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Anwarul Hasan Khan and ors. Vs. Ali Mohammad and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 433 of 1960
Judge
Reported inAIR1961All558
ActsArbitration Act, 1940 - Sections 20, 39 and 39(1)
AppellantAnwarul Hasan Khan and ors.
RespondentAli Mohammad and ors.
Advocates:Gopinath Kunzru and ;Amarnath Kaul, Advs.
DispositionAppeal rejected
Excerpt:
(i) arbitration - arbitration agreement - section 20 of arbitration act, 1940 - opposite party denied existence of arbitration agreement - it is obligation of court to interfere and decide about existence of arbitration agreement. (ii) appealable orders - sections 20 and 39 (i) of arbitration act, 1940 - whether order under section 20 appealable - held, order is duly appealable. - - the proper interpretation of section 20 of the arbitration act clearly is that, even in cases where the existence of the agreement is denied, it is for the court to enter into that question and give a definite finding whether the agreement does or does not exist and until such a finding is recorded, there can be no final order refusing to make a direction for filing the agreement......the respondents had applied to the court for an order directing the present appellants to file an arbitration agreement. the appellants denied the existence of that agreement. the trial court, without going into the question whether an agreement of the nature alleged by the respondents was or was not executed and without recording any finding as to its existence, dismissed the application on the view that since the existence of the agreement was denied by the present appellants, no order under section 20 of the arbitration act could be made directing the appellants to file the agreement. that order of the trial court was set aside in appeal by the learned single judge on the ground that a mere denial by the present appellants could not be the basis for refusing to make an order for.....
Judgment:

V. Bhargava, J.

1. We have heard learned counsel for the appellants in this special appeal and we find that there is no prima facie reason for differing from the view taken by the learned Single Judge, so that this appeal has no force.

2. The appeal before the learned Single Judge came up under Section 39 of the Arbitration Act against an order passed by the trial court on an application under Section 20 of the Arbitration Act dismissing that application. The respondents had applied to the court for an order directing the present appellants to file an arbitration agreement. The appellants denied the existence of that agreement.

The trial court, without going into the question whether an agreement of the nature alleged by the respondents was or was not executed and without recording any finding as to its existence, dismissed the application on the view that since the existence of the agreement was denied by the present appellants, no order under Section 20 of the Arbitration Act could be made directing the appellants to file the agreement. That order of the trial court was set aside in appeal by the learned Single Judge on the ground that a mere denial by the present appellants could not be the basis for refusing to make an order for filing the agreement under Section 20 of the Arbitration Act and that such an order could only be made after the trial court had recorded a finding that no agreement was executed and that no agreement did, in fact, exist.

Having heard learned counsel, we are unable to see that there is any error in this judgment of the learned Single Judge. The nature of proceedings under Section 20 of the Arbitration Act itself indicates that a court has to be approached. under the provision of law when one of the parties desires a reference to arbitration and the other wants to avoid such a reference. In such cases, the party desiring the reference to arbitration moves the application. The party not wanting the reference can oppose it on various grounds and one of them can be the assertion that no arbitration agreement exists.

If the court could competently refuse to make an order under Section 20 of the Arbitration Act merely on such a denial of the existence of the arbitration agreement, it would mean that, in all cases, the person wanting to avoid the reference would deny the existence of the agreement and would get away with it as the court would not be investigating the question of its existence. The proper interpretation of Section 20 of the Arbitration Act clearly is that, even in cases where the existence of the agreement is denied, it is for the court to enter into that question and give a definite finding whether the agreement does or does not exist and until such a finding is recorded, there can be no final order refusing to make a direction for filing the agreement.

This the trial court, in this case, omitted to do. The arbitration agreement relied upon by the respondent was the agreement which, according to him, was executed on his appointment as principal of the institution and it was the existence of that agreement which was denied by the appellants. It is for the trial court to record evidence of parties, take into account all circumstantial evidence and presumption of law and record a finding on the question of existence of the agreement before passing a final order under Section 20 of the Arbitration Act.

3. Two other points were urged by learned counsel for the appellants in this appeal. One point was that no appeal lay to this Court against the order of the trial court as Section 39 of the Arbitration Act did not apply to the order passed by the trial court. This point has been decided against the appellants by the learned Single Judge and we agree with him that the order, which the trial court passed dismissing the application of the respondents for an order under Section 20 of the Arbitration Act, was an order falling under Clause (iv) of Sub-section (i) of Section 39 of the Arbitration Act and the appeal did lie to this Court.

4. The other point urged by learned counsel was that the application under Section 20 of the Arbitration Act presented by the respondents was time-barred. The question of limitation was not raised in so many words before the trial court and was raised, for the first time, in appeal in this Court before the learned Single Judge. Such a question is not a pure question of law. The question whether this application had become time-barred or not would depend on a determination of the date with effect from which the period of limitation started to run.

Such a question of fact can properly be investigated by the trial court. It may be, as urged by learned counsel, that the trial court may have to go into this question of limitation without its being raised specifically in view of the mandatory language of Section 3 of the Indian Limitation Act but, in any case, it is a matter for the trial court to go into and decide in the first instance and the learned Single Judge need not have recorded a definite decision on it in the appeal. The case has already been remanded to the trial court and it will be for the trial court to go into all such appropriate questions.

5. The appeal is rejected.


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