1. This Civil Revision Petitions directed against the judgment and decree in A. S. No. 51 of 1965, whereby the District Judge, Khammam, allowed the appeal and set aside the Award.
2. Briefly stated, the facts are: The father of the revision-petitioners agreed to sell 5 1/2 acres of land, bearing Survey No. 320 situated at Khammam, to the 1st respondent, for a sum of Rs. 3,200/- and executed an agreement of sale dated 16-4-1952 having received an advance consideration of Rs. 1,300/-. The father of the petitioners put the 1st respondent in possession of the property in pursuance of the agreement of sale. Admittedly, a sum of Rs. 200/- was paid by the 1st respondent on 5-8-1954 to K. M. Hussain, the Power of Attorney holder of the mother of the petitioners. Subsequently disputes arose between the parties as the balance was not paid and the sale deed was not executed by the petitioners father in favour of the 1st respondent. The 1st respondent alleged that a sum of Rs. 800/- was paid to the petitioners on 23-3-1953, but the petitioners denied that payment. The dispute was referred to the arbitration of five named arbitrartors , among whom one K. Appa Rao was to be the Sarpanch or Umpire. After recording the evidence and hearing the parties , the arbitrators passed the Award dated 21-7-1957. As per the Award , the 1st respondent was to pay Rs. 1,700/- with interest at 9% per annum by 27-7-1957 and in default the 1st petitioner should refund the purchase money of Rs. 1,500/- by 29-7-1957 to the 1st respondent. The respondents did not pay the amount within time and the petitioners, therefore, in compliance with the terms of the Award, deposited Rs. 1,500/- with the arbitrators and obtained a receipt. The Award was registered on 25-7-1957 and kept with the arbitrators.
3. The petitioners filed O.S. No. 41 of 1958 in the Court of the Subordinate Judge, Khammam , for making the Award a rule of Court. The respondents opposed the suit. According to them, the dispute that was referred to the Arbitrators was not with regard to the sale of the land, but was with regard to the amounts paid by respondent No. 1. The Agreement of Reference was brought about by undue influence, misrepresentation and fraud. No enquiry was made and the Award was an ex-parte one. The arbitrators colluded with the petitioners and misconduct themselves. The ward was not read out and explained to the 1st respondent. The registration of the Award and the refund of the amount by the petitioners to the arbitrators , were all false. The respondents were in continuous possession of the property since the date of the agreement of sale, i.e., 16-4-1952 and they, therefore, cannot be dispossessed. Since the arbitrators colluded with the petitioners, the respondent did not accept the arbitration and accordingly , sent a written communication to the arbitrators on 20-7-1957. The respondents had to pay only Rs. 866-75p. and were also willing to pay that amount and to take the registered sale deed . The Award is vitiated in law. The respondents , accordingly, prayed for setting aside the Award and for dismissing the plaintiff's suit.
4. The petitioners filed a suitable rejoinder.
5. On the basis of those pleadings , the trial Court framed appropriate issues and after considering the evidence adduced by the parties in support of their respective versions, decreed the plaintiff's suit in terms of the Award.
6. Aggreived by the above Judgment and decree of the trial Court, making the Award a rule of Court, the respondents in the suit filed before the Subordinate Judge filed an appeal to the District Judge, Khammam. While supporting the judgment of the trial Court, the respondents in the said appeal before the District Judge raised a preliminary objection that the appeal filed before him by the appellants was not maintainable, in law. For the reasons stated by him in paragraph (9) of his judgment, the District Judge overruled the preliminary objection raised by the respondents and held, that the appeal was maintainable in law against the judgment of the trial Court making the Award a rule of Court. Then he addressed himself on the question whether the Award dated 21-7-1957 was liable to be set aside for all or any of the reasons put forward by the appellants. After discussing the position of law, the District Judge, in paragraph (10) of his judgment came to the conclusion that Exhibit X-12 i.e., the Award , could not be looked into in view of the two decisions of the Supreme Court and one of this Court referred to in that paragraph. In paragraph (11), the District Judge also found that the proceedings before the Arbitrators were ex parte and that the arbitrators did not intimate the appellants that they would proceed with the arbitration ex parte and that the circumstances did not permit or warrant any such ex parte procedure. The arbitrators thus misconducted themselves and the Ward was, therefore, vitiated in law. In view of those findings, the learned District Judge allowed the appeal , set aside the judgment of the trial Court and dismissed the suit.
