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Mehta Teja Singh and Co. Vs. Fertilizer Corporation of India, Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberF.A.O. No. 54-D of 1964
Judge
Reported inAIR1968Delhi188; ILR1968Delhi75
ActsArbitration Act, 1940 - Sections 16, 16(1), 30 and 39(1); Code of Civil Procedure (CPC), 1908 - Sections 115
AppellantMehta Teja Singh and Co.
RespondentFertilizer Corporation of India, Ltd. and anr.
Appellant Advocate T.P.S. Chawla, Adv
Respondent Advocate C.M. Oberoi, Adv.
Cases ReferredIn Brahma Swaroop Gupta v. Diwan Chand Mintora
Excerpt:
.....considerations in matters relating to custody of a minor child. - the court below, in a fairly lengthy judgment, allowed in part the objection petitions and remitted the award in part, holding the rest of it to be good and valid. the only point which was sought to be made out was that in case there is a partial remit, then that order would clearly be appelable. according to that provision 'an award remitted under paragraph 14 becomes void on failure of the arbitrator or umpire to reconsider it. the ratio of this decision is clearly distinguishable. section 16(3) provides that the award so remitted shall become void on the failure of the arbitrator to reconsider it and submit his decision withn the time fixed. but even if we had entertained some doubt in this respect, the fact..........paragraph 15 of the second schedule of the civil procedure code. according to that provision 'an award remitted under paragraph 14 becomes void on failure of the arbitrator or umpire to reconsider it.' there does nto appear to be any provision in the civil procedure code by which a portion of an award may be remitted. the reasons are obvious. it is impossible to say for any person who is nto the arbitrator, how the arbitrator proceeded to frame his award. it may be that the portion objected to has an intimate connection with the portion which is nto objected to. the arbitrators, thereforee, must be given a free hand to recast the award.'on the authority of this passage, we are unable to hold that in spite of section 16 of the act, expressly empowering the court to remit to the.....
Judgment:

(1) These three appeals (F. A.Os. Nos. 54 D, and 65 D of 1964 ) and three revisions (C. Rs. Nos.59 D, 60 D of 61 D of 1964) have been placed before us pursuant to the order of reference dated 26-10-1967. Two questions, as mentioned in the referring order, fall for our decision : (1) whether under Section 16 of the arbitration Act No. 10 of 1940 (hereinafter called the Act'), it is open to the Court to remit a part of an award and (2) whether in such a case appeal lies under section 39(1)(vi) of the Act. Incidentally the third question which may have to be answered is, if no appeal is held to lie in such a case, can this Court entertain a revision against such an order. It may be pointed out that by way of abundant caution, the appellant has also preferred three revisions so that in case appeals are held to be incompetent, no prayer need be made to convert those appeals into revisions may themselves be decided on the merits, if held competent.

(2) All the three cases, it may be observed, relate to a single award given by Shri B. K. Khanna on 14-10-1961 with respect to three contracts between Messrs. Mehta Teja Singh & Co. and the Fertilizer Corporation of India, Ltd. the award was filed in Court by the arbitrator pursuant to a ntoice served on him on petitions under section 14 of the Act presented by Messrs. Mehat Teja Singh & Co. After ntoice of the filing of the award was served on the parties, the appellant-company filed objections petitions under Section 15, 16, 17, 30 and 33 of the Act. The Court below, in a fairly lengthy judgment, allowed in part the objection petitions and remitted the award in part, holding the rest of it to be good and valid. It is against this order that the appeals and the revisions have been preferred and the questions to be decided are common to all the three cases.

(3) Turning now to the scheme of the Act, we may; first read Section 39 which creates the right of appeal:

'39. (1) An appeal shall lie from the following orders passed under this Act (and from no tohers) to the Court Authorised by law to hear appeals original decrees of the Court passing the order:

An order-

(I) superseding an arbitration;

(ii) on an award stated in the form of a special case;

(iii) modifying or correcting an award;

(iv) filing or refusing of file an arbitration agreement;

(v) staying or refusing to stay legal proceedings where there is an arbitration agreement;

(vi) setting aside or refusing to set aside as award:

Provided that the provisions of this section shall nto apply to any order passed by a Small Cause Court.

