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Radha Kishan and anr. Vs. Sapattar Singh - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. No. 227 of 1952
Judge
Reported inAIR1957All406
ActsEvidence Act, 1872 - Sections 91; Arbitration Act, 1940 - Sections 2 and 17; Contract Act, 1872 - Sections 10 and 29
AppellantRadha Kishan and anr.
RespondentSapattar Singh
Appellant AdvocateBrijlal Gupta, Adv.
Respondent AdvocateM.A. Kazmi, Adv.
DispositionAppeal dismissed
Excerpt:
arbitration - arbitration agreement - sections 2 and 17 of arbitration act, 1940 and section 91 of evidence act, 1872 - arbitration agreement is a contract - reference of dispute made voluntary agreement is binding - slight uncertainty in agreement be rectified at time of hearing - award binding on parties and do not effect the right of strangers. - - on the evidence the court below was satisfied that the appellants had notice of the arbitration proceedings and that in spite of such notice they deliberately kept out of arbitration. first, that the arbitration agreement was bad in law because there was, in fact, no dispute, as there could not be, in his view of the matter, because radha kishan and tegh singh were karkuns of deo raj and the dispute really was with deo raj. we are,..........took the view that the appellants could not lead evidence to show that they had not referred the dispute to arbitration. the learned judge has precluded the appellants from giving this evidence on the ground that such evidence was barred by the provisions of section 91 of the indian evidence act.mr. gupta's contention was that this view of the learned judge was wrong. mr. gupta relied on a single judge decision of this court in babu ram v. lala ram : air1929all415 ; where ashworth, j. held that section 91 of the indian evidence act does not apply to an agreement to refer to arbitration because such an agreement was neither a contract nor a grant nor other disposition of property. we are unable to agree with this decision for in our view an arbitration agreement is a contract within the.....
Judgment:

Mukerji, J.

1. This is a first appeal from order dismissing the objection, of the appellants to an arbitration award.

On the 3rd of August 1951 a reference to arbitration was made by Sapattar Singh as party no. 1 and Radha Kishan and Tegh Singh as party no. 2 for the settlement of certain disputes that had arisen between them in respect of a brick kiln business, to the arbitration of certain named arbitrators. An award was made on the 11th of November 1951. On the 21st of November 51 Sapattar Singh filed an application for calling for the award from the arbitrators and making it a rule of the Court. Notices were issued and a written statement was filed on behalf of the appellants to the effect that there was no dispute between them and Sapattar Singh, because the real person who was interested in the brick kiln business and with whom there was a dispute of Sapattar Singh was one Deo Raj and that the appellants were only his karkuns and, therefore, there could be no dispute with them. The other question that was raised was that the appellants had no notice of the arbitration proceedings and consequently they could not make any proper appearance before the arbitrators. The appellants also contended that they had in fact made no reference to arbitration and that the arbitration agreement that was produced in the case had been forged on a blank piece of paper on which the appellants' signatures or thumb-marks had been obtained earlier.

2. The controversy that arose in the court below, therefore, centered round the following Questions:

(1) Whether there was, in fact, a reference to arbitration?

(2) Whether the reference by Radha Kishan and Tegh Singh in respect of the dispute could be made because they were not interested in the brick kiln business....the real interested party being Deo Raj?

(3) Whether there was misconduct On the part of arbitrators which made the award unenforceable?

(4) Whether the award was in the excess of the authority given to the arbitrators by the deed of reference?

3. The court below has found that there was a dispute which was referable to arbitration. The Court below has further found that there no misconduct on the part of the arbitrators which could justify the setting aside of the award. On the evidence the court below was satisfied that the appellants had notice of the arbitration proceedings and that in spite of such notice they deliberately kept out of arbitration. The court below has also come to the conclusion that to the extent that the award created a charge on the bricks in the kiln the award was in excess of the powers of the arbitrators. The court, therefore, modified the award by separating the portion that it thought was in excess of the authority of the arbitrators from the portion which was within their authority. The two portions having been separated the court below enforced that part of the award which was within the authority of the arbitrators by making it a rule of the Court.

4. On appeal Mr. Brij Lal Gupta has raised two questions in the main. First, that the arbitration agreement was bad in law because there was, in fact, no dispute, as there could not be, in his view of the matter, because Radha Kishan and Tegh Singh were karkuns of Deo Raj and the dispute really was with Deo Raj. Mr. Gupta stated that the court below has erred in law in not permitting him to raise this question and to give evidence on it. The Court below took the view that the appellants could not lead evidence to show that they had not referred the dispute to arbitration. The learned Judge has precluded the appellants from giving this evidence on the ground that such evidence was barred by the provisions of Section 91 of the Indian Evidence Act.

