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High Court Of Madhya Pradesh
V. R. Newaskar and H. R. Krishnan, JJ.
RUSTOMJEE DORABSHA - Appellant
Versus
MANMAL PRABHUDAYAL - Respondents
Misc. Appeal 147 Of 1960
Decided On : 09/12/1962
ARBITRATION - AWARD - SEVERABILITY - REFERENCE INCLUDING ITEMS OUTSIDE SCOPE OF SUIT - AWARD COVERING FIELD WIDER THAN PROPER SUBJECT-MATTER - SEVERABILITY OF DISTINCT AND SEVERABLE CLAIMS - UMPIRE'S JURISDICTION - APPOINTMENT - IRREGULARITY - WAIVER - REASONING IN AWARD - NECESSITY - JUDICIAL MISCONDUCT - VIOLATION OF PRINCIPLES OF NATURAL JUSTICE - AMENDMENT OF PLEADINGS - REFUSAL - DISCRETION OF ARBITRATOR - LEASE - VALIDITY - LAW AGAINST LEASE TO FOREIGNER - OBSOLETE LAW - ZAMINDARI ABOLITION ACT - INAPPLICABILITY TO FACTORIES AND LANDS NOT CONNECTED WITH AGRICULTURE - FORMAL DEFECTS IN AWARD - DELAY IN FILING - CONDONATION.
Fact of the Case:
The defendants were lessees of a bone-crushing factory and premises. They paid rent until August 1952 but defaulted thereafter. A suit was filed for the rent payable until March 1954, with interest. The suit was referred to arbitration. The arbitrators failed to arbitrate, and the matter was referred to an umpire. The umpire granted the plaintiff certain amounts of money as rent for the suit period plus two additional sums: one for rent for the subsequent period and the other for compensation for damage caused to the machinery. The defendants challenged the award on various grounds, including that the reference itself was invalid because it had included two items of claim which were outside the scope of the suit, that the umpire was not properly appointed, that the award did not contain any reasoning, that the proceedings before the arbitrators were bad for several defects, that the lease itself was against the law, and that the umpire failed to comply with several formal requirements.
Finding of the Court:
The court held that the two additional items in the award, namely, damages on account of the machinery and the rent for a period after the filing of the suit, were outside the scope of the suit, but they were distinct and severable from the proper subject-matter of the suit. Therefore, the court could accept the award in regard to the rent for the suit period and interest. The court also held that the umpire was properly appointed, that the award contained sufficient reasoning, that the proceedings before the arbitrators were not bad for any defects, that the lease was not against the law, and that the umpire had complied with all the formal requirements.
Issues: 1. Whether the reference to arbitration was invalid because it included two items of claim which were outside the scope of the suit? 2. Whether the umpire was properly appointed? 3. Whether the award contained any reasoning? 4. Whether the proceedings before the arbitrators were bad for several defects? 5. Whether the lease itself was against the law? 6. Whether the umpire failed to comply with several formal requirements?
Ratio Decidendi: 1. The court held that the two additional items in the award, namely, damages on account of the machinery and the rent for a period after the filing of the suit, were outside the scope of the suit, but they were distinct and severable from the proper subject-matter of the suit. Therefore, the court could accept the award in regard to the rent for the suit period and interest. 2. The court held that the umpire was properly appointed because the parties had agreed to his appointment in the event of the arbitrators failing to agree or not making the award within the time specified. 3. The court held that the award contained sufficient reasoning because an arbitrator is not required to set out the reasoning in the manner of a regular court. 4. The court held that the proceedings before the arbitrators were not bad for any defects because the defendants had waived any irregularities by appearing before the umpire and conducting their case without objection. 5. The court held that the lease was not against the law because the law against leases to foreigners was obsolete at the time the lease was entered into, and the Zamindari Abolition Act did not apply to factories or lands not connected with agriculture. 6. The court held that the umpire had complied with all the formal requirements because the delay in filing the award had been condoned by the court.
Final Decision: The court dismissed the appeal with costs and pleaders fee assessed according to rules, payable by the defendant-appellants to the plaintiff-respondent.
( 1 ) THIS is the defendants' appeal from a decree for the arrears of rent of a leased factory and premises included, based on an umpire's award, with a few modifications by the 'court substantially in their favour. This is one ot the four cases that have come up before this Court at about the same time in which different problems concerning awards on arbitrations have been raised and equivalent Citation: decided. Quite a number of grounds were raised before the trial Court by the defendants, most of which were rejected. Before this Court the following grounds are emphasised: (i) The reference itself was invalid because it had included two items of claim which was outside the scope of the suit; this is a basic illegality not cured by the Court's separating the portion within the scope of the suit, and basing its decree on that only, (ii) The umpire was not properly appointed at all and as such did not get any jurisdiction, (iii) The award does not contain any reasoning so that we are in doubt as to whether the umpire gave due regard to the evidence before him. (iv) The proceedings before the arbitrators were bad for several defects, in particular, refusal to permit the defendants to amend their statements, (v) The lease itself was against the law -- both for contravention of the statute in force at that time and in view of the subsequent events by which the plaintiff was divested of his property in the leased factory and premises, (vi) Finally, the failure of the umpire to comply with, several formal requirements also vitiates the award. ( 2 ) THE facts of the case are broadly common ground. The defendants were the lessees of a bone Crushing factory and the premises attached to it for a fixed monthly rental. An additional amount was provided as rent for a railway siding which the lessor was to get opened. The siding, incidentally, was not opened, and the claim was restricted only to that separately fixed for the premises and the land. This point, however, is of interest for the consideration of the defendants' plea of frustration for failure on the part of the lessor to get the siding opened. The defendants paid the rent upto the end of August 1952, but defaulted during the later period. A suit was filed for the rent payable upto the end of March 1954, with an additional amount as interest. A number of grounds in defence were raised including the statutory invalidity of the lease, the alleged failure on the part of the lessor to observe the terms, and the effect of the Zamin-dari Abolition Act, by which, according to the defendants, the property itself had vested in the State government, at one stage, the suit was referred to arbitration by two arbitrators, one appointed by each of the two parties, and an umpire also named, in case the arbitrators failed to do the arbitration or did not agree. The matters proceeded with various relays, petitions, and the like, till ultimately it was found that the arbitrators would not arbitrate. Accordingly, a prayer was made by the plaintiff that the matter should be referred to the umpire (Shri C. M. Mehta, Solicitor at Bombay ). After calling upon the defendants to show cause why the dispute should not be referred to him in accordance with the agreement, the matter was referred to him; he, in his turn, gave an award granting the plaintiff certain amounts of money as rent for the suit period plus two additional sums specified; one, as the rent for the subsequent period, and the other, as compensation for the damage caused to the machinery. There was some delay in the filing of the award; but it was condoned and the time enlarging by an express order of the Court. In reply to the plaintiff's prayer that a decree should be passed on the basis of the award, the defendants urged various grounds why it could not be, eighteen in number. The Court considered them and rejected all but one. It held that the grant of compensation for damage to the machinery and future rent was really out
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