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Case Number

First Appeal No. 104 of 1914

Judges

Atkinson
Jwala Prasad, JJ.

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Smart Summary

Concise Analytical Summary of the Opinion

Factual and Procedural Background

This suit was instituted on 27 October 1911 for partition of several mauzas set out in the plaint and for separate possession upon allotment. On 23 August 1912 the parties filed a petition of compromise, sanctioned by the Court, by which the partition was to be effected by arbitration. Paragraph 6 of the compromise petition appointed five arbitrators (only two named were Abinash Chandra Ojha and Hari Mahto) and provided that, between the parties, the arbitrators' partition would be conclusive. Paragraph 7 provided that the parties would abide by the arbitrators' division, but allowed a party to object and have partition done through the Court at the objector's cost.

Only three of the five arbitrators actually met, inquired and agreed upon a partition. Hari Mahto did not take part in the arbitration inquiry but subsequently signed the award before filing; Abinash Chandra Ojha neither acted nor signed the award prior to its being filed. The award and partition papers were filed in Court on 6 September 1913 with the signatures of four arbitrators; Abinash Chandra Ojha had not then signed.

On or about 18 September 1913 (via petitions dated 8 September 1913) defendants numbered 6 and 10 (and, in the broader narrative, defendants 6 to 10) filed objections to the award contending that it was not the joint adjudication of all five arbitrators and was, in law, a nullity. On 22 November 1913 Abinash Chandra Ojha signed the award in open Court at the Court's direction. The learned Subordinate Judge heard the objections and, on 12–13 January 1914, held the objections time-barred and pronounced decree in terms of the award. The present appeal challenges the Subordinate Judge's decree and, centrally, whether an appeal lies under Rule 16, Schedule 2, Code of Civil Procedure (CPC) against the Judge's decision refusing to set aside the award.

Legal Issues Presented

Whether an appeal lies under Rule (para.) 16, Schedule 2, Code of Civil Procedure, from the adjudication of the Subordinate Judge declining to set aside an arbitration award and from the decree pronounced pursuant to that award.
Whether the arbitration award in this case was valid when (a) only three of the five appointed arbitrators actually acted in making the award, and (b) one arbitrator (Abinash Chandra Ojha) did not sign the award prior to its being filed in Court (and subsequently signed it in Court at the hearing of objections).

Arguments of the Parties

Appellants' Arguments

The appeal is competent because Rule 16, Schedule 2 presupposes a valid award; the award in this case was invalid (not made by all appointed arbitrators and improperly signed) and therefore the Subordinate Judge had no basis to pronounce a decree on such an award.
Under Rule 10, Schedule 2, all arbitrators were required to sign the award before it was filed; after filing the arbitrators become functus officio and it was not open to an arbitrator to sign later nor for the Court to accept such a late signature.
Authorities such as Ramesh Chandra Dhar v. Karunamoyi Dutt and Junglee Ram v. Ram Heet Sahoy were cited to show that awards not signed by all appointed arbitrators or where there was no authority for a majority to act have been held invalid.

