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NaraIn Das Hari Vansh Vs. Kanpur Nagar Mahapalika - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. No. 330 of 1960
Judge
Reported inAIR1963All269
ActsArbitration Act, 1940 - Sections 16, 16(1) and 23
AppellantNaraIn Das Hari Vansh
RespondentKanpur Nagar Mahapalika
Appellant AdvocateDeokinandan Agrawal, Adv.
Respondent AdvocateN.D. Pant and ;S.N. Verma, Advs.
DispositionAppeal allowed
Excerpt:
(i) arbitration - power of court - section 23 of arbitration act, 1940 - reference to arbitration by court - jurisdiction of court remain suspended and limited till arbitration superseded. (ii) interference by court - section 16 (1) (c) of arbitration act, 1940 - complete case referred to arbitrator - court can interfere only if arbitrator has laid down principle of law that is untenable - question of limitation - not covered by section 16 (1) (c) - not erroneous on face of award. (iii) errors in arbitrator's award - section 16 of arbitration act, 1940 - award with error apparent on the face of it - court not to set aside the award but to remit it for reconsideration. - - in the latter case, however, if the court is satisfied that there is an error of law which is apparent from the.....srivastava, j.1. this is a plaintiff's appeal. the plaintiff constructed some zonal reservoirs for the municipal board of kanpur now represented by the nagar mahapalika. the contract given for the construction of the reservoirs contained an arbitration clause and provided that if any dispute arose it was to be referred to the superintending engineer for decision. the reservoirs having been constructed a final bill was prepared which was certified by the person who was to certify it under the contract and was submitted to the board. the amount was not paid. some security had also been deposited in connection with the contract. it was also not refunded. the plaintiff, therefore, filed a suit for the recovery of rs. 42,772/2/9 as balance due according to the final bills, rs. 7,126/ 2/- as.....
Judgment:

Srivastava, J.

1. This is a plaintiff's appeal. The plaintiff constructed some zonal reservoirs for the Municipal Board of Kanpur now represented by the Nagar Mahapalika. The contract given for the construction of the reservoirs contained an arbitration clause and provided that if any dispute arose it was to be referred to the Superintending Engineer for decision. The reservoirs having been constructed a final bill was prepared which was certified by the person who was to certify it under the contract and was submitted to the Board. The amount was not paid. Some security had also been deposited in connection with the contract. It was also not refunded. The plaintiff, therefore, filed a suit for the recovery of Rs. 42,772/2/9 as balance due according to the final bills, Rs. 7,126/ 2/- as interest from the date of the bill to the date of the suit, Rs. 9,725/- as security deposit and Rs. 1,179/- as interest thereon. The total amount claimed was Rs. 60,802/4/9. After the suit was filed the defendant made an application under Section 34 of the Indian Arbitration Act praying that the suit be stayed and a reference be made to arbitration as provided for in the arbitration agreement.

2. A question arose about the payment of Court-fee on the application under Section 34 of the Indian Arbitration Act. That question having been decided an application in revision was filed in this Court. It was, however, not pressed. When the case went back the question whether the suit was to be stayed under Section 34 of the Act was taken up and ultimately decided in favour of the defendant. Against that order a First Appeal from Order was filed in this Court. That appeal was, however, not pressed and it was decided that the dispute between the parties should be referred to arbitration. It was, therefore, referred for arbitration to the Superintending Engineer Mr. A.K. Roy. Before him the plaintiff submitted his claim and the defendant submitted its objections. He framed certain issues. One of them related to the claim being barred under Section 326 of the U. P. Municipalities Act, 1916. No evidence was produced in respect of this issue and after hearing arguments the arbitrator decided that issue in favour of the plaintiff. He then proceeded to consider the other questions raised and gave an award on 8-3-1960 by which he allowed the plaintiff's claim in respect of two items of Rs. 42,772/2/9 and Rs. 9,725/-. He allowed the claim for interest in part only. The rest of the claim was rejected. The award was filed in Court as required by Section 14 of the 'Indian Arbitration Act and both the plaintiff and the defendant filed objections. The objection of the plaintiff was in respect of the rejection of a part of the claim for interest. It was contended on behalf of the plaintiff that the award should be remitted to the arbitrator for inclusion of the full interest on the security deposit and the amount of the final bill in favour of the plaintiff. The objection filed by the defendant was to the effect that the arbitrator 'had misconducted himself and the proceedings' by not properly considering and deciding the plaintiff's claim with reference to Section 326 of U. P. Act II of 1916. It was also urged in the objection that in view of the mandatory provision under Section 3 of the Limitation Act it was incumbent upon the arbitrator to reject the claim of the plaintiff without going into the merits of the case.

