Andhra Pradesh High Court
Judges : N.KUMARAYYA, P.CHANDRA REDDY
Ravu Venkata Surya Rao - Appellant
Versus
Ravu Venkata Rao - Respondent
Decided On : 04-11-62
ARBITRATION ACT, 1940 - SECTION 20 - APPLICABILITY - CONDITIONS - AGREEMENT TO REFER DISPUTES IN PENDING SUIT - NOT COVERED - APPLICATION UNDER SECTION 20 NOT MAINTAINABLE - ARBITRATOR ENTERING ON REFERENCE - AUTHORITY CANNOT BE REVOKED WITHOUT LEAVE OF COURT - AWARD TO BE GIVEN WITHIN FOUR MONTHS OR EXTENDED TIME - FAILURE TO APPLY FOR EXTENSION - ARBITRATOR BECOMES FUNCTUS OFFICIO - SECTION 20 CANNOT BE INVOKED.
Fact of the Case:
Parties to a suit agreed to refer disputes to arbitration. Arbitrator entered on reference but proceedings came to a standstill. Application was made under Section 20 of the Arbitration Act, 1940 to file the agreement in Court.
Finding of the Court:
Section 20 of the Arbitration Act, 1940 is not applicable to agreements to refer to arbitration, disputes in pending suits. It is intended to cover only those cases where the parties without having recourse to litigation have agreed to refer their differences to arbitration. Once the party had proceeded under Chapter II, there is nothing in Section 20 to enable him to make an application thereunder.
Issues: Whether Section 20 of the Arbitration Act, 1940 is applicable to agreements to refer to arbitration, disputes in pending suits.
Ratio Decidendi: The conditions prescribed in Section 20 of the Arbitration Act, 1940 are cumulative and not mutually exclusive. Unless these conditions are satisfied, there can be no occasion for making an application under Section 20. The object of Section 20 is to give effect to arbitration agreements where no suit is pending and differences arise to which the agreement applies. Once the proceedings are started under Chapter II, the provisions of Section 20 will not be available.
Final Decision: Appeal allowed. Order of the Court below set aside.
( 2 ) THE facts leading to the said proceeding may be shortly stated. In an action, i. e. , O. S. No. 98 of 1950 for partition of joint family properties laid by the appellant against the respondents in Sub Judges Court, Kakinada, the parties eventually filed an agreed memo and a preliminary decree followed in terms thereof on 21-11-1950. The decree provided for partition and enjoyment of the properties into four equal shares. It also provided that the liabilities of the family agreed upon as per the list signed by all parties and kept with the plaintiff shall be borne in equal shares by all the four brothers. There was further a clear stipulation in paragraph 5 of the decree that in case the parties failed to work out their rights according to the terms stated in the decree within four months from the date of the decree, the reliefs stated in the decree may be obtained in final decree proceedings. The stipulated time was over but final decree proceedings were never initiated. That was because the division of family lands was in fact effected between the parties though of course, agreement could not be reached on the extent of total liabilities. Besides some complications seem to have developed thereafter. The parties thought it expedient then to refer the disputes to arbitration of Mr. M. Satyanarayana, advocate of Kakinada. They executed an agreement Ex. A-1 dated 28-12-1956 in his favour. The arbitrator accordingly entered on reference on 14-7-1957. The parties filed their respective statements. Thereafter some adjournments became inevitable. The appellant changed his mind and would not like the arbitration to go on. Before the four months period had expired from the date of entry on reference, the appellant on 12-11-1957 gave notice to the arbitrator asking him not to proceed with the arbitration. Ineffective such a notice may be in law, the proceedings thereafter seem to have in fact come to a standstill. The period of four months expired meanwhile. The respondents did not apply to the Court to enlarge the time for making the award under Section 28. A long time thereafter, on 20-2-1958, they made the application in question out of which the present appeal arises.
( 3 ) THE application was resisted mainly on the ground that Section 20 was not applicable and the appellant was entitled to avoid the agreement. The learned Subordinate Judge negatived the contentions of the appellant and decreed the suit with costs as prayed for.
( 4 ) SRI R. V. Subba Rao attacks this order on two grounds. Firstly, the facts of the case do not attract the provisions of Section 20 of the Arbitration Act and hence the application thereunder is wholly misconceived; secondly, that since the conduct of the arbitrator had shaken the confidence of the appellant in him he was entitled to avoid the agreement of reference and that no order under Section 20 can be possibly made. It is also urged as no award was made within four months and the time was not sought to be enlarged in that behalf, the arbitrator became functus officio and the agreement can no longer be enforceable. The controversy, it may be seen, turns largely on the construction of Section 20. It is useful to extract that Section here so far as it is material for our purpose. It reads thus:-" (1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. (2) x x x x (3) x x x x (4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall
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