Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

Lachhmi Prasad v. Gobardhan Das And Others Opposite Party.

Patna High Court
Aug 26, 1947
Smart Summary (Beta)

Structured Summary of the Opinion — Mukharji, J.

Factual and Procedural Background

These two connected civil revisions arise from disputes over an arbitral award relating to a partnership. On 13 February 1946 Gobardhan Das (opposite party No. 1) filed an application in the Court of the Subordinate Judge, Motihari, claiming that an award dated 29 January 1946 was invalid and inoperative. The application purported to be under Section 33 of the Arbitration Act. The Additional Subordinate Judge started Miscellaneous Case No. 9 of 1946 and ordered service on the opposite parties and the three arbitrators. The arbitrators appeared and filed an affidavit in support of the award.

On 3 August 1946 the applicant (Gobardhan Das) petitioned to withdraw his application; the Court allowed withdrawal on 5 August 1946. The present petitioner (seeking relief in revision) then asked the Court to make the award a rule of Court and to pass a decree under Section 17 of the Arbitration Act; that prayer was refused by the learned Additional Subordinate Judge, who passed the final order in the miscellaneous case on 5 August 1946.

Gobardhan Das filed a title suit on 7 August 1946 in the same Court seeking, among other things, a declaration of dissolution of the partnership on a certain date, rendition of accounts, and alternatively a preliminary decree for dissolution and accounts; he also sought appointment of a Commissioner to take accounts. One of the present civil revisions (No. 909 of 1946) seeks a stay of that title suit; the other revision (No. 727 of 1946) challenges the order of 5 August 1946 refusing the prayer to make the award a rule of Court.

Legal Issues Presented

  1. Whether the learned Additional Subordinate Judge was correct in refusing to make the arbitral award a rule of Court and to pass a decree under Section 17 of the Arbitration Act on the ground that the award had not been filed in Court under Section 14 of the Arbitration Act.
  2. Whether an application under Section 33 of the Arbitration Act (to set aside an award) was maintainable when the award had not been filed in Court.
  3. How the periods of limitation in Article 178 and Article 158 of the Limitation Act apply to (a) an application for the filing of an award in Court under Section 14 and (b) applications to set aside or remit an award for reconsideration.
  4. Whether the receipt of the arbitrators' records and an affidavit in Court, after the Court had called for the record, constitutes "filing" of the award in Court within the meaning of Section 14.
  5. Procedural: whether, after the withdrawal of the application under Section 33, the Court should at once pronounce judgment according to the award under Section 17, or whether notice must be given under Article 158 before proceeding.

Arguments of the Parties

Petitioner's Arguments (present petitioner seeking decree on award)

  • The learned Additional Subordinate Judge was wrong to refuse the prayer to proceed under Section 17 simply because the award had not been formally "filed" under Section 14.
  • The original application (Misc. Case No. 9) filed by opposite party No. 1 within 90 days prayed that "the entire records of the arbitration proceedings ... be called for" from the arbitrators; that application should be treated as an application under Section 14 requesting the Court to call for and take on record the award.
  • The Court called for the records and received them; therefore, there was no irregularity and the award was validly before the Court, enabling the Court to proceed under Section 17 if appropriate.

Opposite Party's / Arbitrators' Arguments

  • It was contended that the award had not been filed in Court in accordance with Section 14, and thus the petitioner could not have his prayer to make the award a rule of Court entertained.
  • Mr. Sarjoo Prasad (for the opposite party) argued that mere receipt of the records by the Court after calling for them is different from the filing of the award; filing can only be effected by an application, and in the present case the arbitrators forwarded the award to Court pursuant to a direction and did not make a formal application to file the award or hand it to a court officer in the ordinary way.
  • Earlier it was argued (and the opinion notes) that the application under Section 33 was not tenable because, generally, until the award is filed no application to set it aside can be entertained.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
I.L.R. (1943) 2 Cal. 3921 and A.I.R. 1942 Bom. 101 The principle that until an award is filed no application to set it aside can be entertained. The Court relied on this principle to observe that the opposite party's application under Section 33 was not tenable when brought before the award had been placed before the Court; this explains why the opposite party sought to withdraw his Section 33 application.
A.I.R. 1945 Bom. 417 The filing of an award by an arbitrator is a ministerial act; no special solemnity is required—an arbitrator may intimate by letter or otherwise that the award has been made and it should be taken on file. The Court applied this principle to hold that the arbitrators' forwarding of the records and the affidavit in support constituted valid placing of the award on the record — i.e., the award was validly before the Court.

