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Parmeshwar Lal and Co. Vs. Jai Narain - Court Judgment

LegalCrystal Citation
CourtPunjab and Haryana High Court
Decided On
Case NumberF.A.F.O. No. 2 of 1951
Reported inAIR1952P& H373
ActsArbitration Act, 1940 - Sections 16(1) and 39; Partnership Act, 1932 - Sections 19; Evidence Act, 1872 - Sections 115
AppellantParmeshwar Lal and Co.
RespondentJai Narain
Appellant Advocate K.L. Gosain, Adv.
Respondent Advocate A.N. Grover, Adv.
DispositionRevisions dismissed
Cases ReferredHellaby v. Brown
.....the order of remitting the award is bad because (i) there was no award in one of the suits (only one copy of the award has been filed) and (ii) a joint award is not a legal award as one award cannot be given in two suits......the defendants have filed two revisions also in this court.2. the plaintiff had dealings with two firms, firm subh karan das-churanji lal and par-mesh war lal & company. the former deals in forward contracts of gold and the latter of silver. the partners in the former are subh karan das, madan lal, basheshar lal, chu-ranji lal, parmeshwar lal and ram lal and in the latter are basheshar lal, parmeshwar lal, gulzari lal and shiv karan das. both these firms are firms of pucca arhtias. jai narain, the plaintiff, filed two suits against the firm subh karan das-churanji lal for forward contracts of gold from 19th february 1946, to 19th july 1946, and against parmeshwar lal & company for silver contracts, but it is not clear for what period. both these suits were for accounts. a preliminary.....

Kapur, J.

1. This judgment will dispose of two appeals F. A. O. Nos. 2 and 3 of 1951 and two Civil Revisions Nos. 187 and 183 of 1951 all arising out of the same order. The appeals are directed against the same order passed intwo suits dated the 18th December 1950 in which the learned trial Judge repeated his order for remitting the award and also dismissed the objections which had been filed by the defendants. As there was some doubt as to whether an appeal would lie from this order or not the defendants have filed two revisions also in this Court.

2. The plaintiff had dealings with two firms, firm Subh Karan Das-Churanji Lal and Par-mesh war Lal & Company. The former deals in forward contracts of gold and the latter of silver. The partners in the former are Subh Karan Das, Madan Lal, Basheshar Lal, Chu-ranji Lal, Parmeshwar Lal and Ram Lal and in the latter are Basheshar Lal, Parmeshwar Lal, Gulzari Lal and Shiv Karan Das. Both these firms are firms of pucca arhtias. Jai Narain, the plaintiff, filed two suits against the firm Subh Karan Das-Churanji Lal for forward contracts of gold from 19th February 1946, to 19th July 1946, and against Parmeshwar Lal & Company for silver contracts, but it is not clear for what period. Both these suits were for accounts. A preliminary issue was framed as to whether a suit for accounts lay against Pucca Arhtias.

3. On the 18th July 1947, two applications were filed for arbitration which were signed by Basheshar Lal and Jai Narain. By this Dwarka Das was appointed the arbitrator. As he refused to act, Shiv Narain Shankar, an Advocate, was appointed the arbitrator on the 14th May 1948, again by the same two persons Basheshar Lal acting on behalf of the two firms. The award was made on the 28th October 1948, in which a consolidated sum was awarded to the plaintiff against both the defendant firms. Two sets of objections were raised by the defendant firms, or by firm Subh Karan Das-Charanii Lal and ParmeRhwar Lal and Subh Karan Das. That was in the suit against the firm Subh Karan Das Chviranji Lal. In the suit against Firm Parmeshwar Lal & Company objections were also raised and they are on behalf of the firm and Parmeshwar Lal. For both these objections Mr. Tara Chand Brij Mohan Lal was briefed on behalf of the defendant firms and the objecting partners.

4. The learned trial Judge framed two issues :

'(1) Whether Basheshar Lal had authority torefer the matter to arbitration and to appointan arbitrator, and if not what is the effect?

(2) Whether the arbitrator misconductedhimself or the proceedings?'