3. The defendant made a separate applications also claiming that as even on the allegations made in the plaint the suit was filed beyond time the plaint should be rejected under Section 3 of the Indian Limitation Act. The plaintiff did not press his objection before the learned Civil Judge. At any rate, it has been stated before us by the learned counsel for the plaintiff that that objection is not being pressed.

4. The objection filed by the defendant against the award was taken up by the learned Civil Judge along with the application for the rejection of the plaint under Section 3 of the Limitation Act and both the objection and the application were disposed of together. The learned Civil Judge was of the view that the suit of the plaintiff was barred by the six month's rule of Limitation, that in view of the provisions of Section 3 of the Limitation Act the suit was bound to be dismissed, and that in overruling the plea of limitation the arbitrator had misconducted himself. He, therefore, passed the following order:

'The suit is barred by limitation and is, therefore, dismissed with costs. The Arbitrator in deciding this matter misconducted himself and, therefore, his award is set aside.'

This order was pronounced on 31st May, 1960.

5. The defendant (sic) has filed this appeal against the above order of the Civil Judge. It has been filed under Section 39(i)(vi) of the Indian Arbitration Act. The relief claimed in the appeal is that this Court be pleased to allow the appeal and setting aside the judgment, order and decree of the Court below order the award to be made a rule of the Court and to decree the suit accordingly with costs throughout and to grant the appellant such other and further relief as the Court may in the circumstances deem just. Among the grounds mentioned in the memo of appeal the last one reads: -

'Because at any rate the Court below could not have dismissed the suit along with the order setting aside the award without first superseding the arbitration and then allowing the suit to proceed to hearing.'

6. A preliminary objection has been raised on behalf of the respondent and is to the effect that the order by which the learned Civil Judge has disposed of the case really amounts to a decree. He has dismissed the suit as time barred. Against that decree the plaintiff should have filed a regular appeal and paid ad valorem court-fee on the amount claimed. The first appeal from order against the portion of the order by which the award was rejected is really not maintainable because that portion of the order is really a surplusage and was included in the order unnecessarily. When the suit was being dismissed there was no necessity of setting aside the award.

7. The reply of the learned counsel for the appellant to this preliminary objection is that a reference having been made to the arbitrator the learned Civil Judge was not seized of the case except to the limited extent provided in the Arbitration Act. In this case it is pointed out a reference to arbitration had been made, the award too had been made and filed in Court and even objections had been filed against it. At that stage the only thing which the learned Civil Judge could do was either to accept the objections and set aside or remit the award for further consideration, or to reject the objection and pass a decree in accordance with the award. If he accepted the objections it was also open to him to supersede the agreement of reference. Then he would have got seized of the whole case and could proceed to consider the question of limitation. Without superseding the agreement of reference he could not himself go into the question of limitation and pass a decree dismissing the suit on that ground. His order dismissing the suit as time barred, is therefore, a nullity as it was without jurisdiction. It could be ignored by the plaintiff and it was not necessary for the plaintiff to file an appeal against it. The real order passed by the Civil Judge was the order setting aside the award and that order being appealable under Section 39 of the Arbitration Act the plaintiff has rightly filed this appeal.

