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Ram Kishan Chopra Vs. Mulk Raj Chopra and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 26 of 1969
Judge
Reported inILR1971Delhi658
ActsArbitration Act, 1940 - Sections 39(1); Limitation Act, 1963 - Schedule - Article 119
AppellantRam Kishan Chopra
RespondentMulk Raj Chopra and ors.
Advocates: Y. Dayal and; M.K. Saxena, Advs
Cases ReferredSaha and Co. v. Ishar Singh Kirpal Singh and Co.
Excerpt:
(i) arbitration act, 1940 - section 39(1) (vi)--objections to the award filed beyond limitation--order dismissing objections is appealable. ; that in a case where the objections to the award have been rejected and a decree is passed in accordance with the award, an appeal lies under section 39 (i) (vi) of the act on the ground that the objections should not have been dismissed. in such a case if the award is set aside by the appellate court, the decree falls through. on the other hand, if the objections are not set aside and a decree is passed and an appeal is filed against the decree itself, the only ground of appeal against a decree is that the decree itself is either in excess of or is not in accordance with the award; and where the grounds of appeal do not suggest that the decree is..........there was no reference with respect to that particular item. (7) it may be mentioned here that the award was filed in court on 2-12-1964 and a notice was issued to the parties on 19-12-1964. on 23-12-1964 the petitioner was duly served with the notice. he, however, did not file any objections to the award within a period, of 30 days from the date to service of notice on him. objections were, however, filed by him on 30-1-1965. on 8-3-1965 when the matter came before shri avtar singh sohal, subordinate judge 1st class delhi, two preliminary issues were framed, one of them related to the question of limitation while the other related to the award being bad on the ground of want of reference. learned subordinate judge held that the objection were filed beyond time and as such could not be.....
Judgment:

Hardayal Hardy, J.

(1) This civil revision is directed against the judgment of an Addl. District Judge whereby the order made by Shri B. B. Gupta, Subordinate Judge 1st Class Delhi on 31-8-1967 directing that the award made by the arbitrator be made a rule of the Court and a decree in accordance therewith be passed, was up-held by the learned Addl. District Judge. The circumstances under which the controversy in the revision petition has arisen may briefly be stated:

(2) Jaswant Lal Vohra, Mulk Raj Chopra and Ram Kishan Chopra entered into an agreement on 27-11-1962 to run a provision store in partnership at premises No. 1507/1511/12, G. T. Road, near Clock Tower, Subzimandi, Delhi. Ram Kishan Chopra is the. petitioner in this Court while Mulk Raj and Jaswant Lal are imp leaded as respondents 1 and 2 while the arbitrator Shri Mohan Lal Narula has been imp leaded as respondent No. 3. Before entering into the aforesaid partnership Mulk Raj and Jaswant Lal were jointly running a dry cleaning business in partnership with each other. Under the new agreement the dry cleaning business run by Shri Mulk Raj and Shri Jaswant Lal came to an end and the petitioner and the said two respondents became partners for running a Provision store. The agreement between the parties contained a clause viz. Clause No. 12 which ran as under :-

'THAT in the case of any dispute arising amongst the parties, on any account whatsoever, the same shall be referred to arbitration under the Arbitration Act in force.'

(3) The three partners started running the business but on 21-3-1964 a dispute arose among them which was referred to the sole arbitration of Shri Mohan Lal Narula. While referring the dispute to the arbitrator the parties addressed a letter to him to the following effect :-

'Shri Mohan Lal Narula Bangalow Road, Kamla Nagar Delhi. Sir. Whereas the parties to an agreement of reference (enclosed herewith) dated 15-1-1962 have referred their disputes and differences to your sole arbitration, we the undersigned hereby request you to please act in accordance therewith.' sd/- 1. Jaswant Lal Vohra sd/- 2. Mulk Raj Chopra sd/- 3. Ram Kishan Chopra.'

Delhi Dated 21-3-1964.

(4) The arbitrator gave the award on 17-8-1964 and presented an application under Section 14 and 17 of the Arbitration Act, 1940 which will hereafter be referred to as the Act, with the object of making the award a rule of the Court.