7. Aggrieved by the above decision of the District Judge, the respondents in the 1st appeal have filed the Civil Revision Petition.
8. The learned Counsel, Sri Triambak Rao Deshmukh, appearing for the revision-petitioners , contended that when an Award is made a rule of Court and a decree passed in terms thereof, an appeal under Section 17 of the Arbitration Act will lie only on two grounds, viz., the judgment of the Court making the Award a rule of Court is either in excess of or not otherwise in accordance with the award. Except on those two grounds, an appeal against the judgment and decree of the Subordinate Judge , Khammam could not have been filed in the Court of the District Judge. Hence the judgment of the District Judge , Khammam is without jurisdiction. Respondent No. 1 filed his written statement to the plaint long after 30 days from the date of the Award and hence even assuming that it could not be taken as a petition filed by respondent No. 1 for setting aside the Award, it was time barred and hence could not be treated as an application for setting aside the Award, and the appeal to the District Judge was not therefore, an appeal under Section 39(1)(vi) of the Arbitration Act. The Award is not ex parte , and even if it is ex parte , the circumstances justify the making of an ex parte Award. The Award did not create any interest in the immovable property of the value of more than Rs. 100/- and did not, therefore, require registration. The copying of the Award on the stamp paper was only a ministerial act and the arbitrators could not for that purpose be considered to have become functus officio. The arbitrators neither misconducted themselves ,nor the proceedings . The District Judge therefore, erred in allowing the appeal and setting aside the Award.
9. As against those arguments, the learned Counsel , Sri Subbaravudu, submitted that there was no particular form for filing an application for setting aside the Award. The written statement filed by Respondent No. 1 to the application filed by the revision-petitioners for making the Award a rule of Court , has to be considered as an application for setting aside the Award, if it has been filed within 30 days from the date of service of the notice of filing the Award . The time limit of 30 days does not run from the date of the Award, but runs from the date of service of the notice of the filing of the Award into the Court. The written statement filed in this case was within 30 days from the date of service of notice of the filing of the Award and hence it has to be considered as an application for setting aside the Award. In rejecting the objections raised by the respondents, and making the Award a rule of Court, the Subordinate Judge must be considered to have passed a composite order, one refusing to set aside the Award and the other passing a decree in terms of the Award. In such a case, the Aggreived party can file an appeal against the judgment of the Court making the Award a rule of Court and such an appeal would be one under Section Section 39(1)(vi) of the Arbitration Act and not under Section 17 of the Act. The District Judge was, therefore, right in considering the validity of the Award on grounds other than those mentioned in Section 17 of the Act. The Award is dated 21-7-1957 . It is on a plain paper and not on the requisite stamp paper. The Award was copied on the requisite stamp paper on 25-7-1957. The arbitrators could not copy the Award on stamp paper on 25-7-1957 and get it registered as they had already become functus officio on 21-7-1957 when they had made the Award. The Award is therefore, invalid and void. Unless the arbitrators gave notice to the respondents herein (appellants before the first appellate Court) that the proceedings against them would be ex parte the arbitrators could not proceed ex parte and conduct the proceedings in the absence of one of the parties. The circumstances did not warrant the arbitrators to conduct ex parte proceedings. In making the ex parte enquiry , the arbitrators violated the principles of natural justice. The Award did require registration under the provisions of the Indian Registration Act, as it created an interest in immovable property of the value of more than Rs. 100/-. The District Judge rightly held that the arbitrators misconducted themselves and the proceedings. The Award passed by the arbitrators was not a valid Award in view of the fact that it was not executable. The order of the District Judge was, therefore, correct on merits. Even if the order of the District Judge is considered not to be correct, still in the exercise of its revisional powers, the finding given by the District Judge cannot be disturbed by this Court.
