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Kehar Dass Vs. Tarak Singh and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal No. 665 of 1973
Judge
Reported inAIR1977P& H306
ActsArbitration Act, 1940 - Sections 32
AppellantKehar Dass
RespondentTarak Singh and anr.
Appellant Advocate B.S. Jawanda, Adv.
Respondent Advocate Y.P. Gandhi, Adv.
DispositionAppeal dismissed
Cases ReferredUttam Singh Dugal & Co. v. Union of India
Excerpt:
.....of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - --i am, therefore, of the opinion that section 32 contemplates an award that has been filed in court under section 14(2) and made a rule of the court under section 17, and that an award which has not gone through these processes is no better than a mere scrap of paper. 2 was duly published and satisfied. it is well settled that as a general rule all claims which are the subject-matter of a reference to..........rajendra nath mittal, j., was that the defendant was competent to set up the award as a bar to the suit filed by the plaintiff. the parties vide agreement and reference, exhibit d-l, had agreed to refer the matter in dispute for arbitration of the panchayat and exhibit d-2 dated 19-6-1961 is the award given by the panchayat. the award given by the panchayat, was signed by the parties. the question for decision is, as to whether the plaintiff, who was a party to the arbitration agreement and who signed the award can get rid of it by filing a suit on the same cause of action by ignoring the award or impeaching its validity. the award in question was made on a reference out of court and was not filed in the court 5. the learned counsel for kehar dass appellant vehemently contended that.....
Judgment:

Gurnam Singh, J.

1. This Letters Patent appeal has been filed by Kehar Dass Chela Bawa Joti Parkash, plaintiff, against the decision and judgment of Rajendra Nath Mittal, J., vide which his second appeal was dismissed.

2. The plaintiff claimed himself to be the owner of the site shown fey letters ABCE' in plan, Exhibit P-1, attached with the plaint. In the year 1933 the Sikh Gurdwara Tribunal declared this land to be a part of this Dera. There is a wall towards the South of this site. Tarak Singh, defendant No. 1, obtained permission from the Gram Panchayat of the village for opening a door in the said wall and to pass the water towards the site in dispute. Defendant No. 1 proposed to open the door and to pass the water over the property in dispute, upon which the plaintiff filed a suit for restraining him (Defendant No. 1) from doing so. Tarak Singh contested the suit and pleaded that the plaintiff was not the owner of the site in dispute, rather it is a part of shamlat property. He further pleaded that the dispute had been referred by the parties to the Panchayat and the Panchayat gave an award and consequently the suit was not maintainable in the Court.

3. The trial Court decreed the plaintiff's suit. Tarak Singh, defendant No. 1, went in appeal, which was heard by the Senior Sub-Judge, Ludhiana, and he reversed the judgment and decree of the trial Court and dismissed the plaintiff's suit. Being aggrieved with the judgment of the Senior Sub-Judge, the plaintiff came up in appeal to this Court and as stated above, it was dismissed.

4. The view taken by Rajendra Nath Mittal, J., was that the defendant was competent to set up the award as a bar to the suit filed by the plaintiff. The parties vide agreement and reference, Exhibit D-l, had agreed to refer the matter in dispute for arbitration of the Panchayat and Exhibit D-2 dated 19-6-1961 is the award given by the Panchayat. The award given by the Panchayat, was signed by the parties. The question for decision is, as to whether the plaintiff, who was a party to the arbitration agreement and who signed the award can get rid of it by filing a suit on the same cause of action by ignoring the award or impeaching its validity. The award in question was made on a reference out of Court and was not filed in the Court

5. The learned counsel for Kehar Dass appellant vehemently contended that unless the award in dispute was made a rule of the Court in accordance with the provisions of the Arbitration Act, it could not be pleaded in defence in a suit regarding the property covered by the award. In support of his contention, he placed reliance upon:

1. Mohamad Yusuf v. Mohammed Hus-sain, AIR 1964 Mad 1 (FB); 2. Paman-dass Sugnaram v. S. Manikyam Pillai, AIR 1960 Andh Pra 59 (FB); 3. Karichori Raman v. Kodoth Krishnan, AIR 1976 Ker 22; 4. Saileshwar v. Kanti Kumar, AIR 1965 Pat 238 and 5. Gireanna v. Basappa, AIR 1964 Mys 238.