Court's Reasoning and Analysis

The court proceeded by first explaining the factual chronology and the lower Court's reasoning. The Additional Subordinate Judge refused to make the award a rule of Court because he considered the award had not been filed under Section 14; he also relied on the amended Article 178 of the Limitation Act, treating the 90-day period as running from 31 January 1946 (the date of service of notice regarding making and signing of the award) and concluding that the petitioner had not caused the award to be filed within that period.

Mukharji, J. accepted that an application under Section 33 would not be tenable until the award had been filed in Court, citing authority to that effect. The principal question then became whether the lower Court was right to refuse to pass a decree on the award after the applicant (opposite party No. 1) had withdrawn his objection.

On the interpretation of Section 14 and Article 178 the Court reasoned as follows:

  • Section 14 allows a party to request the arbitrators or umpire to file the award in Court, and separately allows the arbitrators or umpire to file the award on being directed by the Court.
  • The Court cannot suo motu order that an award be filed; the implication is that one or both parties must move the Court by application, whereupon the Court may direct the arbitrators to file the award.
  • The 90-day limitation in Article 178 is to be computed from the date when one of the parties files an application in Court under Section 14 requesting the Court to call for the award; it does not run from the date the arbitrators were requested outside Court to file the award.
  • In the present case the original petition filed by opposite party No. 1 within the 90-day period explicitly prayed that "the entire records of the arbitration proceedings ... be called for" from the arbitrators. The Court called for and received those records.
  • Given the filing-by-arbitrator principle articulated in A.I.R. 1945 Bom. 417 (that filing is a ministerial act and can be effected by an arbitrator's communication), the Court concluded that the award was validly on the record when the arbitrators forwarded the record pursuant to the Court's direction and filed an affidavit in support of the award.

The Court therefore held that (a) the petition of opposite party No. 1 under Section 33 was not maintainable prior to filing, which explains the withdrawal, and (b) the lower Court was wrong to refuse to consider the petitioner's prayer that the award might be accepted as valid merely because of the absence of a formal filing in the narrowest sense.

However, the Court also addressed the fairness dimension under Article 158 (30-day period) which gives a party the right of notice that an award has been filed in Court before Article 158 may be used against him. Although more than 30 days had elapsed since the award was received and since the affidavit was filed, the Court was concerned that immediately holding the opposite party to the award without giving notice and opportunity to object could result in failure of justice because opposite party No. 1's withdrawal did not amount to an acceptance of the award.

The remedy ordered was procedural: the learned Additional Subordinate Judge was directed to start a new miscellaneous case on the petition filed by the present petitioner requesting judgment on the award; to issue notice to the opposite party regarding the filing of the award and invite objections, if any; and thereafter to proceed according to the relevant provisions of the Arbitration Act.

The Division Bench order also stayed the related title suit (No. 127 of 1946) pending compliance with the directions and ordered that the parties bear their own costs. Sinha, J. concurred.

Holding and Implications

Core Ruling: The learned Additional Subordinate Judge was wrong to refuse to consider the petitioner's prayer that the arbitral award might be accepted as valid on the ground that the award had not been formally filed under Section 14; the award was validly on the record after the Court called for the arbitration record and the arbitrators forwarded it and filed an affidavit in support. The lower Court is directed to initiate a fresh miscellaneous proceeding, give notice to the opposite party about the filing of the award and then proceed in accordance with the Arbitration Act.