He held that Basheshar Lal had not the authority of the partner of the two firms to enter into arbitration and that there was no binding custom by which he could enter into arbitration, but the defendants were estopped because their conduct amounted to ratification. He relied on a judgment of Achhru Ram, J. in 'IIANUMAN CHAMBER OF COMMERCE LTD. v. JASSA RAM', AIR 1949 E P 46. He also dismissed the objections of the defendants and affirmed the order remitting the award which had been passed on the 18th of March 1949.

5. It may here be stated that a revision was brought against this order of the 18th of March 1949, but I remanded the case for adjudication of the objections which had been raised. So the result of the order of the Subordinate Judge dated the 18th December 1950, is that the award was remitted to the arbitrator under Section 16(1) (a) and (b) of the Arbitration Actfor determining the respective liabilities of the two defendant firms separately. Against this order, two appeals and two revisions have been brought.

6. An objection is taken by the learned counsel for the respondent that no appeal lies against this order. Under Section 39 of the Arbitration Act appeal lies on various grounds. An order setting aside or refusing to set aside an award is appealable under Section 39. The learned Judge has remitted the case, and he has also dismissed the objections. In my opinion an appeal would not lie, but whether an appeal lies or not is not material except as to the question of Letters Patent Appeal, because the appellant has also filed revisions against the order of the Subordinate Judge. I therefore proceed to decide the two revisions.

7. The petitioners have submitted in the first instance that Basheshar Lal had no authority to refer the matter to arbitration as under Section 19 of the Indian Partnership Act one partner has not the implied authority to submit a dispute relating to the business of a firm to arbitration. There would be a great deal of force in this contention, but the circumstances show that the other partners were aware of the arbitration proceedings and they must be taken to have ratified the act of their co-partner Basheshar Lal. It was held in the judgment of Achhru Ram J., in 'Hanuman Chamber of Commerce Ltd. v. Jassa Ram', AIR 1949 E P 46 :

'Where the initial reference to arbitration on behalf of his firm is made by one of the partners without any express or implied authority from his other partners, there is nothing to prevent such other partners from ratifying his act which was unauthorised at its inception. Ratification need not be by any express act or declaration and may be implied from conduct. It may be inferred from mere acquiescence or silence or inaction on the part of such other partners. (From the circumstances of the case acquiescence on the part of non-referring partners was inferred).'

In this case the circumstances are that the written statement was filed by Basheshar Lal on behalf of the two firms. It is proved that he was authorised to conduct the proceedings in Court and Parmeshwar Lal has stated as D. W. 5 that he kept himself informed about the progress of these suits and he was also informed that Basheshar Lal had entered into an arbitration but he did not protest at any stage. The first arbitration agreement was entered into on the 18th of July, 1947, and the second one on the 14th May 1918. The proceedings went on till the award was given on the 28th October 1948. None of the partners of the two firms have come into the witness-box to state that they did not know of the arbitration proceedings. Basheshar Lal in cross-examination has stated on the other hand that he could not say whether the others knew about the proceedings in Court and before the arbitrator and that he did not have any talk with the other partners with regard to the arbitration proceedings. No other partner except Par-meshri Lal seems to have gone into the witness-box to deny knowledge of the arbitration proceedings. During the course of the arbitration proceedings account-books of both the firms were produced by Basheshar Lal. Shiv Karan Das. who is a partner in firm Parmeshwar Lal & Company appeared before the arbitrator. Parmeshwari Lal who is a common partner in both the firms has stated that he kept himself informed of the proceedings in Court and also knew about the arbitration. The arbitrator was paid Rs. 500/- of which Rs. 250/- was to be paid by the defendants firms and was so paid. The proceedings before Shiv Narain Shankar went on for about five months and the first arbitration had been entered into on the 13th o July 1947. Right from that time till the date that the objections were filed no objection of any kind was taken by the other partners to the arbitration proceedings. There is no kind of evidence produced by the defendants to show that they did not accept the reference to arbitration, nor is there anything on the record showing that they took any step to have the arbitration set aside. Even at the time of objections, the only persons who have come forward with objections are Parmeshwari Lal on behalf of Parmeshwar Lal & Company and Parmeshwari Lal and Subh Karan Das on behalf of Subh Karan Das-Chu-ranji Lal and in the witness-box only Parmeshwar Lal and Basheshar Lal have appeared. It appears to me that the other partners, knowing of what was going on, took the chance of having a favourable decision and when the award was against them have come forward to object which, in my opinion, they are not entitled to do and are estopped from doing.