10. Section 17 of the Act provides that where the Court sees no cause to remit the Award or any of the matters referred to arbitration for reconsideration under Section 16 of the Act, or to set aside the Award on any of the grounds mentioned in Section 17 of the Act, 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 judgment so pronounced , a decree shall follow and no appeal shall lie from such a decree except on the ground that it was in excess of or not otherwise in accordance with the Award. Sec. Section 39(1)(vi) of the Arbitration Act provides for an appeal against an order refusing to set aside the Award.
11. In the instant case, the application by the petitioners, to the Court of the Subordinate Judge, Khammam, for making the Award a rule of Court, was made on 5-8-1957. Notice of the filing of the Award was served on the respondents in August or September, 1957, and the written statement was filed by respondent No. 1 on 13-9-1957, that is, well within 30 days from the date of service of notice of the filing of the Award into Court. The time has to be reckoned not from the date of the Award, but from the date of service of notice of the filing of the Award into Court. In his written statement, the 1st respondent prayed for setting aside the Award. There is no particular form for filing an application for setting aside the Award. Even a written statement filed in answer to the petition for passing a decree in terms of the Award , can be considered as an application for setting aside the Award, if it is filed within the time prescribed by law and contains a specific prayer that the Award should be set aside.
12. In Madan Lal v. Sunderlal : 3SCR147 his Lordship Wanchoo, J., speaking for the Supreme Court held that :-
'................. If a part wants an award to be set aside on any of the grounds mentioned in Section 30 , it must apply within 30 days of the date of service of notice of filing of the award as provided in Article 158 of the Limitation Act. If no such application is made , the Award cannot be set aside on any of the grounds specified in Section 30 of the Act. It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection to an award in the nature of a written statement 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 .................'
13. To this same effect are the decisions of this Court in Ramakistam v. Somalingam, AIR 1962 Andh Pra 492 in which a Division Bench of this Court consisting of Chandra Reddy , C.J. and Venktesam, J., held that :-
'............ Where, in proceedings under Section 14 of the Arbitration Act, one of the parties to the arbitration agreement files objection against the award on the ground that the arbitrators had misconducted themselves and the Court after overruling the objection proceeds to make the Award a rule of the Court , an appeal against the order of the Court refusing to set aside the award falls under Section Section 39(1)(vi) of the Act. It is not an appeal falling under Section 17 of the Act read with Section 96, Civil P.C.' and V. Chetti v. V. Chetty, AIR 1957 Andh Pra 493 in which a Division Bench of this Court , consisting of Subba Rao, C.J., (as he was then) and Bhimasankaram, J., held that :-
'.............. Under Section 17 of the Act, the Court has no jurisdiction to pronounce judgment in accordance with the award till it disposed of an application filed to set aside the award. In the circumstances when the Court pronounces judgment without expressly dismissing a petition filed to set aside the award the order made may reasonably be construed as a composite one involving a decision on the application to set aside the award also ...............' '............... Thus where a party files objection to an award filed in Court and the Court, rejecting the objections passes a decree in terms of the Award under Section 17 the rejection of those objections would amount to a dismissal of petition for setting aside an award and in this view , the order is a composite order refusing to set aside the award and also making a decree in terms of the award. An appeal would, therefore, lie under Section Section 39(1)(vi) , against the order refusing to set aside the award..............'
14. As against those realigns, relied upon by the learned Counsel Sri Subbarayudu, the petitioner's advocate, Sri Triambak Rao Deshmukh relied upon a decision of the Madras High Court in Bangarayya v. Ramabhadraraju, AIR 1947 Mad 315 in which a Division Bench of the Madras High Court held that :
'............. Where after the filing of an award in Court one of the parties to the arbitration , being misled by the order of the Court posting the suit for objections, filed objections instead of an application to set aside the Award and the objections not only are in substance an application to set aside the award, but almost so in form , the mistake made by the party is nothing more than an irregularity which is not such as to entitle the Court to overlook his objections and to pass a decree in terms of the award .................'
