- Bookmark
- Share
- CaseIQ
Umersey Premji And Anr. v. Shamji Kanji And Bhanji Kanji
Factual and Procedural Background
The opinion concerns objections raised by defendant No. 2 (represented by Mr. Anderson) to the validity of an arbitration award on the ground that the award was not delivered (filed in Court) within the time allowed under the Court's order, although the award was made and signed within that period. The Court examined competing interpretations of the relevant provisions of the Civil Procedure Code, considered prior judicial decisions and English authorities, and addressed whether the award could be set aside or whether the Court should remit certain matters to the arbitrators under the Code. The Court ultimately ruled on the validity of the award as affected by the timing of its making and filing, whether portions of the award should be remitted for determination, and on the allocation of costs arising from the contest.
Legal Issues Presented
- Whether an arbitration award is invalid (liable to be set aside) because it was not filed in Court within the period fixed by the order of reference, despite the award having been made (completed and signed) within that period.
- Whether the last clause of Section 521 of the Code of Civil Procedure requires delivery/filing of the award within the period allowed, or whether completion/making within the period suffices.
- Whether Section 514 (and related provisions) applies to such a situation, and whether the Court has power to enlarge the time for delivery/filing of an award.
- Whether the Court should remit the award under Section 520 so that three matters left undetermined may be disposed of by the arbitrators.
Arguments of the Parties
Arguments Presented by Mr. Anderson (for defendant No. 2)
- He contended that his client had not waived the right to object to the validity of the award on the ground that it was not delivered within the time allowed under the order of the Court, even though it was made and signed within that period.
- He relied on the interpretation placed by the Court at Allahabad in Behari Das v. Kalian Das I.L.R. 8 All. 543, which read the last clause of Section 521 of the Code of Civil Procedure as equivalent to a rule that the award must be delivered within the period fixed by the Court.
Arguments Presented by Mr. Jardine
- He cited English authorities (including statutes and cases under Stat. 3 & 4 Will. IV cap. 42, s. 39) to show that in England courts have long been open to enlarging the time for delivery of awards and that such power is exercised in various circumstances.
- He relied on English cases indicating the circumstances in which courts will exercise the power to enlarge time, and on authorities showing that courts of equity possess such power and have applied it where arbitrators have not made awards within periods fixed by the parties.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Behari Das v. Kalian Das I.L.R. 8 All. 543 | Interpreted the last clause of Section 521 as requiring the award to be delivered within the period fixed by the Court. | The Court stated it differs from this decision. It observed that the Allahabad decision did not appear to consider the fuller reasoning in Norman J.'s decision and that it may have depended on another circumstance besides the omission to file within the fixed period. |
| Browne v. Collyer 20 L.J.Q.B. 426 | English authority indicating courts may enlarge the time for delivery of awards under Stat. 3 & 4 Will. IV c.42 s.39. | Referred to as part of the body of English cases showing English courts' practice of enlarging time; used as background but the Court ultimately followed a different interpretative line under the Code. |
| In the matter of an arbitration between James Ward and The Secretary of State for the War Department 35 L.J.Q.B. 53 | Another English authority showing courts can enlarge time for awards. | Noted as part of English practice supportive of enlargement of time; considered in weighing differing views. |
| Edward v. Davies 23 L.J.Q.B. 278 | Authority on circumstances in which the Court will exercise the power to enlarge time. | Referred to for the principle governing when courts exercise the enlargement power; used as comparative English authority. |
| In re Warner and Powell's Arbitration L.T. 3 Eq. 261 | Shows that Courts of Equity possess power to enlarge time for awards. | Quoted as authority that equity courts may enlarge time; the Court invoked the general principle in discussing remedial powers of courts. |
