- Bookmark
- Share
- CaseIQ
Prem Sagar v. M/S. Security & Finance (Pvt.) Ltd.
Structured Summary of the Provided Opinion
Factual and Procedural Background
On June 22, 1962, an award was purportedly made by Shri Kundan Lal, Pleader, acting as sole arbitrator, under which the appellant and his guarantor were held jointly and severally liable to pay the respondent company a sum of Rs. 15,786.85 and to return a vehicle or pay Rs. 10,000 in lieu. The award was filed in Court by the company and notice of filing was served on the parties. The appellant received notice on September 8, 1962, and on October 11, 1962, applied under sections 30 and 33 of the Arbitration Act, 1940 seeking setting aside of the award and declaration that it was void. The principal ground raised by the appellant was that the arbitration agreement dated August 22, 1957, was forged and had never been signed by him — i.e., the factual existence of the arbitration agreement (and therefore arbitrator's jurisdiction) was challenged.
The company contended that the objections were time-barred. The trial Court (Subordinate Judge) framed an issue on limitation and applied Article 158 of the Limitation Act, 1908 (corresponding to Article 119(b) of the Limitation Act, 1963), holding that the objections filed beyond 30 days were barred. A question was referred to the Full Bench asking whether an application under section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement is governed by Article 119(b) of the Limitation Act, 1963 (previously Article 158, Limitation Act, 1908).
Legal Issues Presented
- Whether an application under section 33 of the Arbitration Act, 1940 challenging the validity of an award on the ground of non-existence of the arbitration agreement is governed by Article 119(b) of the Limitation Act, 1963 (previously Article 158 of the Limitation Act, 1908)?
Arguments of the Parties
Appellant's Arguments
- The arbitration agreement dated August 22, 1957, was forged and had never been signed by the appellant.
- Consequently, the arbitration agreement did not factually exist and the arbitrator therefore lacked jurisdiction; the award should be declared void (i.e., adjudged non-existent) rather than merely set aside.
Respondent's / Company's Arguments
- The objections to the award were time-barred and should be dismissed as having been filed beyond the 30-day period prescribed by Article 158 (Article 119(b)).
- The respondent relied on precedent (for example, the Bombay decision in A.R. Savkur) which was said to require that even an application to have an award declared a nullity be brought within the Article 158 period; the respondent's counsel also relied on other authorities such as United India Fire & General Insurance Co. Ltd. v. Bhagat Singh, Lal Chand v. Gopi Chand, and Shafia Begum v. Bashir Ahmed.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.R. Savkur v. Amritlal Kalidas and others, A.I.R. 1954 Bombay 293 | Held that section 30 deals with grounds on which an award can be set aside, while section 33 provides the procedure; concluded that even an award alleged to be a nullity must be challenged within the Article 158 period. | The opinion recounts this decision as representing a contrary view and notes the Bombay Court's concern about having two different limitation periods; the Full Bench considered and ultimately rejected the apprehension that the result would be unacceptable, indicating that A.R. Savkur's conclusion did not control the result in the present reference. |
| Saha & Co. v. Ishar Singh, A.I.R. 1956 Cal. 321 | The Calcutta Full Bench (majority) held there was effectively no separate application under section 30 and that challenges to awards (including those alleging nullity) should be made under section 33; an exception was recognised where the factual existence of an award was challenged. Separate opinions (minority) took a different view. | The opinion discusses the Calcutta Full Bench at length, cites both majority and dissenting reasoning, and adopts the distinction between existence and validity of an arbitration agreement/award. The Court aligns with the view that challenges to factual non-existence of the arbitration agreement/award fall under section 33 rather than being matters for section 30 within Article 158. |
| Basant Lal v. Surendra Prasad and others, A.I.R. 1957 Patna 417 | The Patna High Court (Division Bench) differed from the Calcutta majority, holding section 30 relates to invalidity of award (proceedings before arbitrator) and does not include challenge to existence/validity of arbitration agreement/reference. | The opinion cites this as an authority expressing a different view and uses it to represent the diversity of judicial approaches; the Full Bench analyzed the competing positions and sided with the view that existence/non-existence may be challenged under section 33. |