8. The arbitration in this case was made through the intervention of the Court and the question raised by way of a preliminary objection is governed by the provisions of Chapter IV of the Indian Arbitration Act. Section 23 of that Chapter provides: -

'23. (1) The Court shall, by order, refer to the arbitrator the matter in difference which is required to determine and shall in the order specify such time as it thinks reasonable for the making of the award.

(2) Where a matter is referred to arbitration, the Court shall not, save in the manner and to the extent provided in this Act, deal with such matter in the suit.'

Section 25 of the same Chapter reads: -

'25. The provisions of the other Chapters shall, so far as they can be made applicable, apply to arbitrations under this Chapter: Provided that the Court may, in any of the circumstances mentioned in Sections 8, 10, 11 and 12, instead of filling up the vacancies or making the appointments, make an order superseding the arbitration and proceed with the suit, and where the Court makes an order superseding the arbitration under Section 19, it shall proceed with the suit.'

Under the other provisions of the Act which have been made applicable to arbitration through the intervention of the Court the award is to be signed and filed under Section 14. Then on objections being filed it can be modified or corrected under Section 15 or set aside or remitted under Section 16. If that is not done judgment , in terms of the award is to be pronounced under Section 17. If the award has become void under Sub-section (3) of Section 16 or has been set aside, the Court may by order supersede the reference under Section 19 and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the differences referred.

9. These provisions, in our opinion, make it clear beyond all doubt that having once made a reference to arbitration the Court cannot deal with the suit except under the provisions of the Indian Arbitration Act. Its normal jurisdiction to deal with the suit gets suspended and limited to a considerable extent. After the reference has been made it can deal with the suit only in the manner and to the extent provided in the Arbitration Act. It cannot deal with the suit as if a reference to arbitration had not been made and as if the suit was pending before it in the ordinary course. After a reference had been made the Court will again become seized of the case to the fullest extent only after the reference to arbitration has been superseded and not before that is done.

10. In the present case, therefore, a reference to arbitration having been made, an award having been filed and objections having been preferred against the award the only thing which the Court could do was to consider the objections and either to uphold the award and pronounce judgment in accordance with it or to set aside or remit the award to the arbitrator or to correct and modify it. It had, in our opinion, no jurisdiction to take up the question of limitation and ignore only the order of reference and the award, to dismiss the suit as time barred.

11. It was, however, urged on behalf of the respondent that in this case the learned Civil Judge should be held to have impliedly superseded the reference and in support of this contention learned counsel placed reliance on the fact that the learned Civil Judge had purported to dismiss the suit and in the relief prayed for in the appeal the order of the learned Civil Judge has been described as a decree. In the circumstances of the present case, however, no order superseding the arbitration can be held to have been passed. No specific order to that effect was ever passed; nor can such order be held to be implied, because after the reference had been superseded there could be no question of setting aside the award and in the impugned order the learned Civil Judge had also directed that the award be set aside. We are not prepared to attach any importance to the fact that in the relief mentioned in the memo of appeal the word 'decree' has been used. The appellant wanted the award to be accepted, the objections to it rejected and judgment to be pronounced in accordance with the award. That would have resulted in a decree.

12. The view that after the case had been referred to arbitration till the reference is superseded the power of the Court to deal with the case in the exercise of its ordinary jurisdiction remains suspended is supported by authorities also.

13. In Jamna Kunwar v. Nasib All, ILR 24 All 312 the case had been referred to arbitration but the award had not been submitted within the time allowed. The Court, therefore, proceeded to decide the case on merits. An attempt was made to support the decision on the ground that the reference had been superseded but this was not accepted and it was observed:-

'Under these circumstances we hold that the view taken by the learned Subordinate Judge was entirely mistaken, and that the reference to arbitration is still in force, and that before the suit can be entertained or heard, there must be an order for supersession under Section 510 or Section 514 of the Civil Procedure Code.'