(5) Ram Kishan Chopra, who will hereafter be referred to as the petitioner, filed an objection petition which took the form of two separate applications. One of these applications was for an amendment under Order Vi rule 17 of the Code of Civil Procedure while the other was under Section 33 of the Act praying that the award dated 17th August 1964 be adjudicated as a nullity. The main ground urged by the petitioner was that the award was illegal and void on the ground that there was no proper reference of the dispute to the arbitrator. The terms of reference i.e. the real dispute between the parties, were to the filed before the arbitrator but the arbitrator made the alleged award in the absence of any terms of reference. One of the questions decided by the arbitrator was with regard to the tenancy of the premises in which the business of partnership was being conducted by the parties. The arbitrator had held that the petitioner had no concern with the premises and that he should remove the goods from the premises by 14-11-1964. Jaswant Lal was required to pay Rs. 879.17 to the petitioner by 14-11-1964 in full and final settlement of the account between the parties while Mulk Raj was required to pay Rs. 103.32 to the petitioner. The petitioner was required to vacate the premises by 14-11-1964 failing which he was to pay Rs. 15.00 per day as damages to Shri Mulk Raj and Jaswant Lal. The said two respondents were also entitled after 14-11-1964, to get possession of the premises through the process of the court.

(6) In the application for amendment as well as in the application under Section 33 of the Act, the petitioner's contention was that the dispute regarding possession of the shop premises had not been referred to the arbitrator and as such there was no reference with respect to that particular item.

(7) It may be mentioned here that the award was filed in Court on 2-12-1964 and a notice was issued to the parties on 19-12-1964. On 23-12-1964 the petitioner was duly served with the notice. He, however, did not file any objections to the award within a period, of 30 days from the date to service of notice on him. Objections were, however, filed by him on 30-1-1965. On 8-3-1965 when the matter came before Shri Avtar Singh Sohal, Subordinate Judge 1st Class Delhi, two preliminary issues were framed, one of them related to the question of limitation while the other related to the award being bad on the ground of want of reference. Learned Subordinate Judge held that the objection were filed beyond time and as such could not be entertained. With regard to the other matter he fixed the case for further consideration. On 15-4-1965 the two applications, one for amendment of the objections while the other, as I have said before, was under Section 33 of the Act were moved. On 30-4-1965 the respondents I and 2 filed their reply to the said applications. On 11-6-1965 the award was set aside by the learned subordinate Judge on the ground that there was no proper reference. In between the learned subordinate Judge had dismissed the petitioner's application for amendment under Order Vi rule 17 Civil Procedure Code on 21-5-1965 but no separate order was made on the petitioner's application under Section 33, presumably because the award itself was set aside on 11-6-1965 on the ground that there were no terms of reference.

(8) Against the order of the award having been set aside, the respondents filed an appeal which came up for hearing before Sliri Udham Singh, Addl. District Judge Delhi. This appeal was disposed of by the learned Addl. District Judge by his order dated 13-9-1965 whereby he remanded the case to the trial Court with a direction that a fresh decision be made after deciding the issue whether the question of possession of the business premises as decided by the arbitrator, was beyond the scope of reference or not. In other words, the trial Court was asked to decide whether the arbitrator had exceeded his jurisdiction or not by deciding the question of possession of the business premises of the partnership. The learned Addl. District Judge also held that the trial Court had erred in holding that the reference was not complete and was not specific.

(9) On remand the case came up before Shri B. B. Gupta Subordinate Judge 1st Class Delhi who on an examination of the evidence produced before him held that the question of possession was referred to the arbitrator and since no objections had been filed by the petitioner thereto within the time allowed by law the award was made a rule of the Court and a decree-sheet was ordered to be prepared in terms of the award. It is against that decision of Shri B. B. Gupta, that an appeal was filed by the petitioner which was disposed of by Shri J. N. Verma, Addl. District Judge whereby the decision of the trial Court was confirmed.

(10) The present revision petition is directed against the said decision of Shri J. N. Verma, Addl. District Judge Delhi.