Implications and immediate effects:

  • The lower Court must start a new miscellaneous case on the petition to pronounce judgment on the award and must issue fresh notice to the opposite party inviting objections before proceeding.
  • The connected title suit (No. 127 of 1946) is stayed pending the processing of the new miscellaneous proceeding about the award.
  • The parties are ordered to bear their own costs.
  • The opinion does not purport to lay down a novel rule of law beyond its application of existing authorities and statutory provisions; the decision directs the lower Court on remittance and procedural steps rather than establishing a new precedent.

Order: Directions as above; hearing of the connected title suit stayed; parties to bear their own costs. Sinha, J. concurred.

Show all summary ...

Mukharji, J.:— These are two connected civil revisions. They arise in the following way. On 13-2-1936 Gobardhan Das opposite party No. 1, filed an application in the Court of the Subordinate Judge of Motihari praying that a certain award made on 29-1-1946 was invalid and inoperative. The application purported to have been made under Section 33 of the Arbitration Act (Act 10[X] of 1940). Under the order of the Additional Subordinate Judge a miscellaneous case No. 9 of 1946 was started and the number of the opposite party including the three arbitrators were ordered to be served with notice. Notice was served and the opposite party appeared. The arbitrators filed an affidavit in support of the award. On 3-8-1946 the applicant (opposite party No. 1 before this Court) put in a petition to the effect that he wanted to withdraw his application. On 5-8-1946 the Court allowed the prayer. The present petitioner requested the Court to make the award a rule of the Court and pass a decree thereon under Section 17 of the Arbitration Act; but this prayer was refused. The learned Additional Subordinate Judge passed his order finally in the miscellaneous case on 5-8-1946. The opposite party no. 1, Gobardhan Das, filed a title suit on 7-8-1946, in the same Court. The award above referred to related to certain partnership business between the parties. One of the reliefs prayed for in the title suit (No. 127 of 1946) is that the Court should declare that the partnership business was dissolved on a certain date. There was also a prayer that the defendants of the suit might be directed to render accounts from the beginning of the partnership business till the date of its dissolution. There was also an alternative prayer that if the Court should come to the conclusion that there was no legal and effective dissolution of the partnership business a preliminary decree for dissolution of partnership and for rendition of accounts might be passed. The plaintiff of the suit requested the Court that a Commissioner might be appointed for taking accounts.

2. One of the applications in revision (Civil Revision No. 909 of 1946) is for stay of proceedings in the title suit mentioned above. The other civil revision (No. 727 of 1946) is directed against the order of the Subordinate Judge passed on 5th August 1946, refusing the prayer of the present petitioner to make the award a rule of the Court. I shall deal with civil Revision No. 727 of 1946 first. The reasoning of the learned Additional Subordinate Judge in this case for refusing the prayer of the petitioner to proceed under Section 17 of the Arbitration Act, is that the award in question was not filed in Court under S. 14 of the Act. The following few lines from the order of the learned Additional Subordinate Judge may be usefully quoted here:

“In other words, the Court need not pronounce its judgment unless and until the award is filed under S. 14 of the Act. Admittedly here the award has not been filed under S. 14 of the Act. Therefore the opposite party's prayer to the Court for giving its judgment over it seems to be illegal and improper.”

3. The learned Additional Subordinate Judge then went on to consider the provisions of Article 178, Limitation Act, as they stand after their amendment consequent upon the enactment of Act 10[X] of 1940. The learned lower Court refers to the period of limitation mentioned in the amended Article and observes that this period is to be computed from 31st January 1946 when the parties to the arbitration proceedings were served with notice regarding the making and signing of the award. It is further observed by learned lower Court that as the present petitioner did not call upon the arbitrators to file the award in the Court within the period of limitation, he was out of Court. Towards the end of the order complained of the learned lower Court has made the following remarks:

“In fact the award by the punches was not filed in this case within 90 days from 31st January 1946 …. In the present case it was filed on 4th May 1946 for evidentiary purpose. The opposite party, therefore, cannot make up his laches by coming at this stage with the protest petition to the applicant's prayer for withdrawal of the miscellaneous petition. It is up to the applicant to pursue or to withdraw it or to allow it to be dismissed for default. All that the opposite party can rightfully claim is the compensation for his unnecessary harassment.”

