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Parshottamdas Narottamdas Patel Vs. Kekhushru Bapuji - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case NumberAppeal No. 11 of 1932
Judge
Reported inAIR1934Bom6; (1933)35BOMLR1101
AppellantParshottamdas Narottamdas Patel
RespondentKekhushru Bapuji
DispositionAppeal dismissed
Excerpt:
arbitrators-award-award duly made cannot be superseded by arbitrators-consent of parties does not validate the action-absence of one of the arbitrators invalidates award-subsequent signature to the award by the absent arbitrator does not validate it-civil procedure code (act v of 1908), order i, rule 8, schedule ii, para. 20(3)-representative action-notice of suit.;disputes which had arisen between the khatedars and the inamdar of a village were referred by the representatives of the former and by the latter to the arbitration of five persons without the intervention of court. the arbitrators heard the parties, and wrote out their award on a rough sheet of paper which was signad by all the arbitrators. the award was handed over to one of the arbitrators for getting it engrossed on a.....w. baker, acting c.j.1. this appeal raises a number of questions of law, the plaintiffs, as representatives of the khatedara and inhabitants of the village of ralej in borsad taluka, brought a suit to have the award dated july 9, 1929, passed between them and the defendants, the iuamdars of the village, filed in court and a decree passed upon it under schedule ii, para 21, of the code of civil procedure, a number of objections were taken by the defendants to the filing of the award, some of them of a very technical nature. most of them were overruled by the first class subordinate judge of nadiad, but he declined to file the award on two grounds. the first ground was that the award which was sought to be filed in court was not the original award made by the arbitrators, but a second award.....
Judgment:

W. Baker, Acting C.J.

1. This appeal raises a number of questions of law, The plaintiffs, as representatives of the khatedara and inhabitants of the village of Ralej in Borsad Taluka, brought a suit to have the award dated July 9, 1929, passed between them and the defendants, the iuamdars of the village, filed in Court and a decree passed upon it under Schedule II, para 21, of the Code of Civil Procedure, A number of objections were taken by the defendants to the filing of the award, some of them of a very technical nature. Most of them were overruled by the First Class Subordinate Judge of Nadiad, but he declined to file the award on two grounds. The first ground was that the award which was sought to be filed in Court was not the original award made by the arbitrators, but a second award which had been made after the first award had been passed, and that the arbitrators had no authority, after passing the first award, to review it or substitute a second award for it. The second ground on which he refused to file the award was that one of the arbitrators, Parshottam, was not present at the making of the award and did not sign it along with the other arbitrators, and the Judge held also that this was an objection to the filing of the award which justified his refusal to file it.

2. The plaintiffs have appealed, and at the appeal, besides the two points to which I have already referred, a further ground was taken on behalf of the appellants that the defendant-inamdar having by his conduct induced the arbitrators to modify or make a fresh award, and also having induced the plaintiffs to agree to this modification of the award, it is not now open to him to seek to go behind the award, the modification of which he was instrumental in obtaining. Another point which has been raised by the learned counsel for the respondents is that the form of the suit is bad, and therefore the award should not be filed. This was a ground decided in his favour by the lower Court There are certain questions in connection with this last ground which are of some difficulty. But it is possible to decide the case on the first two grounds alone, although I will deal shortly with the two remaining grounds, inasmuch as they both involve questions of law of some importance.

3. The facts are that there being disputes on various grounds between the inamdar-defendants and their tenants, a number of persons suggested that the disputes between them should be referred to arbitration, a proposal which was accepted by the inamdar. We need not go into the question of who was responsible for this reference. The submission paper was signed by 145 persons purporting to be khatedars of the village of Ralej. It has been contended that this paper is signed or purports to have been signed by persons who are dead and persons who have no connection with the village. That is a point which will arise a little later on. However that may be, the inamdar agreed to go to arbitration, and the submission paper was signed by him as well as by these other persons, that is Exhibit 44, and the arbitrators appointed are five, viz., Mr. Dadubhai Purshottamdas, as umpire, Darbar Gopaldas Ambaidas, Parsottam Narandss, Motibhai, and Vallavbhai Narsinhbhai Ishwardas; Parshottam, No. 3, was the nominee of the inamdar, a fact which has some importance in the present case. After considering the case of either party these arbitrators admittedly gave an award. The date of that award is not known, nor is it before the Court. But there is ample evidence consisting of the admissions of all the arbitrators who have been examined that there was an award. After that award had been passed, the inamdar took objection to certain clauses in it. The other side agreed to certain modifications in the award, and ultimately the present award, which is now sought to be filed under Schedule II of the Civil Procedure Code, was passed on July 9, 1929.