6. In Mohamed Yusuf's case (AIR 1964 Mad 1) (FB) (supra) the finding given was that 'an award made on reference out of Court but which has not been filed in the Court, in accordance with the Act. and the judgment obtained thereon, cannot ordinarily be put up as a defence to an action'. In Pamandass Sugnaram's case (AIR 1960 Andh Pra 59) (FB) (supra), which is also a Full Bench judgment, it was observed that 'it is not open to a defendant to set up an award as a bar to the suit to the original cause of action, where the award has not been filed and all proceedings relating thereto had not been gone through as required by the Arbitration Act.' in Karichori Raman Nair's case (AIR 1976 Ker 22) (supra), G. Balagangadharan Nair J., observed as under:--

'With respect, I prefer to follow the Full Bench decisions of the Madras and Andhra Pradesh High Courts rather than the Rajasthan decision, discussed above. The plaintiff cannot be non-suited on the ground that his suit is based upon the alleged agreement, antecedent to the award, because the award Ext. A-l which has not been made the subject of a judgment is infructuous and unenforceable and is therefore incapable of extinguishing the earlier rights, if any.'

The Rajasthan decision referred to in Karichori Raman Nair's case was Firm Gulzarimal Gheesalal v. Firm Ramesh-chandra Radhyfishyam, AIR 1959 Raj 162, In this case the dispute between the parties had been referred to arbitration and the Arbitrators had passed an award making the defendants liable for certain amounts. The defendants not having complied with the award, which was never made a rule of the Court, the plaintiff brought the suit on the original cause of action and alternatively on the award. The trial Court held the award to be illegal and it gave the plaintiff a decree on the original cause of action. Both the parties appealed. The first appellate Court did not enter any finding on the validity of the award but gave the plaintiff a decree for a larger amount in terms of the award. The defendant took a second appeal to the High Court and the learned single Judge held in the first place that where a dispute culminates in an award, no suit will lie on the original cause of action, which is extinguished and becomes merged in the award. The learned Judge further observed that 'when he pleads an award, it is not open to the plaintiff to raise a suit for enforcing the award, and that his only remedy is to file an application under Section 33 and have the award implemented according to the procedure laid down in the Arbitration Act itself.'

7. In Saileshwar Lakhaiyar's case (AIR 1965 Pat 238) (supra), decided by a Division Bench, it was observed that:--

'I am, therefore, of the opinion that Section 32 contemplates an award that has been filed in Court under Section 14(2) and made a rule of the Court under Section 17, and that an award which has not gone through these processes is no better than a mere scrap of paper. Such an award cannot attract the provisions of Sections 32 and 33 Section 33 comes into play after an award has been filed in Court and notice of this fact has been given to the parties as contemplated by the second part of Section 14(2). The stage for making an application under Section 33 cannot arise unless the award has (been filed in Court It follows, therefore, that an award that has not been filed or made a rule of the Court is wholly ineffective and the parties are relegated to the position as if there was no arbitration and no award.'

8. In Kapgal Konda Gireanna's case {AIR 1964 Mys 238) (supra), it has been observed:--

'Section 32 of Arbitration Act which prohibits the plaintiff to rely upon the terms of the award unless the award has received the imprint of a Court also prohibits the defendant to rely on its terms by way of defence, unless he has a judgment and decree on the said award in his favour.'

