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Umadutt Nemani Vs. Chandrao G. Kadam - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case Number O.C.J. Award No. 15 of 1945
Judge
Reported in(1946)48BOMLR675
AppellantUmadutt Nemani
RespondentChandrao G. Kadam
Excerpt:
indian arbitration act (x of 1940), section iv - indian limitation act (ix 1908), article 158-award-application to set aside award time-barred-application jot judgment in terms of award-whether party alleging award bad can appear and point out to court grounds to set award aside.;where a party has debarred himself under article 158 of the indian limitation act, 1908, from applying to set a purported award aside, he cannot, on an application made to the court by the other party for judgment in terms of the award, appear in court and point but to the court the grounds on which it should set aside the award itself under the powers reserved in the earlier part of section 17 of the indian arbitration act, 1940. - - thirty days from june 7 would expire on july 7, well before the present..........out of time. the only difficulty i feel about coming to that conclusion is this, namely, that the word 'award' prima facie means a genuine award and not a bogus award, which, for purposes of considering this point, i assume, without deciding, the so-called award now in question to be. however, in considering the material sections, i am entitled to take into account what the law before 1940 was, what were its defects which the legislature has attempted to remedy by the arbitration act of 1940, and if, and so far as the language used permits, i may and should then consider the act in such a way as to make the proposed remedy effective. one of the defects in the old law was that the remedies to a party aggrieved, or posing as aggrieved, by an award were all too numerous, and the machinery.....
Judgment:

Blagden, J.

1. This is an application for judgment in terms of an award made under Section 17 of the Indian Arbitration Act, 1940. The award was made on March 25 last and it was filed in this Court on May 1, and on June 7 notice was given by this Court to the respondent to the effect that the award had been filed under Sub-section (2) of Section 14 of that Act. The present application is made pursuant to a notice dated July 24 for August 10 of this year, and between June 7 and July 24 the present respondent has, so far as is material to this application, done nothing. Article 158 of the Limitation Act, as amended by the Indian Arbitration Act of 1940, provides a period of thirty days from the date of the service of the notice of the filing of the award for an application to set aside an award or to get the award remitted for reconsideration. Thirty days from June 7 would expire on July 7, well before the present notice of motion was taken out. Nonetheless, the respondent has attended the hearing of the motion and alleged in affidavits several grounds which, if they happened to be true (as to which, for the moment, I express, of course, no opinion), are to the general effect that the award was as bad as any award could be, for it is alleged, amongst other things, that there was no reference to arbitration; that as there was no reference there was no arbitration, and consequently, no award; and that that which purports to be an award and has been filed as an award is, in reality, no award at all. He says that though he has no right to apply to the Court to set the award aside or remit it for reconsideration, he has a right to bring these matters, which he alleges to be facts, to the notice of the Court in the hope that the Court, under Section 17 of the Act, will see cause to set aside the award. Section 17 does not say what the Court has to do if it sees cause to set aside the award, but merely what it has to do if it sees no cause to set aside, an award. But, presumably, what the Legislature meant was that if the Court does see cause to set aside an award, it shall set the award aside. So that, in substance, the respondent's application is an application to set the award aside -and is out of time. The only difficulty I feel about coming to that conclusion is this, namely, that the word 'award' prima facie means a genuine award and not a bogus award, which, for purposes of considering this point, I assume, without deciding, the so-called award now in question to be. However, in considering the material sections, I am entitled to take into account what the law before 1940 was, what were its defects which the Legislature has attempted to remedy by the Arbitration Act of 1940, and if, and so far as the language used permits, I may and should then consider the Act in such a way as to make the proposed remedy effective. One of the defects in the old law was that the remedies to a party aggrieved, or posing as aggrieved, by an award were all too numerous, and the machinery for enforcement of awards was inadequate, slow, ineffective and uncertain, with the result that all too often arbitration, which is resorted to by the parties as a cheap substitute for litigation, was the high road from India, in some cases, to Downing Street, and always into expensive litigation-the very thing which parties who go to arbitration seek to avoid.

2. Now, how did the Legislature set about trying to amend that state of affairs? First of all, I must quote some sections which do not greatly differ in substance from their predecessors. Section 14 provides:

(1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of tees and charges payable in respect of the arbitration and award.

The alleged absence of that notice is one of the things the respondent complains of in this case. Then Sub-section (2) says:

The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of tiling the award, cause the award or a signed copy of it, together with any depositions and document)) which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.

