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1961 Supreme(All) 8

IN THE HIGH COURT OF ALLAHABAD
D. P. Uniyal, J.
MANGAL SINGH - Appellant
Versus
NAWAB SINGH - Respondents
Civil Revn. 1371 Of 1955
Decided On : 02/01/1961

Advocates Appeared:
D.Sanyal, M.N.Shukla

The validity of an arbitration agreement cannot be challenged in an application to set aside an award under Section 30 of the Arbitration Act.

Headnote:

ARBITRATION ACT, 1940 - SECTION 30 - SECTION 33 - VALIDITY OF ARBITRATION AGREEMENT - CHALLENGE TO - PROCEDURE - COURT'S JURISDICTION.

Fact of the Case:

An application was filed under Section 14 of the Arbitration Act to make an award the rule of the court. The opposite parties objected to the award on the ground that the arbitration agreement was obtained by fraud and was bad for vagueness. The Munsif found that the arbitration agreement was valid and the award was made in accordance with the disputes between the parties. The Civil Judge, on appeal, set aside the Munsif's order, holding that the agreement of reference was bad for indefiniteness.

Finding of the Court:

The High Court held that the Civil Judge had erred in deciding the jurisdictional fact that the arbitration agreement was invalid and had wrongly assumed jurisdiction in deciding that question. The court found that the objection of the opposite parties in the present case in so far as it related to the validity of the arbitration agreement could not be gone into by the learned Civil Judge in an application made to set aside an award.

Issues: 1. Whether the Civil Judge had jurisdiction to decide the validity of the arbitration agreement in an application to set aside an award? 2. Whether the expression "or is otherwise invalid" in Clause (c) of Section 30 of the Arbitration Act is ejusdem generis with the preceding sentences in Clause (c)? 3. Whether an objection to the validity of reference to arbitration comes within the provisions of Section 30 of the Arbitration Act?

Ratio Decidendi: 1. The court held that the Civil Judge had no jurisdiction to decide the validity of the arbitration agreement in an application to set aside an award. The court found that Section 30 of the Arbitration Act sets out the grounds upon which an award may be set aside, and the invalidity of an arbitration agreement is not one of those grounds. 2. The court held that the expression "or is otherwise invalid" in Clause (c) of Section 30 of the Arbitration Act is ejusdem generis with the preceding sentences in Clause (c). The court found that the context in which those words occur leave no room for doubt that those words have be used ejusdem generis with the preceding sentences in Clause (c) and that all the powers conferred upon a court in relation to an award on ,a reference made in a suit pre-suppose a valid reference on which award has been made which may be open to question. 3. The court held that an objection to the validity of reference to arbitration does not come within the provisions of Section 30 of the Arbitration Act. The court found that Section 33 of the Arbitration Act is the only section under which an application can be made challenging the existence or validity of an arbitration agreement or award or to have the effect of either determined.

Final Decision: The High Court allowed the revision, set aside the order of the Civil Judge, and restored that of the Munsif.

D. P. UNIYAL, J.

( 1 ) THIS is a revision against an order of the Civil Judge, Kanpur, dated 25-8-55 setting aside the order of the Munsif dated 23-10-53 by which he passed a decree in terms of the award.

( 2 ) THE facts of the case are these. The parties to the dispute are alleged to have entered into an arbitration agreement to refer their disputes to certain named arbitrators. The arbitrators gave an award which was signed by both the parties. Thereafter; an application under Section 14 of the arbitration Act was filed in the court of the Munsif by one of the arbitrators with a prayer that the award be made the rule of the court. Notices were issued to the parties concerned and the opposite parties thereupon tiled objections to the award. One of the objections raised was that the arbitration agreement had been obtained by fraud and further that the same was bad on account of vagueness.

( 3 ) THE learned Munsif found that the opposite parties had signed the arbitration agreement and the allegation of fraud by them had not been substantiated. He further held that the reference to arbitration was not vague and that the award and the reference should be read together in order to ascertain the disputes between the parties. In his opinion the evidence in the case disclosed that the disputes between the parties had been fully made clear to the arbitrators who after examining the evidence had made the award which was also signed by the parties. He was also of the opinion that it was not open to the opposite parties to challenge the agreement of reference as that was a matter which the court could not properly adjudicate upon while considering the objection as to the validity of the award.

( 4 ) THE learned Civil Judge in appeal set aside the order of the Munsif on the ground that the agreement of reference was bad for indefiniteness, and that the disputes between the parties had not been clearly mentioned in the said agreement.

( 5 ) A preliminary objection was raised by the learned counsel for the apposite parties about the maintainability of the revision. He contended that the finding recorded by the lower appellate court was a finding of fact and that the lower appellate court had not committed any illegality in the exercise of jurisdiction in making the order. On behalf of the applicant it was contended, on the other hand, that the jurisdictional fact on which the appellate court assumed jurisdiction was that the agreement of reference was vitiated by vagueness. The appellate court had no jurisdiction to enter into the question of the validity of the agreement of reference and, as such, had wrongly assumed jurisdiction in deciding a question which could not be the subject of challenge in an application to set aside the award. He relied on Chaube Jagdish Prasad v. Ganga prasad, AIR 1959 S C 492 where it was held that if an erroneous decision of a subordinate court resulted in its exercising jurisdiction not vested in it by law, a case for the exercise of power of jurisdiction by the High Court is made out.

( 6 ) THE first question, therefore, that falls to be determined is whether the learned Civil Judge had decided the jurisdictional fact erroneously and thereby assumed jurisdiction not vested in him. The argument was that the opposite parties had applied to have the award set aside on the ground that the arbitration agreement was invalid on the ground of vagueness. It was urged that in an application to set aside an award the validity of the arbitration agreement could not be challenged because it was a matter anterior to the award.

( 7 ) SECTION 30 of the Arbitration Act sets out the grounds upon which as award may be set aside. It reads thus:-

"an award shall not be set aside except on one or more of the following grounds: (a) That an arbitrator Or umpire has misconducted himself or the proceedings; (b) that an award has been made after issue of order by the court superseding the arbitration or after the arbitration proceedin
















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