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Govindji Jevat and Co. Vs. Shree Saraswati Mills Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract;Arbitration
CourtMumbai High Court
Decided On
Case NumberArb. Petn. No. 126 of 1980 in Avard No. 29 of 1980
Judge
Reported inAIR1982Bom76
ActsEvidence Act, 1972 - Sections 115
AppellantGovindji Jevat and Co.
RespondentShree Saraswati Mills Ltd.
Appellant AdvocateH.V. Gala, Adv.
Respondent AdvocateS.M. Jhunjhumwala, Adv.
Excerpt:
.....the award, and acceptance of any amount awarded to him under the award is clearly a case where he accepted a benefit under the ward and there by acquiesced in the correctness of the award and the validity of the award, and thereby precluded himself from challenging the award'.the principle on which the learned judge acted is to be found in russel on arbitration, 14th edition, page 191; and what the learned author says is that is will be good answer to a motion to set aside an award if the opposing party can show that the party moving has acquiesced in the award by knowingly acceptance of the award by knowingly accepting a benefit under it. thus a party may claim that the award was made without jurisidctioin or that the award was made without guilty of misconduct and that for those or..........came in be passed for rs. 1,15,164,13 pa, in favour of the petitioner. the rules provided for a right of appeal to the board of directors of the said association, and an appeal was filed by the respondent. in the appeal the amount was reduced to rs. 37,500/- and interest. it is the result of the appeal which is under challenge.3. after tje appeal was decided the respondent sent to the petitioner a sum of rs. 38,944-67 ps. along with its letter dated 24-3-1980. in full implementation of the award. the amount was made up of the principal amount and interest. this amount was sent by demand draft and the demand draft was encashed by the petitioner before 2nd april, 1980, after encashing the same the petitioner addressed a letter to the respondent stating that the petitioner intended to.....
Judgment:
ORDER

1. This is a petition to challenge the arbitration award of the East India Cotton Association Ltd. Made pursuant to the rules of the said Association.

2. The facts leading to the award and the challenge thereto are as follows. Pursuant to several contracts which were all made subject to the bye-laws of the said association, the petitioner agreed to sell and deliver to the respondent, various quantities of cotton bales aggregating to 5750. Disputes and differences arose between the parties, which resulted in a claim being filed by the petitioner before the arbitrators. In the said arbitration the respondent did not appear and an award came in be passed for Rs. 1,15,164,13 pa, in favour of the petitioner. The rules provided for a right of appeal to the board of directors of the said Association, and an appeal was filed by the respondent. In the appeal the amount was reduced to Rs. 37,500/- and interest. It is the result of the appeal which is under challenge.

3. After tje appeal was decided the respondent sent to the petitioner a sum of Rs. 38,944-67 ps. Along with its letter dated 24-3-1980. In full implementation of the award. The amount was made up of the principal amount and interest. This amount was sent by demand draft and the demand draft was encashed by the petitioner before 2nd April, 1980, After encashing the same the petitioner addressed a letter to the respondent stating that the petitioner intended to take proceedings to set aside or modify the said award and that the demand draft was accepted without prejudice to the petitioner's right and contentions in the matter. It is thereafter that this petition was filed challenging the award.

4. The petitioner challenges the award on the ground of misconduct viz., that the Board has taken into consideration material which was not before the arbitrators with material being a letter addressed by a broker allegedly varying the conditions regarding the commencing of interest and that the letter was neither referred to not produced before the arbitrators nor can the same be said to have been proved as no evidence was lead for proving the same. Mr. Gala for the petitioner contends that looking to the facts and circumstances of the case, the Board in appeal could not have relied on the said letter or based its decision thereon without oral evidence having been led particularly, when no contention based on the said letter was taken up at the first stage of arbitrtion nor was the siad letter even referred to anywhere or at any time in the course of the first arbitrtion. Mr. Gala further contended that this being an appeal Court in Civil Procedure Code were applicable and the Board in appeal ought not to have taken fresh evidence except on the same principles and that these principles did not permit fresh evidence at the appellate stage in the present case.