15. Relying upon the above decision of the Madras High Court, Satyanaraya Raju, J. (as he then was) In Lakshmikanta rao v. Venkateswaralu, : AIR1960AP576 held that :
'................ Rules 1 and 2 framed under the Arbitration Act require that an application for setting aside an award should be in writing . Article 11 (m) of the Court - fees Act prescribes the payment of Court-fee. On a combined reading of these provisions it is clear that the mere filing of objections or an oral application will not satisfy the requirements of law. This conclusion receives further support from the language of the Proviso to Section 33 , which provides for setting down of the application for hearing on other evidence also. There is no question of an oral application being set down for hearing. Therefore to hold that neither a written application nor the payment of court-fee on such an application is a pre-requisite for setting aside the award, would have the result of rendering all the aforesaid provisions otiose ..............'
16. The former decision of the Madras High Court does not help the petitioners. What the ruling says is that if the objections were filed instead of an application for setting aside the Award, they cannot be overlooked , if those objections were filed into Court by being misled by an order of the Court. The latter decision of the learned Single Judge runs contrary not only to the Division Bench rulings of this Court in AIR 1962 Andh Pra 492 and AIR 1957 Andh Pra 493 but also against the decision of the Supreme Court in : 3SCR147 . The decision in : AIR1960AP576 cannot be said to have laid down good law , in view of the decision of the Supreme Court in : 3SCR147 .
17. I , therefore, reject the arguments of the learned Counsel Sri Triambak Rao Deshmukh , and hold that the order passed by the Subordinate Judge passing a decree in terms of the Award was a composite order refusing to set aside the Award and passing a decree in terms of the Award. In such a case the aggrieved party was entitled to file an appeal to the District Court under Section Section 39(1)(vi) of the Arbitration Act and raise all objections which could be raised under Section 30 of the Arbitration Act for setting aside the Award. In this case, the written statement or the objections for setting aside the Award were filed within 30 days from the date of service of notice of the filing of the Award into Court. Hence it was filed within time and therefore, such objections could be treated as an application for setting aside the Award. Hence I hold that the appeal to the District Judge against the order of the Subordinate Judge , passing a decree in terms of the Award, has been rightly filed on grounds other than those specified in Section 17 of the Act. The first contention urged by the learned Counsel for the petitioners has no force and is therefore, rejected.
18. The Award was made, on a plain paper, on 21-7-1957, but it was copied on a stamp paper and registered on 25-7-1957. The learned counsel for the petitioners submitted that the copying of the Award on the stamp-paper was only a ministerial act and the arbitrators cannot be considered to have become fanctus officio for that purpose and, therefore, the District Judge erred in holding that the Award was void. In support of this argument, the learned counsel relied upon a decision of the Madras High Court, in Dasaratharao v. Ramaswamy, AIR 1956 Mad 134 where in a Division Bench of the Madras High Court held that :
'............. It is true that when once the award has been pronounced, the arbitrators, having done what they were called upon to do under the submission, become functus officio thereafter, in regard to the reference. But the remains certain ministerial acts such as the engrossing of the award on stamp paper and getting the award so engrossed registered which acts cannot be put on the same footing as proceedings in connection with the pronouncement of the award. The arbitrators cannot be deemed to have become functus officio with regard to the carrying out of such ministerial acts..................'
19. In Hemraj v. Surajamal, a learned single Judge of the Rajasthan High Court held that : --
'..................... Though under Sections 13 and 16 of the Arbitration Act, the award cannot be returned to the arbitrators for the purpose of registration, there is no provision existing in the Arbitration Act which forbids the return of the award for this purpose. Something which has not been provided in the Act cannot be taken to have been prohibited and unless something is prohibited, it can be considered to be permissible. The order returning the award after hearing the parties can by itself be considered an order under Section 151, Civil P. C. Such order, even if erroneous, is in proper exercise of jurisdiction and an erroneous decision in proper exercise of jurisdiction is not the same thing as exercise of jurisdiction not vested by law within the meaning of Section 115...................'
20. On the other hand, the learned Counsel, Sri Subbaravudu, relied upon the decision of the Supreme Court in Rikhabadass v. Ballabhadas, : AIR1962SC551 . Reversing the decision of a Division Bench of the Nagpur High Court, in paragraph (10) of its judgment, at p. 554, the Supreme Court ruled that
'The Division Bench was in error in thinking that an order could be made remitting the award to the arbitrator with a direction to re-write it on a stamped paper and re-submit it to Court.................'