| United India Fire & General Insurance Co. Ltd. v. Bhagat Singh, A.I.R. 1954 Punjab 171 | Relied upon by respondent's counsel (specific rule as relied upon is not detailed in the opinion). | The Court noted that the respondent's counsel relied on this decision but stated it did not deal with it in detail because the principal conflict of authority was adequately represented by the other decisions discussed. |
| Lal Chand v. Gopi Chand, A.I.R. 1964 Punjab 61 | Relied upon by respondent's counsel (specific rule as relied upon is not detailed in the opinion). | The Court observed this case was placed before it by the respondent's counsel but did not analyze it in detail for the reasons explained in the judgment. |
| Shafia Begum v. Bashir Ahmed, I.L.R. 1962 Bombay 178 | Relied upon by respondent's counsel (specific rule as relied upon is not detailed in the opinion). | The Court noted reliance on this authority by respondent's counsel but did not deal with it in detail for the reasons given in the opinion. |
Court's Reasoning and Analysis
The Full Bench framed its analysis around the meaning of the phrase "to set aside an award" in Article 158 (Limitation Act) and whether a challenge under section 33, alleging non-existence of the arbitration agreement (and thus that the award is a nullity), falls within the 30-day limitation period prescribed by that Article.
Key points of the Court's step-by-step legal analysis (as stated in the opinion):
- The short 30-day limitation in Article 158 suggests legislative intent to provide a definite time‑limit for challenging awards so that awards may be expeditiously translated into judgments.
- There is a conflict of High Court authorities on whether challenges alleging non-existence of an arbitration agreement must be brought within Article 158 (i.e., are to be treated as applications to "set aside" the award) or whether such challenges fall under section 33 and are outside Article 158's ambit.
- The Court examined the language and structure of the Arbitration Act, 1940 — particularly sections 15, 16, 17, 30, 32 and 33 — and identified textual and structural indications that different kinds of relief are contemplated by the Act: (a) remedies to set aside, remit or modify awards under sections 15, 16 and 30; (b) declaratory/adjudicatory jurisdiction under section 33 to decide questions of existence and validity of arbitration agreements or awards.
- Specific statutory observations the Court relied upon included:
- There is no provision elsewhere in the Act (other than section 33) expressly conferring a right to ask the Court to determine the effect or existence of an arbitration agreement.
- Section 16 authorizes remittal of awards for reconsideration in certain cases; the language of sections 15 and 16 shows that certain reliefs (remittal, modification) are intended to be obtainable under those sections rather than by a generic section 33 procedure.
- Article 158 prescribes limitation for getting an award remitted for reconsideration; the Court interprets this to point to section 16 applications rather than to be taken as applying universally to all applications under section 33.
- Section 17's wording suggests the Court, in some instances, can set aside an award even without an application — indicating a distinction between court-initiated nullification and applications under sections 30/33.
- The Court rejected a rigid dichotomy that would force all challenges (including those alleging non-existence of the arbitration agreement) into the category of "setting aside" an award within Article 158. The Court emphasized the conceptual distinction between:
- Validity of an award (an award that exists but is voidable or invalid as to its making) — matters contemplated by section 30 and related provisions; and
- Existence of an award (or of the arbitration agreement) — situations where, if the arbitration agreement did not factually exist, no arbitrator existed and therefore there is nothing properly describable as an award to be "set aside"; these are matters for section 33 declaratory jurisdiction.
- The Court observed that treating section 33 purely as a procedural adjunct to section 30 (so that section 33 applications are always governed by Article 158) would render certain words in the statute unnecessary (for example, the reference to "existence" in section 33) and would obscure the legislature's separate treatment of remittal/modification (sections 15/16) as distinct remedies.