Respondent's Arguments

The appeal is incompetent because Clause (2), Rule 16, Schedule 2, CPC bars appeals from decrees pronounced in pursuance of an award except insofar as the decree is in excess of or not in accordance with the award; thus the Subordinate Judge's decree is final.
The Subordinate Judge regarded the absence of a signature as a formal defect that had been rectified when Abinash Chandra Ojha signed the award in Court on 22 November 1913; the objection was also held time-barred by the first Court.
The respondent relied on the Privy Council decision in Ghulam Khan v. Muhammad Hassan to support the proposition that no appeal lies in the circumstances described by Rule 16.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ghulam Khan v. Muhammad Hassan (Privy Council)	Held that no appeal lies from a decree pronounced in pursuance of an award except in so far as the decree is in excess of, or not in accordance with, the award; arbitrators decide questions of law and fact where referred, and an error of law by arbitrators does not vitiate the award.	The Court relied on this decision as determinative of the question of appealability under Rule 16, Schedule 2, and applied it to hold that no appeal lay from the Subordinate Judge’s decree even though objections were made to the validity of the award.
Purnea Municipality v. Siva Sankr Ram (Sir Francis Maclean, C.J.)	Interpreted and applied the Privy Council decision; stated that the Privy Council meant no appeal where a decree had been passed in accordance with the award and indicated earlier contrary decisions were effectively overruled.	The Court cited Sir Francis Maclean’s exposition to show the Privy Council rule had been adopted by Indian High Courts and to support the conclusion that the present appeal was barred.
Kanakhu Nagalinga Naick v. Nagalinga Naick	Used as part of a group of cases pointing to the same conclusion that appeals are barred under the Privy Council rule.	Referenced as part of the uniform practice adopted after the Privy Council decision to demonstrate binding practice in India corroborating the bar on appeals under Rule 16.
Lutawan Kubar v. Lachiya	Referenced as confirming the same legal position adopted by the courts post-Privy Council decision.	Cited to show consistency of subsequent judicial practice aligning with the Privy Council principle that appeals are limited as specified in Rule 16.
Rai Charan Pukait v. Amrita Lal	Another case indicating the same conclusion reached by other Indian Courts following the Privy Council ruling.	Used to reinforce that the Privy Council principle had been universally followed in India and therefore bound the present Court.
Ramesh Chandra Dhar v. Karunamoyi Dutt	Factually similar case where an award was filed without the signature of one arbitrator who subsequently signed; decision delivered shortly before Sir Francis Maclean’s exposition.	The Court noted this case was in point factually but observed it was delivered two days before Maclean, C.J.'s decision and therefore could not be treated as binding in light of the later prevailing authorities following the Privy Council rule.
Junglee Ram v. Ram Heet Sahoy	Held that an award not signed by all appointed arbitrators, and where there was no submission authorizing the majority to make the award, could be invalid.	Cited by the appellants to argue invalidity; the Court recognized the authority but held the appeal nonetheless incompetent under the Rule 16 principle derived from the Privy Council and subsequent practice.

Court's Reasoning and Analysis

The Court's analysis proceeded in two related strands: (1) assessment of the factual validity of the award, and (2) determination of the appealability of the Subordinate Judge's decision under Rule 16, Schedule 2, CPC.

1. Factual assessment of the award (summary of findings):

The arbitrators' proceedings had been conducted by only three of the five appointed arbitrators. Hari Mahto did not take part in the inquiry but signed the award before filing; Abinash Chandra Ojha neither acted nor signed the award before it was filed on 6 September 1913.
Defendants objected on two primary grounds: that the award was not a joint adjudication of all five arbitrators and that the award was a nullity in law since the appointed arbitrators had not properly acted or signed.
The Subordinate Judge held the objections time-barred and treated the absence of the fifth arbitrator's signature as a mere informality because Abinash Chandra Ojha signed the award in Court on 22 November 1913. The learned Judge therefore pronounced decree in terms of the award.
Atkinson, J. expressed the view that an award produced by only three arbitrators and filed having been signed by only four made the award void and without legal effect; however he emphasized that this factual/legal point was not the primary issue before the appellate Court for determination because of the question of appealability.

2. Legal issue of appealability and its resolution:

The central legal question identified by Atkinson, J. was whether an appeal lies under para. 16, Schedule 2, CPC from the Subordinate Judge’s adjudication declining to set aside the award and from the decree made pursuant to that award.
Both judges gave controlling weight to the Privy Council decision in Ghulam Khan v. Muhammad Hassan, which interpreted the predecessor provision (Section 522 of the 1882 CPC) and held that no appeal lies from a decree pronounced on foot of an award except insofar as the decree is in excess of, or not in accordance with, the award.
Atkinson, J. described the post-Privy Council judicial practice in India as uniformly adopting that interpretation; he cited Sir Francis Maclean's exposition in Purnea Municipality v. Siva Sankr Ram and other High Court decisions as demonstrating that earlier contrary decisions had been effectively overruled.
Jwala Prasad, J. reviewed the facts, the appellants' reliance on the formal requirement that all arbitrators sign before filing (Rule 10, Schedule 2) and the contention that arbitrators become functus officio upon filing. He noted that the Court had ruled on the validity question under the power conferred by Rule 15, Schedule 2 (as amended to permit setting aside awards as invalid), but held that the appeal was still incompetent because the bar on appeals under Rule 16 must be applied.
Both judges concluded that, whether or not the award were valid, the law as interpreted by the Privy Council and applied by subsequent Indian courts meant that no appeal lay from the decree except insofar as the decree exceeded or was not in accordance with the award; the present appeal did not raise such a ground and therefore was barred.
Atkinson, J. also observed that paragraph 7 of the compromise petition, which purported to allow any party to object to the award "on any account" and obtain partition through the Court at the objector's cost, was ultra vires and inconsistent with the arbitration procedure of Schedule 2; he regarded that point as immaterial since the Subordinate Judge's decision was final for purposes of appealability.

