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Lingam Dasaradharamayya Vs. Kanuri Raja Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.O. No. 231 of 1958 and A.S. No. 260 of 1958
Judge
Reported inAIR1964AP348
ActsArbitration Act, 1940 - Sections 30 and 33
AppellantLingam Dasaradharamayya
RespondentKanuri Raja Rao and ors.
Appellant AdvocateA. Sambasiva Rao and ;K. Ramanatham, Advs.
Respondent AdvocateG. Bhaskara Rao and ;P. Raja Rao, Advs.
DispositionAppeals dismissed
Excerpt:
.....as findings have been given in regard to the other important matters referred to for determination. from out of these, he failed to give findings on three specific items which were matters of considerable importance having regard to the nature of dispute between the parties. the arbitrator must be careful to see that his award is a final decision of all matters requiring his determination and his failure to determine any of them may completely vitiate his award; an award which does not decide the differences referred to arbitration is bad and unenforceable. so also is an award which purports to determine matter not comprised in the submission, unless the part of the award which was beyond the scope of the arbitration can be served from that which deals with the matters comprised in..........of the petitioner while the 5th respondent i.e., the appellant herein pleaded that the enquiry held by the arbitrator was complete and the award was not liable to be set aside. respondents nos. 1, 4, 7, 8, 12, 13, 14, 15 and 18 remained ex parte. the learned subordinate judge on a consideration of the documents produced before him and the arguments advanced on either side came to the conclusion that the award, ex. a.2, was invalid and was, therefore, liable to be set aside. the civil miscellaneoue appeal arises against the said order. he consequently dismissed the suit filed by the 9th respondent to pass a decree in terms of the award, which is the subject-matter of a. s. no. 260 of 1958,4. the learned counsel for the appellant contends that the lower court was not justified in.....
Judgment:

Sharfuddin Ahmed, J.

1. This Miscellaneous Appeal (No. 331 of 1958) arises out of the judgment and order of the Sub-ordinate Judge, Masulipatnam dated 17th of April 1958 made in O. P. No. 21 of 1956 on his file while A. S. No. 260 of 1958 is directed against the order of the Court, refusing to pass a decree in terms of the award, made in the suit (O. S. No. 17 of 1956) filed by the 9th respondent in the saidO. P. The 5th respondent is the appellant in C. M. A. No. 231 of 1958 while the 9th respondent in the O. P. is the appellant in the other appeal. The parties will be described for the sake of convenience as arrayed in O. P. No. 21 of 1956.

2. The relevant facts may briefly be stated. The petitioner in O. P. No. 21 of 1956 and respondents Nos. 1 to 9 were running a partnership business under the name and style of 'Sri Murali Krishna Rice Mill Contractor Company' of which R. 1 was the Working Manager. The Mill was taken on lease by the partnership firm from 5-12-195 (sic) till the end of November 1952. The petitioner had a four-anna share and subscribed considerably towards the capital. The 1st respondent as the Working Manager and the 3rd respondent as the General Manager were in-charge for running the business, maintenance of accounts and other acts incidental to the running of the business.

After sometime disputes arose between the partners regarding the settlement of accounts and as to whether the partnership ended in loss or profits. The matter was ultimately referred to an arbitrator, the 17th respondent who is an advocate practising at Masulipatnam and all the parties concerned executed an arbitration agreement dated 20th July, 1955, Ex. A.1, in his favour. The arbitrator passed an award, Ex. A.2, dated 6th January 1956 after going through the accounts of the partnership and scrutinising the-claims of various creditors.

