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indrasen Uttamrao Deshmukh Vs. Sadashivrao Sambhajorao Arwade - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application No. 572 of 1977
Judge
Reported in(1978)80BOMLR343; 1978MhLJ565
Appellantindrasen Uttamrao Deshmukh
RespondentSadashivrao Sambhajorao Arwade
DispositionAppeal allowed
Excerpt:
.....act, the petitioner expressly referred to article 119 of the limitation act and stated the written-statement was being filed within the period of limitation of thirty days from the date of the service of notice prescribed under article 119. on october 23, 1974 the court granted the application dated october 9, 1974 and ordered that defendant no. 5 (the petitioner) was allowed to file his written-statement. in the written-statement the petitioner had challenged the validity of the award inter alia on the ground of misconduct of the arbitrators and the written-statement positively contained a prayer for setting aside the award.;on july 29, 1975 respondent no. 3 filed an application under section 17 of the arbitration act stating that since none of the respondents had made an..........on october 9, 1974 the petitioner filed an application for taking the case on board along with a written-statement. on october 9, 1974 the suit was not fixed for hearing, it having been fixed earlier for october 1, 1974 and then adjourned to october 23, 1974. the contents of the application and the written-statement filed by the petitioner are slightly relevant in the context of the question which arises in this petition. in his application dated october 9, 1974 (exh. 2) which is made by the petitioner for taking the suit on board on that day the petitioner has referred to the fact that the notice of the application was served on him on september 11, 1974 and 'the opponent no. 5 is entitled to file his written statement within 30 days from the date of the receipt of the notice under.....
Judgment:

Chandurkar, J.

1. Certain disputes arising out of partnership business carried on by the petitioner along with respondents Nos. 3, 4, 5 and 6 were referred for decision to five arbitrators viz. respondents Nos. 1, 2 and 7 to 9. The arbitrators are said to have made an award on June 6, 1974 and two of the arbitrators viz. respondents Nos. 1 and 2 filed on July 4, 1974 an application for filing of the award. The arbitrators themselves have prayed in that application that judgment and decree be passed in terms of the award. The other three arbitrators were shown as opponents in this application under Section 14(2) of the Arbitration Act. Notices of this application were issued to the petitioner and the other partners. According to the petitioner, the notice was served on him on September 11, 1974. It appears that on October 9, 1974 the petitioner filed an application for taking the case on board along with a written-statement. On October 9, 1974 the suit was not fixed for hearing, it having been fixed earlier for October 1, 1974 and then adjourned to October 23, 1974. The contents of the application and the written-statement filed by the petitioner are slightly relevant in the context of the question which arises in this petition. In his application dated October 9, 1974 (exh. 2) which is made by the petitioner for taking the suit on board on that day the petitioner has referred to the fact that the notice of the application was served on him on September 11, 1974 and 'the opponent No. 5 is entitled to file his written statement within 30 days from the date of the receipt of the notice under Article 119 of the Indian Limitation Act and as such the written statement is settled today. It may be accepted....' Article 119 of the Limitation Act refers to an application for setting aside an award or getting an award remitted for consideration. The prescribed limitation is thirty days from the date of service of the notice of the filing of the award.

2. In the written-statement which is filed by the petitioner, the petitioner has challenged the validity of the award on several grounds to the details of which it is not necessary to refer. There is little doubt that the object of filing what was styled as a written-statement was to point out to the Court that the arbitrators had misconducted themselves; that the arbitrators were interested in some of the parties; that the arbitrators were indebted to some of the partners of the firm; that the essential rules of natural justice and provisions of the Arbitration Act have been violated etc. and the concluding part of the written-statement reads as follows:

For these reasons and the arguments to be advanced at the time of hearing it is prayed that the award under consideration be set aside with costs and the application may be dismissed with costs and the opponent No. 5 may be awarded the costs from the applicants.