9. It was further observed that:--

'The scheme of the Arbitration Act isto prevent the parties to an arbitrationagitating questions relating to the arbitration in any manner other than thatprovided by the Act. If a party desiresto rest his case on an award, on a refer-ence by mutual agreement, he cannot doso unless the award becomes a rule ofthe Court. For that purpose, the partyhas to take the necessary steps as contemplated under the Arbitration Act byfiling an application in Court to be fol-lowed up by a decree on such an award.

* * * * *

Where the defendant, who is himself relying upon the award, did not take steps to have it filed and dealt with under the appropriate provisions of the Arbitration Act, it is not competent to him to rely upon it in answer to an action.'

10. The learned counsel for the appellant further pointed out that in Kashinathsa Yamasa Kabadi v. Narsingsa Bhaskarsa Kabadi, AIR 1961 SC 1077, no considered opinion was given on the question in dispute and it was observed that

'where an award made in arbitration out of Court is accepted by the parties and it is acted upon voluntarily and a suit is thereafter sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. By setting up a defence in the present casa that there has been a division of the property and the parties have entered into possession of the properties allotted, defendant No. 1 is not seeking to obtain a decision upon the existence, effect or validity of an award. He is merely seeking to set up a plea that the property was divided by consent of parties Such a plea is in our judgment not precluded by anything contained in the Arbitration Act,'

11. The learned counsel further con-tended that in the instant case the award given by the Panchayat was not accepted by the appellant nor the same has been acted upon, rather on the complaint made by the plaintiff, the door opened by Tarak Singh defendant No. 1, on July 5, 1961, was got closed toy the Superintendent of Police, Ludhiana, on Jan. 14, 1962.

12. The learned counsel further urged that an award assumes validity or be-' comes effective or binding upon the rights of the parties only when it ha3 been made a rule of the Court and that Section 32 of the Arbitration Act contemplates an award that has been filed in the Court under Section 14(2) and made a rule of the Court under Section 17 of the Arbitration Act. Further according to him an award which has not been gone through the aforesaid processes is no more than a mere scrap of paper and the parties are relegated to the position as if there was no arbitration or no award.

13. The contention of the learned counsel for the respondent in reply was, that when the parties enter into an agreement for settlement of their dispute by arbitration, its effect is, to take the Ms out of the hands of the ordinary Courts of the land and to entrust it to the decision of, what has been termed, a private tribunal. Further according to him, the object of the Arbitration Act is to prevent parties to an arbitration from reagitating the same question in dispute referred to arbitration in the manner other than as provided by the Act and that an award which is signed by the parties would determine the dispute and It is not necessary before it can be regarded as complete that it should be made a rule of the Court. He further pointed out that it is not necessary that the award should be filed in the Court and it is only when a party to an arbitration agreement feels that it would be necessary for him to obtain the assistance of the Court, it is only then that he requests the arbitrator to file the award in the Court and that the award which is not made a rule of the Court is not a nullity. He placed reliance upon Thakkar Viihaldas Hargovind v. Kachhia Jagjivan Motilal, ILR (1969) Guj 12 decided by a Division Bench of the Gujarat High Court, wherein it has been held that:--

'An award given by an arbitrator remains valid until it is set aside and such an award even if not filed in the Court remains valid and binding between the parties to it. Where no action is taken by a party affected by the award for setting aside the same under Section 33 read with Section 30 or for having it reconsidered under Sections 15 and 16 of the Act, the award, though not made a rule of the Court by having it filed under Section 14(2) of the Act and having obtained a decree thereon under Section 17 of the Act so as to make it enforceable by any competent Court, it stands as a valid award as between the parties in respect of the subject-matter entrusted to the arbitrator. The validity of the award is presumed and it cannot be challenged in a suit or proceeding other than the one taken under the provisions of the Act. While it may not be an enforceable award in the sense that it has not merged in a decree under Section 17 of the Act so as to be executable by any competent Court, it does not lose its existence as between the parties thereto. It may bar a remedy for enforcing the same, but it cannot bar or take away the right of a party thereto to challenge the maintainability of a suit by the other party ignoring the award, in respect of the same subject-matter which was entrusted to the decision of an arbitrator and when in fact, an award has been given by him it binds the par-ties.'