Holding and Implications

Holding: The appeal was DISMISSED.

Direct consequences and implications as set out in the opinion:

The decree pronounced by the Subordinate Judge in terms of the arbitration award must stand and cannot be impeached on the appeal before the Court because Rule 16, Schedule 2, CPC bars such appeals except where the decree is in excess of, or not in accordance with, the award.
The Court followed the Privy Council interpretation and later High Court practice in India and declined to entertain the appeal on the question whether the award was void or invalid; that question had been addressed by the Subordinate Judge and his determination was not open to appeal under the cited provision.
The Court regarded paragraph 7 of the compromise petition as ultra vires in relation to the statutory scheme of Schedule 2, but treated that finding as immaterial to the outcome because the appeal was incompetent in any event.
The decision did not purport to establish a novel rule; rather it applied and reinforced the prevailing interpretation of Rule 16, Schedule 2, CPC as derived from the Privy Council and subsequent High Court authority. The Subordinate Judge’s decree therefore remains operative.

Order recorded in the opinion: "This appeal must be dismissed." (Atkinson, J.) and "Appeal dismissed" (final entry).

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Khudiram Mahto v. Chandi Charan Mahto

Atkinson, J.:— This suit was brought for the partition of the several mauzas set forth in the schedule to the plaint, and for separate possession on allotment of the property when partitioned. The suit was instituted on 27th October, 1911. During the course of its proceeding a compromise petition was agreed upon between all the parties in the action with the sanction of the Court, providing that the partition of the properties mentioned in the plaint should be referred to arbitration. The petition of compromise is dated 23rd August, 1912, and the only material paragraphs in the petition to which it is-necessary to refer, are paras. 6 and 7, Para. 6 eo nomine appoints five arbitrators to make a partition. It is unnecessary to name move than two of these arbitrators and the two to be named are Abinasli Chandra Ojha and Hari Mahto, and this clause also provides that, as between the parties to the suit, the partition to be-made by the arbitrators was to be conclusive. Para. 7 merely embodies a declaration that the parties were to fully abide by the division and partition to be made by the arbitrators in pursuance of para. 6, with the additional provision that if any of the parties objected to the division on any account then, in that event, the partition should be effected through the Court at the cost of the individual or individuals who might object to the partition made and effected by the arbitrators. Only three of the five arbitrators met to consider and inquire as to the proper partition which it would be fair and right to make as between the parties to the suit.

2. The two arbitrators whom I have named and mentioned did not take any part in the arbitration, but the remaining three arbitrators having inquired and satisfied themselves made their award, declaring the nature of the partition which they had agreed upon. Hari Mahto, although he did not take part in the proceedings of the arbitration leading to the completion of the award, signed and executed the award before it was filed in Court as one of the arbitrators, after it had been prepared and drawn up by his three colleagues who acted. Abinash Chandra Ojha, on the other hand, neither acted as an arbitrator in the inquiry, nor did he sign and execute the award prepared by his colleagues before the same was filed on 6th September, 1913. The award, as stated, was filed in Court on 6th September, 1913, and on 18th September, 1913 defendants 6 and 10 objected to the award on the ground set forth in their respective petitions dated 8th September, 1913; and, shortly stated, their objection to the award was twofold: one, that the award was not the joint adjudication of all five arbitrators who had been appointed to arbitrate, but was only the award of three, that two had not acted, that one had acted, signed and executed the award without having taken part in the arbitration inquiry, and on the further ground that Abinash Chandra Ojha had neither acted nor signed and executed the award prior to its being filed in Court, and that, secondly, in point of law the award was a nullity, and in no sense could it be considered a legal and valid award of the matters referred to the arbitration of the persons specifically named by the compromise petition.

