Important point
Where award was filed into Court and party to award was served notice by Court but award was not contested, nor objection under Section 30 was filed and award was made rule of Court, during execution proceedings the party could not be permitted to assail decree as invalid merely on the ground award was filed into Court beyond time limit prescribed in the Act.

Headnote:(i) Arbitration Act, 1940-Sections 14 and 30-Code of Civil Procedure, 1908 - Section 47-Award decree-Validity of-Challenge in execution proceedings-Arbitration award filed into Court after four years-Notice served on respondent-Not contested-Objection not filed-Award made rule of Court-During execution proceedings objection under Section 47 of C.P.C. filed stating decree was nullity on ground award filed into Court after expiry of limitation period-Objection overruled-High Court remanding case to consider objection-Not sustainable-In execution proceedings such a contention requiring executing Court to go behind decree cannot be sustained-Issue was to be raised before award was made rule of Court-Award decree on the face of it was not shown to be without jurisdiction - Judgment of High Court set aside.
       Held : Notice was issued by the court to the respondent to show cause as to why this award should not be made rule of the court. There is no dispute that this notice was served on the respondent. Despite such service of notice, for reasons best known to the respondent, it did not think it fit to contest the proceedings nor did it file any objection under Section 30 of the Arbitration Act 1940. In the result, the court passed an award decree on 2.6.1989 on account of absence of any contest by the judgment debtor. It is true that this award decree was sought to be executed years thereafter. But the said delay on the part of the decreeholder in executing the decree within the permissible period for limitation in execution of such decree cannot give any sustainable right to the judgment-debtor to challenge the execution proceedings on that ground. The contention of Shri Javali, learned senior counsel for the respondent that the award was a mock one and was not intended to be enforced cannot be sustained as that stage has gone for the respondent. In execution proceedings such a contention requiring the executing court to go behind the decree cannot be sustained. The question whether the award decree was filed by the arbitrator on his own or not was a mixed question of law and fact. The Division Bench in the impugned judgment itself has noted that if the award was filed by the arbitrator suo motu then the award decree cannot be said to be barred by limitation but if, on the other hand, the award was filed by the arbitrator at the instance of the appellant - decreeholder then the question of limitation would arise. The aforesaid observation of the Division Bench itself indicates that this is a mixed question of law and fact. That was an issue to be raised before the award was made a rule of Court. But such a plea can never make the decree a nullity especially when the respondent for reasons best known to it did not think it fit to file objections under Section 30 of the Arbitration Act, 1940. It is well settled that the executing court cannot go behind the decree unless it is shown that it is passed by a court having inherent lack of jurisdiction, which would make it a nullity. (Para 9)
       This is not a case in which the award decree on the face of it was shown to be without jurisdiction. Even if the decree was passed beyond the period of limitation, it would be an error of law or at the highest a wrong decision which can be corrected in appellate proceeding and not by the executing court which was bound by such decree. It is not the case of the respondent that the court which passed the decree was lacking inherent jurisdiction to pass such a decree. This becomes all the more so when the respondent did not think it fit to file objection against the award which was sought to be made rule of the Court. The award decree has become final and that too when the respondent - judgment debtor did not think it fit to contest the proceedings and did not contend that no decree could be passed. He cannot now, in execution proceedings, contend that the decree should be ignored as being a nullity. (Paras 10 and 12)
       (ii) Arbitration Act, 1940-Section 30-Constitution of India-Article 136-Arbitration award-Setting aside of-Award filed into Court-Notice served on respondent - Not contested - Objection under Section 30 not filed-Award made rule of Court-During execution proceedings plea takes that award decree not valid-Plea before Supreme Court that award was mock award and he came to know about award only when arrest warrant issued by executing Court-Not sustainable on facts-Respondent participated in arbitration proceedings and knew passing of award-Paid one instalment of award amount-No fraud was committed on respondent or on the Court-No equity in favour of respondent warranting interference in Article 136 proceedings.
       Held : As the respondent raised a dispute regarding the quantum of interest and the time for repayment of loan which according to it would start after two years, the dispute was referred to the sole arbitration of an Advocate of standing at Calcutta. It is not in dispute between the parties that in the proceedings before the Arbitrator the respondent’s partner appeared and after hearing him, the award was passed. The award in question gave instalments of Rs. 2 lacs each and that is how the amount was made payable within two years from 15.7.1985 to 15.4.1987. The first instalment of Rs. 2 lacs was made payable on or before 15.7.1985 with interest at the rate of 2 per cent per mensem till payment. The second instalment of Rs. 2 lacs was made payable on or before 15.10.1985 with interest as aforesaid till payment and similarly other instalments of Rs. 2 lacs each were granted. It is interesting to note that on 17.10.1985 the partners of the respondent firm addressed a letter to the appellant admitting that they had undertaken to repay the instalment due on 15.10.1985 and interest from July to October, 1985 by 15.11.1985 and prayed for accommodation for the time being. This clearly indicated that the grant of second instalment of Rs. 2 lacs which was made payable by the award on or before 15.10.1985 with interest from the date of first instalment to the date of second instalment was within the knowledge of the partners of the respondent firm even as early as on 17.10.1985 otherwise they would never have got an idea to pay the instalment due on 15.10.1985. This shows that they were aware of the instalments granted by the sole arbitrator, almost by the same time the award was passed in the year 1985 itself. If that is so, it must be held to be a mere excuse on the part of the respondent when it was contended in the execution proceedings that the respondent’s partners had no idea or knowledge about the award or award decree. Under these circumstances, it is difficult to appreciate how the arbitration proceeding was a mock proceeding or that any fraud was committed on the respondent or the Court when the award decree came to be passed. These are all afterthoughts and they clearly indicate that the respondent having received the amount of Rs. 15 lacs under a promissory note as early as in 1985 did not think it fit to pay up the decretal dues as per the award decree and was only interested in delaying the proceedings. Consequently, this is not a case in which it can be pleaded for the respondent that fraud was committed on the respondent by the decreeholder or that there was any equity in favour of the judgment debtor in not complying with the terms of the award decree or that the execution of the said award decree would result in injustice to the respondent so as to persuade us not to interfere under Article 136 of the Constitution of India with the impugned order of remand. In the fact situation of this case, it must be held that there is no equity in favour of the respondent which would require us not to interfere with these proceedings when under law and also in equity the appellant decree holder is entitled to get the fruits of his award decree especially when despite the award granting instalments and interest at 24 per cent per annum, the award decree grants interest only at 8 per annum from the date of the decree till realisation. (Para 13)

