1. This appeal has been filed against the judgment of the Sub-Judge 1st Class, Rohtak, dated July 1, 1969 by which the objections under Section 30 of the Arbitration Act, 1940(hereinafter referred to as the Act) were dismissed against the Award of the Arbitrator, dated May 31, 1969.
2. The facts giving rise to this litigation are that Risal Singh plaintiff instituted a suit for recovery of Rs. 14,000/- as principal and Rs. 2,000/- as interest at the rate of 1 per cent. Per mensem against Ganga Ram on the ground that he took a loan of the aforesaid amount from him (plaintiff) vide bahi entry dated Asoj Sudi Dui Samvat 2023 Bk (June 15, 1966), which he had thumb marked after having admitted the contents thereof to be correct. He did not pay the amount in spite of repeated requests and therefore notice was also served on him. It is further stated by the plaintiff that he is not a money lender. Ganga Ram, who was originally the defendant (but died during the pendency of the suit) contested it and pleaded that he did not raise any loan from the plaintiff. He further pleaded that he was an illiterate person and had money dealings with the plaintiff and he after representing to him (Ganga Ram) that an amount of Rs. 1,400/- was due from him on account of earlier accounts obtained his thumb impression on a stamped blank paper stating that he will get the entry made later, as no scribe was available at that time. The relations between the plaintiff and Ganga Ram became strained subsequently as the plaintiff wanted him (Ganga Ram) to support a candidate of his (plaintiff's) choice in elections which he refused to do. The plaintiff, therefore, got the false entry prepared on the blank paper which was in his possession. He also pleaded that the plaintiff was a moneylender and he did not comply with the provisions of the Punjab Registration of Money Lenders Act. 1938(hereinafter referred to as the 'Money Lenders Act') and the Punjab Regulation of Accounts Act, 1930(hereinafter referred to as the 'Accounts Act'). The trial Court during the pendency of the suit, on the statement of the parties, referred the dispute to the sole arbitration of Chaudhry Maru Singh, Advocate, Rohtak. He gave an award dated May 31, 1969 holding that an amount of Rs. 14,000/- was due from Ganga Ram to the plaintiff. As Ganga Ram died during pendency of the suit, therefore, he held that his property was liable in the hands of his legal representatives, who had been impleaded as defendants. The plaintiff did not file any objections against the award. The defendants, however, filed objections under Section 30 of the Act. The trial Court framed the following issues:--
'(1) Has the arbitrator been guilty of judicial misconduct?
(2) Is the award otherwise liable to be set aside for reasons given in the objections?
The trial Court held that the arbitrator was not guilty of misconduct and that the award was not liable to be set aside. Consequently, it dismissed the objections and made award the rule of the Court. The defendants, having felt aggrieved against the judgment and decree of the trial Court, have come up in appeal to this Court.
3. The first contention of the learned counsel for the appellants is that two pleas taken before trial Court by Ganga Ram defendant were that the plaintiff was a moneylender and that he was not entitled to interest and issues were also framed on the said pleas. The arbitrator did not give decision on the former plea and on the latter he held that the plaintiff-respondent was not entitled to interest as he did not comply with the provisions of the Accounts Act. He further submits that the whole case was referred to him and if he dealt with the latter question, it was also incumbent upon him to give a decision as to whether he was a moneylender as both the questions are correlated and the provisions of both the Acts are similar. He also urges that if the plaintiff was a money-lender under the Money Lenders Act, his suit was liable to be dismissed on this short ground, as he neither got himself registered nor obtained a licence under the aforesaid Act. On the other hand, the learned counsel for the respondent submits that it was within the discretion of the arbitrator to give decision either on whole case without giving any reasons or on each of the issues separately. According to him, if the arbitrator did not give any decision on the question as to whether the plaintiff-respondent was a money-lender it will be deemed that he had rejected the contentions of the defendant-appellants. I have heard the contentions of the learned counsel for the parties at great length. The issues as to whether the plaintiff-respondent was entitled to interest and that he was money-lender are connected matters. In the Accounts Act, the word 'creditor' has been defined and it means a person who in the regular course of business advances a loan as defined in this Act. The word 'loan' has been defined in sub-section (7) of Section of the said Act which says that it is an advance whether of money or in kind at interest and shall include any transaction which the Court finds to be in substance a loan but shall not include.....................Certain exceptions have been given under the aforesaid sub-section but none of them is applicable to the facts of this case. In the Money Lenders Act, the word 'money-lender' has been defined in sub-section (9) of S. 2(9) and it means a person or a firm carrying on a business of advancing loans as defined in this Act. The word 'loan' has been defined in sub-section (8) of Section 2 of the said Act and it states that the loan is an advance whether secured or unsecured of money or in kind at interest and shall include any transaction which the Court finds to be in substance a loan, but it shall not include..............Here also certain exceptions have been provided, but the present case does not fall within any of them. On reading the aforesaid sub-section it will be clear