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1976 Supreme(Del) 47

High Court Of Delhi
VED PRAKASH - Appellant
Versus
RAM NARIAN GOEL - Respondent
Election 33 of 1976
Decided On : 04/01/1976

Advocates Appeared:
B.S.Charya, S.C.SINGHA

A consent decree based on an arbitration award bars a subsequent challenge to the existence or validity of the arbitration agreement or the award under Section 33 of the Arbitration Act.

Headnote:

ARBITRATION ACT - SECTION 33 - SCOPE OF ARBITRATION AGREEMENT AND AWARD - DETERMINATION - CONSENT DECREE - EFFECT - APPLICATION UNDER SECTION 33 NOT MAINTAINABLE.

Fact of the Case:

An application was filed under Section 33 of the Arbitration Act to determine the scope of an arbitration agreement and the award made pursuant to it. The application was filed after a consent decree was passed in the suit based on the award. The applicants argued that they had not waived their right to challenge the existence or validity of the arbitration agreement or the award by consenting to the decree.

Finding of the Court:

The court held that the application under Section 33 of the Arbitration Act was not maintainable after a consent decree had been passed. The court reasoned that the scheme of the Arbitration Act is that once an award is made a rule of the court by consent or contest, no party to the arbitration agreement or the award can challenge its existence or validity by way of an application in the suit or independently under Section 33 of the Arbitration Act.

Issues: Whether an application under Section 33 of the Arbitration Act is maintainable after a consent decree has been passed based on the award.

Ratio Decidendi: The court held that the application under Section 33 of the Arbitration Act was not maintainable after a consent decree had been passed. The court reasoned that the scheme of the Arbitration Act is that once an award is made a rule of the court by consent or contest, no party to the arbitration agreement or the award can challenge its existence or validity by way of an application in the suit or independently under Section 33 of the Arbitration Act.

Final Decision: The court dismissed the application with costs.

Yogeshwar Dayal, J.

( 1 ) THIS order will dispose of L. A. 33of 1976 which has been filed in the suit itself by way of an application on behalfof respondents 2 to 5 only purporting to be under Section 32 of the Arbitration Act, but really under Section 33 of the Arbitration Act for determiningthe scope of Arbitration agreement and the Award pursuant thereto as well asfor quashing the Award, if any and the consequential proceedings.

( 2 ) THE main question which is involved in the petition is whether any petition under Section 33 of the Arbitration Act is at all maintainable after theaward being made by the Arbitrator and it being filed in court and after noticebeing given to all the parties to the arbitration agreement and the Award andafter the Award being made a rule of the Court as per consent of allthe parties.

( 3 ) THE question as aforestated has arisen in the following circumstances :it appears that a tripartite agreement described as memorandum ofsettlement was entered into between the parties, the plaintiff petitioners in the suit, respondent No. 5, M/s. R. S. Madhoram and Sons (NB) hereinafter REFERRED TO as "the firm", respondent No. 4, M/s. Madhosons Stores and Services Pvt. Ltd. . hereinafter REFERRED TO as "the Company". The settlement contained anarbitration clause for referring certain disputes to the named sole Arbitrator. The settlement on behalf of the firm was signed by two of the partners,respondents Nos. 1 and 2 in the present application, but was not signed by thethird partner, Shri Shiv Narain Goya, respondent No. 3. in the present application though he was one of the persons representing the firm as well as thecompany. In view of the arbitration clause, the disputes were REFERRED TO thesole Arbitration named in the agreement. The Arbitration gave a non-speakingaward, specifying the amounts payable to each of the plaintiff-petitioners in the suit totalling Rs. 95,124. 99. The Award having been given by the Arbitrator, the plaintiff-petitioners filed a petition under Sections 14 and 17 of. the Arbitration Act for directing the Arbitrator to file the Award in Court and for making it a rule of the court. This was registered as Suit No. 164-A of 1975. Thepresent E. A. 33 of 1976 has been filed in this suit. On statement on behalf of all the parties to the arbitration agreement and the Award and the suit, the Award was made a rule of the Court in terms of the compromise and decreewas passed in terms of the compromise on 25/08/1975, In spite of theconsent decree neither the Firm nor the Company nor the other judgment debtors, who are respondents 1 to 5, and the applicants in the present application,made any payment and accordingly the plaintiff petitioners in the suit who weredecree-holders filed the Execution application in this Court (execution No. 69of 1975 ). On the filing of the Execution application, Shri Harish Chandra,advocate appeared on behalf of judgment debtors 1 to 5 out of whom, thepresent application has been filed by judgment-debtors 2 to 5. Shri Harishchandra tendered a cheque for Rs. 20,000. 00 inpart satisfaction of the decreeholders dues on behalf of judgment debtors including the applicant-respondents. but the cheque was dishonoured. Thereafter, some of the goods were attachedthe applicant-respondent filed objections under Section 47 of the Code ofcivil Procedure as to the executability of the decree on the ground that it waspassed by a court lacking inherent jurisdiction to pass the decree. Those objections were the subject-matter of E. A 32 of 1976 and have been disposed of bya separate judgment. What is to be noticed is that the present respondent-applicants to the present application which purports to be an application undersection 32 of the Act but is really an application under Section 33 of the Actwere parties to the consent decree and were not exparte at the stage of thepassing of the decree.

( 4 ) SOME of the grounds on the basis of which the applicants desire to challenge the e






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