14. The learned counsel has also placed reliance on a decision of the Supreme Court in Uttam Singh Dugal & Co. v. Union of India, Civil Appeal No. 162 of 1962, decided on 11-10-1962 (SC). In this case Messrs. Uttam Singh Dugal & Co. had filed an application under Section 33 of the Arbitration Act. The Union of India called upon respondent No. 2 Col. S. K. Bose to adjudicate upon the matters in dispute between respondent No. 1 and the appellate Company. The appellant's allegation was that the purported reference to respondent No. 2 (Col. S.K. Bose) for adjudication on the matters alleged to be in dispute between the parties was not competent because by an award passed by respondent No. 2 on 23rd of April, 1952 all the relevant disputes between the appellant and respondent No. 1 had been decided. The award given on 23rd of April, 1952, by respondent No. 2 was duly published and satisfied. The appellant wanted the trial Court to determine the effect of said earlier award. The application made by the applicant was allowed 'by the trial Judge who held that the claim decided by the arbitrator was deemed to have been decided by him and the claim was merged in the award. Against his decision an appeal or a revisional application was preferred before the Patna High Court. The Patna High Court took the view in revision that the second reference was valid as it was not the subject-matter of the earlier reference. The application of the appellant under Section 33 of the Arbitration Act was dismissed. It was in dealing with this question that their Lordships of the Supreme Court have pointed out that the application under Section 33 of the Arbitration Act was competent. Their Lordships in considering this position have pronounced upon the true legal position of an award and this is what they have Observed:--

'The true legal position in regard to the effect of an award is not in dispute. It is well settled that as a general rule all claims which are the subject-matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award. After an award is pronounced, no action can be started on the original claim which had been the subject-matter of the reference. As has been observed by Mookerjee J. in the case of Bhajshari Shah Benikya v. Beharilal Basak ((1906) ILR 33 Cal 881) 'the award is in fact, a final adjudication of Court of the parties' own choice and until impeached upon sufficient grounds in an appropriate proceeding, an award which is on the fact of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive, in reality, an award possesses all the elements of vitality even though it has not been formally enforced, and it may be relied upon in a litigation between the parties in relation to the same subject-matter'. This conclusion according to the learned Judge, is based upon the elementary principle that as between the parties and their privies, an award is entitled to that respect which is due to the judgment of a Court of last resort. Therefore, if the award which has been pronounced between the parties has in fact, or can in law, be deemed to have dealt with the present dispute, the second reference would be incompetent. This position also has not been and cannot be seriously disputed.'

15. The learned counsel for the respondent also relied upon Satish Kumar v. Surinder Kumar, AIR 1970 SC 833, in which the Hon'ble Judges observed as under:--

'The award is not a mere waste paper but has some legal effect. It is final and binding on the parties and it cannot be said that it is a waste paper unless it -is made a rule of the Court. The conferment of exclusive jurisdiction on a Court under the Act does not make an award any the less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure. The award is, in fact, a final adjudication of a Court of the parties' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the face of it regular, is conclusive upon the merits of the controversy submitted. As between the parties and their privies, an award is entitled to that respect which is due to judgment of a Court of last resort.'

16. In Satish Kumar's case (AIR 1970 SC 833) (supra), a reference to the case M/s. Uttam Singh Dugal & Co. v. Union of India (Civil Appeal No. 162 of 1962, D/- 11-10-1962) (SC) (supra), has been made and after quoting a para from the aforesaid judgment, the Hon'ble Judges observed as under:--

'This judgment is binding on us. In our opinion this judgment lays down that the position under the Act is in no way different from what it was before the Act came into force, and that an award has some legal force and is not a mere waste paper. If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of Section 17(1)(b) of the Registration Act.'