After this written-statement was filed, nearly nine months later, the respondent No. 3 filed an application on July 29, 1975 under Section 17 of the Arbitration Act stating that since none of the respondents had made an application to set aside the award or to remit the award for reconsideration he was entitled to judgment and decree in terms of the award passed by the arbitrators on June 6, 1974. The prayer in the application, therefore, called upon the Court to pronounce judgment and pass a decree in accordance with the terms of the award. After this application was made by the respondent No. 3, an application came to be made by the petitioner on November 1, 1976 requesting the Court to treat the written-statement filed by the petitioner as an application under Section 33 and the petitioner made reference to the decision of the Supreme Court in Madan Lal v. Sunder Lal AIR[1976] S.C. 1233. In effect the application appears to be one for amendment of the written-statement for the purpose of changing its form into one from a written-statement to an application which is the alternative prayer made by the petitioner, the principal prayer being that the written-statement should be treated as an application itself. The amendment sought was only in the cause title by showing the present petitioner as the applicant and the present opponents as opponents. This application was opposed by the respondent No. 3. The trial Court purporting to make an order on the application (exh. 51) filed by the present petitioner which was the application made on November 1, 1976 held that though the respondent No. 3 had given an application on July 29, 1975 contending that no party had filed an application for setting aside the award and therefore a decree should be passed, the present petitioner who was defendant No. 5 'did not try to check legal position and made efforts to rectify the mistake by filing a separate application under Section 33 of the Arbitration Act'. The learned Judge observed that 'this will show that the defendant No. 5 in spite of noticing the legal position did not choose to follow the correct procedure and filed his application on November 1, 1976 requesting to treat his written statement exh. 28 as a separate application under Section 33 of the Arbitration Act.' It was argued before the learned Judge that a written-statement raising objections to the award could be treated as an application under Section 33. Referring to this argument the learned Judge observed:

If defendant No. 5 succeeds to show that there need not be a separate application under Section 33 of the Arbitration Act and the written statement Ex. 28 can be treated as raising objections under Section 33 of the said Act the present application is without merit.

The effect of these observations is that the question as to whether the written-statement could be treated as raising, objections under Section 33 was left open. However, while rejecting the application, the learned Judge reiterated the ground which he had earlier given viz. that no application was made under Section 33 even after the respondent No. 3 had filed an application under Section 17 on July 29, 1975. In para. 8 the learned Judge observed:

There are also other reasons to reject this application. The important fact required to be considered at this stage is that defendant No. 5 had not taken a proper step to cure the defect inspite of the application dated 29.7.1975 given by the present defendant No. 1 in Miscellaneous Application No. 132 of 1975 requesting the Court to make the award rule of the Court in absence of separate application under Section 33 of the Arbitration Act by any one of the parties. The present defendant No. 5 has not given any reason as to why he had not taken steps to cure the defect when it was brought to his notice. In my opinion, there is no reasonable ground to grant this application and hence I pass the following order.

This order is now challenged by the petitioner in this petition.