- The Court acknowledged the respondent's concerns about practical anomalies (two different limitation periods, appeal rights, interaction with various sections) but found those apprehensions insufficient to override the plain meaning of the statutory text. The Court stated that where the statutory words are plain and unambiguous, the Court must interpret them rather than modify them to avoid perceived anomalies.
- On that basis, the Court concluded that an application under section 33 seeking a declaration that an award is a nullity because the arbitration agreement did not exist is not an application "to set aside an award" within Article 158 and therefore is not governed by the 30-day limitation in Article 158.
Holding and Implications
Holding: The Full Bench answered the referred question in the negative. Specifically, non-existence and invalidity of an arbitration agreement are not grounds for setting aside the award under section 30, and Article 158 of the Limitation Act does not apply where the relief sought is to have the award declared null and void on the ground that there existed no arbitration agreement.
Implications (as stated in the opinion):
- The consequence for the immediate litigation is procedural: the case was directed to be sent back to the Divisional Bench for decision in the light of the Full Bench's answer.
- Direct legal effect: where a party seeks a declaration under section 33 that no arbitration agreement existed (and therefore that the award is a nullity), such an application is not governed by the 30-day limitation period under Article 158. In those circumstances the relief is an adjudication of non-existence/invalidity under section 33 rather than an application "to set aside" an award under Article 158/section 30.
- The Court noted residual issues and potential anomalies (for example, appellate rights under section 39(1)(vi), interaction with section 37(5) on exclusion of time, and other procedural consequences) but expressly declined to resolve those controversies in the present case; such matters may require resolution in appropriate future cases.
- The opinion thereby distinguishes between (a) challenges to the validity of an award (addressable under section 30 and, when appropriate, within Article 158's time limits) and (b) adjudicatory challenges to the existence or nullity of an arbitration agreement/award (addressable under section 33 and outside Article 158's 30-day bar, as interpreted here).
- No broader re-writing of the Arbitration Act was undertaken; the Court emphasized adherence to the plain words of the statute and left unresolved ancillary controversies for future adjudication.
Disposal / Outcome: Reference answered in the negative; the case was sent back to the Divisional Bench for further proceedings consistent with this answer.
Judges expressing agreement in the opinion: S.K. Kapur, J. (opinion author), S. N. Andley, J., and K. S. Hegde, C.J. — all concurred with the negative answer to the reference.
S.K Kapur, J.:— The following question has been referred to the Full Bench: —
“Whether an application under section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement, is governed by Article 119 (b) of the Limitation Act, 1963 (previously Article 158 of the Limitation Act, 1908) ?”
2. On June 22, 1962, Shri Kundan Lal, Pleader, purporting to act as the sole arbitrator made an award whereunder the appellant and his guarantor J. N. Khanna were held jointly and severally liable to pay to Messrs Security and Finance (Private) Limited, New Delhi, respondent (hereafter referred to as the company) a sum of Rs. 15,786.85 Paise and were also to return vehicle No. MPE-187 (Commar 1956 Model) or in default to further pay an amount of Rs. 10,000/- being the assessed market value. The arbitrator filed the award in Court at the instance of the company and notice was given to the parties of filing thereof. The notice was served on the appellant on September 8, 1962, and on October 11, 1962, he made an application under actions 30 and 33 of the Arbitration Act for setting aside of the award and for its being declared void. Various objections were taken to the award but I am concerned with only one of them, namely, that the arbitration agreement dated August 22, 1957, was a forged document and had never been signed by the appellant. In short, the very existence of the arbitration agreement and consequently the jurisdiction of the arbitrator were challenged. The company pleaded for dismissal of the objections on the ground of limitation and, therefore, the trial Court framed issue No. 10 reading —
“Whether objections under sections 30 and 33, Arbitration Act, are within limitation ? If not, its effect ?”