17. Further, the Hon'ble Judges, with reference to para 7 of Schedule I to the Registration Act, observed that:--

'If the award is final and binding on the parties it can hardly be said that it is a waste paper unless it is made a rule of the Court.'

18. The learned counsel also relied upon Kedar Nath v. Ambika Prasad 1973 All LJ 372 : {AIR 1974 All 37} in which it was held that:--

'An award even though not made a rule of the Court cannot be treated as a mere waste paper and some legal effect has to be given to it. Section 32 of the Arbitration Act bars a suit for decision upon the existence, effect or validity . of an arbitration and prevent? an award from being enforced, set aside, amended, modified or in any way affected otherwise than is provided in the Act. Held that an arbitration award even though not made a rule of the Court can be set up as a defence to a suit.'

19. In this case also, the Hon'ble Judges relied upon the finding in the case M/s. Uttam Singh Dugal & Co. v. Union of India (Civil Appeal No. 162 of 1962, D/- 11-10-1962) (SC) (supra), and came to the conclusion that an award even though not made a rule of Court cannot be treated as a mere waste paper. Reliance was also placed on the case of Satish Kumar (AIR 1970 SC 833) (supra), and the Hon'ble Judges observed as under:--

'We must, thereforee, as a consequence of the pronouncement of the Supreme Court in the case of Satish Kumar v. Surinder Kumar hold that an arbitration award even though not made a rule of the Court can 'be set up as a defence to a suit, for to hold otherwise, as has been seen, would be to treat the award as a mere waste paper, which is not the correct view to take.'

20. Sub-section (b) of Section 2 of the Arbitration Act, 1940, defines 'award'. 'Award' means an arbitration award The award is to be signed and filed under Section 14 of the Arbitration Act and when the Court sees no reason to set aside the award it shall proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree follows and then no appeal lies from such a decree. An award can only be set aside in accordance with the provisions of Section 30 of the Arbitration Act. Section 32 of the Arbitration Act provides that no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. Any party desiring to challenge the award has to make an application to the Court.

21. The object of the Arbitration Act appears to be that in respect of matters which are covered toy the arbitration agreement, a suit shall not be entertained or proceeded with or in any event it should be stayed Rule 7 of the First Schedule to the Arbitration Act says that the award shall toe final and binding on the parties and persons claiming under them respectively. As said above 'award' means an arbitration award and if the intention of the legislature was that a suit can be brought on the original cause of action if the award is not made a rule of the Court it could have so provided in the Act. Sections 32 and 33 of the Arbitration Act provide that an arbitration agreement or an award can only be contested by an application and not by a suit and if no such application is made, the award cannot be set aside on any ground specified in Section 30 of the Arbi-tration Act.

22. There is no doubt a difference of opinion amongst the various High Court on the point in issue but the matter has been set at rest by the Supreme Court in Uttam Singh Dugal & Co. v. Union of India (Civil Appeal No 162 of 1962, D/_ 11-10-1&62) (SC) (supra). Their Lordships of the Supreme Court have considered and decided the question as to what is the true effect of an award and have observed that an award which is pronounced has full efficacy. The Supreme Court has also in terms decided that in respect of the matters which are covered by the first award, the second action is not competent and this is the ratio of the judgment. The law declared by the Supreme Court is binding on all Courts in India under Art 141 of the Constitution of India. The Supreme Court has declared the law that a second action is not competent in respect of what has been decided in the first award. Thus in view of the clear pronouncement of the Supreme Court in Uttam Singh Dugal & Co. v. Union of India, (supra), and in view of the other decisions of the Supreme Court, referred to, above, it is clear that an award even if it is not made a rule of the Court would certainly bar the suit. The learned single Judge, therefore, rightly dismissed the appeal and accordingly this appeal fails and is hereby dismissed with costs.

Harbans Lal, J.

I agree.


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