4. Now the first two objections which have been taken to the filing of the award are these: first, that the arbitrators having once passed an award, their authority ceased, and they could not either modify it or pass a fresh award in supersession of it. The second point is that Parshottam, the nominee of the inamdar, was admittedly in Bombay from the date of the signing of the first award, and took no part in the deliberations which resulted in the award of July 9.

5. Dealing with the first point first, the learned Judge of the lower Court has referred to a number of cases which show that when an award has been made by an arbitrator, he is functus officio, his authority is finished, he has no power either to modify the award or to pass any fresh award in supersession of it, and therefore when the award which is not before the Court, the first award, was passed, the work, of the arbitrators was finished, and nothing further could be done in the matter. The learned advocate for the appellants has sought to distinguish the cases which have been quoted by the lower Court and by the learned counsel for the respondents, and has argued that there is no hard and fast rule as to when an award is final, and it depends on the facts of each individual case. If we apply that test, and look at the evidence of the arbitrators, it is perfectly clear that in this case the award was passed, it was signed by all the arbitrators, it was written on a rough piece of paper, and was then handed over to Narsinhbhai, one of the arbitrators, for the purpose of getting it engrossed on a stamp paper. The writing out of the award on a stamp paper, which would be necessary before it could be filed in a Court, is merely a ministerial act. The expression of the arbitrators' opinion on the disputes placed before them, which constitutes the award, may be oral, but when, as in the present case, it was in writing, and has been signed by them, there can be no doubt that this constitutes the final award. There are numerous authorities on the point, most of which have been referred to by the learned Subordinate Judge. In Dandekar v. Dandekars I.L.R. (1882) Bom. 663 which was a case of an oral award, it was held that the actual award was an oral award made by all the arbitrators on the last day of their joint sitting, and the drawing up of the formal award was a purely ministerial act to give effect to the previously completed judicial act. In Kula Nagabushanam v. Kula Seshachalam (1883) 1 Md. H.C.R. 178 which is a case on all fours with the present, the five arbitrators came to a decision and made, dated, and signed a rough draft of their award, after which a fair copy was made, and it was held that the award was complete at the date of the rough draft, and that its validity was not affected by the subsequent occurrences. In Dutto Singh v. Dosad Bahadur Singh I.L.R. (1883) Cal. 575 it was held that after an award has been made and handed to the parties, the functions of the arbitrators ceased and they had no authority afterwards to deal with an application for review of their decision. In Baikanta Nath Goswami v. Sita Nath Goswami I.L.R. (1911) Cal. 421 where certain questions in dispute were left to the determination of the Court after making a local inspection, it was held that the decision of the Munsif was in the nature of an award, and that he could not alter the award when once made, or review his own decision. In Halsbury's Laws of England, Vol. I, p. 665, para. 1120, it is stated :-

An award is published when the arbitrator or umpire, as the case may be, gives notice to the parties that it is ready.

An arbitrator or umpire who has made his award is futctus officio, and could not by common law alter it in any way whatsoever; he could not even correct an obvious clerical mistake. But where the submission is contained in a written agreement, the Arbitration Act, 1889, enables an arbitrator or umpire to correct any clerical mistake or error arising from any accidental slip or omission.

