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Indian Telephone Industries Vs. Jayaram Reddy - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKarnataka High Court
Decided On
Case NumberCRP No. 1859 and 1334 of 1979
Judge
Reported inILR1985KAR2967
ActsArbitration Act, 1940 - Sections 17; Limitation Act - Schedule - Article 119; Code of Civil Procedure (CPC) - Sections 80
AppellantIndian Telephone Industries
RespondentJayaram Reddy
Appellant AdvocateK.J. Shetty, Adv.
Respondent AdvocateS.V. Narasimhan, Adv. for S.V. Raghavachar, Adv.
Excerpt:
.....court below has tendered a piece of advice that the parties should file their objections to the award filed in the court and, thereafter, the court should pass such order as it deems fit. the executing court has no power to tender such an advice. therefore, the revision filed by the judgment - debtor questioning this portion of the order is allowed. - section 17 & security interest (enforcement) amendment rules, 2007, rule 13 (as amended): [anand byrareddy, j] payment of prescribed court fee auction sale-appealed against under section 17 - question as to payment of court fee for appeals amendment to security interest (enforcement) rules, 2003 and introducing or rule 13 -court fees payable for applications and appeals - petitioner sought for the benefit of security interest rule,..........in execution case no. 1031 of 1978, on his file, directing the parties to file objections to the award filed in the court in original suit no. 91 of 1969 and further directing that after hearing the parties, the court should pass such order, as it deems fit on the award filed by the arbitrator. civil revision petition no. 1334 of 1979 by the decree-holder is directed against the same order dismissing the execution on the ground that the decree passed was a nullity and was one passed by a court without jurisdiction.2. jayaram reddy - the decree-holder - filed a suit in original suit no. 91 of 1969 against the judgment-debtor under section 20 of the indian arbitration act. the matter was referred to the arbitrator. the arbitrator filed the award in the court. the court passed a decree in.....
Judgment:
ORDER

Kulkarni, J.

1. Civil Revision Petition No. 1859 of 1979 by M/s. Indian Telephone Industries Limited, (Judgment Debtor), is directed against a portion of the order dated 7-3-1979 passedby Second Additional Munsiff, Bangalore, in Execution Case No. 1031 of 1978, on his file, directing the parties to file objections to the award filed in the Court in Original Suit No. 91 of 1969 and further directing that after hearing the parties, the Court should pass such order, as it deems fit on the award filed by the Arbitrator. Civil Revision Petition No. 1334 of 1979 by the decree-holder is directed against the same order dismissing the execution on the ground that the decree passed was a nullity and was one passed by a Court without jurisdiction.

2. Jayaram Reddy - the decree-holder - filed a suit in Original Suit No. 91 of 1969 against the judgment-debtor under Section 20 of the Indian Arbitration Act. The matter was referred to the Arbitrator. The Arbitrator filed the award in the Court. The Court passed a decree in terms of the award on 24 7-1978. This decree had been put into execution by the decree-holder.

3. The judgment debtor contended that the decree sought to be executed was one passed in violation of Section 17 of the Indian Arbitration Act and was thus one passed by a Court without jurisdiction, inherent or otherwise, and, therefore, it was inexecutable

4. This contention raised by the judgment-debtor appealed to the Executing Court and it held that the decree sought to be executed was one passed by a Court without jurisdiction and, thus, the decree sought to be executed was a nullity and inexecutable. The Executing Court did not stop at dismissing the execution petition but proceeded to direct the parties to file their objections to the award filed in the Court and has further directed that thereafter the Court should pass such order as it deemed fit.

5. The judgment-debtor, being aggrieved by the latter portion of the order, has come up with Civil Revision petition No. 1859 of 1979 whereas the decree-holder,being dissatisfied with the order passed by the Executing Court dismissing the execution petition, has come up with Civil Revision Petition No. 1334 of 1979.

6. The decree-holder filed a suit in Original Suit No. 91 of 1969 under Section 20 of the Indian Arbitration Act against the judgment-debtor. It is undisputed that the matter was referred to the Arbitrator. It is also undisputed that the Arbitrator filed his award in the Court. It is also undisputed that the Learned Counsel appearing for the judgment-debtor took notice o the filing of the award on 7-7-1978 though, in fact, no notice had been given by the Court to the judgment-debtor. The Court proceeded to pass a decree against the judgment-debtor on 24-7-1978.

7. Shri K.J. Shetty , Learned Counsel appearing for the judgment debtor, relied on Section 17 of the IndianArbitration Act and contended that as the decree had been passed by the Court before the time prescribed for making anapplication to set aside the award expired, the decree was a nullity and illegal, and was one passed by a Court withoutjurisdiction and was, thus, inexecutable.