21. In Srinivasa Rao v. Narasimha Rao, : AIR1963AP193 a Division Bench of this Court, consisting of Umamaheswaram & Chandrasekhara Sastry, JJ., held that : --
'................. As soon as the award is signed by the arbitrators, they become functus officio. They are not entitled to re-write the award on a duly stamped paper subsequently and present it for registration to get over the objection as to want of stamp and registration.'
In coming conclusion, the learned Judges relied upon the decision of the Supreme Court in : AIR1962SC551 .
22. The decisions relied upon by the learned counsel. Sri Triambakrao Deshmukh, for the petitioners, do not, in my opinion, help the petitioners. The decision of Madras High Court in AIR 1956 Mad 134 runs contrary to the decision of the Supreme Court in : AIR1962SC551 and it cannot, therefore, be said that the decision in AIR 1956 Mad 134 lays down good law.
23. The decision of the Rajasthan High Court, on the other hand, merely says that an order, even if erroneous, is in the proper exercise of jurisdiction and an erroneous decision, in the proper exercise of jurisdiction, is not the same thing as the exercise of jurisdiction not vested by law within the meaning of Sec. 115, Civil P. C. That decision only says under what circumstances the revisional powers, under S. 115, Civil P. C. could be exercised. Those rulings do not, therefore, in my opinion, hold that the Award in this case was inadmissible in evidence for want of stamp duty, and the Subordinate Judge could not pass a decree in terms of that Award.
24. The next contention raised by the learned counsel. Sri Triambak Rao Deshmuk, for the petitioners was that the Award, in question, was not an ex parte Award, and even if considered to be an ex parte one, the arbitrators, in the circumstances of the case, were justified in passing an ex parte Award.
25. In paragraph (11) of his judgment the learned District Judge observed that, although the Award, in so many words, does not say that it was an ex parte Award, still it is a fact that the 2nd respondent was looking after the affairs on behalf of the 1st respondent and he was not present, or was heard, before the Award was passed. In those circumstances, the parties conceded that the Award was an ex parte award.
26. The parties cannot go behind that concession. It is also clear from the manner in which the Award was passed, that it was an ex parte Award. When an in what circumstances can an award be passed ex parte has been stated by the Calcutta High Court in Juggilal v. General Fiber Dealers Ltd., : AIR1955Cal354 . Chakravarti, C. J., speaking for the Court, laid down the following principles :--
'.............. The procedural rule applicable to arbitration proceedings is more tolerant than the rule followed in Courts of law. Broadly stated, the principles governing the arbitrator's right to proceed ex parte are :
'If a party to an arbitration agreement fails to appear at one of the sittings, the arbitrator cannot or, at least, ought not to, proceed ex parte against him at that sitting. Where the non-appearance was accidental or casual, the arbitrator ought ordinarily to proceed in the ordinary way, fixing another date of hearing and awaiting the future behaviour of the defaulting party.'
'If on the other hand, it appears that the defaulting party had absented himself with a view a preventing justice or defeating the object of the reference, the arbitrator should issue a notice that he intends at specified time and place to proceed with the reference and that if the party concerned does not attend, he will proceed in his absence. But, if after making such a peremptory appointment and issuing such a notice, the arbitrator does not in fact proceed ex parte, on the day fixed, but fixes another subsequent date, he cannot proceed ex parte on such subsequent date, unless he issues a similar notice in respect of that date as well.
'If, he issues a similar notice and the party concerned does not appear, an award made ex parte, will b in order. But if he does not issue such a notice on the second occasion, but nevertheless proceeds ex parte, the award will be liable to be set aside in spite of a notice of a peremptory hearing having been given in respect of the earlier date, subject, however, to the condition that prejudice was caused to the party against whom the ex parte order was made. But this duty to give notice of an intention to proceed ex parte is not an absolute duty.
'If it appears from the circumstances of the case that a particular party is determined not to appear before the arbitrators in any event, as when he has openly repudiated either the reference itself or the particular arbitrators and has shown no desire to recant, the arbitrators are not required to issue a notice such a recalcitrant person and may proceed ex parte and make a valid award without issuing a notice. The better course, however even in such a case is to issue to notice and give the party concerned a chance to change his mind.'
