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Attorney(S)
  • C.L Agarwal, for appellant
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  • Mr. L.N. Chhangani
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Citation Codes
Equivalent Citations
citation codes
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Attorney(S)
  • C.L Agarwal, for appellant
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  • Mr. L.N. Chhangani
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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

This appeal arises under Order 43 Rule 1(u) of the Code of Civil Procedure against an appellate order of the Additional District Judge of the former State of Ajmer dated 30-7-1956, which reversed the original court's decision on the point of limitation in a money suit.

The plaintiff, Seth Ramswarup, carrying on business at Naya Nagar, entered into transactions of purchase and sale with the defendants in 1942. A sum of Rs. 1,896/15 was acknowledged as due to the plaintiff on 25-4-1946. After subsequent transactions, the plaintiff became entitled to recover Rs. 2,430/11/3 on 24-12-1948 and initiated arbitration proceedings on that date through the Chamber Saraifa, Naya Nagar.

The arbitrators awarded the plaintiff Rs. 2,336/13 on 22-8-1951 and the award was filed in the court of the Sub-Judge, Naya Nagar for decree. The Sub-Judge, by order dated 13-5-1952, set aside the award. The plaintiff's appeal against that order was dismissed by the District Judge, Ajmer on 8-11-1952 and a further revision to the Judicial Commissioner was dismissed on 16-2-1953. Thereafter the plaintiff filed the present suit claiming Rs. 2,489/6/9.

In the trial court the defendants pleaded the bar of limitation. Issue No. 8 was framed as: "Is the suit within time?" The trial court held that the plaintiff was entitled to exclude the period up to the date of the trial court's order setting aside the award but not the period taken in prosecuting the appeal and revision; accordingly it held the suit barred and dismissed it.

On appeal the Additional District Judge, Ajmer held that the plaintiff was entitled to exclude the period spent prosecuting the appeal and revision against the order of the first instance setting aside the award; he reversed the trial court's decision and remanded the matter to the trial court to ascertain the period taken in appeal and revision and to decide limitation after giving that benefit to the plaintiff. The defendants (appellants in this proceeding) filed the present appeal challenging the Additional District Judge's order. The plaintiff-respondent did not appear in this Court and the appeal was heard ex parte.

Legal Issues Presented

  1. Whether the word "court" in Section 37(5) of the Arbitration Act includes appellate and revisional courts (so as to permit exclusion of the time taken in appeal or revision when computing limitation)?
  2. Whether the time taken in prosecuting appeals and revisions against an order of the original court setting aside an arbitration award may be excluded for limitation purposes under Section 37(5) of the Arbitration Act?
  3. Whether the appellate court's interpretation and remand for ascertainment of the period taken in appeal/revision (as done by the Additional District Judge) was legally correct and thus liable to be interfered with on this appeal under Order 43 Rule 1(u) CPC?

Arguments of the Parties

Appellant's Arguments (as presented by Shri C.L. Agarwal)

  • Contended that the word "court" in Section 37(5) can only mean the court of first instance and cannot include an appellate or revisional court.
  • Therefore, the period spent after the original court's order setting aside an award—specifically, the time taken in prosecuting appeal or revision—cannot be excluded for limitation purposes.
  • Emphasised the definition of "court" in Section 2(c) and relied on authorities where the word was given a narrow interpretation in connection with the Arbitration Act (for example, the Calcutta High Court decision in Abani Bhusan v. Hemchandra and the Allahabad decision in Moradhwaj v. Bhudardas as construed by the appellant).