| May v. Harcourt 13 Q.B. Div. 688 | Power to enlarge time may be applied where arbitrator has not made award within period fixed by the parties themselves. | Cited to show English practice where enlargement is applied even when time is fixed by parties; considered as part of comparative law. |
| Simson v. Venkatagopalam I.L.R. 9 Mad. 475 | Discussed the "return" (filing) of the award; judgment shows award was not made in fixed time. | The Court observed the headnote mentions return, but the judgment shows the award was not made in time; used to distinguish factual circumstances from present case. |
| Bhugwan Dass v. Nund Lall Sein I.L.R. 12 Calc. 173 | Addressed related points under Sections 514 and 521 of the Civil Procedure Code (Act XIV of 1882). | The Court treated it as a case similar to Simson v. Venkatagopalam and noted it did not raise the precise filing-vs-making issue now before the Court. |
| Muselbrook v. Dunkin 9 Bing. 605 | Illustrates that making an award is different from publishing it. | Used to support the textual distinction between making/completing an award and publishing/filing it. |
| Mac Arthur v. Campbell 5 B. and Ad. 518 | Authority distinguishing making of an award from publishing it. | Referred to as part of the English authorities confirming the difference between making/completing and publishing/delivery. |
| Armitt v. Breame 1 Salk. 75 | Referenced on what constitutes a delivery. | Used as an historical authority in the Court's exposition of "delivery" versus "completion." |
| Brown v. Vawser 4 East. 584 | Lord Ellenborough distinguished delivery from completion; an award can be complete and the arbitrator functus officio before actual delivery. | Quoted in support of the proposition that an award may be complete within the time even if delivery/filing occurs later. |
| Veale v. Warner (cited via Williams Saunders) | Principle concerning completion and delivery of awards (cited in secondary source). | Referred to alongside other authorities to show established English principles distinguishing completion and delivery. |
| Henfree v. Bromley 6 East. 308 | Another authority on the distinction between completion and delivery. | Referred to as supporting authority for the principle distinguishing completion from delivery/publishing. |
| S.M. Jagatsundari v. Sonatan 5 Beng. L.R. 357 | Norman J.'s decision interpreting older Code provisions; held that completion of the award is distinct from submission/filing to the Court. | The Court followed Norman J.'s reasoning, treating completion/making of the award as distinct from filing, and relied on that reasoning to interpret the present Code provisions. |
| Jewel v. Christie L.R. 2 Co. 296 | Shows authority for treating outstanding debts as matters requiring an affirmative decision to prevent further litigation. | Used to support the Court's view that the outstanding debts and related matters are within the terms of the reference and should be remitted for affirmative decision. |
| Harrison v. Crswick 21 L.J.C.P. 113 | Authority cited in relation to remitting matters to arbitrators. | Referred to as supporting authority for remitting matters within the reference back to arbitrators. |
| In the matter of Robson and Railston I.B. & Ad. 723 | Used in context of remitting matters to arbitrators. | Referenced by the Court as part of authorities supporting remittal where matters fall within the reference. |
| Spencer v. Spencer 2 Y. and J. 249 | Shows advantage of an affirmative decision about outstanding debts to prevent further litigation. | Applied by the Court to justify remitting outstanding debt-related matters for determination to avoid subsequent litigation. |
| Lord v. Lee L.R. 3 Q.B. | Quoted for the proposition that a judge may cure defects of form to prevent arbitration failing through mere mistake or inadvertence. | Quoted to support the Court's interpretative approach favoring constructions that carry out the manifest purpose of the legislation and to show judicial willingness to cure formal defects. |
Court's Reasoning and Analysis
The Court proceeded through the following analytical steps, relying on the language of the Code provisions, comparative authorities, and prior judicial interpretation:
- The Court first accepted that defendant No. 2 had not waived his right to object that the award was not "delivered" within the time allowed, despite the award being made and signed within the period.
- The Court considered the Allahabad decision in Behari Das v. Kalian Das which read the last clause of Section 521 as mandating delivery within the period, but observed that the language of the Code (distinct uses of "make," "complete," "deliver," "file," and "submit") suggested potential difficulties with that interpretation.