The learned Subordinate Judge decided in favour of the company and held that the objections having been filed beyond 30 days were time-barred. The trial Court applied Article 158 of the Limitation Act,.1908.
3. The answer to the question turns on the meaning to be ascribed to the words “to set aside an award” in Article 158 in the First Schedule to the Limitation Act, 1908. If the application be treated as one for setting aside the award undoubtedly the period would be 30 days from the date of service of the notice of filing of the award and consequently the objections barred by time. Article 158 reads —
“Description of appeal Period of limitation Time from which period begins to run. 158. Under the Arbitration Act, 1940 (10 of 1940) to set aside an award or to get an award remitted for reconsideration. Thirty days. The date of service of the notice of filing of the award.
4. The short period of limitation fixed for filing objections does indicate an intention on the part of the Legislature to fix a definite time-limit for challenging the validity of he award and for providing an expeditions method of getting an award translated into a judgment. There prevails a considerable conflict in the decisions of the various High Courts and I hope, in expressing my views on this inartistically drafted statute, I shall not be thought wanting in respect to the various eminent Judges who have dealt with this point. The various lacunae in the Act appear to be the result of a conflict in the mind of the Legislature arising out of its anxiety to achieve the final disposition of differences between the parties in a faster, less expensive, mote expeditious and perhaps less formal manner than is available in Court proceedings and the anxiety to preserve the fundamentals of all quasi-judicial determinations. If I decide that an application for challenging the factual existence of the arbitration agreement and consequently getting an award declared a nullity, is an application for setting aside the award, Article 158 of the Limitation Act would apply. If, on the other hand, my conclusion be that an arbitration award made in pursuance of the purported exercise of power under an arbitration agreement, which factually does not exist, is not to be, and cannot be, set aside but is merely declared null and void, the matter would fall exclusively within the field covered, by section 33 of the Arbitration Act outside the purview of Article 158 of the Limitation Act. In A.R Savkur v. Amritlal Kalidas and others, A.I.R 1954 Bombay 293 (1), a Bench of the Bombay High Court, presided over by Chagla, C.J, decided that section 30 of the Arbitration Act dealt only with the grounds on which an award could be set aside and the procedure for getting it set aside was laid down by section 33 with the result that even in the case of an award which is alleged to be a nullity, an application under section 33 will have to be made within the period prescribed by Article 158, Limitation Act. The Bombay High Court, in coming to that conclusion, was influenced by the fact that accepting the other point of view will result in prescription of two different periods of limitation, one for setting aside an award and the other for having it adjudged void. That would be according to the Bombay High Court, destructive of the intention of the Legislature reflected in section 17 of the Arbitration Act which enjoins upon the Court to writ only till the period of limitation under Article 158 has expired before passing a decree. The matter was considered at great length in Saha & Co. v. Ishar Singh, A.I.R 1956 Cal. 321 (2). Chakrawartti, C.J, Lahiri and P.B Mukherji, JJ., representing the majority view, held that there was no such thing as an application under section 30 and an application for either challenging the validity of an award or for having it declared void could be made only under section 33; that there was nothing in the language of sections 30 and 33 suggesting that the invalidities contemplated by the two sections were mutually exclusive and that the non-existence or invalidity of the arbitration agreement only furnished grounds for setting aside of an award. One exception was however, recognised by the majority, namely, the cases where the factual existence of an award was challenged. The first question referred to the Calcutta Full Bench, namely — “Does the Indian Arbitration Act, 1940, distinguish between an application for setting aside an award and application for the adjudgment of an award to be a nullity and contemplate that an application of the former kind should be made under section 30 of the Act and an application of the latter kind under section 33 ?” Was, therefore, answered in the negative. S. R. Das Gupta and Bachawat, JJ., however, took a contrary view. Bachawat, J. held —
1. “While section 33 also empowers the Court to decide questions of validity of the award all reliefs which may be granted by the Court under section 15, 16 and 30 by way of setting aside, remitting and modifying the award on account of its invalidity may and must be obtained under those sections and not under section 33.”