It is, therefore, quite clear on the authorities that once the award is made and published, as it has been in the present case, and signed by all the arbitrators, it is not open to the arbitrators to substitute another award for it, and where, as in the present case, the authority of the arbitrators ceased from the time they made the award, the consent of the parties could not render valid that which is absolutely void. In Banerjee's Law of Arbitration, 1st Ed., p. 273, it is said :-

As consent consent confer jurisdiction, the omission to observe such statutory requirements as create jurisdiction cannot be cured by ratification. But an award which is not absolutely void, but merely voidable because of Some defect or irregularity which does not affect the jurisdiction of the arbitrators or of the Court may be validated by such acts of the parties as indicate an intention to abide by it, and if ratified it will have the same effect as a valid award.

But in the present case the second award made by the arbitrators is void on the authorities which have been quoted, and no action of the parties by way of consent or otherwise would give the arbitrators authority to make a second award.

6. But it is contended by the learned advocate for the appellant that the conduct of the parties in agreeing to an alteration in the award may be treated as a second submission to arbitration. There is no evidence that there was any second submission, and this argument is open to the difficulty that the award will then be invalid under the second objection taken in the lower Court. It is an admitted fact that Parshottam, the nominee of the inamdar and one of the arbitrators, did not take any part in the discussion before the promulgation of the second award. It has been pointed out that under the submission paper, Exhibit 44, the parties agreed to be bound by the decision of the majority of the arbitrators, and if any one of the arbitrators is absent, by the decision of the majority of the arbitrators present. The second award was made by four of them in the absence of Parshottam. At the close of his judgment the learned Judge of the lower Court appears to think that the fact that Parshottam did not sign at the same time as the other arbitrators would invalidate the award. As a matter of fact he gave his consent subsequently, and his signature was obtained on his return to Kaira District. The actual making of the signature by an arbitrator at a different time to the other arbitrators does not invalidate the award in this country although the law in England appears to be stricter, as laid down in Muthukutti Nayakan v. Acha Nayakan I.L.R. (1920) Lah. 481 and Abdul Rahman v. Shahab-ud-Din I.L.R. (1894) Mad. 22 But both those cases make it clear that it is necessary that all the arbitrators should agree to the terms of the award, although there is no provision of law requiring them to sign it in the presence of each other; what has been laid down repeatedly as necessary is that all the arbitrators should apply their minds to the making of the award. This particular arbitrator Parshottam has admitted in his deposition that he was in Bombay, and that he had nothing to do with the making of the award. He merely gave his consent afterwards from Bombay, and then he was sent for because his signature was necessary : he did not even read the award; p. 22 of the record. It follows, therefore, that there was no concurrence of this arbitrator in the judicial act, and there was no combined action of the arbitrators or judicial exercise of the minds of the five arbitrators which is necessary, as laid down in Abdul Rahman v. Shahab-ud-Din. If there was a fresh submission, which does not appear to be the case, then it would have to be shown that the submission was one by which the parties agreed to be bound by the decision of the majority of the arbitrators. Bat there is no evidence of such fresh submission, and it is quite clear from the record that what happened was that after the arbitrators had given their award, the inamdar being dissatisfied, asked them to re-consider it, the other party agreed, the arbitrators re-considered their award, and passed a fresh award. That, in view of the decisions which have been referred to, is clearly illegal, as they have no authority to review their decision. All that was done after the first award was passed is void, and cannot be validated by any action of the parties. The Judge was, therefore, right in refusing to file the award on that ground, and his order must be upheld. Also apart from the question of signature, which is merely a ministerial act, it is obvious that Parshottam did not apply his mind to the making of the award with which we are now concerned, and therefore there is no award.

7. This is sufficient for the decision of the appeal, but as certain other points have been raised, I may as well deal with them briefly. It has been contended by the learned advocate for the appellants that the defendant, having by his action caused the arbitrators to re-consider the award, cannot now be heard to object to its being filed. The learned advocate does not go quite so far as to say that he is estopped, but this is virtually what it amounts to. The answer to that has already been given in an earlier portion of this judgment in the quotation from Banerjee's Law of Arbitration, viz., that what is void cannot be ratified by the action of the parties.