Plaintiff-Respondent's Position (from pleadings and procedural posture)

  • The plaintiff pleaded that he had prosecuted his claim through arbitrators, then in the court where the award was filed (which set aside the award), and subsequently in the appellate and revisional courts; he claimed exclusion of the period taken before the arbitrators and in the court proceedings up to and including the appellate and revisional courts.
  • Note: The plaintiff-respondent did not appear when this appeal was heard in this Court; his detailed oral arguments before this Court are not recorded in the opinion.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in This Opinion
Abani Bhusan v. Hemchandra, AIR 1947 Cal 93 Interpreted the word "court" in Section 21 of the Arbitration Act to mean the court of first instance only; held that an appellate court cannot make a reference to arbitration under that Section. The judgment was relied upon by the appellant to advance a narrow meaning of "court." The Court examined and distinguished its reasoning as not being directly applicable to the interpretation of "court" in Section 37(5).
Moradhwaj v. Bhudardas, AIR 1955 All 353 Discussed the competence of appellate courts to make references to arbitration; applied Section 107 CPC with Section 8 of the General Clauses Act to hold that an appellate court can refer matters to arbitration (thereby taking a broader view than the Calcutta case). Noted by the Court as taking a contrary view to the Calcutta decision on Section 21 questions; used to show that the meaning of "court" has been treated differently in different contexts, but the Court held that issues under Section 21 do not govern the interpretation of Section 37(5).
Thakur Prasad v. Baleshwar Ahir, AIR 1954 Pat 106 Adopted a broader meaning of "suit" and held that an appellate court should not be excluded from making references under Section 21 of the Arbitration Act; relied on considerations including pre-Act law and consolidation principles. Presented by the opinion as a persuasive authority favouring a broader construction; the Court said it felt inclined to follow the Patna view but clarified that decisions under Section 21 cannot be extended automatically to Section 37(5).

Court's Reasoning and Analysis

The Court conducted a step-by-step analysis focused on whether the word "court" in Section 37(5) of the Arbitration Act should include appellate and revisional courts for the purpose of excluding time spent in appeals/revisions from limitation calculations.

  1. Distinction from Section 21 precedents: The Court observed that authorities interpreting "court" in Section 21 (which deal with the competence of appellate courts to make references to arbitration) are not directly applicable to Section 37(5). Section 21 raises competence questions; Section 37(5) raises a limitation/exclusion question. Thus, an analogy to Section 21 would be misleading.
  2. Appellate competence under the Act: The Court noted that Section 39 provides a right of appeal against orders setting aside or refusing to set aside awards. Given the clear appellate jurisdiction, an appellate court plainly has power to reverse or uphold decisions on awards, and this competence cannot be doubted.
  3. Practical and legal consequences of a narrow meaning: The Court reasoned that if "court" in Section 37(5) were limited to the court of first instance, a litigant who pursued an appeal or revision after the original court's order setting aside an award might be denied exclusion of the time spent on that appeal/revision. That interpretation would effectively restrict or burden the statutory right of appeal under Section 39, an outcome the Court found unreasonable and unlikely to have been intended by the Legislature.
  4. Statutory and analogous support: The Court referred to Section 14 of the Limitation Act (which explicitly allows exclusion of time taken in appeals) and observed that Section 37(5) corresponds with Section 14. Although the language differs, the general principle of excluding time taken in appeals supported a broader interpretation of "court" in Section 37(5). The Court concluded that Section 37(5) should be construed in harmony with the established principles that safeguard the right of appeal.
  5. Consideration of CPC provisions: The Court considered the role of Section 107 CPC and Section 8 of the General Clauses Act as they had been used in cases dealing with Section 21, but held that the reasoning based on those provisions in the context of Section 21 cannot be mechanically transferred to Section 37(5). In contrast, appeals under Section 39 of the Arbitration Act are appealed under the Act itself, bringing Section 107 CPC into play in a manner that supports treating appellate actings as part of the "court" for Section 37(5) purposes.
  6. Conclusion from principles and necessity: Considering statutory text, the right of appeal under Section 39, the analogy with Limitation Act principles, and the practical consequences of a narrow construction, the Court held it reasonable and fair to interpret "court" in Section 37(5) to include appellate and revisional courts—at least when an award is set aside by an appellate or revisional court.