(2) No second appeal shall lie from an order passed in appeal under this section , but ntohing in this section shall affect or take away any right to appeal to the Supreme Court.'

The entire controvers;y concededly turns on the construction clause (vi) of sub-section (1). Our first impression was that this clause deserves to be liberally construed and the impugned order must be held in part to; amount to refusal to set aside the award and in part to setting it aside, but the categorical and peremptory language used in Section 30 seems to suggest that our first impression was nto quite correct. This section lays down that an award shall nto be set aside except on one or More of the following grounds, namely:-

(a) that an arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

(c) that an award has been improperly procured or is toherwise invalid.

This section , on its plain reading, seems to suggest that it is exhaustive of the grounds on which an award is to be set aside and it does nto contemplate setting aside or refusing to set aside a part of an award. Section 39(1)(vi) would also seem to us to contemplate an appeal from an order setting aside or refusing to set aside an award as a whole. We are thus inclined, as at present advised, to; hold that an order remitting a part of an award and affirming a part, does nto necessarily amount to an order setting aside or refusing to set aside an award within the contemplation of Section 39(1)(vi) of the Act and it would thus nto be appealable. We are nto unmindful of the fact that a provision of law permitting appeals to the higher Courts, deserves to be liberally construed, but this liberal construction must nto involve stretching of the language, for it has to be remembered that right of appeal is statutory, and, but for a statutory affirmative provision, no inherent right of appeal is claimable by an aggrieved suitor. In the case in hand, the language of Section 39(1)(vi) read in the light of Section 30, seems to us to be clear and the present case does nto fall under this clause. There is no toher clause in Section 39(1) which can reasonably be held to provide for an appeal against an order remitting or declining to remit an award. The decision of a learned Single Judge of the Punjab High Court in the State of Patiala and East Punjab States Union v. Messrs. Puran Chand Rangi Ram, 1966 Pun LR 694, would thus seem to lay down a correct rule of law. The learned Single Judge of the Punjab High Court agreed with the view taken in R. T. Perumal v. John Deavin, : AIR1960Mad43 . It is true that in the Madras case, it was conceded by Mr. Nambiar at the Bar that there was no right of appeal against the order of the Court remitting the award to the arbitrator and the point was nto decided on a discussion of the scheme of the Act, but, in our opinion the concession was rightly made. Clause (c) of Section 30, when it refers to the improper procurement of the award, would prima facie seem to us to contemplate the improper procurement of the award as a whole and nto a part of it, and if that be so, then the invalidity of the award toherwise would also seem to us to refer to the award as a whole and nto to a part of it , for, btoh parts of this clause would get colour and content from each toher. Looking at the scheme of the act we are also inclined to think that section 16 of the Act dealing with the power of the Court to remit the award, should be construed independently and the remission of the award or any matter contemplated by this section is nto intended to include within its fold setting aside of the award or a part of it as contemplated by Section 30, which is apparently an exhaustive provision specifically dealing with setting aside of awards. We are also aware of a decision of the Supreme Court in B. S. Madhava and Co. v. Kapila Textile Mills,Ltd., Civil Appeal No. 1094 of 1963 decided by Subba Rao, J. (as he then was) and J. C. Shah, J., on 9-9-1964, in which it was observed that an order under Section 16(1)(c) of the Act refusing to remit an award to the arbitrators or the umpire is nto appealable under the Act. Now, if refusing to remit an award cannto be construed as a refusal to set aside an award and, thereforee, nto appealable, the remission of an award or any matter would also seem to us, on parity of reasoning, nto to amount to setting aside the award or a part of it. If that be the correct way of looking at things, then obviously an order remitting to the arbitrator or umpire for reconsideration an award or any matter referred to arbitration, cannto be deemed to include an order setting aside an award or a part of it and then remitting the award or the matter, as the case may be. Before closing discussion on this point, we may point out that on behalf of the appellant Shri T. P. S. Chawla actually conceded that if the entire award is remitted by an order, then that order would nto be open to appeal. The only point which was sought to be made out was that in case there is a partial remit, then that order would clearly be appelable. For this distinction, we find no basis in law.