14. In Dooly Chand v. Mohanlal : AIR1924Cal722 after the case had been referred to arbitration and an award had been received the parties filed a compromise and the question which arose was whether the compromise could be recorded. It was held that it could not be recorded and that till the reference had been superseded the Court had no jurisdiction to record the compromise. The same view was reiterated in Prafulla Chandra v. Panchanan Karmakar AIR 1946 Cal 427 when it was observed by Akram, J.:-

'Once the dispute goes to arbitration the authority of the Court to proceed with the suit is suspended and it cannot deal with the subject-matter of the reference as long as the reference stands; it is only when the arbitration is superseded that the suit, as it were, revives and the matters in dispute can be dealt with by the Court. What is sought to be done in the present case, is to embark upon an inquiry and to determine whether in fact there has been a compromise, which one of the parties disputes. Such an inquiry in my opinion will necessitate dealing with the subject-matter of the reference and that would be contrary to Section 23 Clause (2) and Section 25, proviso to the Arbitration Act.'

Chakravartti, J., agreed and observed:-

'Apart from statutory provisions, the principle seems to be warranted by the very nature of a reference to arbitration. Such a reference is itself an adjustment or compromise and so long as it is pending, there cannot possibly be room for another and a different compromise. Two compromises cannot co-exist at the same time, nor can two authorities have simultaneous seizin of the matter in dispute, viz., the Court and the arbitrators.'

15. The question was considered recently in an indirect way by the Supreme Court in Civil Appeal No. 178 of 1956 Munshi Ram v. Banwari Lal, decided on 9-1-1962 : AIR1962SC903 . That wag a case of reference to arbitration outside the Court. The award had been received, objections had been filed and then the parties filed a compromise. The question was whether the compromise could be recorded. After noting the conflict of opinion between the various High Courts on the point the Supreme Court held that the Court was not powerless and a compromise could be recorded. Pointing out the difference between a case of reference to arbitration without the intervention of the Court and a case in which reference had been made through the Court it observed : -

'The power to record such an agreement and to make it a part of the decree, whether by including it in the operative portion or in the schedule to the decree, in our opinion, will follow from the application of the Code of Civil Procedure, by Section 41 of the Arbitration Act and also Section 141 of the Code. It only remains to point out that in a reference without the intervention of the Court, the Court has no general jurisdiction over the subject-matter as in a reference in a pending suit. If the submission is superseded in the former, there is nothing more the Court can do, but in the latter, the Court must proceed with the suit before it, and give effect to the compromise in the suit according to law.'

From this it follows that in cases where a reference has been made through the intervention at the Court as long as the reference remains unsuperseded the Court has no power to deal with the case but after superseding the reference it can record the compromise.

16. In the present case the learned Civil Judge not having superseded the reference, the reference was continuing. While considering the objections to the award, he had no jurisdiction to take up the case on merits and to dismiss the suit on the ground of limitation. That part of the order he had passed on 31-5-1960 is therefore without jurisdiction. Against such an order which is passed without jurisdiction, the person against whom it is passed has two alternative remedies. He can either challenge the order in appeal, revision or writ proceedings and have it set aside or quashed, or he can ignore the order as a nullity and if someone tries to enforce it against him plead that the order being a nullity cannot be enforced. An order which is null and void for want of jurisdiction need not specifically be cancelled or set aside. The appellant cannot therefore be taken to task for not challenging in this appeal or by separate appeal that portion of the order which was passed without jurisdiction and was on that account null and void.

17. The preliminary objection, is therefore, not tenable and we overrule it.

18. Coming to the merits of the case, the learned Civil Judge has set aside the award of the arbitrator in this case on the ground that the arbitrator had misconducted himself. No attempt was made before us to support the view that the arbitrator in the present case was guilty of misconduct.

19. It was also not contended that the question of limitation which had been raised before the arbitrator had not been considered by him. In fact in the objections which the respondent had filed to the award he had impliedly conceded that the question had been considered. The only objection he took was that it had not been properly considered.