2. “The Court cannot set aside an award under section 30 unless the award is filed in Court but the Court may decide under section 33 “that no award exists where a document which in fact is not an award is set up as an award though the document has not been filed in Court.”
3. “An award which has become void under sub-section (3) of section 16 does not legally exist and the Court may so decide under section 33 but such award cannot and need not be set aside under section 30.”
4. “The Arbitration Act, 1940, recognizes a distinction between awards which are void and a nullity and consequently do not legally exist and awards which are voidable and therefore invalid are liable to be set aside;” and
5. “Where the arbitration agreement is valid ‘initio’ it may be treated as non-existent and the Court may so decide and adjudicate under section 33.”
In Basant Lal v. Surendra Prasad and others, A.I.R 1957 Patna 417 (3), a Division Bench of the Patna High Court differed from the majority view of- the Calcutta High Court and held —
“In my judgment, therefore, section 30 speaks only of invalidity in making the award, and the grounds set forth in section 30 clearly indicate that these grounds have reference only to proceedings before the arbitrator alone, and not to the anterior proceedings of the Court. The words ‘or is otherwise in valid’ must, therefore, refer to the invalidity of the award based on any ground unconnected with the proceedings of the Court. The words ‘or is otherwise invalid’ occurring in clause (c) of section 30 of the Act, should not, as such, be taken as including the question whether there existed an arbitration agreement, or whether there was a valid reference to arbitration. These words do not include an objection impeaching the existence, or validity, of an arbitration agreement, or reference, upon which the award is founded. Non-existence, or invalidity, of an arbitration agreement, or reference, are not contemplated by, and, included in the words ‘or is otherwise invalid’ in section 30 (c), and are, as such, not grounds, contemplated by, and, within the meaning of section 30, on which an award can be set aside, under it even if the award is based on any invalid non-existent arbitration agreement, or reference, without the intervention of the Court. These words consequently should not be read ejusdemgeneris with the other cases mentioned in clauses (a) and (b), or, in the preceding words in clause (c) of section 30. They should be restricted to cases where an award is on one or more of the grounds mentioned in section 30, or on grounds other than those specifically mentioned in clauses (a), (b) and (c) of section 30, relating to the invalidity of the award.”
It is unnecessary to multiply authorities but it may be mentioned that Mr. Nayar, the learned counsel for the respondent, relied on United India Fire and General Insurance Co. Ltd. v. Bhagat Singh, A.I.R 1954 Punjab 171 (4); Lal Chand v. Gopi Chand, A.I.R 1964 Punjab 61 (5); and Shafia Begum v. Bashir Ahmed, I.L.R 1962 Bombay 178 (16). I have not dealt with these judgments in detail for the reason that the difference in the views is sufficiently represented by the decisions discussed above. There are considerable difficulties in accepting the view that for various reliefs contemplated by the Act application has in all cases to be made under section 33, and that the said section is only a procedural provision. The following are some of the indications pointing to the contrary: —
(1) There is no provision in the Arbitration Act, except section 33, conferring a right to challenge an arbitration agreement or to have the effect of such agreement or award determined.
(2) Section 16 of the Arbitration Act empowers the Court to remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration in the prescribed cases. Section 33, on the other hand, does not appear to give any right to an aggrieved, party to make an application for relief under section 16 with the result that such relief will have to be sought for only by an application under section 16.
(3) Under section 16 (1) (a) a party can apply to the Court for remitting the award for reconsideration inter alia where the arbitrator determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred. But for the provisions of section 16, in such a case the entire award will have to be set aside. To save that situation a power has been given to the Court to have the award reconsidered without affecting the decision on the matters referred to arbitrator. If, on the other hand, a part of the award is upon a matter not referred to arbitration, and such part can be separated from the other part without affecting the decision on matters referred, the Court may under section 15 modify or correct the award. Such reliefs are not possible on an application under section 33 but can be obtained only by resorting to sections 15 and 16.