8. The remaining points were raised by the learned counsel for the respondent, and are mainly points of procedure of a somewhat technical character. He has raised the objection that it is not clear who were the parties to the award, and how far the persons who signed the submission, of whom there are 145, can claim to represent the ryots or khatedars of the village of whom there are somewhere about 450, speaking roughly. But the contention which is raised will not prevail in view of his own admission at p. 8 of the record that the award was to be made for the whole village and not only for the khatedars, and in view of that it seems that the inamdar must have accepted that the parties to the reference were representatives of the whole village. No doubt the principal dispute was between the khatedars and the inamdars, but there were also some disputes regarding water rights in which persons who were not khatedars are interested. However, in view of this admission of the inamdar himself, I do not think there is very much in this objection.

9. The remaining objection concerns the form of the suit, and although it is a highly technical one, and is not necessary for the disposal of this appeal, I do not want to avoid it. It is very unusual for a combination of circumstances like the present to arise. The objection taken by the learned counsel for the respondents is this. The present is a case of an arbitration without the intervention of the Court, and is governed by Schedule II, paras 20 and 21 of the Code of Civil Procedure. Under Clause (3) of para. 20, the Court shall direct notice to be given to the parties to the arbitration other than the applicant, requiring them to show cause within a time specified why the award should not be filed, and it is contended that no such notice has been given in the present case. Now the present case is a combination of two sets of circumstances, not only an award without the intervention of the Court, but also a suit brought by certain persons as representatives of a class. The persons who have signed the reference to arbitration are 145 in number, as representing the khatedars, and as has already been pointed out, it has been admitted by the inamdar that they represent the inhabitants of the village. There are a considerable number of khatedars besides, about 300 more, and the total population of the village must be very much more than that. When the application for filing the award was made, the matter under Schedule II became a suit, and as a suit it is one to which the provisions of Order I, Rule 8, apply, and as a matter of fact a notice under Order I, Rule 8, has been issued. What is contemplated by the Code is that in cases where there are a large number of plaintiffs or defendants, one or more persons may be treated as representing them, and in that case a notice must be given to the others either through publication in a newspaper or in some other suitable way. Similarly, under the arbitration Schedule, where an application has been made for filing an award, notice must be given to the parties to the arbitration other than the applicant. The present case which is one falling within both these provisions, would seem to be one in which it might be argued that technically two notices were necessary, one under Order I, Rule 8, and one under para 20, Clause (3), of Schedule II to the Code. The learned counsel, however, says he does not go so far as that, and as a matter of common sense it would seem sufficient if notice is given to the parties concerned that an application has been made to file an award which purports to have been made on their behalf. The notice which was issued in the present case is at p. 85 of the record, and was published in the Kaira Gazette. The form of that notice is, omitting unnecessary details, that there were quarrels between the plaintiffs and the defendants, and to bring an end to the said disputes both parties had appointed arbitrators, and the said arbitrators had given a written award on July 9, 1929, and the said plaintiffs on their own behalf as also as representatives of the village have made an application to this Honourable Court for filing the award under Order I, Rule 8, of the Code of Civil Procedure. Schedule II, para 20, Clause (3), does not lay down any form in which the notice should be given, and, in my opinion, it will be mere surplusage to issue two separate notices in a case like the present, one under Order 1, Rule 8, and the other under para 20, Clause (3), of Schedule II. The notice, Exhibit 14, p. 85, refers distinctly to the application being for filing the award, and also to the representative character in which the plaintiffs sue under Order I, Rule 8. That seems to me to be a sufficient compliance with the spirit of the Code, although technically perhaps two notices might be more formal. I do not think, therefore, that there are any grounds for holding that the form of the suit in the lower Court was wrong in law; but this of course makes no difference to the disposal of the appeal in view of the fact that the award given by the arbitrators was one given after their authority had ceased, and being void, it could not be ratified either by the conduct of the parties in accepting the modification of the award, or by the defendant in consenting to a reconsideration by the arbitrators.

10. For these reasons I am of opinion that the order of the lower Court is correct, and should be confirmed, and the appeal dismissed with costs.

Divatia, J.