(11) The main ground urged by the learned counsel for the petitioner is that there is no discussion in the judgment of the learned Addl. District Judge about the petitioner's application under Section 33 of the Act. Such an application has no doubt been referred to in para 4 of the judgment but has been rejected on the ground that since it was filed by the petitioner after the expiry of the period of limitation prescribed for the setting aside of the award no such application could be entertained. Moreover, it is stated in the Judgment that though Shri Avtar Singh Sohal, Subordinate Judge 1st Class, had held by his order dated 8-3-1965 that objections to the award were barred by time and the respondents had gone in appeal against that order, the petitioner did not file any appeal against that order. So far as the question of limitation was concerned the order made by Shri Avtar Singh Sohal became final. In such a case, it was not open to the petitioner to re-agitate the same question by an application under Section 33. The petitioner's reply was and is that since the award itself was not set aside by the order made by Shri Avtar Singh Sohal on 8-3-1965 and eventually on 11-6-4965 the award was actually set aside by the learned subordinate Judge, there was no occasion for the petitioner to challenge the earlier order dated 8-3-1965. The question as to how far the decision of an issue which went to the root of the matter namely, whether the objections filed by the petitioner were barred by time when the award as such was not set aside on that ground, obliged the petitioner to file an appeal against the decision of the court on that particular issue, is a question of some importance. It is no doubt true that against the decision of the learned subordinate Judge dated 11-6-1965 the respondents did file an appeal. It was then open to the petitioner to have supported the order of the learned subordinate Judge by filing cross-objections on the ground that even the earlier order of 8-3-1965 holding that the objections had been filed beyond time was incorrect and the decision of the subordinate Judge could be supported both on the ground that the objections had been filed within time and the award was had for want of a proper reference. No such position was, however, taken by the petitioner. If the petitioner had raised such an objection and had persuaded Shri Udham Singh the case might not have been remanded by him to the trial Court. On the other hand, in the absence of an appeal or cross-objections by the petitioner Shri Udham Singh took the view that there was a proper reference before the arbitrator and that the only ground on which the case was being remanded to the trial Court was to decide the question as to whether in the reference the question of possession of the partnership premises had also been referred to the arbitrator.

(12) In this view of the matter, Shri J, N. Verma Addl. District Judge rightly came to the conclusion that there was no occasion for consideration of the petitioner's application under Setion 33 of the Act and that in the absence of any such application the question of refusing to set aside the award as envisaged under Section 39(1)(vi) of the Act did not arise.

(13) Counsel for the respondents submitted that apart from filling cross-objections to the appeal filed by the respondents the order dated 8-3-1965 made by Shri Avtar Singh Sohal was itself an appealable order under Section 39(1)(vi) of the Act. In this connection he relied upon a Bench decision of Assam High Court in Mafizuddin Bhayan and another v. Alimuddin Bhayan and others A.R.I. 1950 Assam191 where it was held that if objections to an award are dismissed on the merits or they are dismissed on the ground that they are filed beyond time, the Court by dismissing them in effect refuses to set aside the award and an order refusing to set aside an award is clearly appealable under Section 39 of the Act.

(14) To the same effect are the observations of J. L. Kapur J. (as he then was) in M/s, Swastika Scientific Engineering Co, v. The Union of India and others where the case of Mafizuddin has been alluded to along with certain other decisions of Calcutta High Court.

(15) More or less the same view appears to have been taken by a Division Bench of Allahabad High Court in Abdul Rehman Khan and others v. B. Basant Rai and others : AIR1955All678 What the Court was considering in that case was whether a composite order refusing to set aside an award and directing a decree to be passed in terms thereof was appealable under Section 39 of the Act. It was said that normally, the Court should pass two separate orders on separate sheets of papers, one deciding the objections to the award and the other directing a decree to be passed in terms of the award. But very often the lower courts did not follow that procedure and after having held that there was no force in the objections and rejecting them. they make a direction in the same order that a decree be passed in terms of the award. Such procedure, though irregular, cannot, by any stretch of reasoning, take away the right of a party to appeal against the order refusing to set aside the award.

(16) I am inclined to hold that in a case where the objections to the award have been rejected and a decree is passed in accordance with the award, an appeal lies under Section 39(1)(vi) of the Act on the ground that the objections should not have been dismissed. In such a case if the award is set aside by the appeal Court, the decree falls through. On the other hand, if the objections are not set aside and a decree is passed and an appeal is filed against the decree itself the only ground of appeal against a decree is that the decree itself is either in excess of or is not in accordance with the award and when the grounds of appeal do not suggest that the decree is either in excess of or not in accordance with the award and the award as such is not attacked because objections thereto were filed beyond the period of limitation, the appellant cannot be allowed to challenge the award by attacking the decree.

