 Pat 201, where it has been held that, if the required notice is not served, the question of limitation under Article 158 does not arise. In Nilkantha Sidramappa v. Kashinath Somanna, AIR 1962 SC 666, it was observed:—

“We see no ground to construe the expression ‘date of service of notice’ in column 3 of Article 158 of the Limitation Act to mean only a notice in writing served in a formal manner. When the Legislature used the word ‘notice’ it must be presumed to have borne in mind that it means not only an intimation but also an informal one. Similarly, it must be deemed to have in mind the fact that service of a notice would include constructive or informal notice. If its intention were to exclude the latter sense of the words ‘notice’ and ‘service’ it would have said so explicitly. It has not done so here. Moreover to construe the expression as meaning only a written notice served formally on the party to be effected, will leave the door open to that party even though with full knowledge of the filing of the award he has taken part in the subsequent proceedings, to challenge the decree based upon the award at any time upon the ground that for want of a proper notice his right to object to the filing of the award had not even accrued. Such a result would stultify the whole object which underlies the process of arbitration—the speedy decision of a dispute by a tribunal chosen by the parties.”

5. In view of these observations of their Lordships of the Supreme Court, on the facts of this case, it has to be held that the starting point of limitation for filing an objection to the award by the respondent would be the 12th June, 1963. The observations of this Court in Deep Narain Singh's case, AIR 1960 Pat 201 which were made on a reference to the special facts of that case have got no application here.

6. It was next contended by Mr. Gorakh Nath Singh for the respondent that the question of limitation would arise only in respect of two misconducts, namely, that the arbitrators did not take into account the damaged articles of the shop and that they fixed the valuation of the other articles with the help of outsiders, but the plea that the award was invalid because of the vagueness of the reference and that it was re-written were beyond the scope of Section 30 of the Arbitration Act and could not be held to have been barred by limitation. Reliance was placed on a Bench decision of this Court in Basant Lal v. Surendra Prasad, AIR 1957 Pat 417 and a decision of their Lordships of the Judicial Committee in Chhabba Lal v. Kallu Lal, AIR 1946 P.C 72 that the expression “otherwise invalid” in Section 30 of the Indian Arbitration Act and paragraph 15 of Schedule II to the Code of Civil Procedure does not include objections challenging the existence or validity of an arbitration agreement. A contrary view was taken in Saha & Co. v. Ishar Singh Kripal Singh & Co., AIR 1956 Cal 321 (FB) by the majority of a Full Bench of the Calcutta High Court; but that decision was dissented from by a Bench of this Court in Basant Lal's case, AIR 1957 Pat 417 and, as the latter decision is binding on us, it is not proposed to examine the correctness of the proposition in detail.

7. In support of his contention that the award was bad because it was rewritten, Mr. Singh relied on a Bench decision of this Court in Chhati Lal v. Ramchariter, AIR 1941 Pat 215 and also the decision in Deep Narain Singh's case, AIR 1960 Pat 201 already referred to. In Deep Narain Singh's case, AIR 1960 Pat 201 additions had been made to the award already pronounced by way of interpolation and, in those circumstances it was held that it was invalid. In the present case, there is no question of any variation, or addition, or alteration in the award. In Chhati Lal's case, AIR 1941 Pat 215 the award was published on the 28th March, 1936 but it was re-written on the 6th August, 1937 and registered on the 14th of the same month. As the award was not presented for registration within four months from the date on which it was made, it was held that the rewritten award could not be looked into as a valid award. Section 23 of the Indian Registration Act, 1908, lays down that a copy of the decree or order may be presented within four months from the date on which the decree or order was made. The award is an order of the Arbitrators and, according to this section, a copy of it may be prepared if it is to be registered. In the instant case, therefore, when the award was registered only two days after the making of the award on the 3rd April, 1962, it cannot be said on the authority of Chhati Lal's case, AIR 1941 Pat 215 that it was rendered invalid because it was copied out on stamped paper on the 4th April, 1962. I have not been able to understand the judgment of the Court below on this point.