3. On 12th January, 1914 the matters arising on the petition of objection of defendants 6 and 10 came before the learned Subordinate Judge for his consideration and adjudication, and the learned Judge held that the objection of the defendants was barred by limitation of time, the same not having been made within 10 days from the date of the filing of the award, and he apparenly regarded the action Abinash Chandra Ojha, in not having acted in the arbitration proceedings and not having signed the award, as a mere informality, because on 22nd November, 1913, this matter having been brought to his notice, he there and then in his own presence in open Court had the award, which was filed on 6th September, signed and executed by Abinash Chandra Ojha. So that, when the case arising on the objections of defendants 6 and 10 came before him, the award was signed by all the arbitrators, and the Judge, without considering the legal effect of how the award was procured, held that the award was regular upon its face and the plaintiff's right to challenge or set aside the award was barred by limitation. He accordingly pronounced a decree in the terms of the award. We think that the award, which was brought into being as a result of the adjudication of only three persons instead of five, coupled with the fact that the award before it was filed was only signed by four instead of five, made the award itself void and without legal effect. But firs matter is not really one which we have to consider with any great detail in this case. The main question for consideration is, whether an appeal lies under para. 16, Sch. 2, Code of Civil Procedure, from the adjudication of the Subordinate Judge, declining to set aside the award on the objection of defendants 10 and 6 and the decree made and pronounced by him as the result of such rule. Para. 15, Sch. 2, Code of Civil Procedure, provides that no award shall be set aside, arising in any pending matter or suit, except on one of the three grounds set forth in Cls. (a), (b) and (c); and clearly it would have been open to the learned Judge, had he so thought fit, under Cl. (c) to have set aside this award on the ground of its invalidity. Prior to the year 1901 it was well reaognised and established in all Courts in India, that a decree pronounced and passed in respect of an award which was void or illegal, was subject to a right of appeal under the old Section 522 of the CPC, 1882, which is in terms identical with para. 16, Sch. 2, of the existing Code of 1908, because the interpretation which was given to the old section was, that the right of appeal was only taken away in cases where there had been a decree pronounced on a valid and legal award and that, if the award was void and illegal, then in fact there was no award and there was nothing upon which the provisions of the section could legally operate. However in 1901 their Lordships of the Privy Council had to consider the terms and provisions of the old Section 522 of the then CPC. In the case of Ghulam Khan v. Muhammad Hassan(1) their Lordships of the Privy Council laid down in distinct and definite terms what they believed to be the true interpretation to be put upon the arbitration section set out in Sch. 2 of the Code, and more especially with regard to the interpretation they put upon S. 522. Lord Macnaghten there laid it down clearly and distinctly that to hold that an appeal lay from a decree pronounced on foot of an award in an arbitration matter from the Court having seisin of the arbitration proceedings, would be doing violence to the plain language and obvious intention of the Code, except in so far as the decree might be in excess of or not in accordance with the provisions of the award. The actual wording of Section 16, Cl. 2, Sch. 2 of the CPC. is as follows:

‘Upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except in so far as that decree is in excess of, or not in accordance with the award.”

4. Thus, whether the award be valid or invalid no appeal lies from the decision of the Judge of first instance as to the validity or invalidity of the award, except in cases where a decree pronounced in pursuance of the award is in excess or not in accordance with the provisions of the award itself. Up till that time the Courts in India had acted on a totally different basis. After the decision of the Privy Council in the case I have referred to, all the Courts in India, Calcutta, Madras, Bombay, Allahabad, and Punjab, loyally and universally followed and gave effect to the law as laid down by the Privy Council, thereby going back on the many previous decisions in which a contrary rule or principle had been laid down. In the year 1906 in the case of Chairman of the Purnea Municipality v. Siva Sankr Ram(2) Sir Francies Maclean, C.J, laid down what he conceived to be the true legal meaning of the decision of the Privy Council; and he says of I.L.R 33 Cal. at p. 992 of the report:

“The Judicial Committee there held that no appeal lay where a decree had been passed under Section 522 of the CPC in accordance with the award, which is not the case before us. No doubt, before that decision of the Judicial Committee, there were a series of cases in most, if not in all the High Courts in India, which held in effect that, where a decree was passed upon an award, which is not valid or legal, an appeal would lie. I need not refer to these cases, because I think it must be taken that those cases were practically overruled by the decision of the Judicial Committee, to which I have referred.”

