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Case Number

C.R.P No. 793 of 1982

Attorney(S)

For the Appellant: O.V. Radhakrishnan

Judges

T. Kochu Thommen
P.K Shamsuddin, JJ.

Acts

Section 17, read with Section 30 and 33 of the Arbitration Act.12.
suit;8. Article 119 of the Schedule to the Limitation Act, 1963
Article 119 of the Schedule to the Limitation Act
Section 39(1)(vi) of the Arbitration Act,
Section 39(1) of the Arbitration Act.4.
SECTION 33 ARBITRATION ACT
Section 39(vi) of the Arbitration Act
Section 39(1) of the Arbitration Act
SECTION 39 ARBITRATION ACT
Section 115(2) C.P.C14.
Section 30(c)
Section 35;(c)

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Smart Summary

Judgment Summary — Civil Revision Petition (Shamsuddin, J.)

Factual and Procedural Background

O.P. (Arbitration) No. 7/79 was filed in the Subordinate Judge's Court, Thodupuzha by the 1st respondent seeking a decree in accordance with an arbitration award dated 5-5-1979. The 1st respondent alleged a partnership with the petitioner for a rice mill which ceased functioning from November 1976, and that the dispute was arbitrated by local S.N.D.P. office-bearers resulting in the award of 5-5-1979. While the O.P. was pending, the petitioner filed I.A. No. 1331 on 3-11-1981 seeking a declaration that the award was a nullity for want of a valid arbitration agreement. The respondents objected that the I.A. was barred by limitation because it was not filed within 30 days from the date of filing the award in Court. The learned Subordinate Judge sustained the limitation objection, dismissed I.A. No. 1331 of 1981 with costs, and that order was challenged in this Civil Revision Petition (C.R.P.).

Legal Issues Presented

Whether an application seeking a declaration that an arbitration award is a nullity for lack of a valid arbitration agreement is governed by the 30-day limitation under Article 119 of the Limitation Act (i.e., whether it is an application "for setting aside the award or remittance for reconsideration" under the Limitation Act).
Whether an order dismissing such an application on the ground of limitation falls within Section 39(1)(vi) of the Arbitration Act as an appealable order, thereby ousting revisional jurisdiction under Section 115(2) of the Civil Procedure Code (C.P.C.).

Arguments of the Parties

1st Respondent's Arguments

The 1st respondent argued that the petition under I.A. No. 1331 was barred by limitation because it was not filed within 30 days from the date of filing the award in Court (relying on Article 119 of the Limitation Act).
Counsel for the 1st respondent raised a preliminary objection that an appeal was available under Section 39(1) of the Arbitration Act against the order under challenge, and therefore revisional jurisdiction could not be exercised due to the bar contained in Section 115(2) C.P.C.