8. Mr. Gosain relying on a judgment in 'Sohan Lal v. Madho Ram', 53 Pun L R 23, submitted that no issue of estoppel was raised and in the absence of any evidence the trial Court should not have gone into this matter. In the trial Court no objection was taken that this point could not be raised. As a matter of fact, in the trial Court counsel for the defendants argued this point and even quoted a ruling in support of his submission. Besides this the question had been specifically raised in the reply of the plaintiff. It cannot, therefore, be said that the question did not arise and should not have been adjudicated upon. I have had to deal with this matter on a previous occasion in 'Messrs. Shankar Das v. Governor General in Council', 53 Pun L R 231. There, however, the facts were slightly different, but I followed the rule laid down by Achhru Ram J., in the judgment that I have quoted above and am of the opinion that in the case now before me the defendant firms must be taken to have ratified what was done by the partner, Basheshar Lal. Although there was no specific issue the matter was before the Court and was argued by both parties and no objection can now be taken that no specific issue was raised.

9 Mr. Gosain then submitted that the order of remitting the award is bad because (i) there was no award in one of the suits (only one copy of the award has been filed) and (ii) a joint award is not a legal award as one award cannot be given in two suits. As to the first point the objection was never taken in the trial Court and I do not find it even in the grounds of appeal before me and is not, in my opinion, a point of any substance and cannot be raised at this stage. The other part of the objection that a joint award cannot be given in two suits is sought to ba supported by a judgment of Das J., now a Judge of the Supreme Court, in 'I. G. H. Ariff v. Bengal Silk Mills Ltd.', AIR 1049 Cal 350. At page 354 the learned Judge has said :

'There being separate 'Suits, separate arbitration agreements and separate orders of reference by Court, it was irregular for the umpire to make one single consolidated award.'

The learned Judge had said that this defect was sufficient to vitiate the award, but in the present case the facts arc different. No doubt there were two suits, two applications and the award should have been separately given so as to specify the amounts which were to be decreed against the two firms. The proceedings of the arbitrator show that it was throughout clear to the arbitrator that there wore two cases and he had to decide the rights and liabilities of two firms. It was agreed by Jai Narain plaintiff and Basheshar Lal on behalf of the defendant firms before the arbitrator that the evidence would be led and taken down in one case, i.e., in the case of firm Subh Karan Das-Chunranji Lal. Defendant Basheshar Lal filed two statements of accounts, Ex. A, which was of the firm Parmeshwari Lal and Company and Ex. B of the other firm. Different items which arose out of Exs. A and B were put to the credit and debit of different parties and after going through the proceedings I find that the different items were being considered in regard to the two different firms. It was only at the time of the writing of the award that the arbitrator did not make any distinction and it is for that purpose that the award has been remitted. In 'Hellaby v. Brown', (1857) 156 E R 1394, a case which was relied upon by Das J., an action was brought by A against B and a cross-action by B against A. Both these actions were referred to arbitration and the arbitrator made his award on one piece of paper. The Court remitted the award to the arbitrator that he might make two awards and find the issue specifically. Pollock, C. B.. observed at page 1395:

'I think that the award must be sent back to the arbitrator in order that ths objections to it, whirh arc purely technical, may be removed. He should make two awards.'

The other learned Barons, Martin, B. and Watson, B., agreed. After having been taken through the record of proceedings before the arbitrator I find that by consent of the parties evidence was led in one proceeding though copies of accounts of the two firms were separately filed and tha items separately considered. Thus so far there is no irregularity. All that the arbitrator has now to do is to make calculations and specify what sum is due from each of the two firms. Under Section 16(1) (a) and (b) an award can be remitted where a matter has been left undetermined or the award is so indefinite as to be incapable of execution. Under Sub-clause (c) it can be remitted whore an objection to the legality of the award is apparent on the face of it. In my opinion, this award falls at least under one of the three clauses and the learned Subordinate Judge has rightly remitted the award. I, therefore, dismiss these petitions and affirm the order of the Court below and discharge the rules. The respondent will have his costs in this Court and in the Court below. I direct that the parties should appear in the trial Court on 30-7-1951.

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