20. The sole ground on which the decision of the learned Civil Judge setting aside the award was tried to be supported before us was that the award was liable to be remitted under Section 16(1)(c) of the Arbitration Act, because there was an objection to the legality of the award apparent on the face of it. The contention is that the arbitrator had taken a view on the question of law viz., the interpretation of Section 326 of the U. P. Municipalities Act which was erroneous on the face of it and on that ground alone the award was liable to be remitted for reconsideration. It is argued that the period of limitation applicable to the claim made by the plaintiff was six months and not three years, and as the claim had been made beyond the period of six months it could not be entertained. It was therefore liable to be dismissed on the ground of limitation and in entertaining the claim and decreeing a part of it the arbitrator committed an apparent mistake of law.

21. Before an award can be remitted under Clause (c) of Sub-section (1) of Section 16 of the Arbitration Act it should be established that (1) it suffers from an error of law (2) that the error is apparent and (3) that it is apparent on the face of the award itself. A distinction has been made in this section between cases where a specific question of law is referred to arbitration, and cases where no specific question of law is referred nut a question of law arises incidentally and is necessary for the decision of the dispute. It has been held that in the former case the award cannot be set aside or remitted even if the decision of the arbitrator on the question of law is erroneous. In the latter case, however, if the Court is satisfied that there is an error of law which is apparent from the award itself or some documents which can be considered to be parts of the award, the Court can interfere and remit the same under Section 16. In such cases also the Court should bear in mind that it is not sitting in appeal over the decision of the arbitrator and is not entitled to interfere simply because it is inclined to take a different view from that of the arbitrator. It can interfere only if the arbitrator has laid down or assumed some principle of law which is clearly untenable.

22. The leading case on the point is to be found in Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co., Ltd., AIR 1923 PC 66. In that case their Lordships of the Privy Council quoted with approval a dictum of Williams, J., in Hodgkinson v. Fernie, (1857) 3 CB NS 189 which they declare laid down the law clearly. In that passage Williams, J., had observed : -

'The law has for many years been settled, and remains so at this day that, where a cause or matters in difference are referred to an arbitrator, a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact ......... The only exceptions to that rule are cases where the award is the result of corruption or fraud, and one otter, which though it is to be regretted, is now, I think firmly established viz., where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established.'

23. The occasion to consider this matter arose before the Supreme Court of India for the first time in Thawardas Pherumal v. Union of India : [1955]2SCR48 . The claim in that case had been made by contractor and consisted of 17 heads. The claim had been allowed by the arbitrator. In appeal the award was sought to be questioned on the ground that it suffered from an apparent error of law. Dealing with this question the Supreme Court observed: -

'In India this question is governed by Section 16(1)(c) of the Arbitration Act of 1940, which empowers a Court to remit an award for reconsideration 'where an objection to the legality of the award is apparent upon the face of it.''

This covers cases in which an error of law appears on the face of the award. But in determining what such an error is, a distinction must be drawn between cases in which a question of law is specifically referred and those in which a decision on a question of law is incidentally material (however necessary) in order to decide the question actually referred.

If a question of law is specifically referred and it is evident that the parties desire to have a decision from the arbitrator about that rather than one from the Courts, then the Courts will not interfere, though even there, there is authority for the view that the Courts will interfere if it is apparent that the arbitrator has acted illegally in reaching his decision, that is to say, if he has Decided on inadmissible evidence or on principles of construction that the law does not countenance or something of that nature. See the speech of Viscount Cave in -- Kelantan Government v. Duff Development Co., Ltd., 1923 AC 395 at p. 409. But that is not a matter which arises in this case. The law about this is, in our opinion, the same in England as here and the principles that govern this class of case have been reviewed at length and set out with clarity by the House of Lords in F. R. Absalom Ltd. v. Great Western (London) Garden Village Society, Ltd., 1933 AC 592 and in 1923 AC 395...............................

An arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not, he can be set right by the Courts provided his error appears on the face of the award. The single exception to this is when the parties choose specifically to refer a question of law as a separate and distinct matter.'

In that particular case some portions of the award were set aside on the ground that the arbitrator had committed errors of law which were apparent on the award itself.