5. Mr. Jhunjhunwala for the respondent contends that having accepted the payment under the decision of the Board of Directors of the said Association, the petitioner is now estopped from challenging the award and that in any event there is nothing to show that the Board has taken into consideration the said letter and passed an ward thereon. He has also contended and tried to establish that from the various contentions and the ultimate decision of the Board, it is apparent that this particular claim of the respondent based on the said letter is not accepted by the Board.

6. Coming to the first contention of Mr. Jhunjhunwala, it appears to me clear from the authorities cited by him that in the facts and circumstances of this case, the petitioner is estopped from challenging the award. Though several authorities were cited, I would refer only to there of them. One is a judgment of the Division Bench of this court consisting of Chagla C. J. And Bhagwati J. Dated 28th August 1952 in Appeal No.32 of 1952, Kantilal Jiwabhai v. Vadila Chunilal. In that case an award was given in favour of the appellant against the respondents for Rs.22, 736-15-10 and one of the respondents sent to the bank for encashment. Even be fore the cheque was sent the appellant has intimated to the respondents his intention to challenge the award. The appellant also replied to the letter sending the cheque saying that he has accepted the cheque under protest he has accepted the cheque under protest and without prejudice to his rights and contentions. It was held aby the single Judge that the appellant having received the benefit under the award could not challenge the award relying on the principle that a person cannot approbate and reprobate. This judgment was upheld by the Division Bench, While dismissing the appeal the Division Bench held, inter alia, as follows:-

'But in this case the appellant's case was that the award was bad and illegal, and that the arbitrator had no right to make it. There fore, nothing whatever ws due to the appellate under the award, and acceptance of any amount awarded to him under the award is clearly a case where he accepted a benefit under the ward and there by acquiesced in the correctness of the award and the validity of the award, and thereby precluded himself from challenging the award'.

The Principle on which the learned Judge acted is to be found in Russel on Arbitration, 14th Edition, page 191; and what the learned author says is that is will be good answer to a motion to set aside an award if the opposing party can show that the party moving has acquiesced in the award by knowingly acceptance of the award by knowingly accepting a benefit under it. The emphasis on 'knowingly' is in order to point out that the award has been made. If the party accepting the benefit wishes to challenge the award, as in this case there cannot be the slightest doubt that the benefit was accepted knowingly by the party.

'But before he filed this petition he never thought it advisable to return the cheque or the amount of the cheque which he had cashed and which he had utilised. It is difficult to see how it would ever be open toa party solemn,ly to get up in Court and challenge the award in respect of which he has obtained a substantial benefit and which he never thinks of returning to the other side.'

7. The next authority which is cited by Mr.Jhunjhunwala is 1940 AC 412, Lissenden v. C.A.V. Bosch Limited . In that case an award was made by a County Court under the Workmen's Compensation Act for payment of certain weekly amount to a worker. There was right to appeal against the said award given by the rules framed under the Act.the Worker after accepting some weekly payments, filed an appeal challenging the award and it was contended that the appeal was barred on the principle of 'approbate and repofbate.' It was held by the House of Lords that this principle may be applicable to the award in normal sense of the case of an appeal from an order of Court and complete different principles applied in such a case. It was held in that case that the award was in the nature of an order of the court and appeal was a normal right of appeal provided by statute as in the case of court's orders and decrees. This case was therefore, not directly a case of an award as it normally yderstood. However, while explaining the difference between the position as applicable to an appeal against order of Court and petition for setting aside an award, the House of Lords has stated at page 434 as follows:

'In Arbitration in the ordinary sense the award is the fruit of a consensual agreement under which the parties have agreed to accept the arbitrator's award, which thus governs them by their agreement. There is no appeal in the proper sense of the term. The court has certain power over arbitrztors, which the parties may invoke. Thus a party may claim that the award was made without jurisidctioin or that the award was made without guilty of misconduct and that for those or other like reasons should be set aside. A party who has treated the award as valid, for instance, by accepting payment of what it awarded him, would generally be barred from adopting the inconsistent attitude of claiming to set it aside, it might then be said tht he could not affirm and disaffirm or perhaps even that he could not approbate and reprobate.'