Mr. Gupta's contention was that this View of the learned Judge was wrong. Mr. Gupta relied on a single Judge decision of this court in Babu Ram v. Lala Ram : AIR1929All415 ; where Ashworth, J. held that Section 91 of the Indian Evidence Act does not apply to an agreement to refer to arbitration because such an agreement was neither a contract nor a grant nor other disposition of property. We are unable to agree with this decision for in our view an arbitration agreement is a contract within the meaning of Section 91 of the Indian Evidence Act. ( Section 10 of the Indian Contract Act states that agreements are contracts for it says:

'All agreements are contracts if they are made by the free consent of the parties competent to contract for lawful consideration and with a lawful object, and are not hereby expressly declared to be void.....'

It was nobody's contention that this agreement was not for lawful consideration or that the object of this agreement was unlawful or that the parties were not competent to contract or that this agreement was expressly declared void by some law. The question whether the agreement had been executed with free consent of parties was never raised though it was alleged that the agreement had, in fact, not been entered into which was a different question from the question that the agreement had been induced by fraud or coercion. An arbitration agreement has been defined in Section 2(a) of the Arbitration Act in these words:

'Arbitration agreement means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not;'

5. In this particular case there was a written document by which the parties to that document had referred their dispute to named arbitrators for decision. We are, therefore, clearly of the opinion that the arbitration agreement in the case fell within the purview of Section 91 of the Indian Evidence Act and that the decision in Babu Ram v. Lala Ram (A), does not in our view lay down the correct law. It may further be pointed out that no authority was relied upon by Ashworth, J. for the view that he expressed in that case. The parties to the agreement of reference in this case referred a dispute which they said arose between them.

Therefore, they could not lead evidence to vary or add to the terms of the agreement by saying that they made the reference in any other capacity save that appearing from the agreement itself, The argument that since the rights of Deo Raj were involved in this dispute, therefore, any reference by the appellants in regard to the dispute was ultra vires is unsustainable for the simple reason that this award to which Deo Raj was not a party could not affect his rights whatever they may have been in the brick kiln but nevertheless the parties to the agreement were bound by the award.

A some what similar matter came up for decision before the Calcutta High Court in Jnandra Nath v. Jitcndra Nath : AIR1928Cal275 ; and a Bench of the Calcutta High Court held that an award which purported to interfere with the rights of strangers would not affect the rights of strangers but as betweeen the partiees its provisions must be held to be operative if its validity could not otherwise be questioned. We are of the opinion that once it is found that the reference to arbitration was made voluntarily and the reference was not illegal for any other reason then the agreement must be held to be binding on the parties.

6. The next argument in connection with the invalidity of the reference that was raised by, Mr. Gupta was that the reference was vague and, therefore, illegal. What the parties to the reference said was that there was some dispute in regard to the brick kilo and that the arbitrators were to decide that dispute in any manner they thought proper. The parties knew what their disputes were so that when the matter came up for decision before the arbitrators the parties could without any difficulty at all formulate those differences.

In arbitration agreements the actual points of dispute are seldom stated. Generally, references are made to arbitration where disputes arise and the parties thereafter formulate, when necessary, their disputes before the arbitrators and seek their decision on those points of differences. The arbi-tration agreement in this case cannot be said to be jso vague or uncertain as to be unenforceable. Section 29 of the Contract Act says that:

'Agreements, the moaning of which is not certain, or capable of being made certain, are void.'

7. As we read this agreement we do not think that the meaning of this agreeement was in any sense uncertain but even if there was any slight uncertainty that was capable of being made certain and was, in fact, made certain at the time when the arbitrators heard the evidence and decided the matter.

8. The contention that the arbitration agreement had not, in fact, been executed by the appellants but had been forged on a blank piece of paper which either bore their thumb-mark or signatures has been repelled by the court below. We have seen nothing on which we could justly take a differ-ent view from that taken by the Court below. We, therefore, have come to the conclusion, in agreement with the court below, that there was a valid reference to arbitration by the two appellants.

9. Another contention that was raised by Mr. Gupta before us was that which is contained in the fourth ground of the grounds of appeal. This question was, however, not raised before the court below. What was argued by Mr. Gupta was that since Mulhar Singh made a mistake in regard to the date of purchase of the stamp and in regard to the actual scribing of the award it indicated that Mulhar Singh had not taken part in the arbitration proceedings and, therefore, the award was bad. We have had the statement of Mulhar Singh read to us and we find from that statement that Mulhar Singh may have made some mistakes in regard to dates but nevertheless Mulhar Singh was perfectly clear that the award was made by arbitrators and the award was scribed on the stamp paper. We have not the slightest hesitation in holding in the evidence that the contention of Mr, Gupta in regard to this matter was unfounded,

10. The last contention raised by Mr. Gupta was that the appellants had no notice of the proceedings. The court below has, as we have already pointed out, repelled this contention. We have no hesitiation in agreeing with the conclusions arrived at by the court below for nothing has been shown Jo us which would justify us in arriving at a different conclusion on this question of fact.

11. For the reasons given above, we are of the opinion that this appeal has no force and must be dismissed.

12. We accordingly dismiss this appeal withcosts. The appeal having been dismissed the stayorder is discharged.


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