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The Industrial Credit Co. Ltd., New Delhi Vs. R.B. Seth Ram Rattan and Co. and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 522D of 1964
Judge
Reported inILR1972Delhi511
ActsCode of Civil Procedure (CPC), 1908 - Sections 34 and 151; Arbitration Act, 1940 - Sections 17
AppellantThe Industrial Credit Co. Ltd., New Delhi
RespondentR.B. Seth Ram Rattan and Co. and ors.
Advocates: R.M. Gupta and; D.D.Sharma, Advs
Cases ReferredState of Punjab v. Surrinder Nath Goel
Excerpt:
.....section 17.; that an arbitrator has no authority to award future interest. section 34 of the civil procedure code confines that jurisdiction to the court pronouncing judgment in accordance with which the decree is to be drawn. a court has to apply its mind and then pronounce a judgment in terms of section 17 of the act. it is only when the decree is made that it becomes executable. while making the decree the court is to decide whether to allow or not to allow further interest.; (ii) arbitration act (1940) - section 17--scope of--decree in excess of award or not in accordance therewith--appeal.; section 17 of the act makes it clear that where the court falls into error and the decree is in excess of the award or is otherwise not in accordance therewith, then such a decree can be..........order allowing the principal amount mentioned in item i of the award namely rs. 83,000.00. another amount of rs. 675.00 was added to that amount of rs. 83,000.00 as allowed by item no. 2 in the award. the court consciously exercising its jurisdiction in terms of section 34 of the civil procedure code passed a decree for rs. 83,675.00 only. the decree being silent in respect of further interest it must be held that the court while passing the decree refused to allow any further interest.(11) the petition being untenable and without merit is dismissed. there will be no order as to costs.
Judgment:

Pritam Singh Safeer, J.

(1) -THIS petition preferred against the order dated the 28th of August, 1964, made by the Sub-Judge First Class, Delhi, faces a preliminary objection. It is urged that the petition preferred under section 115 of the Civil Procedure Code is not maintainable because the remedy open to the petitioners was by way of an appeal as envisaged by section 17 of the Arbitration Act, 1940, and ignoring the said remedy the petitioners had started the proceedings by filling an application under sections 151 and 152 of the Civil Procedure Code.

(2) In order to appreciate the preliminary objection and the contentions otherwise raised before me, it is necessary that the circumstances leading to the present petition be taken into account.

disputes having arisen between the parties, they agreed to refer the same to arbitration. The sole arbitrator made his award on the 20th of December, 1962. The first decision recorded in the award is:-

'1.That as agreed and admitted by the parties in their statements before me, I award that the respondents do pay to the Industrial Credit Company Limited a sum of Rs. 83,000.00 (Eighty three thousand only) with further interest at 12 per cent per annum from 20-12-62 till realisation.'

The second item in the award was:-

2.That the respondents shall also pay to the Industrial Credit Company Limited Rs. 675.00 (six hundred and seventy five only) as costs of these proceedings.'

after the award was made an application was filed under section 14 of the Arbitration Act by the arbitrator himself on the 26th of December, 1962.

the parties appeared before the court and on the 3rd of January, 1963, the following statement of the counsel for the parties was recorded:-

'A decree for Rs. 83,675.00 be passed in favor of the claimants against the respondents.'

The statement was signed by the counsel for the parties. The record discloses that the following order was passed by the court after recording the aforequoted statement :-

'the award is made a rule of court and a decree for Rs. 83,675.00 is passed in favor Industrial Credit against respondents.'

In consequence of the aforesaid order a decree was drawn. The original decree has been seen by me. The printed form used at its top contains the following words:-

'SIMPLEMONEY Decree (Section 34 of the Code of Civil Procedure)'.

The decree was passed in the following terms:-

'it is ordered that the award is made a rule of the court and a decree for Rs. 83,675.00 is passed in favor of Industrial Credit against the respondents.'