(17) Counsel for the petitioner has, however, drawn my attention to two decisions of this Court and has urged that an application under Section 33 of the Act, challenging the validity of an award on the ground of non-existence of the arbitration agreement is not governed by Article 119(b) of the Limitation Act, 1963 (previously Article 158 of the Limitation Act, 1908). Non-existence and invalidity of an arbitration agreement are not grounds for setting aside the award under Section 30 of the Arbitration Act and that the existence and validity of the Arbitration agreement could be challenged by an application under Section 33 of the Act even though an award on the basis of the supposed Arbitration Act has been made and even though an application under that section is made after the expiry of the time prescribed by Article 158 of the Limitation Act of 1908. Reliance for this proposition is placed on a Full Bench decision of this Court in Prem Sagar Chawla v. Messrs. Security and Finance (P) Ltd 1 967 Dlt 277.

(18) Another decision of this Court is a judgment of Jagjit Singh, J., in an original suit in M/s. Installment Supply Private Ltd. v. Mohd. Shabir Khan and others where it was held that though an application for setting aside an award, on any of the grounds specified in Section 30 of the Act cannot be considered by the Court unless it is made within 30 days from the date of service of the notice regarding the filing of the award, yet an application under Section 33 of the Act is not governed by .Article 119(b) of the Limitation Act, 1963.

(19) Counsel for the respondents on the other hand, drew my attention to a Full Bench decision of Calcutta High Court in Saha and Co. v. Ishar Singh Kirpal Singh and Co. : AIR1956Cal321 . where the majority (Chakarvarti C. J.) Lahiri and P. B. Mukherji) took the view that all applications challenging an award must be made under Section 33, irrespective of the ground of the challenge and that they must be applications for setting aside the award except in cases where the existence of an award in fact is challenged...... Non-existence or invalidity of the reference can be a ground of an application for setting aside an award, based on such invalid or non-existent reference including the case of an award in an arbitration without the intervention of the Court.

(20) This decision was referred to by the learned Judges of this Court in Prem Sagar Chawla's case) where the minority opinion of S. R. Das Gupta and Bachawat Jj was followed by the learned Judges. I am bound by the afore-said decision of the Full Bench in Prem Sagar Chawla's case.

(21) The difficulty in the way of the petitioner, however, is that under Section 33 of Act, the existence and validity of the arbitration agreement itself can be challenged even though the award on the basis of a supposed arbitration agreement has been made and that an application under that section can be made after the expiry of the time prescribed by Article 119 (b) of the Limitation Act. 1963. In the present case however, it is not open to the petitioner to challenge the existence and validity of the arbitration agreement and thereforee his application under Section 33 of the Act was clearly incompetent.

(22) There are two reasons in support of that view. I have already said that on 15-4-1965 the petitioner had filed two applications, one of them was for amendment of his objections while the other was under Section 33 of the Act. In his application for amendment of his objections the ground urged by the petitioner was the same as was amplified by him in his application under S. 33. That application was dismissed by Shri Avtar Singh Sohal on 21-5-1965. As regards the second application under Section 33, Shri Udham Singh had held in his order dated 13-9-1965 that there was a valid agreement of reference between the parties. After relying upon a decision of Allahabad High Court in Radha Kishan and another v. Sapattar Singh : AIR1957All406 , the learned Judge came to the conclusion that the trial Court had wrongly held that the reference was not complete and was not specific. In that view of the matter, the question raised by the petitioner in his application under Section 33 of the Act about the non-existence and invalidity of the arbitration agreement did not arise at all. The petitioner's contention that, his application under S. 33 was dismissed by Shri J. N. Verma, Addl. District Judge on the ground that the field covered by that application was the same as in his objections under S. 30 of the Act has, thereforee, no particular significance. The petitioner had a right to file a separate application under Section 33 but the scope of that application was the same for the question of non-existence and invalidity of the arbitration agreement had already been decided against him by Shri Avtar Singh Sohal and also by Shri Udham Singh Addl. District Judge.

(23) The result is that there is no merit in this revision which has to be dismissed with costs. It is ordered accordingly.


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