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Chandu Lal and anr. Vs. Ram Autar and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 163 of 1958
Judge
Reported inAIR1962All357
ActsArbitration Act, 1940 - Sections 16(1), 16(3), 28(2), 30 and 33
AppellantChandu Lal and anr.
RespondentRam Autar and anr.
Appellant AdvocateAmbika Prasad and ;Ganesh Pd., Advs.
Respondent AdvocateK.C. Saksena, Adv.
DispositionPetition dismissed
Excerpt:
arbitration - remedy - sections 30(c) and 33 of arbitration act, 1940 - invalid agreement - award passed - it may be set aside - participation in proceedings does not debar the party from challenging the whole award.  - - 4. a perusal of the scheme of the arbitration act will go to show that after an award has been made, the court has been given a power to modify the award under section 15 while the power to remit the award has been conferred by the provisions of section 16. under sub-section (3) of section 16 there is a further provision that an award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed......separate procedure for the same. the further submission is that if a party acting upon the alleged invalid agreement has taken part in the arbitration proceedings, he has no right to challenge the award under section 30 on the ground of invalidity of the agreement. both these contentions of the learned counsel have no force. 4. a perusal of the scheme of the arbitration act will go to show that after an award has been made, the court has been given a power to modify the award under section 15 while the power to remit the award has been conferred by the provisions of section 16. under sub-section (3) of section 16 there is a further provision that an award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision.....
Judgment:
ORDER

Mithan Lal, J.

1. This civil revision arises out ofthe following circumstances.

2. Chandu Lal applicant relying upon toe mercantile usage prevailing in Farukhabad filed same complaint in Kotwali police on which thedefendants opposite parties were taken into custody. At that very time an agreement was arrived at between the, parties to refer their dispute to the arbitration of one Sri Ram Narain Kapur, who happened to be the brother of Chandu Lal applicant. This agreement was executed on 2lst February 1955. It was followed by an award on 10th March 1955. The Arbitrator informed the parties of the making and signing of the award on 11th March 1955. Thereafter an application under Section 14(2) of the Arbitration Act was filed on 23rd March 1955. No notice of the filing of the award was originally given, but the Court finding this defect accepted the objections, though filed beyond time. Since this is not a point in dispute before me it is not necessary to say anything more about it. Objections to the award were filed by the defendants. The main objections of the defendants were two. The first was that the customers of the parties were not made parties to the arbitration proceedings and so the agreement was invalid while the second objection was thatthe agreement had been executed under undue influence and duress.

The trial court held that the customers were necessary to the dispute, while on the question of duress and undue influence it gave a finding that there was no duress or undue influence in entering into the agreement to arbitration. The matter was taken up in appeal and the learned District Judge, Farrukhabad, differed with the judgment of the trial court on bath the points. He has held that the customers were not necessary parties and that the award was not invalid on this ground. He however found that the agreement has been entered into under duress and undue influence and so the award was set aside under Section 30 of the Arbitration Act.

3. The only point which has been canvassed in this case is that an award can be set aside under Section 30 only upon the three specitse grounds given in that section and that the phrase'is otherwise invalid' must be taken to be ejusdem generis with Clauses (a) and (b) of Section 30. This phrase cannot include invalidity of an arbitration agreement as Section 33 lays down separate procedure for the same. The further submission is that if a party acting upon the alleged invalid agreement has taken part in the arbitration proceedings, he has no right to challenge the award under Section 30 on the ground of invalidity of the agreement. Both these contentions of the learned counsel have no force.

4. A perusal of the scheme of the Arbitration Act will go to show that after an award has been made, the Court has been given a power to modify the award under Section 15 while the power to remit the award has been conferred by the provisions of Section 16. Under Sub-section (3) of Section 16 there is a further provision that an award remitted under Sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.

