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2002 Supreme(Bom) 609
IN THE HIGH COURT OF BOMBAY
(NAGPUR BENCH)
Dr. D.Y. Chandrachud, J.
Oriental Fire and General Insurance Company Ltd. .... Appellant.
Versus
Hindustan Agro Agencies others.... Respondents.
First Appeal No. 186 of 1985, decided on 2-7-2002.
Advocates appeared :
A.M. Bapat, for appellant.
A.S. Agrawal, for respondents.
Headnote:Arbitration Act, 1940- Sections 14(1) - Order passed in terms of Award - Original award not produced - Trial Court did not follow provisions under Section 14 of Arbitration Act - Absence of any occasions for Court to pass decree in terms of Award - Contention that respondent must be regarded as having implied authority of arbitrator to file Award - As objections were forwarded, no prejudice caused to appellants - No dispute that award was not the correct Award - Award not filed before Court hence all subsequent steps were liable to be set aside. - In the present case the facts which have been adverted to in the earlier part of the judgment would show that the arbitrator had issued a notice to the parties under Section 14(1) of the Act on 31st January, 1982. The arbitrator stated in the notice that he had made and signed the award and that upon the request of the parties or, if directed by the Court, he would cause the award to be filed in the Court subject to the payment of his fees, charges and expenses. Therefore, the letter of the arbitrator dated 31st January, 1982, far from authorising the respondents to file the award in the Court, expressly spoke of the arbitrator causing the award to be filed if there was a request by the parties or a direction of the Court to that effect. The application which was moved on behalf of the appellant, MJC No. 59/1982, expressly contained a prayer to the effect that the arbitrator should be directed to file the award under Section 14 of the Arbitration Act, 1940. If the respondents had been authorised by the arbitrator to file the award in the Court, there was then no question of their praying for a direction to the arbitrator to file the Award. The respondents, therefore, clearly did not plead that they were authorised by the arbitrator to file the award on his behalf in Court. In the absence of a pleading as such, there could be and was no proof. But, it would be necessary to note that in fact, no evidence was led by the respondents at all. Under the Arbitration Act, 1940, the entire process following the making of the award is initiated upon a filing of the award in the Court by the arbitrator or by someone on behalf of the arbitrator. The Court has, under Section 15 of the Act, the power to modify or correct the award, under Section 16 to remit the award and, under Section 17, to pass a judgment in terms of the award after the time for making an application to set aside the award has expired or in the event that such an application is made and refused. Trial Judge has clearly not followed the provisions of Section 14 of the Arbitration Act, 1940, upon the application which was moved by the respondents. It was open to the trial Court to direct the arbitrator to file the award in the Court under Section 14(2) of the Act. Thereupon, a notice ought to have been given to the parties of the filing of the award so as to enable the appellant, if it was aggrieved by the award, to file its objections to the award. The question is not only one of prejudice to the appellant, as was sought to be urged on behalf of the respondents. The jurisdiction of the trial Court is attracted by the filing of the award by the arbitrator or by a person duly authorised on his behalf. In the present case, Court has come to the conclusion that the award was not filed
by the arbitrator or by any party duly authorised by him, before the Court and, therefore, all the consequential steps which have been taken by the trial Judge must necessarily be set aside. In these circumstances, the appellants are entitled to succeed. The impugned judgment and order of the trial Judge dated 26th June, 1985 is quashed and set aside. However, having regard to the facts and circumstances of this case, it would be appropriate to direct that the matter shall now be remitted back to the learned trial Judge. The trial Judge shall reconsider the application which has been filed by the respondents being MJC No. 59/1982, and consider issuing necessary directions thereon as prayed to the arbitrator to file the award in the Court. The trial Judge shall thereupon issue a notice to the appellant of the filing of the award under Section 14(2) of the Arbitration Act, 1940, and consider such claims or objections as may be filed by the appellant to the award of the arbitrator within the period of limitation. Having regard to the long pendency of the matter, the trial Judge