8. The principle that emerges from the tow decisions is that it is possible in an appeal against decree or orders of Court to0 confor, the same pertly and set aside the same partly even though two parts may not be severable. Another thing to be noted in such a case is that when an appellant challenges a decree against him, the result of the appeal can only be adverse to the appellant to the fails of the his challenge in case his challenge fails and if he succeeds only that part is set aside while the part of the decree which is not challenged reminds untouched; therefore, the appellant when he receives the money or some other benefit under the decree under challenge always retains the benefit whether he wins or loses other appeal. This is not be position of the case of an award. Whenever an award is challenged on whatever ground an award is challenged on whatever ground it may be, the award has to set aside in toto or if made in parts the entire part challenged and thereafter there will not exist any retain the benefit received by him under the award or the part of the award which is challenged. In may view this is an important distinction between an award and decree or order of the court.

9.Another case cited by Mr. Jhunjhunwala was Dexters Ltd. V. Hill Crest Oil Company (Bradford) Ltd. Reported in (1926) 1 KB 348. In that case um[ire made there awards on different footings and then stated a special case leaving the Court to decide which award was right. The amounts in the first and the second awards which were in favour of the appelant were different, the amount in the second award being higher then the one in the first award. The third award was against the appellant in that case . the Court decided that the first award was the correct award. This appellant in whose favour the said first award was decided, demanded the amount and obtained payment the judge contending that the second award was the right one. It was held in that case that having demanded and accepted of the payment or the under the contending that it was worng. This case was decided on the same basis of the the basis that by accepting payment under the first award the appellant had precluded the respondent from challenging the second award and contending that the third award was the correct award.

10. Accordingly, in view the principle of estoppels applies and the petition is not maintainable.

11. As regards the second contention of Mr. Jhunjhunwala and the contentions of Mr.Gala it is for the petitioner to establish from the record that the Board has taken into consideration the new evidence viz. The siad letter of the broker. There is absolutely nothing to show that iut there been so taken into consideration. The only material available is grounds of the appeal, reply thereto and the minutes of the meeting and they do not sup minutes of the meeting and they do not support the contention of Mr. Gala in fact , they do not throw any light on the question. The original claim was and the amount awarded was Rs. 1,15,164,-13 ps. The amount on the basis of the impugned letter according to the respondent, as stated in the meo of appeal would come to Rs.81,400-06ps. But this amount of the bank charges but also the amount of interest admittedly, there of 18th april,1977 when admittedly, there were isc contracts contain the period of grace of 25 days covering 1700 bales and so there was no question of relying on the said letter. This admission the minutes. The statement annexed to the interest as per the said alleged letter would come to Rs.42,771-22 ps. Mr. Gala contends that the amount awarded would have been Rs.34,164- if the contention of the respondent regarding the sum of Rs.81,400-06 ps. Was accepted in toto. This would be the position if all other claims of the respondent were rejected. But the amount awarded is not that but Rs.37,500/- which approximates the amount of Rs.37,124.19 ps which would be payable on this letter was rejected and only the other contentions of the respondent which were in respect of the lorry hire, hundies for excess amount, shortage in weight and for rebate in respect of contracts for which the credit was admittedly to be given were acepted. This being the position it is not possible to conclude that the Board took into consideration the impugnedletter.

12.It is not permissible for the Court to speculate as to ow the minds of members of the Board worked, but the discussion above clearly shows that it is possible that the Board may not have accepted the contention of the respondent based on the sailed arriver and the figure it did without relying on the impugned l;etter. It is for the petitioner to convulsively establish that the arbitrators have acted otherwise which it has failed to do.

13. In the circumstances the petition fails and is dismissed with costs. Looking to the time taken, the cost is quantified at Rs.1,000/-.Petition dismissied.


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