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HIGH COURT OF ALLAHBAD
M. C. DESAI, N. BEG, JJ.
Amod Kumar Verma
Versus
Hari Prasad Burman
F. A. F. O. No. 101 of 1950, connected with F. A. F. O. Nos. 102, 155 and 156 of 1950
Decided On : 31-10-1957
ARBITRATION - AWARD - FILING - JURISDICTION - DECREE - SETTING ASIDE - APPLICATION - LIMITATION - COURT - JURISDICTION - DECREE - PASSING - JURISDICTION - APPLICATION - NECESSITY - RES JUDICATA - ESTOPPEL - JUDGMENT - PRONOUNCEMENT - NECESSITY - DECREE - PREPARATION - NECESSITY - APPEAL - BAR - DECREE - PASSED WITHOUT JURISDICTION - APPEALABILITY - REVISIONAL JURISDICTION - EXERCISE - DISCRETION - SUBSTANTIAL JUSTICE - CONSIDERATION - DECREE - APPEALABILITY - DECREE - PASSED IN PROCEEDING OTHER THAN UNDER SECTIONS 14, 15, 16 AND 17 OF THE ARBITRATION ACT, 1940 - APPEALABILITY.
Fact of the Case:
The appellants, Amod Kumar and Kanhaiya Lal, filed applications under Section 33 of the Arbitration Act, 1940, to set aside an arbitration award. The respondent, Hari Prasad, filed objections to the applications but did not ask for a decree on the basis of the award. The trial court dismissed both the applications, refused to set aside the award, and passed a decree on the basis of the award without any prayer for the same by any of the parties to the arbitration agreement, without the question of whether a decree could be passed or not being discussed or considered, and without hearing the appellants on the question. The appellants challenged the order of the trial court refusing to set aside the award and the passing of a decree on the basis of the award.
Finding of the Court:
The court held that the trial court had no jurisdiction to pass the decree on the basis of the award because: * A decree on the basis of an award can be made only under Section 17 of the Arbitration Act, 1940. * The provisions of Section 17 can be applied only in a proceeding started with an application under Section 14. * In a proceeding started under Section 33, when no proceeding started under Section 14 is pending, no decree can be passed and the only order that can be passed is one refusing to set aside the award. The court further held that the trial court had no justification to pass the decree without any prayer for the same by any of the parties to the arbitration agreement, without the question of whether a decree could be passed or not being discussed or considered, without hearing the appellants on the question, and in spite of the dismissal of the suits of Gopal Lal and Hari Prasad under Section 14.
Issues: 1. Whether the trial court had jurisdiction to pass a decree on the basis of the award? 2. Whether the trial court was justified in passing the decree without any prayer for the same by any of the parties to the arbitration agreement, without the question of whether a decree could be passed or not being discussed or considered, without hearing the appellants on the question, and in spite of the dismissal of the suits of Gopal Lal and Hari Prasad under Section 14?
Ratio Decidendi: 1. A decree on the basis of an award can be made only under Section 17 of the Arbitration Act, 1940. 2. The provisions of Section 17 can be applied only in a proceeding started with an application under Section 14. 3. In a proceeding started under Section 33, when no proceeding started under Section 14 is pending, no decree can be passed and the only order that can be passed is one refusing to set aside the award. 4. A decree cannot be passed on the basis of an award unless it has been filed in the court under Section 14. 5. An application to set aside an award cannot be made unless it has first been filed in the court. 6. A proceeding for the setting aside of an award is a proceeding which commences with an application for the same and terminates when the court sets aside the award or passes an order refusing to do so. 7. In a proceeding for the setting aside of an award, the only orders that are permitted by the legislature to be passed are (1) setting aside the award and (2) refusing to do so. 8. There is no provision in the Arbitration Act, 1940, for the passing of a decree in a proceeding for the setting aside of an award. 9. A decree can be passed in a proceeding under Section 14 only if the award is not set aside or remitted.
Final Decision: The court partly allowed the appeal, set aside the order of the trial court that the award be made a rule of the court and that a decree in terms of the same be passed, and maintained the rest of the order. The court ordered that the appellants will get half of their costs of the appeal from the contesting respondent Hari Prasad.
M. C. DESAI, J. :-
This is an appeal from an order of a Civil Judge, Banaras, refusing to set aside an award of arbitrators and passing a decree on its basis in Suit No. 54 of 1947. The pedigree given below shows the relationship existing among the parties to the appeal:
(See relationship on next page.)
In 1841 the descendants of Kanhaiya Lai through his son and daughter, who naturally were members of two families started a joint money business in the name of Mathura Das Krishna Das. In the evidence this business is referred to as "Kothi business". On 24-6-1934 the firm Mathura Das Krishna Das got itself registered as a partnership firm under the same title.
Later it started two more businesses, (1) in Kalabattu and (2) in Banarsi Saris; the Kalabattu
business was known as Kumar Kalabattu Karkhana (named after Amod Kumar) while the Banarsi Saris business was known as Jagarnath Das Barman, and was in partnership with a stranger to the family named Jiwan Das. On 22-11-1935 Jiwan Das, who was the working partner, died and the firm Jagarnath Das Barman was dissolved though the business in Banarsi Saris continued in the hands of the firm Mathura Das Krishna Das.
In 1935 the members of the two branches divided the three businesses among them by a mutual agreement; the Kalabattu business was given exclusively to Amod Kumar, the Banarsi Sari business was given exclusively to Hari Prasad and Anant Prasad and each of them was to pay interest to the firm Mathura Das Krishna Das for the capital invested by it in the two businesses. The agreement was in writing.
On 31-3-1935 Anant Prasad executed a will or family settlement laying down that the Kothi business should be run jointly by the two branches, that the Banarsi Saris business would be done by him and his heirs exclusively and that the Kalabattu business would be done by Amod Kumar exclusively. In 1937 he died and Hari Prasad assumed control of everything excluding the Kalabattu business.
2. Then differences arose between Hari Prasad, Anant Prasads sons and Amod Kumar and on 19-3-1942 they entered into an arbitration agreement appointing Keshav Deo, a relation, as the sole arbitrator to decide the question of partition of Mathura Das Krishna Das. The arbitrator could not effect complete partition within the time allowed under the arbitration agreement.
So on 4-4-1943 the parties executed another arbitration agreement giving further time to the arbitrator to carry out the partition. The arbitrator settled some disputes between the parties and even made some sort of an interim award but did not make any formal award. On 23-4-1945 Amod Kumar, Hari Prasad Kanhaiya Lal, Nand Lal, Moti Lal and Gopal Lal executed a third agreement referring the disputes over the partition of the Mathura Das Krishna Das and movable and immovable property to the arbitration of Vishnu Das and Lal Chand.
The arbitrators were authorized to appoint a Sarpanch and complete the partition within six months from the date of the agreement and get the award registered; they were given unlimited power to fix the shares of the parties and settle everything by open and secret inquiries and examination of the account books of the parties. The arbitrators could not make the award within the time allowed and on 23-7-1945 the parties executed another agreement extending the time.
On 2-8-1945 they executed a third agreement extending the time further and revising some of the conditions of the original agreement. The two arbitrators appointed one Debi Prasad as the Sarpanch but subsequently Debi Prasad resigned and the arbitrators appointed one Nand Kishore as the Sarpanch. On 21-9-1946 the arbitrators made their award and got it registered on the next day.
It was not signed by the Sarpanch Nand Kishore. The arbitrators on 23-9-1946 gave notice of the making of the award to the parties. On 1-11-1946 Hari Prasad asked the arbitrators to file the award in court and they expressed willingness to do so, but before they could do so Go
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