1961 Supreme(All) 231
IN THE HIGH COURT OF ALLAHABAD
K. B. Asthana, J.
FIRM NANAK CHAND - Appellant
Versus
LALA PANNALAL PROPRIETOR - Respondents
First Appeal 201 Of 1951
Decided On : 12/19/1961
AMBIKA PRASAD, G.P.BHARGAWA
An award can only be set aside on the grounds specified in Section 30 of the Arbitration Act, 1940.
Headnote:
ARBITRATION - SETTING ASIDE AWARD - GROUNDS - CONSENT OF PARTIES - ARBITRATION ACT, 1940, SECTION 30.
Fact of the Case:
The plaintiff filed a suit against the defendants for recovery of a loan amount. During the pendency of the suit, the parties referred the dispute to arbitration. The arbitrators gave an award in favor of the plaintiff. Both the plaintiff and the defendants filed objections to the award. The trial court set aside the award on the consent of the parties and proceeded with the suit. The trial court passed a decree in favor of the plaintiff.
Finding of the Court:
The court held that the trial court erred in setting aside the award merely on the consent of the parties. The court held that under Section 30 of the Arbitration Act, 1940, an award can only be set aside on the grounds specified in the section. The court held that the trial court should have considered the objections filed by the parties to the award on merits and then decided the suit according to law.
Issues: Whether the trial court erred in setting aside the award merely on the consent of the parties.
Ratio Decidendi: The court held that Section 30 of the Arbitration Act, 1940, is imperative and confines the power or jurisdiction of the Court to which an application is made for setting aside an award on the grounds mentioned in that section. The court held that the trial court should have considered the objections filed by the parties to the award on merits and then decided the suit according to law.
Final Decision: The court allowed the appeal, set aside the decree of the trial court, and remanded the case back to the trial court for fresh consideration of the objections filed by the parties to the award.
( 1 ) THIS is a defendants appeal against whom a decree for recovery of a sum of Rs. 6,043/- with proportionate costs, pendente lite and future interest has been passed. The plaintiff respondent lala Panna Lal filed a suit against the defendants appellants and one Dr. Sheo Shankar who is not an appellant before this Court on the allegation that the plaintiff carried on business in the name of Basant Lal Panna Lal and the defendants carried on the business in the sale and purchase of Bins and cigarettes through their firm named Nanak Chand and Sons, that the defendant firm used to take money in cash as loan from the plaintiff at the interest of annas-/12/-per mensem and in lieu of that used to pawn their Bins and cigarettes with the plaintiff. It was further alleged that between October, 1946, and the beginning of December, 1947 the plaintiff had advanced loans amounting to Rs. 21,931/15/- to the defendants; that the defendants paid a sum of Rs. 17,017/- towards the loan which were duly credited in the name of the defendants in the account books of the plaintiffs firm and a sum of Rs. 4914/15/- was still outstanding against the defendants which despite repeated requests and demand the defendants failed to pay, hence the suit.
( 2 ) DR. Sheo Shankar one of the defendants in his written statement pleaded that he had been carrying on the profession of a medical doctor in Hathras and he had no concern with the joint family firm styled as Nanak Chand and Sons dealing in Bins and cigarettes. He further denied that he was a member of the joint family which carried on the business of Biris and cigarettes. The other defendants denied the plaintiffs claim and the defence in the main was that they did not take any loans as such from the plaintiff and the transactions were not done in the manner as alleged by the plaintiff. It was further pleaded that the entries in the account books of the plaintiff were wrong and in fact Biris and cigarettes of a larger value were pledged with the plaintiffs firm than the money advanced by them on that security and nothing was due to the plaintiff.
( 3 ) IT appears that during the pendency of the suit the parties referred the dispute to arbitration after making an application to the Court on 17-3-1949. Lala Ganga Saran Bajaj, Sri Ishwari prasad Bajaj and Sri Ramnath Poddar, residents of Hathras were appointed as Panches and the arbitrators gave their award dated 5-9-1949 by which a decree against the defendants, namely, dr. Sheo Shankar, Laxmi Narain, Ram Narain and Babu Lal Sharma was passed for a sum of Rs. 3412/13/3-The award further provided that the plaintiff could utilize Rs. 850/- which were in deposit in court representing the sale price of Biris and the balance of Rs. 2562/13/- could be realised from any of the four defendants. It was also provided in the award that no interest was to be charged on the decretal amount and the decretal amount could only be realised from the ancestral property belonging to the joint family and not from the separate assets or the property of Dr. Sheo Shankar.
( 4 ) ALL the four defendants against whom the decree was passed by the arbitrators and the plaintiff filed objections to the award. The grounds on which the award was challenged mainly attributed misconduct on the part of the arbitrators in the proceedings carried on by them. It is not necessary for me to mention those grounds in detail or to express any opinion on the same. The proceedings of the Court show that on 23rd November, 1949, Sri Dharampal Varshiny, counsel of the plaintiff, Sri Mahendra Prasad, counsel for the defendants numbers 3 and 4 and Sri Ram narain Misra, counsel for defendant No. 2 stated that the arbitration award be cancelled. On 25th November, 1949, Sri Mohammad Is-mail counsel for defendant No. 5, stated that he had no instruction from his client in the matter. On the same day the learned Civil Judge passed an order which is paper No. 8-A. 2 on record and which is to