(4) The next question which confronts us is whether these appeals should be treated as revisions or the revisions which have been specifically presented in this Court, should be treated as competent. In our opinion, if an appeal is held to be incompetent, then the memorandum of appeal can, in a fit case, be treated as a revision provided there is no toher legal infirmity in adopting this course. It may be pointed out that the label placed on a cause is nto conclusive and does nto ordinarily affect the jurisdiction of the Court to allow the label to be corrected by treating an appeal, provided of course the cause of justice to demands. We would, thereforee, have no hesitation in btoh conceding the appellant's prayer to treat the memorandum of appeal as a memorandum of revision or to dispose of on the merits the revision separately presented.

(5) Now, it must nto be forgtoten that the power of the High Court in exercising its revisional jurisdiction under Section 115, Code of Civil Procedure, is strictly restricted to questions of jurisdiction. Unless there is a either wrongful assumption of jurisdiction or wrongful refusal to exercise jurisdiction or unless the Court below has acted in the exercise of jurisdiction illegally or with material irregularity, this Court would be powerless and would nto be entitled to interfere with the findings and conclusions of the subordinate Courts.

(6) The learned counsel for the appellant, however, contends that the impugned order remitting a part of an award is without jurisdiction and in any event, it must necessarily be held to be tainted with an illegality and a material irregularity in the exercise of the lower Court's jurisdiction. While developing this point, Shri T. P. S. Chawla has submitted that section 16 of the Act must be held to contemplate the remission of the award as a whole and nto a part of an award. According to him, when the section speaks of the remission of 'any matter referred to arbitration' it postulates an award which does nto cover all the matters referred to arbitration and has left out from determination some of them. We may see how far this submission, ingenious as it is, finds support from the decided cases. The plain language of Section 16 and 17 of the Act or the scheme of the act, does nto seem to us to support the submission. The learned counsel has started with a decision of the Calcutta High Court given on 24-4-1867 in Mohun Kishen v. Bhoobun Shyam, (1867) 7 SWR 406. The head-ntoe of this case reads as under:-

'Section 323, Act Viii of 1859, authorises a Court which refers a case to arbitrators to remand it to them for reconsideration when their award contains mistakes, omissions, or defects which cannto be amended by the Court under Section 322. Such award, on the refusal of the arbitrators to reconsider it, becomes null and void without proof of corruption or misconduct under Section 324.'

(7) The facts of the reported case do nto seem to us to justify the submission, and indeed it is nto easy to hold that the ratio decidendi of a judicial precedent, one has to see the problem which the Court was called upon to decide and then to see the principle of law laid down and acted upon in setting the controversy. It is the principle of law thus laid down and acted upon which constitutes the precedent for future Courts and it would, in our view, be scarcely advisable or proper to extend the principle by inferences. The next decision relied upon is also of the Calcutta High Court of the year 1869 in Maharajah sir Joy v. Mohun Ram, (1869) 12 SWR 397. A case had been remanded by the High Court and was referred by the Zillah Judge to two arbitrators who went fully into the matters in dispute and wrtoe and signed, as their award, separate papers bearing different dates which were filled in Court. Objections were raised to this course and the Judge returned the papers to the arbitrators with an order that they should sign their award conjointly in a form which he prescribed. The award having been submitted, the Judge took up and disposed of the objections previously, made making a decree in accordance with the award. On these facts, it was held by the High Court that the two papers originally filed in Court were nto an award, which should be a single instrument complete in itself under Section 320, Act Viii of 1859, and that the Zillah Judge was right in sending back the papers as he had done. Objections made to the two papers were held to be objections to the award and that the Court had no power to pass judgment till the objections to the award presented within the prescribed period were finally disposed of. Here again, we are unable to find support for Shri Chawla's submission from the ratio decidendi of this case. Tursi Ram v. Basdeo, : AIR1926All567 does contain the following observation:-

'There does nto appear to be any provision in the Civil Procedure Code by which a portion of an award may be remitted'.