3. The petitioner thereupon filed a petition under Sections 30 and 33 of the Arbitration Act praying to set aside the award given by the 17th respondent in the O. P. It was contended by him that the award was illegal and vitiated as the arbitrator had not examined the accounts and did not give findings on each of the several questions specifically referred to him for decision. It was also alleged that the arbitrator did not decide the share of the partners, the amount advanced by each of them and whether the accounts were genuine or not. Respondents 2, 3 and 16 supported the contention of the petitioner while the 5th respondent i.e., the appellant herein pleaded that the enquiry held by the arbitrator was complete and the award was not liable to be set aside. Respondents Nos. 1, 4, 7, 8, 12, 13, 14, 15 and 18 remained ex parte. The learned Subordinate Judge on a consideration of the documents produced before him and the arguments advanced on either side came to the conclusion that the award, Ex. A.2, was invalid and was, therefore, liable to be set aside. The Civil Miscellaneoue Appeal arises against the said order. He consequently dismissed the suit filed by the 9th respondent to pass a decree in terms of the award, which is the subject-matter of A. S. No. 260 of 1958,

4. The learned counsel for the appellant contends that the lower Court was not justified in setting aside the award merely because the award did not record findings on each and every aspect of the matter that had been referred for determination. According to him as it had finally decided the rights of the parties it should have been accepted notwithstanding the omission on the partof the arbitrator to record a finding on certain aspects. It would be convenient to reproduce the relevant portion of the arbitration agreement at this stage :

'It is found better to appoint you as an arbitrator as you are interested in the well-being of all of us. Therefore, this arbitration agreement is executed in your favour for a determination of all the questions in dispute between us, namely, (i) the amounts advanced by each of parties 1 to 9 to the partnership-firm; (2) whether the partnership business ended in a loss or profit and whether the accounts to be produced before you are genuine or not, and whether the entries of credit and debit in those books are valid or not; (3) Whether parties 10 to 17 advanced any amounts to the partnership. If it is found that they advanced any amounts, how much of the amounts are to be discharged and in what way they have to be discharged and which of the partners has to discharge them; and (4) to examine all the accounts of the partnership business, to settle the profit and less and determine whether the partners have to pay any amounts to others i.e., to parties 10 to 17, and what amounts are due from each of the parties Nos. 1 to 9 inter se.

You are requested to consider all the above questions and to determine them either by examining any parties or not examining them and we all agree to be bound by the award to be passed by you.'

5. It is clear therefrom that sis definite and distinct matters were referred to the arbitrator viz :

(i) What were the amounts advanced by each of the partners to the partnership business?

(ii) Whether the partnership business ended in loss or profits ?

(iii) Whether the accounts were genuine or not?

(iv) Whether the debts claimed by respondents 10 to 17 are genuine and if so what amounts were due to them and in what way they were to be discharged?

(v) What was the exact profit or loss of the partnership business? And

(vi) What were the amounts due to be paid by each of the partner to the other?

6. A reference to the impugned award would show that the arbitrator did not give a finding in regard to items 1, 2 and 3. The learned counsel for the appellant contends that failure to record findings in respect of these items does not vitiate the arbitration award as findings have been given in regard to the other important matters referred to for determination. Reliance has been placed for this purpose on the case of Pannalal v. Padmabati, : AIR1960Cal693 . It has been held therein that:

'A party who is not prejudiced by an erroneous award and who, on the contrary, has gained an advantage by it cannot move to set aside, the award. Similarly an error, on the face of the award is not a valid ground of complaint, where the error is in favour of and to the advantage of the party moving to set it aside.'

The said case is distinguishable inasmuch as it dries not set put the terms of the arbitration agreement so as to ascertain whether there were commission on the part of the arbitrator in recording findings on some vital matters referred to him for arbitration.

Further, it is not the case of the appellant in the instant case that the respondent has gained any advantage or was not prejudiced by the omissions in the award and was, therefore, precluded from impeaching the validity of the award. The next decision cited by him viz., State of Orissa v. P. C. Chanda. : AIR1962Ori91 also does not advance his case. The matter in dispute in that arbitration was in respect of the amount payable to the contractor for the total work completed by him -- the contending parties being the State Government and the Contractor. The award mentioned the essential points in controversy between the parties, though the contentions of the State Government in respect of every item in the claim of the contractor were not fully set out-The details of the calculations on the basis of which the figures were arrived at were not given. It was held that:

'......as the essence of the dispute related tothe net amount payable to the contractor and that had been accurately and finally decided by the Arbitrator, his omission to give the details of the calculations or to give his findings as regards the rival contentions of the parties in respect of the interpretation of the conditions of contract did not invalidate the award.'