8. Section 17 of the Indian Arbitration Act reads:

'Judgment in terms of award - Where the Court sees no cause to remit the award or any of the matters referred to arbitration forreconsideration or to set aside the award, the Court shall, after 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 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.'

9. Thus, a perusal of Section 17 of the Indian Arbitration Act, makes it clear that it is imperative for the Court, after the award is filed by the Arbitrator in the Court, to wail for the expiry of the time prescribed for making an application to set aside the award

10. In short, Shri K.J. Shetty, Learned Counsel appearing for the judgment-debtor, contended that if the Courtproceeded to pass a decree in terms of the award before the statutory period prescribed for making an application to set aside the award had expired, it would be a decree passed by a Court without jurisdiction.

He placed before me a decision reported in Karumuthu Sivalingam Chettiar v. A. Krishnaswamy Naidu, 1958 (2) Madras L.J. 142 wherein it has been held that a decree passed in violation of Section 17 of the Indian Arbitration Act, was a nullity.

Similar is the principle laid down by the Madras High Court in Sheikh Eusf Rowther Alias A.S. Mohammed Yusuf and Others v. Sheikh Davad Rowther and Another : AIR1951Mad658 .

11 . In both the said Madras cases, a revision under Section 115 of the Code of Civil Procedure had been filed contending that a decree passed in terms of the award before the expiry of the statutory period prescribed for making an application to set aside the award, was a nullity and illegal. The said contention was accepted by the Madras High Court in both the cases.

12. In A.R. Savukar v. Amritlal Kalidas and Others : AIR1954Bom293 it has been held thus :

'It is well settled that a decree which is a nullity may be ignored and it is not necessary to have such a decree set aside. But what the Arbitration Act contemplates is that if an award is on the file of the Court, unless steps are taken to have that award set aside a certain definite result must follow and that definite result is the result indicated by the Legislature in Section 17. Therefore, it is not open to a party to assume that an award which has been filed and in respect of which a notice has been served upon him is a nullity. He must go to Court and get it set aside ....'

Thus, it becomes clear that Bombay High Court ruled that a decree in terms of an award passed by a Court before the expiry of the statutory period mentioned in Section 17 of the Indian Arbitration Act, was a nullity and it might be got set aside by approaching the Court concerned.

13. It has been held in Shrichand Prasad v. Mohan Singh : AIR1964Pat509 thus :

'The provision of 0. 9 Rule 13 Civil P.C. was not attracted; nor could such a decree be set aside in appeal, as the right of appeal under Section 17 is a limited one. However, since no notice of the filing of the award was served on the opposite party, the time under Art. 158Limitation Act for making an application for setting aside the award never began to run and therefore it never expired. Therefore the Court could not pronounce judgment according to the award and no decree could follow upon the judgment so pronounced. In the circumstances, the decree was passed without jurisdiction. In such a case, if the opposite party had no remedy either under 0.9 Rule 13 Civil P.C, or in appeal, to set aside such a decree, the Court had inherent power to set it aside.'

(Underlining is mine)

14. Shri S.V. Narasimhan, Learned Counsel appearing for the decree - holder, placed before me a decision of the Andhra Pradesh High Court in Gudapati Madhav Reddy v.Sripuram Raja Rao AIR 1958 Andhra Pradesh 417. It reads thus :

' The executing Court cannot refuse to execute a decree because it is against law or contravenes the provisions of any law. Where the Court making the award as a rule of the Court had jurisdiction over the subject-matter of the suit but it failed to wait till the time for making an application to set aside the award had expired as required by Section 17 of the Arbitration Act, the omission of the Court was at the most a contravention of the prescribed procedure and the executing Court could not ignore the decree.'

15. The Learned Author Shri Basu has stated in the Arbitration, Seventh Edition, at pages 497 & 498, thus :

'The act of the Court in passing judgment before the expiry of 30 days would be at the most an illegality according to the Sind decision reported in A.I.R. 1916 Sind 79 =34 Ind. Cas. 814, or a mere illegality according to the Allahabad decision in : AIR1931All413 = 13 All.669, which might not be liable to correction in a Court of revision. But the Madras High Court has held that in such a case the order thus passed was without jurisdiction and in such a case an appeal does not lie and the only remedy of the aggrieved party is an application under Section 115 C.P. Code. Where the Court did not wait till the expiry of the time allowed for making application, but proceeded to pronounce judgment immediately after the parties had by that time represented that they have no objection to the same judgment cannot be said to be a nullity'.