- The Court examined the text of the Code—Sections 508, 514, 516, 521 and related older enactments (Acts of 1877 and Act VIII of 1859)—and noted that the statute uses different words at different places (e.g., "made," "complete," "delivered," "caused to be filed," "submitted"), indicating distinct acts.
- The Court reviewed English cases cited by opposing counsel showing that English courts can enlarge the time for delivery and that courts of equity possess similar powers; it acknowledged these authorities but treated them as comparative material rather than binding on interpretation of the Code's language.
- The Court gave weight to the decision of Norman J. in S.M. Jagatsundari v. Sonatan, which expressly considered corresponding older Code provisions and held that "completion" of the award is distinct from submission/filing to the Court. The Court quoted Norman J.'s reasoning emphasizing that once an award is complete the arbitrators are functus officio and the manner of submission is of secondary importance.
- Applying that reasoning to the present Code's language, the Court concluded it would be contrary to Norman J.'s decision and to the language of the present Code to treat "made" as including filing. The Court relied on historical authorities distinguishing "making" and "delivery/publishing" of awards to reinforce that an award can be complete within the time even if actual filing occurs later.
- Consequently, the Court found that Section 514 did not apply in the present case because the arbitrators had in fact made (completed) the award within the time allowed, even though they did not file it within that period. The Court also found that the last clause of Section 521 did not apply; the earlier part of Section 521, however, prohibits the Court from setting the award aside except in specified circumstances.
- Turning to the question of remittal under Section 520, the Court examined whether the three matters left undetermined were within the terms of the reference (which covered "this suit and all matters in dispute between the parties"). The plaint sought directions about outstanding debts and partnership books of account. The Court concluded these matters were "matters in difference" within the reference and therefore should be remitted so that the arbitrators could make the necessary affirmative decision.
- In light of the fact that the plaintiffs consented to remittance when the defendant first proposed it, and because the expenses of the application were caused by the defendant contesting the award's validity, the Court ordered cost allocations.
Holding and Implications
The Court held that the award was not rendered invalid merely because it was not filed in Court within the period allowed, since the arbitrators had in fact made (completed and signed) the award within that period; accordingly, Section 514 and the last clause of Section 521 do not apply in this case.
Direct consequences and orders:
- The Court ruled that the award shall not be set aside on the ground relied on by defendant No. 2 because the award was completed within the prescribed time.
- The Court ordered that the award be remitted under Section 520 to the arbitrators so that the three matters left undetermined (including outstanding debts and books of account and the disposal of monies in the receiver's hands) be disposed of by them; the plaintiffs had consented to remittal when it was proposed.
- Costs were allocated as follows: the defendant represented by Mr. Anderson (who contested the validity) was ordered to pay his own costs and the plaintiffs' costs attributable to the contest; the other defendant was ordered to pay his own costs.
Broader implications: The Court expressly adopted the reasoning of Norman J. (S.M. Jagatsundari v. Sonatan) distinguishing completion/making of an award from filing/submission, and stated that it differed from the interpretation in Behari Das v. Kalian Das. The opinion interprets the statutory language to give effect to that distinction. The Court did not, in express terms, declare that it was creating a binding new precedent beyond this interpretation; it compared, distinguished and applied existing authorities to the facts before it and set out its ruling and orders accordingly.
1. On reading the correspondence I find that Mr. Anderson's client, defendant No. 2, has not waived his right to object to the validity of the award, on the ground that it was not delivered within the time allowed under the order of the Court, although it was made and signed within that period.
2. Mr. Andarson relies on the interpretation placed by the Court at Allahabad in Behari Das v. Kalian Das I.L.R. 8 All. 543 on the last clause of Section 521 of the Code of Civil Procedure, viz. "and no award shall he valid unless made within the period allowed by the Court." On considering the clause along with Sections 508 and 514 the learned Judges held it to be equivalent to a rule that the award must be delivered within that period. No other reported case dealing with the clause has been shown me. The clause appears in the same words in section 521 of the code of 1877, and a similar enactment is found in Act VIII of 1859 in the proviso to Section 318. At the hearing I noticed that the language of Section 516, which treats the making, signing and filing of an award as different acts, causes some difficulty in adopting this interpretation. In Section 525 the making and filing are again distinguished. By Section 508 the Court refers the matter in difference which the arbitrator is "required to determine," and fixes a time for the "delivery of the award." In Section 514 provision is made where the "arbitrators cannot complete the award within the time specified in the order. The Court may, if it thinks fit, either grant a further time and from time to time enlarge the period for the delivery of the award, or &c." There completion and delivery seem to be distinguished.