Revision Petitioner’s Arguments

The revision petitioner contended that the impugned order rejecting the I.A. as barred by limitation did not amount to a refusal to set aside the award within the meaning of Section 39(1)(vi) of the Arbitration Act, and thus was not an appealable order under that provision.
The petitioner further argued that the award was totally without jurisdiction and therefore a nullity; consequently the application was not an application under Section 30 (for setting aside the award) and Article 119 (30-day limitation) of the Limitation Act did not apply. Instead the residuary Article 137 (three years) should apply.
Reliance was placed on Privy Council authority and several High Court decisions (identified below) supporting the view that a nullity award need only be declared null under Section 33 and does not require being "set aside" under Section 30.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chhabba Lal v. Kallu Lal (A.I.R. 1946 P.C. 72)	The Privy Council held that an objection to the validity of a reference to arbitration (in a reference made in a suit) did not come within the provisions that limited grounds for setting aside an award; if there is no valid reference the purported award is a nullity and can be challenged in an appropriate proceeding.	The Court recorded the petitioner's reliance on this decision but distinguished it in light of later statutory provisions and the Supreme Court's ruling in Union of India v. Shri Om Prakash, concluding that Chhabba Lal's reasoning does not control cases under the Arbitration Act with Sections 32 and 33 in force.
Basant Lal v. Surendra Prasad (A.I.R. 1957 Patna 417)	Division Bench view supporting that an award which is a nullity need only be declared null and need not be set aside under Section 30.	The Court acknowledged this decision as one of the authorities relied upon by the petitioner in support of the nullity-declaration approach.
Deep Narain Singh v. Dhaneshwari (A.I.R. 1960 Patna 201)	Similar Patna High Court Division Bench view that a nullity award can be declared null under Section 33 rather than set aside under Section 30.	Noted by the Court as another authority relied upon by the petitioner for the proposition that nullity need not be processed as a Section 30 application.
Prem Sagar v. Security & Finance Ltd. (A.I.R. 1963 Delhi 21) (Full Bench)	Full Bench view aligning with the position that a nullity award does not require being set aside under Section 30 but can be declared a nullity under Section 33.	Recorded by the Court as part of the line of authority for the petitioner's position; ultimately not accepted as overriding the Supreme Court decision.
Joseph Philip v. Varkey Mathai (A.I.R. 1978 Ker. 208)	Division Bench of this Court held that an award cannot be declared null otherwise than in terms of Section 17 read with Sections 30 and 33 of the Arbitration Act (i.e., contrary view to the nullity-declaration approach).	The Court observed that this contrary Division Bench ruling did not call for reconsideration after the Supreme Court decision in Union of India v. Shri Om Prakash and therefore reaffirmed that view.
Saha & Co. v. Ishar Singh (A.I.R. 1956 Cal. 321) (Full Bench)	Full Bench of Calcutta High Court took the view that an award cannot be declared null except in the manner provided by Sections 30 and 33.	Noted by the Court as part of the contrary line of authority to the petitioner's submissions.
Savkur v. Amrit Lal Kalidas (A.I.R. 1953 Bombay 293)	Bombay High Court decision aligned with the position that an award cannot be declared null otherwise than under statutory provisions for setting aside or altering awards.	Recorded by the Court as part of the opposing line of authority.
Union of India v. Shri Om Prakash ((1976) 4 SCC 32 : A.I.R. 1976 S.C. 1745)	Supreme Court held that the words “or is otherwise invalid” in Section 30(c) of the Arbitration Act are wide enough to cover invalidity of the reference itself and that awards on invalid references fall within Section 30(c); Section 32 and 33 now provide the appropriate procedure for challenge.	The Court treated this Supreme Court decision as determinative, applying it to hold that an award on an invalid reference is covered by Section 30(c), that Article 119 (30 days) applies, that the petitioner's application was time-barred, and that the order of the lower court is appealable under Section 39(1)(vi).
Mt. Mariam v. Mt. Amina (AIR 1937 All. 65)	Referenced in the Supreme Court's discussion in Om Prakash as a prior decision whose view was considered in the broader analysis of invalid references.	Referred to in the Supreme Court's reasoning quoted by the Court; not applied separately by this Court beyond the reference in Om Prakash.

Court's Reasoning and Analysis

The Court proceeded by identifying and applying the relevant statutory provisions: Section 30 (grounds for setting aside an award), Section 32 (bar to suit contesting arbitration agreement or award), Section 33 (procedure to challenge existence or validity of arbitration agreement or award by application to the Court), and Article 119 of the Schedule to the Limitation Act (30-day limitation for an application for setting aside or remittance for reconsideration).

The Court contrasted two lines of authority:

Authorities (including the Privy Council in Chhabba Lal and certain High Court decisions) which were read as supporting the proposition that a purported award on an invalid reference is a nullity that may be declared null in an appropriate proceeding (and thus, according to the petitioner, not an application falling under Section 30 and Article 119); and
Decisions (including a Division Bench of this Court and High Courts of Calcutta and Bombay) holding that an award could not be declared null otherwise than in the manner provided by the Arbitration Act (Sections 17, 30 and 33).

The Court concluded that the controversy was settled by the Supreme Court in Union of India v. Shri Om Prakash. Quoting and adopting the Supreme Court's reasoning, the Court held that:

The phrase “or is otherwise invalid” in Section 30(c) is wide enough to include invalidity of the reference itself and therefore an award made on an invalid reference falls within Section 30(c).
Sections 32 and 33 of the Arbitration Act provide the statutory scheme and procedure—Section 32 bars suits to decide arbitration agreements or awards and Section 33 prescribes the application procedure to the Court to challenge existence or validity of arbitration agreements or awards.
Consequently, where an application challenges the award on grounds covered by Section 30 (including invalidity of the reference), Article 119 of the Limitation Act (30 days) applies; the petitioner's application filed after 30 days from service of notice of filing the award was therefore barred by limitation.
Because the order dismissing the petition as barred by limitation relates to refusal to set aside the award within the scope of Section 39(1)(vi), that order is appealable under Section 39(1)(vi) of the Arbitration Act. Given the availability of an appeal, revisional jurisdiction under Section 115(2) C.P.C. is ousted.

The Court thus applied the Supreme Court's authoritative interpretation to the facts: the application was governed by Section 30(c) and Article 119, it was time-barred, and the remedy lies by way of appeal rather than revision.

Holding and Implications

Holding:

DISMISSED — The Civil Revision Petition (C.R.P.) is dismissed with costs.

The Court's decisive conclusions, stated as the direct effects of the decision, are:

The application filed by the petitioner more than 30 days after service of notice of filing of the award is barred by limitation under Article 119 of the Limitation Act and is therefore liable to be dismissed.
The order of the Subordinate Judge dismissing I.A. No. 1331 as time-barred falls within Section 39(1)(vi) of the Arbitration Act and is therefore an appealable order.
Because an appeal lies under Section 39(1)(vi), a revision under Section 115(2) C.P.C. is not maintainable; hence the present revision petition cannot be entertained.