The grounds for setting aside the awardhave been given in Section 30 which reads asfollows:

'30. An award shall not be set aside except on one or more of the following grounds, namely:

(a) that an arbitrator or umpire has misconducted himself or the proceedings,

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

(c) that an award has been improperly procured or is otherwise invalid.'

The expression used in Clause (c), 'or is other wise invalid' is a very wide expression and cannot be limited to the invalidity of the award on the grounds mentioned in Clauses (a) and (b) as argued by the learned counsel. An award will also be otherwise invalid if it has not been submitted after, its remission to the Arbitrator under Sub-section (1) of Section 16 read with Sub-section (3). It will further be void if the arbitration agreement contains a clause of enlarging the time for making the award except with the consent of all the parties to the agreement under Section 28(2). Both these grounds can form the basis of setting aside the award and will evidently be covered by Section 30 Clause (c). Similarly it the arbitration agreement is invalid or is not otherwise in accordance with law, the award may still be set aside on that ground which will be covered by Section 30(c).

5. Section 33 of the Arbitration Act lays down a procedure for a summary remedy for challenging the existence or the validity of an arbitration agreement. That Section has further been made applicable to an award. That section lays down as follows;

''Any party to an arbitration agreement or any person claiming under him, desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits:

provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit.'

It will thus appear from the scheme of the Act that an award may be modified by theCourt, it may be remitted by the Court or it may be set aside by the Court on any of the grounds mentioned in Section 30. If the award has been found to be invalid either under Section 16(3) or Section 28(2) or Section 33 it shall still have to be get aside on the ground given in Section 30(c). It is not necessary for a party to make a separate application under Section 33 for setting aside the arbitration agreement on the ground of its invalidity. He may, if he so chooses, make such an application, but in the ordinary course such a prayer has to be made before the reference is entered upon, He can directly challenge the validity of the award and pray for its setting aside on any of the grounds given in Section 30 including the ground of the invalidity of the arbitration agreement. It is, however, optional for a party either to make an application under Section 33 for setting aside the arbitration agreement or he may make a prayer for setting aside the award on any of the grounds given in Section 30 including the ground of the invalidity of the arbitration agreement. It cannot be contended that if no application under Section 33 challenging the arbitration agreement has been made, this ground cannot be made a ground of attack for setting aside the award on any of the grounds given in Section 30.

6. In the case of Kalka Singh v. Indradeo Singh, AIR 1957 All 781 brother Mukerji expressed the view that:

'Under Section 33 it is competent for a party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined by an application to the Court and the Court is bound to decide the question.'

It was further observed that if a party challenges the award on the ground of its illegality it has a right to question its validity on the ground that the arbitration agreement was invalid. This authority directly supports the view taken by me above. There is also the case of Saha and Co. v. Ishar Singh Kripal Singh and Co., (S) AIR 1956 Cal 321 in which the whole law on the question was discussed and the Full Bench of that Court held that

'The Indian Arbitration Act, 1940, doesnot distinguish between an application for setting aside an award and an application for theadjustment of an award to be a nullity and doesnot contemplate that au application of the former kind should be made under Section 30 of the Actand an application of the latter kind underSection 33.

The Act contemplates that all applications, challenging an award, must be made under Section 33, irrespective of the ground of the challenge and that they must be applications for setting aside the award except in cases where the existence of an award in fact is challenged.

The non-existence or invalidity of the reference can be a ground of an application for setting aside an award...........'

7. With all due respect I entirely agree with the views expressed by the Full Bench of the Calcutta High Court.

8. As regards the second question as to whether the party is debarred from challenging the invalidity of the agreement after he has taken, part in the arbitration proceedings, there could be no such bar because the Statute itself has given a right to the aggrieved party to challenge the whole of the award after it has been made oh the grounds given in Section 30. The mere fact that a party has taken part in the proceedings cannot be made a ground for debarring him. from challenging the whole award.

9. For all these reasons the revision has no force. It is consequently dismissed with costs.

10. Record of the case shall be sent backto the Court below forthwith.


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