(3) The Industrial Credit, Company, Limited, thereafter filed an. application under section 151, and 152 of the Civil Procedure Code under the date 8th of April, 1964, urging that the decree was passed with the consent of all the parties who had specifically agreed to pay future interest at 12 per cent per annum. Paragraph 2 of the application is:-

'THATthe above said decree is based on consent and all the parties had specifically agreed to pay future interest @ 12% per annum.'

In paragraph 3 of the application it was urged:-

'that since the parties had admitted and agreed to pay future interest at the rate of 12% per annum and the court had made the entire award a rule of the court and so the decree holders are entitled to get the interest.'

The applicants prayed that the mistake be rectified and the office of the Executive Engineer be directed to send the amount of interest from the date of the decree till the date of payment @ 12 per cent per annum and that the records be amended and corrected accordingly.

(4) The respondents filed their reply to the said application, in paragraph 2 whereof they urged that the parties never agreed to pay any future interest. As to the award being made the rule of the court in paragraph 3 of their reply the respondents stated:-

'PARANo. 3, is denied. The court never made the entire award the rule of the court. On the other hand, the court could not make the entire award the rule of court. The arbitrator had no jurisdiction to award further interest and that part of the award which was without jurisdiction and hence void could not be made a rule of the court. This honourable court rightfully made that part of the award a rule of the court which is valid.'

After hearing the parties the trial court passed the impugned order observing that there was clearly no mention of future interest in the order made on the 3rd of January, 1963, and that the proper course was to get the order reviewed if there was any mistake in it. The trial court dismissed the application preferred by the present petitioners under sections 151 and 152 of the Civil Procedure Code.

(5) The preliminary objection raised before us that where the award was made the rule of the court in terms of section 17 of the Arbitration Act (hereinafter called 'the Act') and the decree resulting from the order was not in accordance with the award, the remedy open to the aggrieved party was by way of an appeal. Section 17 of the Act is :-

'17.Where the court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with the award.'

The provision contains a direction to the court to pronounce judgment according to the award. The direction, however, is to be exercised in accordance with law. There is no limitation on the court not to pronounce judgment in accordance with that part of the ward which may be legal and to ignore that part on the basis where of no decree can be passed. I am supported in this view by the observations contained in Union of India v. A. L. Rallia Ram, Air 1963 S.C. 1965.

(6) Section 17 of the Act makes it clear that where the court falls into error and the decree is in excess of the award or is otherwise not in accordance therewith then such a decree can be assailed through an appeal.

(7) As long as the proceedings are in the hands of the arbitrator, those are arbitration proceedings. As soon as the award is made the proceedings come to an end. Mr. R. M. Gupta has drawn my attention to sections 15 and 16 and has urged that the court never resorted to those provisions. The argument does not impress me. The reason is that while acting in terms of those sections of the Act the court would be dealing with an award. No appeal would lie against an award. As soon as the court pronounces judgment in terms of section 17 of the Act and as soon as a decree follows, it becomes a decree of the court. As such, it may become open to appeal in terms of the provisions contained in the Civil Procedure Code. Section 39 of the Act is not at all concerned with an appeal against a decree. By section 39 the Act provides for appealing against certain orders. I hold that wherever a decree is passed in terms of section 17 of the Act, it becomes a decree as defined by the Code of Civil Procedure and subject to the limitation imposed by section 17 it can be subjected to an appeal.

(8) It is clear in this case that a simple money decree was passed in terms of the order recorded on the 3rd of January, 1963. The words used in that order to the effect that it was directed that the award be made the rule of the court have been very much emphasised by the counsel for the petitioners and it has been strenuously argued that the entire award was directed to be made the rule of the court. That may be so. That order, however, was not the decree. The decree followed the order. It is emphasised that the decree also uses the same Words. Even then the decree is for a specific amount and does not allow any further interest. If the decree was not in accordance with the award then the remedy which the petitioners could have invoked was provided for by the ultimate part of section 17 of the Act. They did not file the appeal which they could have filed. Wherever a clear remedy is provided a litigant has to seek relief in terms thereof. The appeal provided for by section 17 of the Act would be the first appeal against the decree. The party aggrieved by the decree made by the court of first appeal would be entitled to file a second appeal. I hold that the remedy provided for by section 17 of the Act allowing the filing of an appeal excluded the applicability of sections 151 and 152 of the Civil Procedure Code. The filing of this petition under section 115 of the Code of Civil Procedure is a continuation of an application which was untenable at the date of its institution. In Padam Sen and another v. The State of Uttar Pradesh, A.I.R. 1961 S.C. 219 the court observed :-

'IT is also well recognised that the inherent power is not to be exercised in a manner which will be contrary to or different from the procedure expressly provided in the Code.'