Implications:

The immediate consequence is dismissal of the revision petition and upholding of the lower court's dismissal of the I.A. as time-barred (with costs).
The Court applied and followed the Supreme Court's ruling in Union of India v. Shri Om Prakash to resolve the legal question; the opinion does not purport to lay down a new precedent beyond applying that Supreme Court authority.

End of summary based solely on the provided opinion.

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P.K Damodaran v. T.K Bhaskaran & Others

Shamsuddin, J.:— This Civil Revision Petition came before us on a reference made by Thomas J. To appreciate the legal questions raised in the C.R.P it is necessary to briefly state the facts.

2. O.P (Arbitration) No. 7/79 on the file of the Subordinate Judge's Court, Thodupuzha was filed by the 1st respondent herein seeking to pase a decree in accordance with an arbitration award dated 5-5-1979. The case of the 1st respondent was that he and the petitioner herein entered into a partnership agreement for starting a rice mill, that the said business ceased to function from November, 1976 onwards, that thereafter he had applied to the local S.N.D.P office bearers to arbitrate the dispute between him and the petitioner and accordingly the S.N.D.P Office-bearers arbitrated the matter and passed an award dated 5-5-1979. While the O.P was pending, the petitioner filed I.A No. 1331 on 3-11-1981 praying to declare that the award was a nullity as there was no valid agreement to refer the dispute to arbitration, The respondents filed objection to the I.A raising the contention that the application was barred by limitation since it was not filed within 30 days from the date of filing the award in Court. The learned Subordinate Judge upheld the objection and held that I.A No. 1331 of 1981 was barred by limitation and accordingly the I.A was dismissed with costs. That order is now challenged in this Civil Revision Petition.

3. A preliminary objection was raised by the learned counsel for the 1st respondent that since an appeal is provided under Section 39 of the Arbitration Act, no revisional jurisdiction can be exercised in view of the bar contained in Section 115(2) of the C.P.C According to the learned counsel, an appeal would lie under Section 39(1) of the Arbitration Act against the order under challenge since against the order refusing to set aside the award an appeal is maintainable under Section 39(1) of the Arbitration Act.

4. The learned counsel for the revision petitioner ventured to meet this preliminary objection contending that the impugned order is not an order coming within the purview, of Section 39(I)(vi) of the Act. According to him, the rejection of the petition on the ground that it was barred by limitation will not amount to a refusal to set aside the award within the meaning of Section 39(I)(vi) of the Act.

5. Section 30 of the Arbitration Act, 1940 which deals with the grounds for setting aside the award, reads as follows:—

“30. Any award shall not be set aside except on one or more of the following grounds, namely,

(a) that an arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

6. Section 32 of the Act lays down as fellows:

“32. Bar to suit contesting arbitration agreement or award-Notwithstaoding any law-for the time being in force no suit shall lie on any ground, whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or a ward, be enforced, set aside, amended modified or in any way affected otherwise than as provided in this Act.”

7. Section 33 of the Act provides that any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits. Proviso to the said section further lays down that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit;

8. Article 119 of the Schedule to the Limitation Act, 1963 provides a period of 30 days from the date of service of notice of the filing of the award for filing an application for setting aside the award or remittance for reconsideration. If the application filed by the petitioner to set aside the award is based on any of the grounds mentioned in Section 30 of the Act then there an be no doubt that the same is barred by limitation in view of the above provision of the Limitation Act, In that event, the order passed by the court below will come within the purview of Section 39(I)(vi) of the Act and an appeal would lie.

9. The learned counsel for the revision-petitioner submits that the award in the instant case is totally without jurisdiction and is a nullity in the eye of law and therefore his application cannot be treated as an application or setting aside an award or for remitting the award for reconsideration ind that therefore the period of 30 days prescribed under Article 119 of the Schedule to the Limitation Act is not applicable and that it is only the residuary article 137 which deals with application for which no period of limitation is provided in the Limitation Act, that would apply to this case and that therefore a period of three years from the date on which the right to apply accrued is available to him. His further contention is that since the application is not one made under Section 30 for setting aside the award for the reason stated in Section 30 of the Act, the order passed by the lower court is not an appealable order under Section 39(1)(vi) of the Arbitration Act, and that therefore a revision under Section 115 CPC. is maintainable. The learned counsel for the petitioner heavily relied on the judgment of the privy Council in Chhabba Lal v. Kallu Lal (A.I.R 1946 P.C 72). The Court said:

“A further question referred to the Full Bench was “whether an objection to the validity of reference to arbitration comes within the provisions of para 15 of Sch II, Civil P.C” The learned Chief Justice and Harries J., considered that it did, relying on the words “being otherwise invalid” in para 15; Iqbal Ahmed, J., considered that it did not Upon this question their Lordships agree with the view of Sir Iqbal Ahmad. In their opinion all the powers conferred upon the Court in relation to an award on a reference made in a suit presuppose a valid reference on which an award has been made which may be open to question. If there is no valid reference, the purported award is a nullity, and can be challenged in any appropriate proceeding.”