5. Uniformly since then all the Courts in India have followed the principles enunciated by Sir Francis Maclean, C.J, in the case I have referred to. Kanakhu Nagalinga Naick v. Nagalinga Naick(3), Lutawan Kubar v. Lachiya(4), Rai Charan Pukait v. Amrita Lal(5) all point to the same conclusion, and therefore, I think that we are inevitably bound to follow the course of practice established by a decision so universally recognised as now being the existing law of India. I desire only to mention the case of Ramesh Chandra Dhar v. Karunamoyi Dutt(6), a case identical with the present one before us, but judgment in which was delivered two days before the decision of Maclean, C.J, to which I have referred and, therefore, I think that the latter case, although in point, is not an authority which can bind us, having regard to modern and more recent decisions. Personally I doubt if the decision of the Privy Council in the case reported as Ghulam Khan v. Muhammad Hassan was intended to have so far-reaching a meaning as has been ascribed to it, or that it could be considered as applying to a case where the award is ab initio void.

6. Thus it follows that there is no appeal from the decree and decision of the Subordinate Judge in this matter, and that his view as to the validity of the arbitration award established by his order of 13th January, 1914 cannot be impeached on the appeal before us, and that, therefore, the decree of the Subordinate Judge pronouncing judgment in the terms of the award must stand. The provision in Cl. 7 of the compromise petition, providing that any of the parties might object to the award on any account, is, in my opinion, ultra vires and contrary to the procedure applicable to arbitration proceedings arising in a pending suit, as laid down by Sch. 2, Code of Civil Procedure, and more especially by Cl. 15 thereof. However, this point is immaterial as the decision of the Subordinate Judge is final and conclusive.

7. This appeal must be dismissed.

8. Jwala Prasad, J.:— The suit out of which this appeal arises was instituted on 27th October, 1911 for partition of certain mauzas sat forth in the plaint. On 23rd August, 1912 the par ties filed a petition of compromise agreeing to appoint five persons as arbitrators to make partition and prepare chittahs according to the respective shares of the parties. On 11th September, 1911 the Court passed a preliminary decree for partition and referred the matter to the arbitrators named in para. 6 of the petition to effect partition. By para. 7 of the petition the parties agreed to fully abide by the award of the arbitrators. On 6th September, 1913 the award with the partition papers was filed in Court with the signatures of only four of the arbitrators. The fifth arbitrator, Abinash Chandra Ojha, had not signed the award. On 18th September, 1913, defendants 6 to 10, who are appellants here, filed objections against the award, impugning its validity on, amongst others, the following grounds:

9. That the award was not prepared by all the five arbitrators appointed to make the award. Two of the arbitrators were not present at the time of making the award, one of whom only signed after the award was prepared, and the other arbitrator, Abinash Chandra Ojha, had not signed it even when the award was filed in Court. On 22nd November, 1913, the dated fixed for the hearing of the objections, the fifth arbitrator, Abinash Chindra Ojha, who happened to be present in Court signed the award under the orders of the Court. The objections of the appellants as to the validity of the award were overruled by the learned Subordinate Judge for the reasons given in his judgment dated 13th January, 1914. After disposing of the above objections a decree was made by the first Court on the basis of the award. Defendants 6 to 10 have come up in appeal to this Court and seek to set aside decree of the Subordinate Judge.