I find that since an appeal could have been filed, the powers of the court under sections 151 and 152 of the Code of Civil Procedure could not have been invoked and exercised. The Allahabad High Court observed in Ram Babu v. Lakshmi Narain and another, : AIR1963All252 :-

'the language of section 17 does not confer or create any right of appeal at all. All that that section does is to curtail the existing right of appeal so as to give finality to a decree passed on an award in certain circumstances.'

(9) I come to the conclusion that as soon as an award becomes a decree in terms of section 17 of the Act, the decree becomes ordinarily appealable under the Civil Procedure Code. Section 17 imposes limitations on the scope of such an appeal. The appeal would become confined to that part of the decree which may be in excess of the award or may not otherwise be in accordance therewith. The petitioners' application under section 151 and 152 of the Civil Procedure Code was misconceived. Before parting with the case it is to be seen whether even while making the award into the decree on the 3rd of January, 1963, the court was concerned or not with section 34 of the Civil Procedure Code. It has been noticed earlier that the decree was prepared on a printed form in which section 34 of the Civil Procedure Code was mentioned in the heading itself.

be that as it may, a scrutiny of that provision becomes relevant. Section 34 of the Civil Procedure Code is :-

34.(1) Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court thinks fit.

(2)Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have refused such interest, 516 and a separate suit thereforee shall not lie.'

I hold that whenever and wherever A decree is made for payment of money and does not prescribe the payment of further interest, then it has to be interpreted in terms of section 34(2), Civil Procedure Code. The decree made on the 3rd of January, 1963, is silent with respect to the payment of further interest. It is clear that the court refused to allow further interest.

the Punjab High Court observed in State of Punjab v. Surrinder Nath Goel, :-

'9.I find it is little difficult to reconcile the provision of law contained in section 29, Arbitration Act, with the existence of any implied power in a arbitrator to award future interest, such as is specifically conferred on the courts by virtue of section 34 Code of Civil Procedure. It can be argued with a certain amount of plausibility that by making specific provision in the Arbitration Act itself on the question of awarding future interest, the Legislature intended this provision to be exhaustive and exclusive. It is to be borne in mind that the Arbitration Act of 1940 is a consolidating and amending Act relating to arbitration and, thereforee, the presumption of section 29 being exhaustive cannot be considered illegitimate. Besides, after the enforcement of this Act an award is enforceable only in accordance with its provisions, and an award, unless followed by a judgment and decree, may not even be enforceable or operative by itself. It is, thereforee, difficult to visualize the existence of independent implied power in an arbitrator to grant future interest.'

(10) It is clear that the arbitrator had no authority to award any further interest. Section 34 of the Civil Procedure Code confines that jurisdiction to the court pronouncing judgment in accordance with which the decree is to be drawn. A court has to apply its mind and then pronounce a judgment in terms of section 17 of the Act. It is only when the decree is made that it becomes executable. While making the decree the court is to decide whether to allow or not to allow further interest. In this case the court recorded a statement of the counsel for the parties. Then the court passed a specific order allowing the principal amount mentioned in item I of the award namely Rs. 83,000.00. Another amount of Rs. 675.00 was added to that amount of Rs. 83,000.00 as allowed by item No. 2 in the award. The court consciously exercising its jurisdiction in terms of section 34 of the Civil Procedure Code passed a decree for Rs. 83,675.00 only. The decree being silent in respect of further interest it must be held that the court while passing the decree refused to allow any further interest.

(11) The petition being untenable and without merit is dismissed. There will be no order as to costs.


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