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1953 Supreme(Cal) 14

HIGH COURT OF CALCUTTA
Bachawat
JUGALDAS DAMODAR MODI AND CO. - Appellant
Versus
PURSOTTAM UMEDBHAI AND CO. - Respondent
Award Case 32  Of  1952
Decided On : JANUARY 27, 1953

Advocates Appeared:
I.P.MUKHERJI, P.P.Ginwalla, R.Goho

An award made on a submission of matters in difference in a pending suit without an order of reference by the Court is not valid and enforceable under the Arbitration Act, 1940.

Headnote:

ARBITRATION - Submission of matters in dispute in a suit - Legality - Enforceability - Award on such submission without order of reference by Court - Validity and enforceability - Arbitration Act, 1940, Sections 21 to 25, 30, 33, 47.

Fact of the Case:

Parties to a suit agreed to refer the disputes to arbitration and an award was made. The award was challenged on the ground that the agreement to refer matters in dispute in a pending suit was void, illegal, and not enforceable.

Finding of the Court:

The Court held that the submission of matters in dispute in a suit, while the suit is pending, is legal and that such submission can be enforced under Section 21 of the Arbitration Act, 1940, on the joint application of the parties by an order of reference by the Court. However, an award made on a submission of matters in difference in a pending suit without an order of reference by the Court is not valid and enforceable under the Arbitration Act, 1940.

Issues: 1. Is the submission of matters in dispute in a suit, while the suit is pending, legal? 2. Can the subject-matter of a pending suit be lawfully referred to arbitration? 3. Is such submission specifically enforceable? 4. Is the award on such submission without any order of reference by the Court lawful and valid? 5. Is such award enforceable at all? 6. If so, is it enforceable by a separate suit?

Ratio Decidendi: 1. The Court held that the submission of matters in dispute in a suit, while the suit is pending, is legal and that such submission can be enforced under Section 21 of the Arbitration Act, 1940, on the joint application of the parties by an order of reference by the Court. 2. The Court held that the subject-matter of a pending suit can be lawfully referred to arbitration. 3. The Court held that such submission is specifically enforceable under Section 21 of the Arbitration Act, 1940, on the joint application of the parties by an order of reference by the Court. 4. The Court held that an award made on a submission of matters in difference in a pending suit without an order of reference by the Court is not valid and enforceable under the Arbitration Act, 1940. 5. The Court held that such award is not enforceable at all. 6. The Court held that such award is not enforceable by a separate suit.

Final Decision: The Court set aside the award and vacated the arbitration. The Court also dismissed the suit and the application for stay of the suit.

BACHAWAT, J.

( 1 ) I will deliver one judgment covering the 5 matters in the list.

( 2 ) PURSHOTTAM Umedbhai and Co. instituted Suit No, 3660 of 1949 in which they seek to vindicate a claim against Jugaldas Damodar Modi and Co. A Cross Suit No. 479 of 1951 was instituted by Jugaldas Damodar Modi and Co. against Purshottom Umedbhai and Co. While these suits were pending the parties to the suits by an agreement in writing dated 19-10-1951, agreed to refer the disputes in both these suits to arbitration of one M. Mehta and to confer summary powers on the arbitrator. The parties also agreed to withdraw the suits on the re-opening of the Court after the long vacation. The parties proceeded to arbitration without a formal order of reference by the Court. On 17-11-1951, the arbitrator made an award directing Pursottom Umedbhai and Co. to pay a sum of Rs. 25,000/- to Jugaldas Damodar Modi and Co. On 18-2-1952 the award was filed in Court and the award case is numbered 52 of 1952. The award is before me for judgment. Notice of the filing of the award was duly given on 26-4-1952. On 20-5-1952, Purshottom Umedbhai and Co. took out a notice of motion in award case No. 56 of 1952 for an order that the award be set aside and vacated and that the arbitration be superseded. The award is impeached, 'inter alia', on the ground that agreement to refer matters in dispute in pending suits is void, illegal and not enforceable at all and that the subject-matter in these suits could not be referred to arbitration and that the arbitration and award pending suit on the submission to arbitration is invalid as the suits were pending and no order of reference was obtained. The award is impeached on other grounds also. By consent of the parties only the grounds of invalidity of pending of pure questions of law have been tried in the first instance.

( 3 ) ON 16-8-1952, Jugaldas Damodar Modi and Co. instituted Suit No. 3299 of 1952 against Purshottom Umedbhai and Co. for specific performance of the award and for payment of the sum of Rs. 25,000/-awarded in favour of the plaintiff, for refund of Rs. 2500/- lying in Court in Suit No. 3660 of 1949 and for an injunction restraining prosecution of Suits Nos. 3660 of 1949 and 479 of 1951.

( 4 ) ON 24-11-1952, Pursottom Umedbhai and Co. took out a notice of motion in Suit No. 3299 of 1952 and in Award Case No. 56 of 1952 for an order that the plaint in Suit No. 3299 of 1952 be taken off the file and the suit be dismissed and for an injunction restraining prosecution of the suit. On this notice of motion the parties agreed that the suit be treated as placed in the list and the following preliminary issues in the suit be tried: (1) Whether or not the suit is maintainable? (2) Whether or not the suit is barred by any provisions of law and, in particular, by Section 12, Arbitration Act?at the trial of these preliminary issues it was contended that the award is invalid and unen-forcible and further that a suit oil an award is barred by the Arbitration Act of 1940.

( 5 ) ON 15-12-1952, Jugaldas Damodar Modi and Co. took out a notice of motion in Suit No. 3299 of 1952 for an order for stay of the notice of motion dated 20-5-1952 for setting aside the award and for an injunction restraining further proceedings in Suits Nos. 3660 of 1949 and 479 of 1951 pending disposal of Suit No. 3299 of 1952.

( 6 ) ALL these matters have been heard and tried simultaneously.

( 7 ) THE above facts are all admitted and the following questions of law arise: (1) Is the submission of matters in dispute in a suit, while the suit is pending, legal? (2) Can the subject-matter of a pending suit be lawfully referred to arbitration? (3) Is such submission specifically enforcible? (4) Is the award on such submission without any order of reference by the Court lawful and valid? (5) Is such award enforcible at all? (6) If so, is it enforcible by a separate suit?

( 8 ) LIKE other arbitration agreements a contract in writing to refer to arbitratio








































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