3. The English cases cited by Mr. Jardine on Stat. 3 and 4 Will IV. cap 42, Section 39--Browne v. Collyer 20 L.J.Q.B. 426; In the matter of an arbitration between James Ward and The Secretary of State for the War Deportment 35 L.J.Q.B. 53--show that in England it has long been open to the Court, in a case like the present, to enlarge the time: see Rusell on Awards, 544; and as to the cases in which the Court will exercise the power Edward v. Davies 23 L.J.Q.B. 278. It is possessed by the Courts of Equity--In re Warner and Powell's Arbitration L.T. 3 Eq. 261--and may be applied where the arbitrator ahs not made his award within the period fixed by the parties themselves--May v. Harcourt 13 Q.B. Div. 688. It was also pointed out, at the hearing that the decision in the Allahabad case depended on, another circumstance besides the omission to file the award in Court within the period provided by the order of reference.
4. The question before me being of general importance, and the interpretation contended for by Mr. Anderson being at first sight contrary to the English decisions and legislation and the sprit of such enactments as Section 578 of the Civil Procedure Code, I took time in order to see what other and more recent authorities I could find, besides those cited, bearing on the point. I will now refer to the cases I have found and think applicable.
5. There is the case of Simson v. Venkatagopalam I.L.R. 9 Mad. 475. The head note mentions the "return" of the award; but the judgment shows that the award Was not made in the fixed time, and there was apparently no point raised about the filing being beyond the fixed time. The same may, I think, be said of the case Bhugwan Dass v. Nund Lall Sein I.L.R. 12 Calc. 173. Sections 514 and 521 of the Civil Procedure Code (Act XIV of 1882) are substitutes to a certain extent for the rules contained in Sections 318 and 324 of Act VIII of 1859 which I proceed to quote.
6. Section 318.--"When the arbitrator or arbitrators shall not have been able to complete the award within the period specified in the order, from the want of the necessary evidence or information, or other good and sufficient cause, the Court may from time to time enlarge the period for the delivery of the award, if it shall think proper." (Then follows a rule about the umpire): "Provided that an award shall not be liable to be set aside only by reason of its not having been completed within the period allowed by the Court, unless on proof that the delay in completing the award arose from corruption or misconduct of the arbitrator or arbitrators, or umpire, or unless the award shall have been made after the issue of an order by the Court superseding the arbitration and reealling the suit."
7. Section 324--
"No award shall be liable to be set aside except on the ground of corruption or misconduct of the arbitrator or umpire, Any application to set aside an award shall be made within ten days after the same has been submitted to the Court."
8. Section 320 corresponds with Section 516, and provides that when an award shall be made it shall be submitted to the Court under the signature of the person who made it.
9. The older law, including the very point I have to decide under the present Code, received interpretation from Mr. Justice Norman in the case of S.M. Jagatsundari v. Sonatan 5 Beng. L.R. 357 at pp. 361 and 362 O. Civ. If Section 320 of the old Code be compared with Section 516 of the new, it would appear that his judgment was brought to the notice of the Legislature. Comparing Sections 315 and 318, (to which Section 508 about the reference and Section 514 correspond), the learned Judge observes:
"These two sections show that the Act contemplated the award as completed before it is actually submitted to the Court. No doubt, when there are several arbitrators, the judicial act of making an award must be the act of all the arbitrators. They must all be present together, and concur in that which is to stand as their joint judgment. But when the award is completed, and the functions of the arbitrators as judges are at an end, it matters little through what channel the award is submitted, or, in other words, by whom it is submitted to the Court. I think, therefore, that the reason of the thing, as well as the change in the language, shows that the completion and delivery of the award mentioned in Sections 315 and 318 is something different from the submission of the award to the Court under Section 320."