(4) Although Article 158 of the Limitation Act prescribes a period of limitation for an application to get an award remitted for reconsideration, no such application is expressly provided in the Arbitration Act and consequently the only application contemplated by Article 158 must, be an application under section 16 of the Arbitration Act.
(5) The language of section 17 of the Arbitration Act is suggestive of the position that the Court may, in certain cases, set aside an award even without an application. If that were not so the words ‘or to set aside the award’ before the words ‘the Court shall, after the time for making an application to set aside the award has expired’ would have been unnecessary. If the said words ‘or to set aside the award’ meant ‘to set aside the award on an application’ than the same result could have been achieved by the Legislature without the said words and by framing the section in the following words: —
“Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration, 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, pronounce judgment according to the award, and upon the judgement so pronounced a decree shall follow. . . . . .”
In saying that the Court has such, a power, I have in mind a case where, on the face of the award, a statement appears that the same is being made in pursuance of an arbitration agreement made between two minors.
Three of the learned Judges in Sana & Co's case representing the majority took the view that if the factual existence of the award was challenged, then the prayer would not be for setting aside the award. I am unable to make a distinction between a case where the factual existence of the award is challenged and where the challenge is to the factual existence of the arbitration agreement. The said three leaned Judges were of the opinion that after the purported agreement had resulted in an award a party desiring to challenge the arbitration agreement could make its challenge only by way of advancing it as a reason for impugning the award as invalid. In my opinion, both types of cases fall in the same category. An award must be fully responsive to the authority under which the arbitrators are commissioned and should be co-extensive with the commission. If the arbitration agreement is non-existent, so must be the award, with the result that there would be nothing to set aside. I am unable to reconcile myself to the view that in cases where the arbitrator makes an award without any arbitration agreement, then a party cannot go to Court under section 33 and ask for a declaration that there was no agreement and consequently no award. In such cases the challenge to the agreement is independent. There appears to be no justification for limiting the words “challenge the existence. . . . . of an arbitration agreement” in section 33 to the pre-award stage. The arbitration agreement provides the source of authority to the arbitrator and is the very foundation of his jurisdiction. If there is no arbitration agreement, there is no arbitrator and consequently there is no award requiring to be set aside. The award falls with the agreement leaving nothing to be set aside. A clue is also provided to this process of thought by section 16 (3) of the Arbitration Act. Where the award has become void under that section the Court may so adjudge it under section 33 but is cannot be set aside under section 30. A clear distinction has been maintained between the validity and existence of both an arbitration agreement and an award. Section 33 relates to the challenge to both, the existence and validity of an arbitration agreement or an award, while section 30 touches only the invalidity of an award. If the words “otherwise invalid” in section 30 were comprehensive enough to include cases where the award was alleged to be non-existent or a nullity, then the word “existence” with reference to the award in section 33 was unnecessary. In other words, if section 33 was only a means to an end provided in section 30, that is, setting aside of an award, then section 33 should have confined itself to challenging the validity of an award and not its existence because in that context challenge to the existence of the award would be challenge only to its validity. I entertain no doubt, therefore, that where the challenge to the award is on the ground of factual non-existence of the arbitration agreement, the case would be one of challenge to the existence of the award in section 33 and not to its validity in section 30, with the result that such an award will not have to be set aside but adjudged as non-existent. An award on the supposition of an arbitration agreement which does not exist would be void ab initio and, therefore, not worthy of notice in the eye of law for the purpose of being set aside. The same appears to be the position where the challenge to the award is on the ground that the arbitration agreement is void by reason of non-compliance with any of the conditions precedent to its validity. The existence and validity of the arbitration agreement, therefore, may be challenged by an application under section 33 even though an award on the basis of the supposed arbitration agreement has been made, and even though an application under section 33 is made after the expiry of the time prescribed by Article 158 of the Limitation Act. The same distinction between the existence and validity of an arbitration agreement or award is reflected in section 32 of the Arbitration Act. I agree with the following observation of Bachawat, J. in Saha & Co.'s case: —
“I am therefore of the opinion that under the Arbitration Act, 1940, (a) an award on an arbitration without the intervention of Court presupposes an arbitration agreement; (b) There can be no arbitration award without the intervention of Court if the alleged arbitration agreement does not exist or is invalid; (c) Non-existence or invalidity of the alleged arbitration agreement is not a ground for setting aside an award without the intervention of Court under section 30; (d) An application may be made under section 33 asking for a decision that the arbitration agreement does not exist or is invalid and that consequently the award is a nullity and does not exist; (e) Proceedings for summary enforcement of an award without the intervention of Court may be defended on the ground that the arbitration agreement does not exist or is invalid and that consequently the award does not legally exist even though no substantive application challenging the award has been made.”