4. Thereafter the learned Additional Subordinate Judge allowed the applicant before him to withdraw his miscellaneous petition.

5. It has been contended on behalf of the petitioner that the view taken by the learned Additional Subordinate Judge in this case is wrong. Before I proceed further, I may at once say that the application of opposite party 1 under Section 33 of the Arbitration Act, was not tenable. It has been held in many cases that until the award is filed, no application to set it aside can be entertained. I may in particular refer to the case in I.L.R (1943) 2 Cal. 3921 and A.I.R 1942 Bom. 101.2 If, therefore, the applicant before the learned Additional Subordinate Judge did not want to proceed with his case, one can very well understand the reason. The real question for consideration, however, is whether the learned lower Court was right in his refusal to pass a decree on the award after the applicant before him had withdrawn his objection. On behalf of the opposite party in this Court it has been strenuously argued that as the award had not been filed in accordance with the provisions of Section 14 of the Arbitration Act, the prayer of the petitioner to make it a rule of the Court could not be entertained. In an earlier portion of the judgment I have given the relevant dates. It is common ground between the parties that the notice as contemplated by Section 14(1) of the Arbitration Act, regarding the making and signing of the award was served on 31st January 1946. Article 178, Limitation Act, to which the learned lower Court has referred in his order under revision lays down that an application for the filing in Court of an award based under the Arbitration Act has to be made within 90 days of the date of service of the notice of the making of the award. Under Section 14 of the Arbitration Act, a party may request the arbitrators or the umpire to file the award in Court and in this way the award may be filed in Court. In the same section the arbitrators or the umpire may also file the award in Court on being directed by the Court to do so. The Court of course cannot suo moiu issue an order that a particular award should be filed in Court. The implication is that one of the parties to the arbitration proceedings or both of them can move the Court by an application and the Court thereupon should direct the arbitrators or the umpire to file the award. The period of 90 days referred to in Article 178, Limitation Act, is to be computed from the date when one of the parties or both file an application in Court under Section 14 of the Arbitration Act. It has no reference, to the time when the arbitrators or umpire are requested to file the award. The learned advocate for the opposite party has argued that in the present case neither the arbitrators were asked by the parties to file the award nor was there any application in the Court within the statutory period of limitation for the filing of the award in Court. On behalf of the petitioner it was submitted that as the entire record together with the award was called for by the Court on the application presented within 90 days of the date of service of notice and the same was received by the Court in due course, there was no irregularity or illegality whatsoever. In reply to this the argument that has been advanced is that there was really no application for the filing of the award and that the award was not filed in Court in the proper sense of the term. This makes it incumbent on me to refer to the original application of the opposite party which gave rise to Miscellaneous case No. 9 of 1946. Admittedly this application was made within 90 days of the service of notice under Section 14(1) of the Arbitration Act. The concluding portion of the petition is as follows:

“For the reasons set forth above, it is prayed that the application may be admitted, the entire records of the arbitration proceedings, including the objections of the petitioners, the account books etc., be called for from Babu Brijesh Lal Shibaria or other arbitrators and after finally hearing the award be set aside or such other further order or orders as may appear fit and proper may be passed.”

6. One may very well ask how the Court could set aside the award unless the award was before it? Therefore the Court had to call for it from the arbitrators. In fact there is a distinct prayer that the entire records of the arbitration proceedings be called for from the arbitrators. The records were called for and they were received by the Court. The application of opposite party. I can very well be treated as an application under Section 14 of the Arbitration Act, requesting the Court to call for the award. As already stated, this application was veil within time.