10. He also placed reliance on the observations of Division Bench decisions of the Patna High Court in Basant Lal v. Surendra Prasad (A.I.R 1957 Patna 417) and Deep Narain Singh v. Dhaneshwari (A.I.R 1960 Patna 201) and a Full Bench decision of the Delhi High Court in Prem Sagar v. Security & Finance Ltd. (A.I.R 1963 Delhi 21). All these rulings took the view that if an award is a nullity it does not require to be set aside and only to be declared as a nullity and this declaration can be made only under Section 33 of the Arbitration Act.

11. A contrary view has been expressed by a Division Bench of this Court in Joseph Philip v. Varkey Mathai (A.I.R 1978 Ker. 208), the Calcutta High Court in Saha & Co. v. Ishar Singh (A.I.R 1956 Cal. 321) (F.B) and the Bombay High Court in Savkur v. Amrit Lal Kalidas (A.I.R 1953 Bombay 293). All these rulings took the view that an award cannot be declared to be null and void otherwise than in terms of Section 17, read with Section 30 and 33 of the Arbitration Act.

12. In our view, the controversy has been set at rest by the decision of the Supreme Court, in Union Of India v. Shri Om Prakash ((1976) 4 SCC 32 : A.I.R 1976 S.C 1745). The Court observed:

“According to the respondent an award obtained on an invalid reference is also invalid and is covered by clause (c) of Section 30. It was argued on behalf of the appellant, on the authority of the Privy Council in Chhabba Lal v. Kallu Lal (AIR 1946 PC 72) that the words “otherwise invalid” in Section 30(c) did not cover a case where the award was challenged on the ground of some invalidity attaching to anything outside the award itself. In Chhabba Lal's case the Privy Council held that an objection to the validity of a reference to arbitration did not come within the provisions of paragraph 15 of the Second Schedule to the Code of Civil Procedure, 1908, which provided that no award was to be set aside except on the specific grounds mentioned therein, or the award “being otherwise invalid”. This view which affirms that of Iqbal Ahmad, J. in his dissenting judgment in a Full Bench decision of the Allahabad High Court, Mt. Mariam v. Mt. Amina (AIR. 1937 All. 65) was taken in relation to an award on a reference made in a suit. Their Lordships observed:

………all the powers conferred on the court in relation to an award on a reference made in a suit presuppose a valid reference on which an award has been made which may be open to question. If there is no valid reference, the purported award is a nullity, and can be challenged in any appropriate proceeding.

There was no provision in the second Schedule to the Code of Civil Procedure, which was repealed by the Arbitration Act, 1940, like Section 32 or section 33 of the Act, Section 32 bars the institution of suits concerning arbitration agreements or awards and provides that no arbitration agreement or award shall be set aside, amended, modified or in any way affected otherwise than as provided in this Act; Section 33 says that a party to an arbitration agreement seeking to challenge the agreement or the award must do so by making an application to the court. When the Second Schedule to Code of Civil Procedure was in force, an award made on an invalid reference could be set aside only by filing a suit which was then the “appropriate proceeding” but now the proceeding appropriate for the same purpose is an application to the court as the respondent in these cases has done. Also, these are cases of arbitration without the intervention of court, and the observation from the judgment in Chhabba Lal's case, quoted above, that a reference in a suit should be persumed to be a valid reference, does not apply to these cases. The words “or is otherwise invalid” in clause (c) of Section 30 are wide enough to cover all forms of invalidity including invalidity of the reference. We do not find any reason why the, general and unqualified language of clause (c) should not include an award on an invalid reference which is a nullity.”

(Emphasis supplied)

13. In the light of the Supreme Court decision referred to above, we are of opinion that the ruling of the Division Bench in Joseph Philip's case (AIR 1978 Ker. 208) does not call for reconsideration. For the foregoing reasons, we hold that the application filed by the petitioner after 30 days from service of notice of the filing of the award is barred by Limitation and it is liable to be dismissed. It has also to be held that the order passed by the lower court would, fall within the purview of Section 39(vi) of the Arbitration Act and that therefore it is an appealable order. It follows that the revision petition is not maintainable in law in view of Section 115(2) C.P.C

14. In the result, the C.R.P is dismissed with costs.

P.K Damodaran v. T.K Bhaskaran & Others

Judgment Summary — Civil Revision Petition (Shamsuddin, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

1st Respondent's Arguments

Revision Petitioner’s Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

P.K Damodaran v. T.K Bhaskaran & Others

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