11. I concur. The first point which has been decided against the appellants relates to the finality of the award after it has been signed and delivered by the arbitrators. It has been contended on behalf of the appellants that the arbitrators had meant this only to be a kachcha award, and that it was still to be engrossed on a stamp paper, and that the award could be final only after it was engrossed on a stamp paper. Now this is, really speaking, a question of the intention of the arbitrators, and we have it in evidence on the testimony of one of the arbitrators themselves, Narsinhbhai, Exhibit 67, that they came to a final decision in writing, and it was read over to the parties and the panchas signed it. This is corroborated by the other evidence also. That being so, the mere fact that it has been called kachcha or rough draft could not alter the finality of the award' provided what was meant by the arbitrators to be done subsequently was a simple engrossment of the award on a stamp paper. The authorities make it clear that an award that has been once signed and delivered is a final award. Under the English law also, an award which has been made by the arbitrator cannot be altered subsequently except for correcting any clerical mistake or an accidental slip or omission, and any other alteration that can be made would be under the authority of the Court after the award has been remitted. This would clearly show that the arbitrator is functus offcio after the award is signed and delivered, and anything done by the arbitrators subsequently is without jurisdiction and authority. I think, therefore, the lower Court was right in holding that the arbitrators had no jurisdiction subsequently to make any amendment in the award.

12. The subsequent change in the award is on some points which are obscure on the evidence. But even then the subsequently changed award that has been made has been signed in the first instance not by all the arbitrators who signed the first award but by four of them in the absence of one arbitrator, Parshottam, It has been contended that the submission paper, Exhibit 44, gives an authority to the arbitrators to decide in the absence of any one of them. The words in the submission paper are:-

If any one from the arbitrators is absent, we on both sides shall abide by the decision of those arbitrators who are present whether the decision is unanimous or by a majority of those present.

13. Now if in the first instance Parshottam had remained absent when the first award was made and had not signed that award, then in that case it can be plausibly argued from this that the absence of Parshottam's signature on the second award would not invalidate it. But here we have the fact that the first award has been signed by all the five arbitrators, and the second award purports to make an amendment or a change in some clauses of the first award, and it cannot be said that it was contemplated by the submission paper that once all the five arbitrators had made their award and put their signatures on it, then subsequently an amendment in that award can be made in the absence of one of the arbitrators who had signed the first award. If all the arbitrators had signed the first award, it was necessary that the second award, which would be an amendment of the first award, must be signed by all of them. It is true that it is not necessary for the arbitrators to sign an award at onetime and one place. But it is equally true that all the arbitrators must jointly apply their mind to the decision of the dispute, and it would not do for one of the arbitrators simply to rely blindly upon what the other arbitrators have decided, and then put his signature on that decision without even reading it. That is just what has been done in this case on the admission of that absent arbitrator himself, because he says that he had replied to Dadubhai saying, 'I agree to what you do. Then Moti Vallabh came to call me at Bombay, and he told me, 'Your signature is necessary,' and so I came. When I came the inamdar was at Dadubhai's. I had no talk with the inamdar that day. I did not read the award. I signed seeing the signatures of Dadubhai and others.' Therefore even though it may not be necessary for all the arbitrators to sign the award together, the circumstances in which this award has been signed by the arbitrator Parshottam would clearly show that there was really speaking no judicial proceeding when all the arbitrators would jointly apply their minds, and technically it would be a judicial misconduct on the part of the arbitrator to sign an award without even reading it as to the amendments or modifications made in it. Therefore, I think the learned Judge below was also right in holding that the subsequent signature of Parshottam on the award would also invalidate it.

