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High Court Of Delhi
MEHTA TEJA SINGH AND COMPANY - Appellant
Versus
FERTILIZER CORPORATION OF INDIA LIMITED - Respondent
First Appeal Order 54D of 1964
Decided On : 03/04/1968
ARBITRATION ACT - SECTION 16 - REMISSION OF AWARD - APPEALABILITY - REVISION - JURISDICTION - CONSTRUCTION OF SECTION 16 - POWER OF COURT TO REMIT PART OF AWARD - DISTINCTION BETWEEN REMISSION OF AWARD AND REMISSION OF MATTER REFERRED TO ARBITRATION - EFFECT OF REMISSION ON VALIDITY OF AWARD - INTERPRETATION OF SECTION 30 - GROUNDS FOR SETTING ASIDE AWARD - EXHAUSTIVE NATURE OF GROUNDS - SECTION 39 (1) (VI) - SCOPE AND APPLICABILITY - DISTINCTION BETWEEN SETTING ASIDE AWARD AND REMITTING AWARD - RIGHT OF APPEAL - CONDITIONS FOR TREATING APPEAL AS REVISION - JURISDICTION OF HIGH COURT IN REVISION - SCOPE AND LIMITATIONS - MATERIAL IRREGULARITY OR ILLEGALITY - CONSTRUCTION OF SECTION 16 IN LIGHT OF SCHEME OF ACT - INDEPENDENCE OF SECTION 16 - DISTINCTION BETWEEN SETTING ASIDE AWARD AND REMITTING AWARD - RATIO DECIDENDI OF JUDICIAL PRECEDENTS - ANALYSIS OF CASE LAW - ENGLISH LAW ON REMISSION OF AWARD - VIEWS OF RUSSELL ON ARBITRATION AND HALSBURY'S LAWS OF ENGLAND - PERSUASIVE VALUE OF ENGLISH LAW - VALIDITY OF REMITTING ONE OR MORE MATTERS REFERRED TO ARBITRATION - JURISDICTIONAL INFIRMITY IN IMPUGNED ORDER - SCOPE OF REVISION.
Fact of the Case:
Three appeals and three revisions were placed before the court pursuant to a reference order. The issue was whether, under section 16 of the Arbitration Act, 1940, the court could remit a part of an award and whether an appeal lay in such a case under section 39 (1) (vi) of the Act. Incidentally, the court also considered whether a revision could be entertained if an appeal was held to be incompetent.
Finding of the Court:
1. Section 16 of the Arbitration Act, 1940, empowers the court to remit the award or any matter referred to arbitration to the arbitrator or umpire for reconsideration. 2. The power to remit the award is distinct from the power to remit any matter referred to arbitration, and the exercise of one or the other power may lead to different results. 3. Section 30 of the Act provides exhaustive grounds for setting aside an award, and section 39 (1) (vi) contemplates an appeal from an order setting aside or refusing to set aside an award as a whole. 4. An order remitting a part of an award and affirming a part does not necessarily amount to an order setting aside or refusing to set aside an award within the contemplation of section 39 (1) (vi) of the Act and is, therefore, not appealable. 5. If an appeal is held to be incompetent, the memorandum of appeal can be treated as a revision provided there is no other legal infirmity in adopting this course. 6. The High Court's power in exercising its revisional jurisdiction under section 115 of the Code of Civil Procedure is strictly restricted to questions of jurisdiction. 7. The court held that the impugned order remitting a part of an award was not without jurisdiction and was not tainted with an illegality or material irregularity in the exercise of the lower court's jurisdiction.
Issues: 1. Whether under section 16 of the Arbitration Act, 1940, the court could remit a part of an award. 2. Whether an appeal lay in such a case under section 39 (1) (vi) of the Act. 3. Whether a revision could be entertained if an appeal was held to be incompetent.
Ratio Decidendi: 1. The court interpreted section 16 of the Arbitration Act, 1940, in light of the scheme of the Act and held that the power to remit the award is distinct from the power to remit any matter referred to arbitration. 2. The court analyzed the provisions of section 30 and section 39 (1) (vi) of the Act and concluded that an order remitting a part of an award and affirming a part does not necessarily amount to an order setting aside or refusing to set aside an award within the contemplation of section 39 (1) (vi) and is, therefore, not appealable. 3. The court also considered the scope of the High Court's revisional jurisdiction under section 115 of the Code of Civil Procedure and held that it is strictly restricted to questions of jurisdiction. 4. The court examined the impugned order and found that it was not without jurisdiction and was not tainted with an illegality or material irregularity in the exercise of the lower court's jurisdiction.
Final Decision: The court held that the impugned order remitting a part of an award was not appealable and that the revisions were competent. The court also held that the impugned order was not tainted with any infirmity justifying interference on revision.
( 1 ) THESE three appeals (F. A. OS Nos. 54-D, 55-D and 56-D of 1964) and three revisions (C. Rs. Nos. 59-D, 60-D: and 61-D of 1964) have been placed before us pursuant to the order of reference dated 26/10/1967. Two questions, as mentoned in the referring order, fall for our decision : (1) whether under section 16 of the Arbitration Act No. 10 of 1940 (hereafter called the Act), it is open to the Court to remit a part of an award and, (2) whether in such a case, an appeal lies under section 39 (1) (vi) of the Act. Incidentally the third question which may have to be answered is, if no appeal is held to lie in such a case, can this Court entertain a revision against such an order. It may be pointed out that by way of abundant caution, the appellant has also preferred three revisions so that in case appeals are held to be incompetent, no prayer need be made to conevrt those appeals into revisions and the revisions may themselves be decided on the merits, if held competent.
( 2 ) ALL the three cases, it may be observed, relate to a single award given by Shri B. K. Khanna on 14/10/1961 with respect to three contracts between Messrs Mehta Teja Singh and Co. and the Fertilizer Corporation of India Ltd. The award was filed in Court by the arbitrator pursuant to a notice served on him on petitions under section 14 of the Act presented by Messrs Mehta Teja Singh and Co. After notice of the filing of the award was served on the parties, the appellant-company filed objection petitions under sections 15, 16, 17, 30 and 33 of the Act. The Court below, in a fairly lengthy judgment, allowed in part the objection petitions and remitted the award in part, holding the rest of it to be good and valid. It is against this order that the appeals and the revisions have been preferred and the questions to be decided are common to all the three cases.
( 3 ) TURNING now to the scheme of the Act, we may first read section 39 which creates the right of appeal :-
"39. (1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order :-
"an order-
(I)SUPERSEDING an arbitration;
(II) on an award stated in the form of a special case;
(III) modifying or correcting an award;
(IV) filing or refusing to file an arbitration agreement;
(V) staying or refusing to stay legal proceedings where there is an arbitration agreement;
(VI) setting aside or refusing to set aside as award: Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. "
( 4 ) THE entire controversy concededly turns on the construction of clause (vi) of sub-section (1 ). Our first impression was that this clause deserves to be liberally construed and the impugned order must be held in part to amount to refusal to set aside the award and in part to setting it aside, but the categorical and peremptory language used in section 30 seems to suggest that our first impression was not quite correct. This section lays down that an award shall not be set aside except on one or more of the following grounds, namely :-
(A) that an arbitrator or umpire has misconducted himself or the proceedings;
(B) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35;
(C) that an award has been improperly procured or is otherwise invalid.
( 5 ) THIS section, on its plain reading, seems to suggest that it is exhaustive of the grounds on which an award is to be set aside and it does not contemplate setting aside or refusing to set aside a part of an award. Section 39 (1) (vi) would also seem to us to contemplate an appeal from an order setting side or refusing to s
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