24. The next case in which the question was considered is Dr. S. Dutt v. University of Delhi : [1959]1SCR1236 . Relying on AIR 1923 PC 66 it was contended before the Supreme Court in that case that if no reasons were given by the arbitrator in the award no question of remitting the award on the basis of an error of law could arise. The contention was rejected and what 'an error of law apparent on the face of the award' was has been clearly stated by A.K. Sarkar, J., in these words:-

'In our view, all that is necessary for an award to disclose an error on the face of it is that it must contain, either in itself or in some paper intended to be incorporated in it, some legal proposition which on the face of it and without more, can be said to be erroneous. This was the decision of the Judicial Committee in the Champsey Bhara and Co., case, AIR 1923 PC 66. As the award in this case directs specific enforcement of a contract of personal service, it involves a legal proposition which is clearly erroneous.'

25. The question was considered again in Alopi Parshad and Sons Ltd. v. Union of India : [1960]2SCR793 and it was held: -

'The extent of the jurisdiction of the Court to set aside an award on the ground of an error in making the award is well-defined. The award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision there is found some legal proposition which is the basis of the award and which is erroneous -- 50 Ind App 324; AIR 1923 PC 66. If, however, a specific question is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its face so as to permit of its being set aside. In re King and Duveen, 1913-2 KB 32, and 1923 AC 395.'

26. In the present case it cannot be said that a specific question of law was referred to the arbitrator. The entire dispute between the parties about the claim made by the plaintiff for the work done by him had been referred and one of the grounds on which the claim was resisted was that it was barred by limitation. The question of limitation thus arose incidentally in view of the defence raised. If in deciding that question the arbitrator committed an error which is apparent on the face of the award it is possible to interfere with the award and to remit it to the arbitrator for reconsideration.

27. Two questions, therefore, arise for decision. The first is whether the arbitrator has in fact committed an error of law on the question of limitation, and the second is whether that error is apparent on the face of the award. In deciding in what circumstances an error becomes apparent on the face of the award the observations of the Supreme Court in Satyanarayan Laxminarayan Hedge v. Mallikarjun Bhavanappa : [1960]1SCR890 which were made with reference to Article 226 of the Constitution under which a writ of certiorari is attracted when there is an error apparent on the face of the record, have to be borne in mind. It was observed :

'Is the conclusion wrong and if so, is such error apparent on the face of the record? If it is clear that the error if any is not apparent on the face of the record, it is not necessary for us to decide whether the conclusion of the Bombay High Court on the question of notice is correct or not. An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments. We do not think such an error can be cured by a writ of certiorari according to the rule governing the powers of the superior Court to issue such a writ.'

A distinction must therefore be drawn between a mere error of law and an error of law apparent on the face of the award. In dealing with the questions of law which arose before him the arbitrator may have committed an error. He may have taken a mistaken view of the law, but all such errors or mistakes are not such as can attract the application of Section 16(1)(c) of the Arbitration Act. Before an award can be remitted under that provision it most be shown not only that the error is one of law bat also that it is an error apparent on the face of the award.

28. On the question of limitation which had been raised before the arbitrator in the present case no evidence was led by the parties. He heard arguments and then found that the objection about limitation was not tenable. He did not give any reasons for the view he had taken. On the award therefore there is nothing to indicate that he was laying down or assuming any principle of law which was clearly untenable. Learned counsel however, urged that in holding that the claim of the plaintiff was within time the arbitrator overlooked the Full Bench decision of this Court in Dargahi Lal v. Cawnpore Municipal Board : AIR1952All382 and therefore his decision on this question of law must be held to be apparently erroneous.

29. For a long time there has been a conflict of opinions in this Court on the question whether the period of limitation for a claim made by a contractor for money doe to him on account of work done for a Municipal Board or District Board is governed by the rule of six months' period of limitation or by the ordinary rule of three years. On account of this conflict the matter was considered first by a Full Bench in District Board Allahabad v. Bihari Lal : AIR1936All18 . The case arose with reference to Section 192 of the District Board Act which is in pari materia with Section 326 of the Municipalities Act and Section 97 at the U. P. Town Improvement Act, 1919. The decision of the question turns on the interpretation of the words 'acts done in pursuance of the Act' used in these sections, and whether an illegal omission is included in the word 'act'. Sulaiman, C. J. who delivered his judgment of the Fall Bench and with whom the other Judges agreed, laid down in that case Chat the claim of a contractor was not governed by the Six months rule but was governed by the ordinary three years rule.