27. As against the above ruling relied upon by the learned Counsel for the respondents. Sri Subbarayudu, the petitioner's counsel. Sri Triambakrao Deshmukh, relied upon Saxena and Co. v. D. P. Gupta, where, a learned single Judge of the Punjab High Court, held that
'................ in order to justify an arbitrator's proceeding ex parte , a very strong case must be shown of wilful delay by the party not attending and therefore if a reasonable excuse is shown, the Court should set aside an Award.............'
28. In the case relied upon by the learned counsel for the petitioners , the arbitrator gave notice to both the parties of the date of hearing, but the defendant wrote to the arbitrator , 3 or 4 times to adjourn the case to another date as it was not possible for him to produce his evidence on that date or to file the affidavits which were important in the circumstances of the case. The arbitrator, however , refused to adjourn the case and passed an ex parte award against the defendant. Under those circumstances the Court held that there was no sufficient cause for proceeding ex parte and the Award must, therefore, be set aside.
29. The circumstances in which the ex parte Award has been passed in this case have been stated by the District Judge in paragraph (11) of his judgment and in the end of that paragraph the learned District Judge observed that :
'thus , the proceeding ex parte was not intimated to either of the respondents and the circumstances do not permit or warrant such an ex parte procedure and therefore, this itself amounts to misconduct vitiating the Award...............'
The above conclusion has been arrived at by the learned District Judge after discussing the entire evidence on record. It would, therefore not be proper, in the exercise of my revisional power, to disturb that finding even if it is wrong. However, on a reading of those reasons, I do not consider that the finding arrived at by the learned District Judge is wrong or erroneous. The arbitrators were , therefore, not justified in passing an ex parte award.
30. The next submission made by the learned counsel for the petitioners, was that the District Judge erred in holding that the arbitrators were guilty of misconduct. This matter has been discussed by the District Judge in paragraph (12) of his judgment. After discussing the circumstances of the case, and the evidence on record, the learned District Judge came to the conclusion that all the Panchas were not present at the time when the enquiry was made and at any rate , there was a doubt whether all the persons were present and this itself vitiated the Award and , therefore, the Award was liable to be set aside for misconduct.
31. In this connection, the learned counsel for the petitioners invited my attention to Damodar Valley Corpn. v. Ikrah Nandi Coal Co., : AIR1972Cal153 wherein it was held that absence of signature of one of two arbitrators on some of the minutes of proceedings , even though both of them were present throughout and signed the Award, did not amount to misconduct and the Award could not be set aside.
32. In Johra Bibi v. Mahammad Sadak, : AIR1951Mad997 a Division Bench of the Madras High Court , held that :
'Where an award is the outcome of the joint deliberations of all the five arbitrators to whom the dispute is referred and the award is pronounced after due notice to all the parties, the nonsigning of the Award by one of the Arbitrators who has been throughout a party to the making of the award cannot vitiate the award. The signing of the award is only a formality after it had been made and pronounced and it is not open to the parties to challenge the award on such ground especially when they have agreed to abide by the decisions of the majority.'
33. On the facts of those cases, the Courts came to the conclusion that there was no misconduct. In the instant case, however, the learned District Judge has stated the various circumstances and also discussed the evidence led in the case, and came to the conclusion that the arbitrators misconducted themselves and the proceedings. This is not a case where some of the arbitrators did not sign the Award, but this is a case where an important portion of the enquiry was held when some of the arbitrators were not present. Under those circumstances I am inclined to agree with the finding of the learned District Judge that the arbitrators misconducted themselves and the proceedings.
34. Since the Award is inadmissible in evidence for want of proper stamp duty, and a decree could not be passed in terms of that Award, the Subordinate Judge could not have passed a decree on the basis of that Award. The District Judge having come to the conclusion that the arbitrators misconducted the proceedings, the only order that could be passed by him was to set aside the Award, which he did. The question of excitability of the decree need not, therefore, be considered.
35. There is no apparent error either of law or of facts in the order of the learned District Judge , which calls for my interference in the exercise of revisional jurisdiction. The Civil Revision Petition therefore, fails and is dismissed with costs.
36. Petition dismissed.