is directed that in the event of any objections being filed by the appellant to the Award, those objections shall be heard, and finally disposed of within three months from the date of the filing of the objections. During the pendency of this first appeal, this appeal being an appeal against a money decree, the appellants were directed to deposit the decretal amount before this Court. Permission was granted to the respondents to withdraw the amount so deposited subject to furnishing a bank guarantee. It is common ground between the counsel that the respondents had submitted a bank guarantee and had withdrawn the decretal amount having regard to the interim order which had been passed in these proceedings. It would be appropriate to direct that the bank guarantee which has been furnished by the respondents shall be kept alive during the pendency of the proceedings before the trial Court and for a period of eight weeks after the judgment and decree of the trial Court. The first appeal is accordingly disposed of in the aforesaid terms. No costs
2. On 1st November, 1972, the respondents insured certain goods with the appellant for the purpose of covering the risk of fire under an insurance policy which was valid for a period of one year. The total sum assured was Rs. 1,00,000/-. The policy covered the risk of fire and riot. The goods insured were fertilizers, insecticides, poultry and cattle feed. On 24th November, 1972, another insurance policy, was issued by the appellant valid again for a period of one year with a sum assured of Rs. 1,00,000/-. The risk covered under the policy was that of fire and riot. The case of the appellant is that the goods were destroyed by fire on 24th April, 1973. Disputes arose between the parties since the insurance company, which is the appellant herein, did not accept the claim which was preferred by the respondents. The disputes between the parties were referred to the arbitration of a sole arbitrator, Shri V.G. Bhangde, a practising Advocate. The goods which had been insured had been hypothecated with the Dena Bank by the respondents. On 28th May, 1977, a 'supplementary agreement' was entered into between the parties by which, the following disputes were referred to the arbitration, namely,
(1) Whether as a result of fire on 24th April, 1973, the goods covered by the insurance policies had been destroyed and/or damaged resulting in loss to the insurer;
(2) Whether the insurer was liable to pay compensation under the insurance policies as a result of the fire resulting in loss; and
(3) What would be the amount of compensation payable by the insurer to the claimants in the event of the finding on question No. 2 being in the affirmative.
3. The respondents filed their statement of claim before the arbitrator on 21st December, 1976. The appellants denied that the respondents were entitled to recover.
4. The arbitrator made his Award on 31st January, 1982 and awarded an amount of Rs. 1,36,200/- and interest of Rs. 3,19,275/- together with future interest @ 14% per annum from the date of the Award until realisation.
5. The dispute between the parties originates in what took place subsequent to the making of the Award, I have, with the assistance of the learned Counsel, perused the record and proceedings. On 31st January, 1982, the arbitrator gave a notice to the parties of the making and signing of the Award. This notice was given under the provisions of section 14(1) of the Arbitration Act, 1940. The arbitrator stated therein that if desired by the parties or by any person claiming under them or if directed by a Court and subject to the payment of his fees and charges, he shall cause the Award or a signed copy thereof together with the depositions and documents which have been proved before the arbitrator to be filed in the Court. According to the respondents, this notice together with a copy of the Award was received by them on 2nd February, 1982.
6. On 15th February, 1982, an Application (MJC 59/1982) was filed by the respondents under section 14 of the Arbitration Act, 1940, for a direction to the arbitrator to file the Award and all the papers of the arbitration in Court. Apart from the aforesaid direction, which was prayer 1 of the application under section 14 of the Arbitration Act, 1940, the respondents prayed that a decree be passed in terms of the Award dated 31st January, 1982.
7. The Roznama of the proceedings would show that on 26th February, 1982, the learned trial Judge directed that a notice be issued to the appellant herein. On 4th March, 1982, the respondents filed the original Award dated 31st January, 1982 together with a pursis at Exhibit 5. On 5th March, 1982, a show cause notice was issued to the appellant requiring it to attend the proceedings before the trial Court on 7th April, 1982. The n