8. Mr. Singh, however, has contended that the order of the court below has to be upheld inasmuch as it has held that the agreement for reference was vague. I am not satisfied with the finding of the court below that the agreement for reference is vague. The two documents, Exhibits 1 and 1(a), which contain the terms of reference agreed upon, state that the appellant and the respondent entered into a partnership business and that the business owns a shop known as “Variety House” in the town of Saharsa, in which the respondent owns five annas share and the rest is owned by the appellant. The document then proceeds and states that, as there was a dispute between the two, it is referred to the four arbitrators named therein and their decision shall be binding on them. It is manifest from these documents that the dispute between the parties was with regard to the Variety House which was owned by them as partners and that the dispute was referred for arbitration. Thus, the meaning of the agreement between the parties was certain or, at least, capable of being made certain. In support of this part of his contention also, Mr. Singh relied on the decision in Deep Narain Singh's case, AIR 1960 Pat 201. The properties to which the dispute related in that case, as mentioned in the agreement for reference, were held to be interpolations and, in the circumstances it was held that a reference in respect of all matters of dispute relating to properties not specified in the agreement was extremely vague. Mr. Singh then relied on another Bench decision of this Court in Jai Govind Singh v. Bagal Lal Singh, AIR 1950 Pat 445.

9. In that case, the plaintiff entered into a compromise with the defendant and agreed to give twenty bighas of paddy land out of sardari Jagir properties to the defendant. In the compromise petition which was filed, it was further mentioned that five gentlemen would decide “all matters” relating to the movable and immovable properties of the parties and the twenty bighas of land which were to be given to the defendants to which none of the parties would be competent to make any plea or raise any objection. The award which was filed later on did not settle all the disputes between the parties with regard to their movable and immovable properties, and a question arose before the District Judge as to whether the reference was in respect of Sardari Jagir land only or in respect of other properties as well. The District Judge as well as this Court held that the compromise was ambiguous on this question and its terms were not clear as to whether it related only to Sardari Jagir land or other properties of the parties as well. In these circumstances, the compromise was not recorded on the ground that the agreement between the parties was vague. Both these decisions are distinguishable from the present case.

10. Section 29 of the Contract Act runs as follows:—

“Agreements, the meaning of which is not certain, or capable of being made certain, are void.”

11. Two of the illustrations to the section, namely, illustrations (a) and (c), may be fully quoted to see what the framers of the Act intended. They are as follows:—

“(a) A agrees to sell to B ‘a hundred tons of oil’. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.”

“(c) A, who is a dealer in coconut oil only, agrees to sell B ‘one hundred tons of oil’. The nature of A's trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut oil.”

12. A comparison of these two illustrations makes it manifest that, in cases where, from the surrounding circumstances, the meaning of the agreement is capable of being made certain, the agreement is not void but can be enforced. In the case before us, from Exhibits 1 and 1(a), it is clear that the dispute which was referred for arbitration was a dispute relating to the Variety House, a shop owned by the partnership. From the discussions in the judgment of the Court below, it also appears that the parties appeared before the arbitrators and never challenged their jurisdiction to proceed with the arbitration. In Radha Kishan v. Sapattar Singh, AIR 1957 All 406, it was observed by a Bench of the Allahabad High Court:

“In arbitration agreements the actual points of dispute are seldom stated. Generally, references are made to arbitration where disputes arise and the parties thereafter formulate when necessary, their disputes before the arbitrators and seek their decisions on those points of differences. The arbitration agreement in this case cannot be said to be so vague or uncertain as to be unenforceable. Section 29 of the Contract Act says that:

‘Agreement, the meaning of which is not certain, or capable of being made certain, are void.’”

13. In my opinion, the law on the point has been correctly stated in this decision, and I respectfully agree with what their Lordships have observed and which has been quoted above.

14. Applying that test to the facts of the present case, the award of the arbitrators in the case before us cannot be set aside on the ground of vagueness in the reference for arbitration.

15. For the reasons stated above, the order of the court below must be set aside. The appeal is, accordingly allowed with costs to the plaintiff-appellant of this court as well as the court below. The award is accepted as valid and it is directed that a decree be prepared in terms of the award.

16. Anwar Ahmad, J.:— I agree

MVJ/D.V.C

17. Order accordingly.