But this observation, when taken in its context, would also seem to us nto to support the broad proposition enunciated by Shri Chawla. In the reported case, in a suit pending in a Civil Court, the dispute was referred to three arbitrators and on the award being submitted to the Court, exception was taken to it by the defendants. The Court after considering the objection, directed that the portion of the award which dealt with the division of the zamindari property should be remitted to the arbitrators. The arbitrator appointed by the defendants, however, declined to take any further part in the matter, with the result that the papers were returned to the Court with a statement that the arbitrators could nto reconsider the award owing to the conduct of the arbitrator appointed by the defendants. The Court then took up the matter and held that the part of the award which the arbitrators had refused to reconsider had become void but the remaining award was nto affected thereby. The Court in the circumstances upheld the rest of the award and made a decree, partially on the award and partially on his own judgment. It was in this context that the observation reproduced above was inserted in the following passage:-

'.... That the learned Judge in the Court below ought to have set aside the entire 'award under the provisions of paragraph 15 of the Second Schedule of the Civil Procedure Code. According to that provision 'an award remitted under paragraph 14 becomes void on failure of the arbitrator or umpire to reconsider it.' There does nto appear to be any provision in the Civil Procedure Code by which a portion of an award may be remitted. The reasons are obvious. It is impossible to say for any person who is nto the arbitrator, how the arbitrator proceeded to frame his award. It may be that the portion objected to has an intimate connection with the portion which is nto objected to. The arbitrators, thereforee, must be given a free hand to recast the award.'

On the authority of this passage, we are unable to hold that in spite of Section 16 of the Act, expressly empowering the Court to remit to the arbitrator or umpire for reconsideration of the award or any matter referred to arbitration, the Legislature only intended the entire award to be remitted and nto a matter or matters short of all the matters referred to arbitration. In the reported case, the Court does nto seem to have adverted to that part of paragraph 14 of the Code which contemplates remission of any matter referred to arbitration. Nemi Chand Sowcar v. Kesarimull, AIR 1929 Mad 31, is an original side case in which the award was nto signed by all the arbitrators and the submission was nto filed in the Court as required by the Original Side Rules. The submission that a part of the award accepted by the parties be enforced was negatived by the Court with the observation that there was no provision in the Civil Procedure Code or the Indian Arbitration Act to make a part of an award a rule of the Court and that the award must be looked into as a whole for working out the rights of the parties. The ratio of this decision is clearly distinguishable. Jaldhari Rai v. Muhammad Abdul Kabi, AIR 1923 Pat 470, merely lay down that when an arbitration is made without the intervention of a Court and an application is made to file the award, then if the award is good in part and bad in part, the Court cannto remit to the arbitrator for amendment or declare valid the part to which no exception is taken even if it is separable from the bad part. The facts of the reported case, we may point out, were peculiar and the appeal arose out the suits instituted by Mukarraridars praying for declaration of the plaintiffs' title as auction-purchasers and for recovery of possession against the defendants. The High Court felt no doubt that upon the terms of reference, the arbitrator had no authority whatsoever to remit any portion of the decree money as that question was never in dispute and the tenants had never even dreamt of disputing their liability. On that premise, the award was held to be in excess of jurisdiction and, thereforee, bad and the question posed was whether the bad part could be separated from the good part and the Court could give modified relief by affirming the good part. Mullick, J., speaking for the Bench, thought that it was nto possible to do so in that case. In the Bench decision of the Punjab Chief Court in Ahmed Din Anis-ul Raman v. Atlas Trading Co.,. Delhi, AIR 1915 Lah 105, on an application for filing an award made without the intervention of the Court, it was decided by the Court below that part of the award being on a matter which could nto be the subject-matter of arbitration, was void, but the valid portion of the award being separable from the invalid one, the award was held capable of being filed so far as it was free from the objection of invalidity. The Chief Court on appeal objected the application for filing the award on the ground that a private award must be either affirmed in its entirely or rejected in ttoo. It is obvious that this decision does nto touch the question which falls for our determination. In Satumal v. Khudadad, AIR 1929 Sind 164 the head-nto reads as under:-

'When an award is sent back by the Court to the original arbitrator with direction to specify definitely the land awarded and return the award so amended, and the arbitrator, instead of complying with the order, goes afresh into matter and makes a fresh award, thereby depriving the part of the award made in his favor, the award cannto be accepted and the arbitrator is functus officio except as to that portion of the award which was ordered to be amended.'

