High Court Of Delhi
PREM SAGAR CHAWLA - Appellant
Versus
SECURITY AND FINANCE PRIVATE LIMITED - Respondent
First Appeal 161-D of 1965
Decided On : 04/27/1967
ARBITRATION - APPLICATION TO SET ASIDE AWARD - LIMITATION - ARTICLE 158 OF THE LIMITATION ACT, 1963 - WHETHER APPLIES TO AN APPLICATION UNDER SECTION 33 OF THE ARBITRATION ACT, 1940, CHALLENGING THE VALIDITY OF AN AWARD ON THE GROUND OF NON-EXISTENCE OF THE ARBITRATION AGREEMENT.
Fact of the Case:
An application was filed under Section 30 and 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement. The trial court held that the application was barred by limitation under Article 158 of the Limitation Act, 1963.
Finding of the Court:
The court held that an application under Section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement, is not governed by Article 158 of the Limitation Act, 1963.
Issues: Whether an application under Section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement, is governed by Article 158 of the Limitation Act, 1963.
Ratio Decidendi: The court held that Section 33 of the Arbitration Act, 1940, empowers the court to decide the questions of validity of the award and that all reliefs which may be granted by the court under sections 15, 16 and 30 by way of setting aside, remitting and modifying the award on account of its invalidity may and must be obtained under those sections and not under section 33.
Final Decision: The court answered the question referred to it in the negative, holding that Article 158 of the Limitation Act, 1963, does not apply to an application under Section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-existence of the arbitration agreement.
( 1 ) THE following question has been referred to Full Bench:-
"whether an application under Section 33 of the Arbitration Act, 1940, challenging the validity of an award on the ground of non-exis tence of the arbitration agreement, is governed by Article 119 (b) of the Limitation Act, 1963 (previously Article 158 of the Limitation Act, 1908)?"
( 2 ) ON June 22, 1962, Shri Kundan Lal, Pleader, purporting to act as the sole arbitrator made an Award whereunder the appellant and his guarantor J. N. Khanna. were held Jointly and severally liable to pay to Messrs Security and Finance (Private) Limited, New Delhi, respondent (hereafter referred to as the Company) a sum of Rs. 15,786. 85 Paise and were also to return vehicle No. M. P. E.-187 (Commar 1956 Model) or in default to further pay an amount of Rs. 10,000. 00 being the assessed market value. The arbitrator filed the award in Court at the instance of company and notice was given to the parties of filing thereof. The notice was served on the appellant on September 8, 1962, and on October 11, 1962, he made an application under section 30 and 33 of the Arbitration Act for setting aside of the award and for its being declared void. Various objections were taken to the award but I am concerned with only one of them, namely, that the arbitration agreement dated August 22, 1957, was a forged document and had never been signed by the appellant. In short, the very existence of the arbitration agreement and consequently the jurisdiction of the. arbitrator were challanged. The company pleaded for dismissal oi the objections on the ground of limitation and, therefore, the trial court framed issue No. 10 reading :-
"whether objections under sections 30 and 33, Arbitration Act, are within limitation ? If not, its effect ?the learned Subordinate Judge decided in favour of the company and held that the objections having been filed beyound 30 days were time- barred. The trial court applied Article 158 of the Limitation Act, 1908.
( 3 ) THE answer to the question turns on the meaning to be ascribed to the words "to set aside an award" in Article 158 in the First Schedule to the Limitation Act, 1908, If the application be treated as one for setting aside the award -andoubtedly the period would be 30 days from the date of service of the notice of filing of the award and consequently the objections barred by time. Article 158 reads :- ______________________________________________________________ "description of appeal Period of limitation Time from which period begins to run. _____________________________________________________________ 158. Under the Arbitra- Thirty days. The date of tion Act, 1940 (10 the notice of of 1940 to set aside filing of an award or to get the award. an award remitted for re-consideration.
( 4 ) THE short period of limitation fixed for filing" objections does indicate an intention on the part of the Legislature to fix a definite time-limit for challenging the validity of the award and for providing an expeditious method of getting an award translated into a Judgment. There prevails a considerable conflict in the decisions of the various High Courts and I hope, in expressing. my views on this inartistically drafted statute, I shall not be thought wanting in respect to the various eminent Judges who have dealt with this paint. The various lacunae in the Act appear to be the result of a conflict in the mind of the Legislature arising out of. its anxiety to achieve the final disposition of differences between the parties in a faster, less expensivs, mora expeditious and perhaps less formal manner than is available. , in court proceedings and the anxiety to preserve the fundamentals of all quasijudicial determinations. If I decide that an application for challenging the factual existence of the arbitration agreement and consequently getting an award declared a nullity, is an application for setting aside the award. Article 158 of the Limitation Act would apply.
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