16. The Learned Author Shri Mulla has stated in the Code of Civil Procedure, Fourteenth Edition, Volume I, at page 487, thus:

'The section is a matter of Civil procedure and cannot be said to be subject to section 65 of the Government of India Act or the corresponding section of the other Government of India Act or the corresponding Article of the Constitution. See note 'Scope of Section' under Section 79. As it stood before its recent amendment in 1976, it was held to be explicit and mandatory, admitting no implications or exceptions. Its language being imperative, it was held that it debarred absolutely a Court from entertaining a suit instituted without compliance of its provisions and had in that case to be rejected under 0.7 Rule 11 (d). The High Court of Bombay has held that the the question of compliance of requirements of sub-section (1) is a matter relating to the Court's jurisdiction and therefore the question of waiver of the notice by the Government or the public officer cannot arise'

(Underlining is mine)

17. It was a case arising under Section 80 of the Code of Civil Procedure. As can be seen from the said commentary, if a suit is filed without giving the mandatory notice contemplated by Section 80 of the Code of Civil Procedure or even if a suit is filed before the expiry of the statutory period of two months, the Court is bound to reject the plaint. It has been held by the Bombay High Court that the question of compliance with the said period of limitation is a matter relating to the Court's jurisdiction, Therefore, if the Court proceeded to pass a decree in violation of Section 80 of the Code of Civil Procedure, the said decree would be on a passed by a Court without jurisdiction.

18. Section 80 of the Code of Civil Procedure reads thus:

'(1) Save as otherwise provided in sub-section (2) no suit shall be instituted against the Government (including against a public officer) in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been delivered to or left at the office of'

(Underlining is mine)

19. Therefore, Section 80(1) of the Code of Civil Procedure puts aa embargo on the jurisdiction of the Court to entertain the suit itself until the expiry of two months next after notice in writing has been delivered or served. In short, it declares that the Court has no jurisdiction to entertain a suit or decree a suit before the expiry of two months. Suspension of jurisdiction till the expiry of two months amounts to want of inherent jurisdiction itself. It has taken away the jurisdiction of the Court to entertain a suit or to pass a decree till the expiry of two months next after notice in writing has been delivered.

20. The wordings in Section 17 of the Indian Arbitration Act 'after time for making an application to set aside the award has expired are similar to the words used in Section 80 of the Code of Civil Procedure. Section 17 of the Indian Arbitration Act requires the Court to wait till the expiry ofthe statutory period. It suspends the jurisdiction of Court till the expiry of the statutory period. This suspension of jurisdiction has taken away the jurisdiction of the Court for the period mentioned in the statute. Thus, it amounts to lack of inherent jurisdiction to pass a decree till the expiry of the statutory period of 30 days prescribed by Article 119 (b) of the Limitation Act to make an application to set aside the award.

21. It might be asked as to why he did not file the objections to the award on 7-7-1978 itself when he himself voluntarily took notice of the filing of the award in the Court. When Article 119(b) of the Limitation Act gives him a period of 30 days to tile an application to set asidethe award, he has got a right to file the application even on the last day of limitation. Merely because he did not file an application on 7-7-1978, it cannot be said that he had no objection to file or that he waived his right to file theapplication or that he consented to passing of a decree in terms of the award. Supposing that he hadfiled an application on 7-7-1978, could the Court pass a decree in terms of award before the expiry of the statutory period or before the disposal of the application. If it is so, it was obligatory for the Court to wait till the expiry of the statutory period.

22. The Learned Author Shri Mulla has stated in the Code of Civil Procedure, Fourteenth Edition, Volume I, at page 281, thus :

'A Full Bench of the Rangoon High Court has expressed emphatic dissent from the Calcutta decision and holds that it is against public policy and good sense that the validity of the decree should be questioned by the executing Court. This casehas been followed in a later decision of the same High Court; but the point seems to he concluded by the pronouncement of the Privy Council inJnanendra Mohan -v.- Rabindra Nath [(1933) 60 J.A71 - (33) A.P.C. 61], that, if the Court which passed the decree has no inherent jurisdiction, the decree is incapable of execution.'

23. Therefore, I am of the view that if the Court passes a decree in terms of the award before the expiry of the statutory period of thirty days prescribed by Article 119(b) of the Limitation Act, it would be a decree passed by a Court without inherent jurisdiction. Therefore, the decree, which is sought to be executed now, is a decree passed by a Court without jurisdiction and, thus, it is a nullity invalidating the decree. Thus, the decree is inexecutable. Thus, the finding of the Court below that the decree sought to be executed, is inexecutable and thus dismissing the execution, is confirmed.

24. The Court below has tendered a piece of advice that the parties should file their objections to the award filed in the Court and, thereafter, the Court should pass suchorder as it deems fit. The Executing Court has no power to tender such an advice. Therefore, the revision filed by the judgment-debtor questioning this portion of the order is allowed.

25. In the result, Civil Revision Petition No. 1859 of 1979 filed by the judgment-debtor is allowed, Civil Revision Petition No. 1334 of 1979 filed by the decree-holder is dismissed.


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