30. At one time it used to be thought that the six months' rule applied only to actions in tort and did not apply to actions in contract. Repelling that contention it was held by a second Full Bench which considered the matter in : AIR1952All382 that there was no basis for holding that Section 326 of the Municipalities Act contemplated an action only in tort and not in contract. That was a case in which a servant of the Municipal Board had been dismissed and had not been given his full salary for the period of his suspension. It was held that the omission to pay the salary amounted to an act in the exercise of the functions of the Board. His claim was, therefore, held to be governed by the six months rule. Reference was made to the earlier Full Bench decision in the case of : AIR1936All18 . But it was not overruled or dissented from. It is interesting to note that an earlier decision of the Privy Council in Reoti Mohan v. Jitendra Mohan had been utilised in : AIR1936All18 in support of the view that was being taken in that case and the same decision of : AIR1952All382 was relied upon in the later Full Bench case in support of the view that was being taken in that case.

31. The question was considered again recently by a Full Bench in Lucknow Nagar Mahapalika v. Karamjeet Singh : AIR1962All174 . That was a case in which a person had bid in an auction sale held by the Lucknow Municipal Board and had deposited 1/4th of the price by way of security. His bid had not been accepted and he sued for the refund of the deposit. The Improvement Trust relying on Section 97 of the U. P. Town Improvement Act, 1919, resisted the suit on the ground of limitation and urged that the amount had been forfeited for the breach of the conditions of the same. It contended that the six months' rule of limitation applied and the suit had been filed beyond the period of limitation, hence it was not maintainable. Two of the Judges who constituted the Bench held that the claim was not governed by the six months' rule and three years' limitation applied to it. Nigam, J. however took a contrary view. The earlier Full Bench decision in Dargahi Lal Nigam's case : AIR1952All382 was referred but was again not overruled or dissented from. The only thing observed in respect of it was that the question which the later Full Bench was considering had not been considered by that Full Bench at all.

32. We have not found it easy to reconcile some of the observations made by the learned Judges who delivered the judgments in these three Full Bench cases. It is, however, not necessary in the present case to reconcile those views. What is noticeable is that the question whether a claim like the one made by the plaintiff in the present was governed by the six months' rule of limitation or by the three years' rule is not free from difficulty; and different views can possibly be taken in respect of it. In this state of affairs if the arbitrator decided it one way i.e. in favour of the plaintiff and did not accept the interpretation of Section 326 of the Municipalities Act suggested by the respondent's counsel, we find it difficult to hold that the view taken was necessarily erroneous or that in any case there was an error of law apparent on the face of the award. It cannot be said that he was laying down or assuming any principle of law which was clearly untenable and in support of which nothing could be said at all. This does not, therefore, appear to us to be a case covered by Section 16(1)(c) of the Arbitration Act and the award of the arbitrator could not therefore be remitted for reconsideration on the ground of any error of law apparent on the face of the award.

33. We may mention here that if the learned Civil Judge was of opinion that the arbitrator had committed an error apparent on the face of the award the proper course was not to set aside the award but to remit it for reconsideration. The Civil Judge has, however, set aside the award and without superseding the reference decided the case himself.

34. We have, therefore, come to the conclusion that the sole ground on which the award has been challenged before us is not acceptable and no case had been made out for the setting aside of the award remitting the matter to the arbitrator for reconsideration. The order of the learned Civil Judge setting aside the award and rejecting the plaintiff's claim as time barred cannot therefore be upheld.

35. The appeal in the result succeeds. The order under appeal is set aside. The objections to the award are rejected. The award is made a rule of the Court and a decree shall be prepared in accordance with it. The appellant will get his costs from the respondent in respect of this appeal.


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