3. It is contended on behalf of the petitioner by Mr. Sawant that the learned Judge has failed to consider the effect of the observations of the Supreme Court in Madan Lal's case cited supra and that inasmuch as the petitioner had already filed a written-statement raising objections to the award and the written-statement was filed within the prescribed period of thirty days, no prejudice would be caused to any of the parties if the written-statement was treated as an application for setting aside the award. On the other hand, it is vehemently contended by Mr. Nalavade appearing on behalf of the respondents Nos. 3 and 4 that the Court was not bound as a rule of law to treat the written-statement as an application for setting aside the award and that the petitioner's conduct was such that he had disentitled himself from claiming the exercise of discretion of the Court to treat the written-statement as an application under Section 33 because the object of the petitioner was to somehow or the other protract litigation. The learned Counsel has referred to the reply which is filed by the respondent No. 3 to the application (exh. 51) in which according to the respondent No. 3 though the petitioner was under the award liable to recover and pay off all the dues of the firm, he had collusively and fraudulently procured decrees against the firm in two suits and had also sought attachment of the funds of the firm lying in the Canara Bank, Kolhapur, in Special Suit No. 78 of 1974. Now it is clear that the order of the learned Judge does not disclose that he has gone into the conduct of the petitioner while deciding the question as to whether the written-statement should be allowed to be converted into an application under Section 33 of the Arbitration Act. It would, therefore, not be proper for the first time in this Court in these proceedings to go into the conduct the relevance of which was not material for deciding the question as to whether the written-statement which was filed within the statutory period of thirty days should be allowed to be treated as an application for setting aside the award or not. As the order of the learned Judge itself discloses, it is self-contradictory. In the earlier part of the order the learned Judge has pointed out that after refusal of the adjournment the respondent No. 3 had made an application on July 29, 1975 requesting the Court to pass a decree in terms of the award, and though the real legal position was disclosed viz. that an application for setting aside an award had to be made within a period of thirty days from the date of service of the notice of an application under Section 14(2), the petitioner had not taken any steps to file any application under Section 33. It is difficult to appreciate this view of the learned Judge because if the application for setting aside an award had to be filed within thirty days from the date of the service of the notice of the application under Section 14(2), the petitioner could have filed any such application after the respondent No. 3 had made an averment in his application dated July 29, 1975 that no party had filed any application under Section 33. Such an application if it was filed would have been patently barred by limitation. Then in para. 7 the learned Judge expressed the view that if the petitioner would be able to show that the written-statement could be treated as an application under Section 33, then the application for amendment (exh. 51) was without any merit, which is no doubt a view which it would not be possible to dispute. Exhibit 51 was merely an application for permission to change the form of the written-statement. It is not that by making the application (exh. 51) the petitioner was trying to lodge his objections to the award for the first time on November 1, 1976. No change at all in the averments made in the written-statement which was filed on October 9, 1974 was sought to be made. The learned Judge could not, therefore, be said to be wrong when he took the view that if it was otherwise possible to treat the written-statement on the same footing as an application under Section 33 of the Arbitration Act, a formal application to that effect was not necessary. Unfortunately for the petitioner however that is not the operative part of the order of the learned Judge. While justifying the rejection of the application (exh. 51), the learned Judge in the concluding portion of the order has given an additional reason. That reason again was the same which was referred to in the earlier part of the order viz. that the petitioner had failed to make a proper application under Section 33 of the Arbitration Act even after the respondent No. 3 had specifically referred to the absence of such an application in his application under Section 17 made on July 29, 1975. The effect of these observations in the order below exh. 51 is that the learned Judge has declined in fact to treat the written-statement as an application under Section 33, thereby virtually preventing the present petitioner from canvassing his challenge to the validity of the arbitrators' award. It is at this stage that the decision of the Supreme Court in Madan Lal's case becomes relevant. In Madan Lal's case cited supra the arbitrators' award was filed in Court on September 7, 1957 and notice of filing of the award was issued to the appellant and served upon him on September 30, 1957. The appellant filed an objection to the award in the nature of a written-statement on November 3, 1957 attacking the validity of the award on various grounds. The objection did not contain any prayer at the end nor did it indicate what relief the appellant desired. When the matter was heard by the trial Court, it was contended on behalf of the respondents that the so-called objection was in the nature of an application to set aside the award on grounds provided under Section 30 of the Arbitration Act and the same having been filed more than thirty days after the notice was served, it was barred by limitation under Article 158 of the Limitation Act, 1908. The trial Court held that the objection could not be treated as an application under Section 33 in view of the fact that it was beyond thirty days. A decree in terms of the award thus came to be passed. This view of the trial Court was confirmed by the High Court which held that the objection of the appellant could not be treated as an application under Section 33, as, if it was treated as such application, it would be barred by time. The High Court dismissed the appeal. In appeal against the order of the High Court, while considering the question whether a written-statement can be considered as an application under Section 33 of the Arbitration Act, the Supreme Court pointed out that the party wishing to have an award set aside on the ground that it is improperly procured or otherwise invalid has to make an application. When referring to the scheme of the Act the Supreme Court pointed out that in an appropriate case an objection of the type made in that case could be treated as an application. In para. 8 of the judgment it was observed as follows (p. 1235):.It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But if an objection like this has been filed after the period of limitation it cannot be treated as an application to set aside the award, for if it is so treated it will be barred by limitation.

Referring to the facts of that case the Supreme Court further pointed out that (p. 1236):.There can be no doubt on the scheme of the Act that any objection even in the nature of a written-statement which falls under Section 30 cannot be considered by the Court unless such an objection is made within the period of limitation (namely, 30 days), though if such an objection is made within limitation that objection may in appropriate cases be treated as an application for setting aside the award.