It is manifest therefrom that the main question in dispute between the State Government and the Contractor was finally determined and the omission pertained to the method of calculation and to the interpretation of certain conditions.

7. The position in the instant case is however, different. As mentioned supra, the arbitrator was called upon to give his finding in respect of six specific and distinct matters in controversy between the parties. From out of these, he failed to give findings on three specific items which were matters of considerable importance having regard to the nature of dispute between the parties. Admittedly, this case related to the dissolution of the partnership business. The questions pertaining to the amounts advanced by each of the partners to the assets of the firm and to the exact quantum of profit or loss in which the partnership ended, so also the genuineness of the accounts produced were matters of vital importance. The arbitrator, however, has not chosen to give any specific finding on these aspects. The award, therefore, cannot be held to be complete.

8. In Randall v. Randall. (1805) 7 East 81: 8 R.R. 601 it was held that:

'Upon a reference of all actions, controversies etc., and also of two distinct matters of difference if the arbitrators omit to decide one of such distinct matters, that vitiates the whole award, which cannot therefore be enforced by attachment.'

Lawrence; J. speaking far the bench in the above case said that:

'I did not know whether there might not have been some modern decisions, which had given a more liberal construction in support of awards, where the arbitrators, having distinct matters submitteed to them, had made their award upon some of them only, omitting the mention of othersbut as none such have been referred to, there seems to be no answer to the cases cited against this award, which shew that the arbitrators have not pursued their authority, not having performed the condition on which it was delegated to them.'

Consequently, the rule for attachment was discharged.

9. Similary, in Ganesh Narayan Singh v. Matida Koer, 13 Cal LJ 399, it was held that:

'Where the award leaves undecided one of tha cardinal points in controversy, the award is in complete and cannot be sustained.'

In Ramji Ram v. Salig Ram, 14 Cal LJ 188 it has been laid down that:

'What constitutes a completion of the award, may depend upon the terms of the submission, and upon the facts and circumstances of the individual case.'

It was further held that:

'The arbitrator must be careful to see that his award is a final decision of all matters requiring his determination and his failure to determine any of them may completely vitiate his award; this would be specially the result when there is such a connection and interdependence between the various matters covered by the submission that the decision and disposition of some of them only to the exclusion of others would operate to produce injustice between the parties.'

10. In Halsbury's Laws of England (Volume 1-2nd Edition at page 663) dealing with the scope of the award and referring to some English cases it has been observed that :

'The award must determine all the differences which the parties by their submission referred to arbitration; and, on the other hand, it must not purport to determine matters which were not comprised in the submission.

An award which does not decide the differences referred to arbitration is bad and unenforceable. So also is an award which purports to determine matter not comprised in the submission, unless the part of the award which was beyond the scope of the arbitration can be served from that which deals with the matters comprised in the submission, in which case the latter part will be held good and valid.'

Further, it has been laid down that:

'The award must be final, and therefore a conditional award is bad unless it provides an alternative in case the condition be not fulfilled for can power be reserved to deal with any difference which may arise on the award.'

11. Examined in the light of the principles enunciated above, the impugned award printed at page 3 of Material Papers cannot be held to be complete and final. The questions as to the amounts advanced by each of the partners to the partnership business the availability of the assets and the amount of loss sustained by the firm were of vital importance, but there is no reference to these aspects of the case in any part of the award in spite of a plea for settlement in the arbitration agreement. The matters thus left undecided cannot be regarded as incidental or of no material importance nor can they be held to have been determined by implication. It was bounden duty of the arbitrator to have given a definite finding on the vital issues referred to him and on hisfailure to do so, the award cannot be sustained merely on the ground that it is an intelligible decision which determines the rights of the parties to a certain extent. We are, therefore, of opinion-that the order of the lower Court setting aside the award does not call for interference. Civil Miscellaneous Appeal No. 231 of 1958 is accordingly dismissed with costs of the contesting respondents.

12. In view of the above order A. S. No. 260of 1958 is also liable to be dismissed. It is accordingly dismissed with costs.


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