10. The respondent disputes the competency of this appeal and contends that the decree of the Subordinate Judge is final and the appeal to this Court is barred by Cl. (2), R. 16, Sch. 2 of the Code. The appellants on the other hand contend that the clause does not apply to this appeal inasmuch as R. 16 presupposes a valid award, whereas in the present case the award was invalid as not having been made by all the arbitrators appointed and upon such an award the Court could not pronounce any judgment or base its decrees. In Ramesh Chandra Dhar v. Karunamoyi Dutt, where the award was filed in Court without the signature of one of the three arbitrators, who however subsequently came in Court and signed it, and in Junglee Ram v. Ram Heet Sahoy(7), where the award was not signed by all the arbitrators appointed and there was no authority in the petition of submission for the majority to make it, the awards were held to be invalid.

11. Under R. 10, Sch. 2, it was incumbent upon all the arbitrators to sign the award before its being filed in Court, and as soon as the award was filed in Court the powers of the arbitrators came to an end, they became functus officio, and it was not open to any of the arbitrators to coma in afterwards and sign the award, nor had the Court any power to allow him to do so. There is no provision in Sch. 2 of the Code, nor in the terms of the petition of submission to arbitration in the case, nor in the order of the Court referring the matter to arbitration, authorizing the majority of the arbitrators to make the award. The respondent relies on the authority of the Privy Council ruling reported as Ghulam Khan v. Muhammad Hassain. The case in the Privy Council, unlike here, was that all the arbitrators had signed the award when it was filed in Court, but the objection as to the validity of the award was on the ground that the arbitrators had Wrongly decided the question of jurisdiction of the civil Court involved in that case. Their Lordships held that as the whole case, including the issue as to jurisdiction was referred to them, the arbitrators were both Judges of law and fact, for an error in law did not vitiate the award. Their Lordships however laid down generally that no appeal lies from a decree made under Section 522 of the CPC, of 1882, corresponding to R. 16, Sch. 2, of the present Code, on the basis of an award except in so far as it is in excess of, or not in accordance with, the award and observed that to do otherwise would be doing violence to the plain language of the section.

12. The broad proposition laid down by Lord Macnaghten in the Privy Council, that no appeal lies from a decree based on an arbitration award, except in so far as the decree is in excess of, or not in accordance with, the award (in exact terms of Cl. 2, R. 16), has the effect of overruling all the decisions of the Courts in India to the contrary and has since been followed and acted upon by almost all the Courts. Since the Privy Council ruling the power of the original Court has been extended to set aside an award on the ground of its being invalid, by adding the words “or being otherwise invalid” to Cl. (a), R. 15 of the Schedule. No doubt when the parties take the matter in dispute between them out of the hands of the Court and agree that it should be decided by Judges or arbitrators of their own choice, they intend to putanend to litigation and the policy of the law is to give finality to the decision of the arbitrators, finis rei attendus est. The Court that refers is bound to give effect to the award and in order to do so is vested with the necessary powers (vide Rr. 12 to 15) by the rules in Sch. 2 to determine questions that arises after the finding of the award in Court. After determination of those questions the Court is required to pronounce judgment according to the award under R. 16 of the Schedule, Cl. (2) of which runs as follows:

“Upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except in so far as the decree is in excess of, or not in accordance with the award.”

13. The objection as to the validity of the award was taken by the appellants in the first Court which however held that the objection was a formal one as the fifth arbitrator Abinash Chandra Ojha, who had not signed the award when it was filed, did actually do so afterwards in Court, and thus the award ultimately Game to be signed by all the arbitrators, and was therefore a valid award. The Court further held that the objections as to the validity of the award were out of time. The Court rightly or wrongly has held that the award was valid. Under Cl. 1(c), R. 15 of the Schedule as it now stands, the Court had jurisdiction to determine objections as to the validity of the award.

14. The appeal in this case is solely on the ground that the decree is based upon an invalid award and not that it is in excess of, or not in accordance with, the award. In view of the general proposition laid down by the Privy Council and its universal observance, this Court cannot but hold that the appeal is incompetent however the facts of this case may be differentiated from those in the Privy Council case. The appeal is therefore dismissed, but without costs in the circumstances of the case.

V.S/R.K

15. Appeal dismissed.

Khudiram Mahto v. Chandi Charan Mahto

Concise Analytical Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Khudiram Mahto v. Chandi Charan Mahto

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