Holding and Implications

Holding: The appeal is dismissed.

The Court held that, on a fair and reasonable construction of Section 37(5) of the Arbitration Act, the word "court" includes the appellate and revisional courts. Consequently, the plaintiff is entitled to exclusion of the period taken by him in filing appeal and revision against the order of the court setting aside the arbitration award. The Court found no merit in the appellants' challenge to the Additional District Judge's decision and stated that the view taken by the lower (trial) court as affirmed on appeal called for no interference.

Immediate procedural consequences and ancillary orders:

  • Because the respondents (plaintiff) did not appear in this Court, there is no order as to costs.
  • Leave to appeal to a higher court was granted because an important question of law is involved.

Broader implications:
The opinion adopts an interpretive stance that, for limitation-exclusion purposes under Section 37(5), the term "court" should be read to include appellate and revisional courts in appropriate circumstances (notably where an award is set aside by such courts). The Court grounded this reading in statutory purpose (protecting the right of appeal under Section 39) and in analogy to established limitation principles (Section 14 of the Limitation Act). The opinion did not indicate that it was establishing an entirely new precedent outside the scope of this case; rather, it resolved the question presented and dismissed the present appeal while granting leave to appeal further on the important point of law.

Show full summary ...

    Babulal v. Ramswaroop

    1. This is a defendant's appeal under Order 43 Rule l(u) of the Code of Civil Procedure against the appellate order of the Additional District Judge of the former State of Ajmer dated 30-7-1956 reversing the decision of the original court on the point of limitation in a money suit.

    2. The relevant facts for the proper appreciation of controversy between the parties may be stated in a little detailed manner as follows:

    The plaintiff Seth Ramswarup carries on business at Naya Nagar. The defendants entered into some transactions of purchase and sale of cottonseeds, til, gur and makki and silver with the plaintiff in the year 1942. A sum of Rs. 1896/15/- was found due to the plaintiff from the defendants and was acknowledged by him on 25-4-1946. There were subsequent transactions between the parties; some resulting in losses and others in gains. The defendants made some payments. In the end the plaintiff became entitled to recover Rs. 2,430/11/3 on 24-12-48. On 24-12-1948, the plaintiff took steps to recover his amount through arbitration proceedings through the Chamber Saraifa, Naya Nagar.

    The arbitrators after enquiry gave an award in favour of the plaintiff for an amount of Rs. 2336/13/-on 22nd August, 1951 and informed the parties accordingly. An award was filed in the court of Sub-Judge, Naya Nagar for passing a decree in terms of the award. But the Sub-Judge, vide his order dated 13-5-1952 set aside the award. An appeal by the plaintiff against the order of the Sub-Judge setting aside the award was dismissed by the District Judge, Ajmer on 8-11-1952, and further revision to the Judicial Commissioner met the same fate on 16-2-1953. Thereafter, the plaintiff filed the present suit claiming a decree for Rs, 2489/6/9.

    He pleaded that he was prosecuting his claim through the arbitrators and thereafter in the court where the award was filed and subsequently before the appellate and revisional court and claimed exclusion of the period taken before the arbitrators and in the court of the first instance, which set aside the award and thereafter, in the appellate and the revisional court. The defendant opposed the plaintiff's suit and, inter alia, pleaded the bar of limitation. The trial court framed a number of issues; issue No. 8 being on the question of limitation. It was framed as follows:

    Is the suit within time? ;"

    3. The trial court held that the plaintiff was entitled to the exclusion of the period up to the date of the trial court's order setting aside the award but he is not entitled to the exclusion of the period taken in filing an appeal before the District Judge and a further revision before the Judicial Commissioner and in this view of the matter, he held the plaintiff's suit as barred by limitation and dismissed it.