7. Mr. Sarjoo Prasad for the opposite party contended that mere receipt of the records of the arbitration proceedings by the Court was something quite different from the filing of the award in Court. According to him filing of an award can only be made by an application. In the present cape the award was forwarded to Court by the arbitrators who were a party to the miscellaneous case. The arbitrators also filed an affidavit in support of the award. In such circumstances I do not see how it can be said that the award was not filed in Court. It is true the arbitrators did not hand over the award to an officer of the Court. It is also true that no formal application was made by the arbitrators to the Court regarding the award. It has been held that the filing of an award by an arbitrator is a mere ministerial act. No solemnity attaches to such an act. This is the view taken in A.I.R 1945 Bom. 417.3 An act of an arbitrator when he files an award in Court is an act which the statute requires him to perform. He can intimate to the Court by his letter of re-quest that he has made an award and that it should be taken on file. In the peculiar circumstances of the present case there was no scope for the arbitrators to file the award supported by an application. The learned Additional Subordinate Judge as requested by the applicant before him directed the arbitrators to forward the entire record of the arbitration proceedings including the award and the arbitrators simply obeyed this order of the Court. When they appeared in Court the arbitrators filed an affidavit in support of the award. In my opinion, the award was validly on the record.

8. Now with regard to the prayer of the petitioner that a decree should be passed on the award. It is said that after the prayer for withdrawal made by the opposite party 1 was allowed, there was an end of the case. The miscellaneous case no doubt ended, but the award was before the Court and as I have already pointed out it was validly before the Court. The prayer that it might be made a rule of the Court could still be considered by the learned lower Court. A separate miscellaneous case might have been started for the purpose. Under Article 158, Limitation Act, a party has to file his application for setting aside an award or for getting an award remitted for reconsideration within 30 days of the date of service of the notice of filing of the award. This provision of the Limitation Act clearly does not apply to the present case as the petitioner did not want to set aside the award or to get the award remitted for reconsideration. His prayer that the award may be accepted as valid and that the Court might proceed accordingly.

9. For the reasons stated above, I am inclined to the view that the learned lower Court wrongly refused to consider the prayer of the petitioner that the award might be accepted as valid. One more question that arises for consideration in this connection is whether the Court should at once proceed to confirm the award as opposite party 1 has withdrawn his objection. The opposite party has not withdrawn his objection in the sense that he accepts the award. He prayed for permission to withdraw the case as it was later on found out by him that his application under Section 33 of the Arbitration Act, was not maintainable in the absence of the award in Court at the time when the application under S. 33 was filed. Section 17 of the Arbitration Act, enacts as follows:

“Where the Court sees no cause to remit the award or any of the matters referred to arbitral on for reconsideration or to set aside the award, the Court shall after the time for making an application to set aside the award has expired or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of or not otherwise in accordance with, the award.”

10. Both the parties were before the Court when the award was received from the arbitrators More than 30 days have already passed from the date when the award was received in Court. More than 30 days have also passed from the date when the affidavit in support of the award was filed. If for these reasons it is held that the opposite party must submit to the award the bona fides of which the opposite party was streneously challenging in its application before the learned Additional Subordinate Judge then the result may be a, complete failure of justice. In terms of Article 158, Limitation Act a pirty has a right of notice that an award has been filed in Court before Article 158, Limitation Act, can be used against him. It is accordingly directed that the learned Additional ??? Judge should start a new miscellaneous case on the basis of the petition filed by the present petitioner requesting the learned lower Court to pass judgment on the award. He is further directed to issue notice to the opposite party regarding the filing of the award in Court inviting its objection to the award, if any. Thereafter the learned Additional Subordinate Judge should proceed according to the relevant provisions of the Arbitration Act. Above I have dealt with civil Revision No. 727 of 1946. In view of the order pissed therein, the hearing of the connected title suit must be stayed and is accordingly stayed. In the special circumstances of the case, the parties will bear their own costa.

Sinha, J.:— I agree.

S.C

11. Order accordingly.