4. Mr. Sawant vehemently relied on this decision, while, according to Mr. Nalavade, all that has been laid down by the Supreme Court is that in a given case or in an appropriate case a written-statement may be treated as an application under Section 33. According to Mr. Nalavade, there is discretion left to the Court concerned to treat or not to treat a written-statement as an application under Section 33. While it may not be possible to dispute the proposition that the question whether a written-statement which is filed within the period of limitation prescribed for making an application challenging the award should be treated as an application under Section 33 or not is a matter which will have to be decided on the facts and circumstances appearing in each case, Courts cannot lose sight of the fact that one important circumstance which must be considered while deciding this question is whether the person who seeks to challenge the award has placed on record the grounds on which he challenges the award within the prescribed period of limitation. It is true as pointed out by Mr. Nalavade that the Civil Manual provides for the mode and the manner of making the application. Chapter XV of the Civil Manual which is headed as 'RULES AND INSTRUCTIONS UNDER SPECIAL ACTS' contains rules framed by the High Court under Section 44 of the Arbitration Act, 1940. Rule 273 provides for the mode of making the application and it is provided that all applications under the Act shall be made only to the proper Court and all applications shall be made by petitions and shall be presented in the same manner as plaints or other applications to the clerk of the Court or to such other officer as the Court appoints in that behalf who shall cause them to be registered and take such orders as are necessary from the presiding Judge. Under Sub-rule (7) it is provided that upon any application by petition under the Act, the Judge shall direct notice thereof to be given to all persons mentioned in the petition and to such other persons as may seem to him to be likely to be affected by the proceedings, requiring all or any of such persons to show cause, within the time specified in the notice, why the relief sought in the petition should not be granted. What is contended by Mr. Nalavade is that if the mode and the manner of making an application under Section 33 has now been prescribed by the rules, the petitioner has admittedly not filed any application as required by these rules and, therefore, the written-statement filed by the petitioner should not be permitted to be treated as an application. Now it is well known that the provision relating to a form of an application or notice is never of a mandatory character. What is of importance is the substance of the matter. If an application under Section 33 which is intended to permit a challenge to be made to an award has to contain certain allegations as permitted by Section 30 of the Arbitration Act, and if those allegations are made in the form of a written-statement which is filed within the period of limitation, it is difficult to see why the petitioner should be shut out from agitating the challenge to the award merely because the written-statement is in the form of a written-statement and not in the form of an application. Though the Supreme Court referred to the fact that in an appropriate case a written-statement can be treated as an application under Section 33, it would not be possible to catalogue all such cases where such a course could be adopted. On the facts of this case, however, the intention of the petitioner appears to be perfectly clear that he was purporting to act in the exercise of his right under Section 33 of the Arbitration Act. His application dated October 9, 1974 expressly refers to Article 119 and it is stated that the written-statement is being filed within the period prescribed under Article 119. Article 119 prescribes the period of limitation for an application under Section 33. This application dated October 9, 1974 was granted by the Court on October 23, 1974 when the Court ordered that defendant No. 5 was allowed to file his written-statement. Indeed, if one looks at the written-statement, it contains a positive prayer that the award should be set aside. The written-statement also further states the fact that it is being filed within thirty days from the date of service of notice. All that was therefore lacking in order that this written-statement should comply with the form of an application was that it should have been styled as having been filed by the present petitioner and the names of all the parties should have been shown in full. If this was the only formal requirement which was lacking, the petitioner was trying to make it good by making his application dated November 1, 1976 where he had made two prayers. Firstly, he wanted the written-statement to be treated as an application under Section 33. Alternatively, he wanted the application to be permitted to be amended properly so as to bring the written-statement in the form of an application. The facts that the written-statement was filed within limitation, that it contains the grounds which the petitioner wants to urge in order to challenge the award and that it positively contains a prayer for setting aside the award were, in my view, sufficient to allow the petitioner to treat his written-statement as an application under Section 33. As already pointed out, the fact that the petitioner did not make a fresh application under Section 33 after the respondent No. 3 had riled his application on July 29, 1975 has no relevance whatsoever to the question as to whether the written-statement should be allowed to be treated as an application under Section 33. The impugned order of the learned Judge is, therefore, based on a clear misconception of the legal position. That order is, therefore, liable to be quashed.

5. In the result, the petition is allowed. The order rejecting the application (exh. 51) made by the trial Court is quashed. The petitioner shall be allowed to amend his written-statement as sought by the application (exh. 51) and the same shall be treated by the Court as an application under Section 33 of the Arbitration Act, The petitioner to get his costs from respondents Nos. 3 and 4.


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