    4. On an appeal by the plaintiff, the Additional District Judge, Ajmer came to a contrary conclusion. He held that the plaintiff is entitled to exclude the period which was taken in prosecuting his appeal and revision against the order of the court of the first instance setting aside the award. He, consequently, reversed the decision of the trial court but as the period taken in appeal and revision has to be ascertained, vide his order dated 30-7-1(SIC) he remanded the case to the trial court for asce(SIC) ing that period and deciding the question of (SIC) tion after giving benefit to the plaintiff of the period taken in appeal and revision.

    5. The defendants have filed the present appeal and challenged the order of the Additional District Judge. The plaintiff-respondent in spite of notice of appeal did not appear in this Court and the appeal was heard ex parte.

    6. Shri C.L. Agarwal addressing on behalf of the appellant has very vehemently contended that the word 'court' in Section 37 sub-section (5) can only mean the court of the first instance and cannot include an appellate court or a revmonal court and, therefore, the period spent subsequent to the order of the original court setting aside an award in prosecuting an appeal or revision against the order o± the" court of the first instance cannot be excluded. He emphasised the definition of 'court' in Section 2(c) and cited some cases where the word has been given a narrow interpretation in discussing the provisions of the Arbitration Act.

    In Abani Bhusan v. Hemchandra, AIR 1947 Cal 93 the word 'court' as appearing in Section 21, came up for interpretation in connection with a question whether the appellate court can refer the matter in dispute in appeal to an arbitration and the learned Judges held that the 'court' in Section 21 means the court of the first instance only and, therefore, an appellate court cannot make a reference to arbitration. In Moradhwaj v. Bhudardas, (S) AIR 1955 All 353 the Allahabad High Court in dealing with the question of the competence of the appellate court to make reference to arbitration, interpreted the word 'court' in the same manner but it did not agree with the Calcutta High Court on the question of the competence of the appellate court to make references to arbitration.

    Applying section 107 C. P. C. with the help of Section 8 of the General Clauses Act, it held that an appellate court can refer the matter in dispute to arbitration. As against the cases relied upon by Shri Agarwal, I may refer to Thakur Prasad v. Baleshwar Ahir, AIR 1954 Pat 106 where Jamuar J. sitting with Ramaswami J. took a contrary view and observed as follows:

    "I see, therefore, no reason why a restricted meaning should be given to the word "suit" as used in Section 21, Arbitration Act. In my opinion, the term "suit" in that section ought not to be taken to exclude an appeal. I, for myself, find no good ground for the legislature, while giving power to the Court of original jurisdiction to make an order of reference under Section 21, Arbitration Act, to exclude an appellate Court from making such an order".

    The conclusion was reached on the important considerations (a) that under the law prior to the Act, an appellate court had the power to make an order of reference, (b) that the Act is a consolidating Act, (c) that in construing statutes consolidating laws there is a presumption that the law was not intended to be altered.

    7. This controversy relates to Section 21 and although I feel inclined to follow the Patna view, I do not express any final opinion, as in my judgment considerations relevant under Section 21 of the Act cannot be extended and invoked to limit the meaning of the word 'court' in Section 37(5). Section 21 contemplates a question regarding the competence of the appellate court to discharge functions conferred upon the court of the first instance. No such question arises in connection with Section 37(5).

    It cannot be denied that in view of a clear provision of appeal under Section 39 against an order setting aside award or refusing to set aside an, award, the appellate court's competence to reverse an order of the court of first instance and to set aside an award maintained by the court of first instance or to uphold an award set aside by the original court, cannot be doubted. The question under Section 37 simply is whether while the appellate court has jurisdiction to exercise functions, a suitor resorting to appeal can claim exclusion of time taken in appeal when admittedly he is entitled to the exclusion of time taken in the court of first instance. There is fundamental difference in the two cases and an analogy of Section 21 will be quite misleading and the observations made for the interpretation of the word 'court' in that context are of no help in interpreting Section 37(5).

