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SUPREME COURT OF INDIA
K.S. HEGDE AND H.R. KHANNA, JJ.
Naraindas, Appellant
Versus
Vallabhdas and others, Respondents.
Civil Appeal No. 194 of 1967, D/- 15-10-1971.
Advocates appeared
Mr. S. N. Anand and Miss Kailash Mehta, Advocates, for Appellant; M/s. S. S. Khanduja and K. C. Das, Advocates, for Respondent No. 1.
It was contended that the arbitration was made out of Court and as all the parties to the arbitration did not sign the award in token of their acceptance it could not be made a rule of the Court.
Held: Where no suit is pending with respect to the subject matter of dispute and the parties choose to refer a dispute to arbitrators it is not essential that the parties should signify their consent to the award before the same can be enforced. [Para 7]
The matter is different where a matter is pending before a Court, and the parties obtain an award without intervention of the Court, the award is endorsed by the Court as a compromise or adjustment is the all the parties sign it. AIR 1953 Cal. 690 referred to. [Para 7]
(2) Arbitration Act, 1940 - S. 47, Proviso - litigation about the disputed matter prior to reference to arbitration-such litigation not pending when reference to arbitration made-no bar to refer the dispute to arbitration.
A dispute is referred to arbitration because the parties agreed to such a reference and the mere fact that the property which is the subject matter of dispute was also the subject matter of an earlier litigation. cannot prevent the parties to refer the dispute about that property to arbitration what is referred to arbitrators in such a case is the fresh dispute and although the finding of the Court in the previous litigation may have a bearing on the dispute referred to the arbitrators, it would not stand in the way of reference of the fresh dispute to the arbitrators. [Para 8]
(1) Arbitration Act, 1940 - Ss. 14, 17 & 20 - person not effected not signing arbitration agreement - award not vitiated. [Para 6
(2) Arbitration Act, 1940 - Ss. 47 & 20 - matter not pending in the Court - all the parties refer the dispute to arbitration out of Court all signed the reference - all parties not signing the award in taken of acceptance - award not invalidated.
It is always open to parties to refer a dispute to arbitration without the intervention of the Court. In case a suit is pending in respect of the subject matter of the dispute there can be no valid reference during the pendency of the suit to arbitration without the order of the Court. The underlying reason for that is to avoid conflict of jurisdiction by both the Courts and the arbitrator dealing concurrently with the same dispute. An award given on a reference during the pendency of a suit relating to dispute which is the subject matter of reference without obtaining the order of the Court cannot be enforced. The only exception to this rule is provided by the proviso to section 47 of the Arbitration Act (Act 10 of 1940) according to which "an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending". In such an event, the award is enforced as a compromise or adjustment of the suit because all the interested parties give their consent to the award. Where, however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties chose to refer a dispute to arbitrators, it is not essential that the parties should signify their consent to the award before the same can be enforced. Any other view would run counter to the entire scheme and object of arbitration for the settlement of disputes according to which agreement and consent are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award. AIR 1953 Ca1. 690 referred to. Para 7
(3) Arbitration Act. 1940 - S. 47 - subject matter of reference - was also subject matter of previous litigations - findings in previous litigation no bar for reference to arbitration.
A dispute is referred to arbitration because the parties agreed to such a reference and the mere fact that the property which is the subject matter of dispute was also the subject matter of an earlier litigation, cannot prevent the parties to refer the dispute about that property to arbitration. What is referred to arbitrators in such a case is the fresh dispute and although the finding of the Court in the previous litigation may have a bearing on the dispute referred to the arbitrators, it would not stand in the way of reference of the fresh dispute to the arbitrators. [Para 8
Judgement
KHANNA, J.:- This is an appeal on a certificate of fitness granted by the Madhya Pradesh High Court against the judgment of that Court whereby that Court in appeal set aside the order of the Additional District Judge, Jabalpur, dismissed the objections against an award and directed that the award be made a rule of the Court.
2. Naraindas, appellant is the brother of Vallabhdas and Durgaprasad, respondents 1 and 2 and son of Smt. Sukhrani, respondent No. 3. There were some arbitration proceedings in 1932 between the appellant and respondents 1 to 3 on one side and Pannalal and Smt. Dulari Bahu on the other side. Those proceedings related to partition of property and a claim for maintenance allowance by Dulari Bahu. An award was given in those proceedings and was made a rule of the Court in 13-12-1933. According to the award, Dulari Bahu was to get a maintenance allowance of Rs. 12/- per mensem from the appellant and his brothers. A charge was created of the maintenance allowance on the house which fell as a result of partition to the share of the appellant and respondents 1 to 3. It was also provided that if the appellant and his brothers failed to pay the monthly allowance, Dulari Bahu would be entitled to get the house sold. Out of the sale proceeds, Rupees 3000/- were to be deposited in a Bank on the condition that the amount of interest would be paid to Dulari Bahu but she would not be entitled to draw the principal amount. On Dulari Bahu s death, Rupees 2,000/- our of Rs. 3,000/- would be paid to the appellant and his brothers and Rupees 1,000/- to Pannalal.
3. The amount of maintenance payable to Dulari Bahu was increased to Rupees 30/- per mensem in a suit brought by her and decided on 8-10-1949.
4. As the appellant and his brothers did not pay the maintenance allowance to Dulari Bahu, she, in execution of her claim for maintenance allowance got their houses situated at Jabalpur sold by Court auction. The houses were purchased for Rs. 22,000/- by Sitaram and Laxminarain, respondents 4 and 5. After obtaining the sale certificate, respondents 4 and 5 took proceedings for obtaining possession of the houses but they were resisted by respondent No. 1. The appellant and his brothers further claimed that they had deposited some amount with respondents 4 and 5. The appellant and his brothers and mother on one side and respondents 4 and 5 on the other side thereupon appointed four arbitrators, as per agreement dated 8th April, 1955. According to the agreement, respondents 4 and 5 would have no claim in the houses purchased by them in Court auction and the arbitrators would make award in respect of the amounts to be paid by either of the parties as well as regarding the maintenance allowance payable to Durga Bahu and Sukhrani Bahu. The arbitrators thereafter gave their award dated 20th October, 1956 wherein they made provision for the amounts payable to different parties. Regarding the amount of maintenance allowance payable to Dulari Bahu, the award provided that Rs. 3,000/- out of the sale proceeds would be withdrawn from the Court and be deposited with Durgaprasad, respondent. Durgaprasad was made liable to pay the amount of Rs. 30/- per mensem as maintenance allowance to Dulari Bahu. The award further provided that out of the amount of Rs. 3,000/- Rupees 1,000/- would be paid to Pannalal and Rs. 2,000/- to Durgaprasad on the death of Dulari Bahu. Dulari Bahu was also given a right of residence in a room and maintenance allowance of Rs. 30/- payable to her was made a charge on the house allotted to Durgaprasad.
5. After the award had been put in Court, objections were filed against the award. Learned Additional District Judge set aside the award on the ground that the award affected the rights of Dulari Bahu and she had not been made a party to the arbitration agreement. The reference to arbitration as well as the award, according to the Additional District Judge did not amount to an adjustment and were, therefore, invalid
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