Judgment

S.B. Majmudar, J.-Leave granted in both these Special Leave Petitions.

2. By consent of learned counsel for the parties, these appeals were finally heard and are being disposed of by this judgment.

3. A few relevant facts leading to these appeals may be stated at the outset.

4. The common appellant as the decreeholder got an award decree on 2.6.1989 from the court of learned Single Judge of the High Court of Judicature at Calcutta. The said decree was sought to be executed. At that stage, the respondent - judgment debtor filed objections under Section 47 of the Code of Civil Procedure contending that the decree was a nullity as it was barred by limitation. The objections were overruled by the executing court which resulted in two proceedings by the respondent-judgment debtor before the Division Bench of the High Court. Both the proceedings were disposed of by the impugned common judgment. The Division Bench of the High Court held that the question of limitation regarding passing of the award decree was required to be examined by the executing court and consequently, passed a remand order directing learned Single Judge to decide the matter afresh. The impugned judgment also observed that the learned Single Judge should decide whether the arbitrator had filed the award suo motu or at the instance of the awardholder in the light of the decision of this Court in the case of Patel Motibhai Naranbhai & Anr. v. Dinubhai Motibhai Patel & Ors.1 and other case law.

5. In order to appreciate the grievance of the decree-holder appellant in these appeals, it is necessary to look at relevant background facts. The appellant is said to have granted a short-term loan of Rs. 15 lacs to the respondent on 9.1.1985. The contention of the appellant was that the loan was to be repaid within two months with 24 per cent interest on the principal amount. The respondent disputed the said claim of the appellant and contended that the loan amount was payable after two years and the interest rate was also not 24 per cent. This dispute was referred to the arbitration of a sole arbitrator who after hearing the parties, passed an award on 17.4.1985. It is the case of the appellant that as per the instalments granted in the award the first instalment of Rs. 2 lacs was paid by the respondent - judgment debtor but thereafter it defaulted. It is pertinent to note that before the award was made the rule of the Court, the first instalment as per the award was paid by the respondent. It appears that the award was filed by the arbitrator in the Court on 23.3.1989 for making it a rule of the Court. It is also to be noted that though the notice dated 6.4.1989 as to the filing of the award was served by the court to the respondent - judgment debtor on 10.4.1989, it did not file any objections to the award under Section 30 of the Arbitration Act, 1940. It also appears that the respondent did not choose to contest the proceedings. Ultimately, the court passed an ex parte order making the award rule of the Court on 2.6.1989. Thereafter, when the award decree was not complied with by the respondent, execution proceedings were initiated by the appellant. In the execution proceedings the respondent - judgment debtor raised a contention by filing an application under Section 47 of the Code of Civil Procedure that the decree was not executable and was a nullity on the ground that the arbitrator had no power or jurisdiction to file the award suo motu in the court after four years and hence the award decree could not have been passed as the award was filed beyond the prescribed period. The executing court after hearing the parties overruled the objections by holding that such a contention could not be raised in execution proceedings. As noted earlier, the respondent-judgment debtor carried the matter in appeal and in appeal the Division Bench of the High Court took the view that the question was required to be re-examined by the executing court and hence remanded the pro

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1998 Supreme(SC) 1205

Cases Referred (3)