For this view, reliance was placed on the observations of Erle, J. in Johnson v. Latham, (1851) 20 Ljqb 236. No comment is needed for showing that this decision also does nto help Shri Chawla. The decision of the Lahore High Court in Anant Ram Mangat Rai v. Gurditta Mal Ram Partap, Air 1926 Lah 519, seems to us to be of little assistance in solving the problem posed before us. In Abookbaker Latif v. Reception Committee of the 48th National Congress, Air 1937 Bom 410, it was observed by B. J. Wadia, J, that under S. 13 of the Indian Arbitration Act of 1899, the Court must remit the award as a whole and that the learned Judge had no jurisdiction to remit only a part of the award for reconsideration. It was added that if the award were to be remitted, it must be first be set aside and the whole proceedings must be reopened, but the Court was as a rule nto inclined to open up arbitration proceedings unless the requirements of justice warrant such remission. It may be pointed out that Section 13 of the Indian Arbitration Act 9 of 1899 only empowered the Court to remit from time to time the award to the reconsideration of the arbitrator or umpire and that the statutory language considered by the learned Judge was quite different from the statutory language which concerns us. In Brahma Swaroop Gupta v. Diwan Chand Mintora, : AIR1963Cal583 , head-ntoe (b) has been referred to at the Bar. This head-nto so far as relevant, may be reproduced:

'Section 16(1) empowers the Court to remit the award or any matter referred to arbitration to the arbitrator or umpire for reconsideration upon such terms as the Court thinks fit. The power to remit the award is distinct from the power to remit any matter referred to arbitration, and the exercise of one or the toher power may, lead to different results. Section 16(3) provides that the award so remitted shall become void on the failure of the arbitrator to reconsider it and submit his decision withn the time fixed. Section 16 contains no toher indication as to the effect of an order passed by the Court under Section 16(1). If the whole award. In this context it would appear that the first award is avoided altogether also on the making and filing of the fresh award.

(8) But if only one or some of thematters referred to arbitration is or are remitted to the arbitrator for recnsieration, pending the second reference, the award as to matters nto sent back to the arbitator seem to be in a manner suspended. The arbitrator is functus officio as to those matters and cannto alter his judgment as to them.

(9) The order under Section 16(1) may be made on such terms as the Court thinks fit. The court may, thereforee, give directions to the arbitrator as to the form of the fresh award. The arbitrator is bound to abide by and carry out the directions of the Court in this behalf. In the absence of any such direction the arbitrator acting under an order referring back some of the matters for reconsideration, must make a fresh award, confirming and repeating the first award as to matters nto sent back which he could nto alter 'as it were with a dry pen', thus the fresh award would embrace all matters originally referred, and in the result the first award would become null and inoperative.

'Where the order of reference back of one or some of the matters referred to arbitration specially directs the arbitrator to make his fresh award limited to the matters remitted to him, the fresh award must be limited to those matters and consequently the first award with regard to the matters nto remitted to the arbitrator would remain operative.'

Shri Chawla has also referred us to Russell on Arbitration (17th Edition) and has submitted that the observations at page 305 that nto only an award but the matters or any of them can be remitted, are based on a misappreciation of the ratio deidendi of the English decision in Johnson's case (1851) 20 Lj Qb 236. Same comment has been made in regard to paragraph 122 of Halsubury's Laws of England. Third Edition, Vol. II.

(10) The decision in Brahma Swaroop's case, : AIR1963Cal583 does nto help Shri Chawla. After going through the decision in Johnson's case also, we are nto able to agree with the learned counsel's criticism of the views expressed in Russell on Arbitration and in Halsbury's Laws of England. We are inclined to agree with the views of the above authors in the construction of the observations of Erle, J. But even if we had entertained some doubt in this respect, the fact that this views of law has prevailed in England without serious demur, has a fairly strong persuasive value in its favor. On a consideration of the decisions cited and the arguments addressed at the bar, we are inclined to take the view that the Court could validly remit back to the arbitrator one or more matters referred to arbitration and it was nto necessary in law to remit back the entire award. In this respect, the impugned order is nto tainted with any infirmity justifying interference on revision.

(11) The question now arises whether the impugned order is toherwise tainted with any infirmity justifying interference on revision. On this aspect, we have nto heard the learned counsel for the petitioner and, in our view, this question may be decided by the Single Bench, the important questions referred to the Division Bench having been finally decided.

(12) Order accordingly.


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