5. The apprehension of the learned counsel for the respondent based on A.R SAVKUR'S case that there would be two periods of limitation appears, to my mind, to be unreal. Once a notice is served on a party about the filing of the award it has to object to the award being made the rule of the Court before a decree is passed. It cannot, therefore, be said that although after the expiry of 30 days the Court may pass a decree under section 17 yet the period of limitation for challenging the factual existence of the agreement would not have run out with the result that the aggrieved party may still make an application under section 33. If no objection challenging such existence of an arbitration agreement is filed before the decree is made, the decree will then bind the party and such party's objections regarding the factual existence of the arbitration agreement may be ineffective. Various anomalies have pointed out by the learned counsel for the respondent, which, according to him, must ensure from accepting the fore-mentioned point of view. One of those is that in that case no appeal will lie against the order of the Court as section 39 (1) (vi) provides a right of appeal only in the case of setting aside or refusing to set aside an award. This argument overlooks the fact that the same anomaly may arise in the case of orders under section 16 which are equally important. Similarly, there would be no appeal against an order declaring the award as factually non-existent or pronouncing on the validity or the effect of the arbitration agreement. May be that the words “setting aside” in section 39 (1) (vi) have to be given a wider meaning so as to cover the case where the award is adjudged as null and void, but it is unnecessary to resolve that controversy in the present case. Yet another anomaly pointed out was the effect of section 37 (5) of the Arbitration Act. This anomaly may arise in various other cases, for instance, one of the eventualities in which the time is to be excluded is where the Court orders that the arbitration agreement shall cease to have effect with respect to the difference referred. Such order is contemplated only by section 19. It may be said that the time will not be excluded where a named arbitrator refuses to act, or does not make an award, or dies and the arbitration agreement does not contemplate the filling in of the vacancy. These anomalies do not call for a decision in this case and may have to be resolved in an appropriate case. Suffice it to say for the purpose of this case that these do not persuade me to take a view different from the one that I have taken regarding the interpretation of the statute. The learned counsel for the respondent, relying on the afore-mentioned anomalies, said that the Courts cannot so construe an Act as to reduce it to rank absurdity. That may be so but where the words used are plain and unambiguous, the Courts are bound to construe them in the ordinary sense. Modification in words in such a situation may result in the Courts trespassing into the legislative field. Law represents a compromise achieved, by competing interests. The statute embodying the agreement made in the strictly political forum of the legislature in clear and unambiguous terms requires only to be interpreted and not modified to bring in the Judge's supposed sagacity or sympathy. My conclusion, therefore, is that non-existence and invalidity of an arbitration agreement are not grounds for setting aside the award under section 30 and Article 158 of the Limitation Act does not apply where the relief sought is to have the award declared null and void on the ground that there existed no arbitration agreement.
6. In the result, my answer to the question referred is in the negative. The case would now go back to Divisional Bench for deciding the appeal in the light of the above answer.
S. N. Andley, J. — I also agree.
K. S. HEGDE, CJ. — I agree.
Reference answered in negative
Alert