10. Now, although by Section 516 of the new Code (Act XIV of 1882) the arbitrators are to cause the award to be filed in Court, the Legislature has adhered to the words "complete" and "delivery" while using in Section 616 the words "caused to be filed" instead of "submitted," and in Section 521 "made" instead of "completed." It would be contrary to this decision to hold that "made" includes the filing of the award, and I think it would also be a strain on the language. The phrase "make an award" is frequent in Acts of Parliament, e.g., the Common Law Procedure Act, 1854, Section 15, "shall make his award under his hand." The making of an award is different to the publishing of it--Muselbrook v. Dunkin 9 Bing. 605; Mac Arthur v. Campbell 5 B. and Ad. 518. As to what is a delivery, see Comyn's Dig., Tit. Fait, A 3 and 4 and B 5; Armitt v. Breame 1 Salk. 75. In Brown v. Vawser 4 East. 584 the delivery is distinguished by Lord Ellenborough, C.J., from the completion of the award in these terms: "The award was complete when it was ready to be delivered within the time appointed, and prior to the actual delivery; the arbitrator was then functus officio; and if any accident had happened afterwards to prevent his making a delivery, it would still have been an award." See also cases in 1 William's Saunders 582 under Veale v. Warner: Henfree v. Bromley 6 East. 308 is another authority on the principle.
11. On careful examination of the chapter in the present Code about arbitration I see no indication of any intention of the Legislature to altar the law as laid down by Norman, J., following the English practice, but on the contrary different words have been used which have each received judicial interpretation. "While I have the misfortune to differ from the learned Judges who decided Behari Das v. Kalian Das I.L.R. 8 All. 543, I may remark that the more fully argued case decided by Norman J., does not seem to have been brought to their Lordships' notice, nor the corresponding sections of the older Code. I find, for the above reasons, that Section 514 does not apply, as the arbitrators did actually make or complete the award within the time allowed, although they did not file it within that period. I also find that the last clause of Section 521 does not apply, whereas the earlier part of that section prohibits the Court from setting the award aside. I think in thus ruling I am carrying out the real intent of the Legislature. "It is the duty of Courts of justice to give that construction which most fairly carries out the manifest purpose Per Stuart, V.C. In re Warne and Powell's Arbitration L.R. 3 Eq. at p. 266." "The course of legislation has been to prevent an arbitration, to which the parties have assented, failing through the mere mistake or inadvertence of the arbitrator"--per Mellor, J, in Lord v. Lee L.R. 3 Q.B. at p. 410. In the same case, Blackburn, J., after tracing the history of arbitration observes at p. 409: "Surely it is a very salutary enactment which enables a judge to cure a defect of form, and which the parties might have cured themselves."
12. The next question is, whether I ought under Section 520 to remit the award in order that the three matters left undetermined may be disposed of by the arbitrators. I think they all come within the terms of the reference, which was of "tins suit and all matters in dispute between the parties." The plaint prays for directions about the outstanding debts and books of account of the partnership. As to these matters and as to the disposal of the moneys in the hands of the receiver, I am of opinion that they are matters in difference, and that an affirmative decision is required from the arbitrators: sea Jewel v. Christie L.R. 2 Co. 296; Harrison v. Crswick 21 L.J.C.P. 113; In the matter of Robson and Railston I.B. & Ad. 723. The case of Spencer v. Spencer 2 Y. and J. 249 shows the advantage of having an affirmative decision about outstanding debts to prevent further-litigation. I may add, that the plaintiffs consented to the award being remitted when Mr. Anderson's client first proposed that this course should be taken. The latter expenses having been caused by his contesting the validity of the award, I order that he pay his own and plaintiffs' costs. The other defendant to pay his own.
Alert