It is not disputed that the word 'Court' means, for present purposes, this Court. That notice the respondent in this case, admittedly, has had. I need not bother with the third sub-section of that section. Then Section 15 empowers the Court, in certain cases, to order to modify or correct an award. Those cases are where there is a severable part of the award in respect of which the arbitrators have exceeded their powers; where there is an imperfection in form, or an obvious error, which can be amended without affecting the decision, or where an award contains a clerical mistake or an error arising from an accidental slip or omission. Then Section 16 empowers the Court to remit awards for reconsideration in three cases, the last of which, curiously enough, is where an objection to the legality of the award is apparent upon the face of it. It is difficult to see how such an illegality can be cured by sending the offending award back to the offending arbitrators, but the direction to the Court to send back an award under Section 16 is not imperative but permissive, and Section 30, to which I now turn, sets out the grounds on which the Court may set aside an award. They are where an arbitrator or umpire has misconducted himself or the proceedings; where an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid: and, thirdly, (which is the widest clause) where an award has been improperly procured or is otherwise invalid; and I suppose, if the Court could see, on the face of the award, that it is obviously and totally invalid, it would, of its own motion, set it aside under Section 30 rather than remit it under Section 16. An example would be an award reciting the fact of a dacoity and a reference to the arbitrators, the arbitrators then taking upon themselves the harden of deciding the matter and making a partition of the spoils between the dacoits; no doubt in such a case an award might be set aside, and, direct action taken against the arbitrators.

3. I now turn to Section 17, which prescribes:

Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award.

4. On the sections I have so far read, it might have been possible to have held that they have no application to an award where the award is not an award at all, but a bogus award. It appears, however, in Section 31 and the subsequent sections which are, for the most part, new matters introduced by the 1940 Act, that the word 'award' includes a bogus award. Section 31 provides for the filing of an award in a Court having jurisdiction in the matter to which the reference relates, and then proceeds by Sub-section (2) to say:

Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court.

In that sub-section it is, to my mind, obvious that the word 'award' includes a bogus award, that the word 'agreement' includes a sham agreement, and that the word 'parties' includes persons alleged to be parties. Interpreting it otherwise makes complete nonsense. I do not think I need for the moment trouble to read the rest of that section, and I turn now to Section 32, which provides -.

Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act.

Again, the word 'agreement' must include a sham agreement, and the word 'award' must include a bogus award, if the section is to make any sense. But I think the section which most clearly of all shows that the Legislature could not have meant the word 'agreement' to be taken in its grammatical or ordinary sense is Section 33, which, omitting the proviso, which is immaterial for the moment;, reads thus:

Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits:

If the word 'agreement', taking that alone for the moment, is used literally in that section, the part of it relating to the existence of the agreement means this: 'Any party to an arbitration agreement desiring to pretend that it does not exist shall commit any necessary perjury for that purpose in an affidavit and shall endeavour to deceive the Court by means of that affidavit.' Whoever drafted the Arbitration Act of 1940 must have been conversant with the provisions of. the Indian Penal Code and could not have meant to give a right to persons who falsely pretend not to be parties to an arbitration agreement, when prosecuted for perjury, to plead 'not guilty by statute.' I notice that no part of the Indian Penal Code is repealed by the Act of 1940. The word 'parties' must, therefore, include 'persons alleged to be parties,' and the words 'arbitration', 'agreement' and 'award' have to be construed in a similar manner. I think it is most clear that the Legislature meant to fix a definite time-limit within which the existence or validity of an award could be challenged after the award is filed in Court, and to provide an expeditious method of getting an award translated into a judgment and made enforceable as such. It is no doubt true that expedition sometimes brings its own disasters in its train, and one may regret the speed at which the Legislature has intended these matters to proceed, just in the same way as ante sometimes regrets the speed at which the internal combustion engine is capable of proceeding. But it is not for me to express an opinion whether that speed in these proceedings is desirable or otherwise. It is also true that if the construction, which I think is the correct one, is correct, all words at the beginning of Section 17 down to and including the words 'set aside an award', might perfectly well have been omitted. I have, of course, to try to give some effect-and preferably a sensible one-to every word that the Legislature has used, if I can, but I also have to try and give effect to the general scheme of the Act, and it seems to me that to give effect to Mr. Desai's able argument and to hold that though a party may have debarred himself from applying to set a purported award aside, he can come to the Court, and, as it were, point out to the Court the grounds on which the Court should set aside the award itself under the powers reserved in the earlier part of Section 17, would mean, for all practical purposes, repealing Article 158 of the Indian Limitation Act as now amended, and the only way 1 can make that article and the generality of the Arbitration Act to fit into a coherent whole is by supposing that these words in Section 17 are surplusage. After all, it is not really surprising if the Legislature should have used more words than necessary, or if anyone else should fall into the same error. In these circumstances, the motion is made absolute with taxed costs.

5. Subject to alteration as to the figures of costs and dates to be filled in, decree in terms of the draft decree.


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