    A critical examination of the Calcutta case will show that the reasoning of that case cannot be applied to a case under Section 37(5). The main consideration that prevailed with the Judges in that case was that the provisions of section 107 C. P. C. empowering the appellate court to exercise the powers of the original court could not be extended to the making of the references, It was pointed out that the only provision in the Arbitration Act for extending the Civil Procedure Code generally to arbitration matters are contained in Section 41 of the Arbitration Act and therein it was provided that the provisions of the Civil Procedure Code shall apply to all proceedings before the court and to all appeals under this Act.

    An appeal in the kind of cases before the Calcutta High Court does not lie under the Arbitration Act but under the general law and, therefore, section 107 C. P. C. could not be invoked by the appellate court for making a reference. Under Section 39 of the Arbitration Act, an order setting or refusing to set aside an award has been made appealable and appeals against orders setting or refusing to set aside awards certainly will lie under the Arbitration Act and, therefore, Section 107, C. P. C., must be attracted in cases of this type, and the reasoning of the Calcutta case cannot be extended to this case. We must bear in mind that the appellate court and the revisional court in exercising appellate or revisional jurisdiction is quite competent to set aside the awards, even though the original court may not have thought it proper to set aside and, therefore, if we interpret the word 'court' in S, 37 to mean only the original court, there will be a serious anomaly where an award is set aside by an appellate court. In that case on the argument of the learned counsel for the appellant, there can be no case for exclusion of the period in terms of Section 37 of the Arbitration Act.

    The legislature cannot be imputed to have intended such an absurd result. It appears, therefore, quite reasonable and fair in the context of Section 37 to interpret the word 'court' in Section 37(5) so as to include the appellate and the revisional court, at any rate, when the award is set aside by an appellate or revisional court. This position could not be successfully met by the learned counsel for the appellant. He, however, urges that when an award is set aside by the original court, in that case a litigant should not be entitled to exclude the period taken in a further appeal or revision against the order setting aside the award.

    The obvious short answer to this argument is that we cannot interpret the word 'court' differently because of the variations in circumstances of individual cases. When for one purpose, discussed above, the word 'court' must include the appellate Of revisional court, there is obviously no adequate reason for interpreting it differently when the award is set aside, by the original court.

    8. The matter may be approached from another angle. Section 39 gives a suitor right of appeal against an order setting aside award and very naturally he must be allowed to pursue his right without any kind of restriction or risk. A view that in case of failure in appeal in any subsequent litigation he cannot claim exclusion of time taken in appeal cannot but seriously restrict, if not altogether deprive him of his right. This could never have been intended by the Legislature.

    It will be useful to point out at his stage that Section 37 contains provisions relating to limitation, and sub-section (5) corresponds with Section 14 of the Limitation Act. Under that section the time taken in conducting proceedings in appeal can be excluded on the wordings of the section itself. It is of course me that Section 37(5) does not adopt the language of Section 14 for appeal purposes but the difference in language need not be emphasised to infer a different legislative intent. The general principles of Section 14 being wellknown the legislature very presumably remained content with general language only.

    I have no hesitation in holding that on the general principles of Section 14, and on the obvious necessity of adequately recognising and safe-guarding the rights of parties under Section 39, Section 37(5) should be interpreted to entitle to a suit to claim exclusion of the period taken in appeal against an order setting aside sale and the same principle may in appropriate cases be extended to revisions also.

    9. On a very careful consideration of the various aspects of the matter, I have no doubt that on a fair and reasonable construction of Section 37, the word 'court' should include the appellate and revisional court and that the plaintiff is entitled to the exclusion of the period taken by him in filing appeal and revision against the order of the court setting aside the award. The view taken by the lower court appears to be quite correct and calls for no interference. There is no merit in this appeal and it is consequently dismissed. The respondents having not appeared there will be no order as to costs.

    10. Learned counsel for the appellant has applied for leave to appeal. As an important question of law is involved, the leave is hereby granted.

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    Comments

    Babulal v. Ramswaroop
    (Feb 24, 1960)