14. Next it has been contended that the inamdars have acted upon the second award, and have actually realised the water charges according to the rates decided in the award, and reliance has been placed for that purpose on Exhibits 48, 49 and 50. It is indeed true that the inamdars have taken receipts on the basis of the rate mentioned in the award. It is also true that the inamdars have not opposed this award even in their written statement on the ground now urged by them, and if this had been the case of a mere irregularity or a mere defective award, then I think the inamdars would have been estopped by their conduct from disputing the award now, especially when the amendment in the award was made at their instance. But here we have the case of an award by arbitrators who were functus officio; in other words, the second award has been made by arbitrators who had neither jurisdiction nor authority to make it, and, therefore, it cannot be said that the conduct of the inamdar would validate an award which is ab initio void. The learned advocate for the appellants has relied upon two rulings, one in Brij Mohan Lal v. Shiam Singh I.L.R. (1901) All. 164 In that case it was not held that the arbitrator had exceeded his powers, but it was held that even assuming that the arbitrator had exceeded his powers, the respondent was precluded by his conduct from impeaching it when he had chosen to accept and act on it as if it were a good and binding award. That case is no authority for the proposition that an award without jurisdiction, if acted upon, would be validated by the conduct of the parties, because the actual decision in that case is not based upon any excess of power or want of authority of the arbitrators. The second decision relied upon by the learned advocate for the appellant is Sukhnath Rai v. Nihal Chand I.L.R. (1920) All. 661 Here too this case is not an authority for the proposition that an award made without jurisdiction can be validated by subsequent conduct. In this case there was a reference to arbitration to an arbitrator. Subsequently there was a suit filed in a Munsif's Court with regard to some of the matters which formed the subject-matter of arbitration, the whole of such matters being beyond the pecuniary jurisdiction of the Munsif. The Munsif addressed a precept to the umpire in the arbitration to expedite the arbitration proceedings and to return the award to the Court at a certain date. The arbitrators after hearing the parties eventually delivered the award, and the question was whether this award which was passed by the arbitrtors after it was referred to them by the Munsif would be validated by the subsequent conduct of the parties. Now it is pointed out in this case that the difficulty about the Munsif's order was that the submission to arbitration related to other matters besides those in issue in the Court of the Munsif, and as pointed out, the subject-matter of the submission would have been beyond the jurisdiction of the Munsif's Court in the event of a regular suit having been brought in respect of the same. It was from that standpoint that the arbitrators would have no justification or right to proceed with the award at the instance of the Munsif who had no jurisdiction over the whole subject-uiatter of the dispute before the arbitrators, and it was in these circumstances held that the arbitrators when they proceeded to deliver their award under the Munsif's orders went beyond their power, inasmuch as the Munsif had no jurisdiction to direct them to proceed with the whole of the arbitration. But as a matter of fact, it was not initially the Munsif who had referred the whole matter to arbitration. That was done even before the suit was filed in the Munsif's Court, and therefore even if no suit had been filed in the Munsif's Court, the arbitrators would certainly have the power and jurisdiction to make the award which they subsequently did, and it appears that after they made an award it was filed in the Subordinate Judge's Court, who had certainly jurisdiction to entertain that award. Now on these facts it cannot be said that this case would in any way be a decision on the point in dispute here. In the present case we have got not simply the case of a defective or an irregular award, but an award which certainly was without jurisdiction at all as the arbitrators had exhausted all their authority after they had signed and delivered the award. Therefore I think the learned Judge there also was right in holding that the inamdars were not estopped by their conduct from disputing the award.

15. Then as to form of the suit, the argument that has been urged on behalf of the respondents proceeds entirely on a technical point. Whether it is the notice that is required under Order I, Rule 8, or under paras. 20 and 21 of the Civil Procedure Code, and whether the particular notice Exhibit 85 that was issued here was a notice that complied with the terms of para 21 would not be very material provided all the parties to the arbitration had been served with a notice that an application had been made to have the award tiled and a decree taken in terms thereof. That award may not be binding against all the cultivators or the khatedars of the village. It will be binding against all persons who have signed the reference paper, and whether a particular man signed a reference paper or not need not be gone into at present, provided we have here the fact that a general notice was issued by which the public were informed that an application had been so made to file the award. Therefore even assuming that the procedure adopted by the lower Court may not be strictly according to the terms of paragraph 21 in the II Schedule, still that defect has not created any prejudice so far as the merits of the dispute are concerned, and even then it appears that the inamdars themselves did not object to any irregularity or mistake in the terms of the reference, and went to the panchas without taking any objection. Really speaking, in view of our decision on the first two points, a decision on this point is not necessary, but, it can be said that the lower Court was not wrong in holding that there was nothing in the procedure which would invalidate the proceedings before the arbitrators.

16. For these reasons, I agree that the appeal should be dismissed with costs.


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