that the definition of the word 'creditor' in Accounts Act is pari materia with that of the 'money-lender' in the Money Lenders Act, and the definitions of the word 'Loan' in both the Acts are also similar. The arbitrator observes that the provisions of Accounts Act are applicable to the plaintiff-respondent whereas he has not given any finding whether Money Lenders Act is applicable to him or not. As the facts of this case are, it was necessary for him that he should have given a finding on that question also. In case the plaintiff-respondent was a money-lender, he could not institute a suit for recovery of the amount unless he got himself registered under Section 4 and had obtained a licence under Section 5 of the said Act. When the arbitrator was examined as a witness, he stated that he could not come to the conclusion that the plaintiff-respondent was a money-lender. As an arbitrator he should have decided that question which was an important one. Under Section 30 of the Act an award is liable to be set aside in case an arbitrator or umpire has misconducted himself or the proceedings. The word 'misconduct' has not been defined in the Act but it does not necessarily mean anything in the nature of fraud. It may include cases of fraud by the arbitrators but it implies much more than that. The arbitrator is holding a quasi-judicial position and he has to perform onerous duties including those of deciding complicated and disputed questions of law and facts between the litigants. In interpreting the word in a wider sense it includes legal misconduct, which means some palpably erroneous though honest decision and especially when it caused a miscarriage of justice. It includes neglect of duties and responsibilities. The Courts expect of him that he should act with honesty. It is also expected from an arbitrator that he should enquire into points raised before him by the parties to arbitration. Failure to do so may amount to misconduct in the circumstances of the case. Misconduct is a question of fact to be decided in each case and has to be ascertained from the facts and circumstances of the case. Section 3 of the Money Lenders Act is mandatory and says that suits by a money-lender for recovery of loan or an application by him for the execution of a decree relating to a loan, shall, after the commencement of the Act, be dismissed unless, he at the time of institution of the suit or presentation of the application for execution, or at the time of decreeing the suite or deciding the application for execution, is registered and holds a valid licence. In the circumstances aforesaid, the omission to decide this matter by the arbitrator is a judicial misconduct, as both the aforesaid questions were interlinked and the decision on that question would have materially affected the result of the case. The learned counsel for the respondent has relied on Union of India v. Jai Narain Misra, AIR 1970 SC 753, wherein it has been observed that the arbitrator is not bound to give an award on each point, and he can make his award on the whole case. In case before the Supreme Court, the arbitrator made an award of a sum admitted to be due and a lump sum in respect of the remaining claims. The facts of the case before the Supreme Court were different and the observations made by it are not applicable in the present case.
4. The second contention of the learned counsel for the appellants is that it was stated in the plaint by the plaintiff-respondent that a cash amount of Rs. 14,000/- was paid by him to Ganga Ram decreased but the arbitrator came to the conclusion that no amount was paid in cash at the time of execution of bahi entry and the same was made on the basis of previous accounts. He further urges that in view of the fact that the cash consideration was not paid, the arbitrator should have dismissed the claim of the plaintiff-respondent. The learned counsel for the respondent submits that if the entry was for consideration, it does not matter as to whether the amount was advanced in cash or not. He also submits that the arbitrator was fully justified in deciding the matter in favour of the respondent and the Civil Court cannot interfere with the award under Section 30 of the Act on this ground. There is no force in the contention of the learned counsel for the appellants. It is for the arbitrator to decide as to whether any amount was due to the plaintiff-respondent from Ganga Ram deceased or not. In Firm Sriniwas Ram Kumar v. Mahabir Prasad AIR 1951 S C 177, in a suit for specific performance of a contract, in part performance of which the plaintiff alleges to have paid the defendant some money the defendant denied the contract and pleaded that the money was taken by him as a loan. It was held that the Court could pass a decree for recovery of the loan in favour of the plaintiff on his failure to prove the contract even though the plaintiff had failed to plead, and claim relief on, this alternative case. In the present case the award has been given by the arbitrator on the ground that consideration had been proved by the plaintiff-respondent. No doubt cash consideration was not proved as stated in the plaint but that will not make any difference. It is not for the Court to find out whether the conclusions of the arbitrator are correct or not. The Courts are slow to interfere with the award of the arbitrator, unless misconduct on his part is proved. The finding given by the arbitrator is not perverse. It has been held in Union of India v. Kalinga Construction Co. (P) Ltd. AIR 1971 S C1646, that if the finding of the arbitrator is not perverse, the Court though it differs from his conclusions cannot set aside the award as it cannot be said that there is any error apparent in the award. This contention of Mr. Anand Sarup is therefore, rejected being without any merit.
5. I therefore, accept the appeal and set aside the award of the arbitrator with no order as to costs.
6. Appeal allowed.