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Ram Behari Mehrotra and anr. Vs. Smarts Pvt. Ltd., New Delhi and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 175 of 1972
Judge
Reported inAIR1973Delhi133; 9(1973)DLT176
ActsArbitration Act, 1940 - Sections 33
AppellantRam Behari Mehrotra and anr.
RespondentSmarts Pvt. Ltd., New Delhi and ors.
Advocates: G.R. Chopra and ; B.R. Narang, Advs
Cases ReferredNilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti. It
Excerpt:
the court ruled that where right to challenge the award was lost by omission to invoke section 33 of the arbitration act, 1940 within period of limitation, the order 41 rule 4 of the civil procedure code, 1908 would be of no avail. - .....could after being served with the notice of the application under section 14, within thirty days, filed objections under section 33 of the act challenging the validity of the award. they admittedly did not invoke section 33. they did not contest the application filed by the arbitrator to make the award the rule of the court. respondent no. 1 who had appeared through counsel on the 5th of april, 1969, filed the objections. the petitioners never joined the proceedings at any stage. on statements being made by the parties, the court on 13th august, 1969, passed the following order :- 'in view of the statements made the name of respondent no. 1 is struck off. his objections are dismissed. as no other respondent has filed objections, the award is made the rule of the court. the decree sheet.....
Judgment:

Pritam Singh Safeer, J.

(1) An application dated the 13th of February, 1969, was filed under section 14 of the arbitration Act, 1940, by Shri P. L. Verma, who acting as an arbitrator has made an award on 25th May, 1968, with the prayer that notice of the making of the award be given to the parties and the award be made a rule of the court. The notice was issued to the parties. The petitioner being one of them received the notice, but did not appear in the court. The order recording on 5th April, 1969, discloses that the counsel for the applicant and respondent No. 1 were present and the rest of the respondents were absent in spite of service. Allowing opportunity to respondent No. 1 to file objections the proceedings were adjourned to 24th April, 1969. It was not contemplated by the statute and it was not stated in the said order that the proceedings were to be ex-parte against the absentee respondents.

(2) Section 33 of the Arbitration Act, hereafter called ' the Act ' is :-

'33. Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the court shall decide the question on affidavits : Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit. '

Reference in this behalf may also be made to Article 119 of the Limitation Act, 1963. It is provided therein that where anyone is to apply under the Act praying that the award be set aside or remitted for reconsideration he is to do that within thirty days of the service of the notice of the filing of the award. The petitioners could after being served with the notice of the application under section 14, within thirty days, filed objections under section 33 of the Act challenging the validity of the award. They admittedly did not invoke section 33. They did not contest the application filed by the arbitrator to make the award the rule of the Court. Respondent No. 1 who had appeared through counsel on the 5th of April, 1969, filed the objections. The petitioners never Joined the proceedings at any stage. On statements being made by the parties, the court on 13th August, 1969, passed the following order :-

'IN view of the statements made the name of respondent No. 1 is struck off. His objections are dismissed. As no other respondent has filed objections, the award is made the rule of the court. The decree sheet be prepared. File be consigned to the record room. Announced in open court. Dated 13th August, 1969.''

Thereafter the petitioners filed an appeal against the aforequoted order by which the award had been made the rule of the court. The appeal was dismissed b the impugned order dated the 10:h of January. 1972. Urging this petition Mr. G. R. Chopra submits that having been parties to ihe agreement even though the petitioners had not filed any objections under section 33 of the Act, they had the locus-standi to file an appeal under section 39. It is submitted that the petitioners were parties io the decree because they had been parties to the arbitration agreement. It has to be seen whether a party to an arbitration agreement, who does not challenge in validity of an award can after it is made the rule of the court, file an appeal under section 39 of the Act.

(3) Mr. Chopra has drawn my attention to order 41, Rule 4 of the Civil Procedure Code, which is :-

'4.Where there are more plaintiffs or more defendants then one in suit, and the decree appealed from proceeds on any ground, common to all the plaintiffs or to all the defendants any one of the plaintiffs or of the defendants may appeal from the whole decree, and thereupon the Appellate Court may reverse or vary the decree in favor of all the plaintiffs or defendants, as the case may be.'

He has also urged that section 96 of the Code be taken into consideration. Reading both the provisions together. I am of the view that order 41, rule 4 will be of no avail where the right to challenge the award is found to have been lost by the omission to invoke section 33 of the Act within the period of limitation. The Arbitration Act is a special statute. It takes away the jurisdiction of the ordinary courts. It confers the right on the parties to get their disputes settled through arbitration. Where an award is made and the parties to an arbitration agreement are notified of an application for making it the rule of the court, they have to act within section 33 read with Article 119 of the Limitation Act. A parly, who omits to do so, cannot by resorting to any provision elsewhere confer on itself once again the same locus-standi which it has under section 33 of the Act to prefer a challenge to the validity of the award. Order 41, rule 4 will apply where a person hail tie locus-standi to file an appeal. The rule is in the nature of an exception and its object is to give jurisdiction to the court of appeal to reverse or vary the decree in favor of all the plaintiffs or defendants where any one of the parties entitled to file the appeal may have moved the court. The rule presumes that the appeal is filed by a person entitled to challenge the decree. 4 Reliance has been placed by both the sides on the observations made in Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti. It was observed therein that where no party had filed any objections praying for setting aside the award, the question of refusing to set it aside could not arise and for that reason no appeal could be maintainable under section 39(1)(vi) of the Act, which allows the filing of an appeal against an order refusing to set aside an award. I am persuaded to hold that where a party to an arbitration agreement does not challenge the validity of an award by preferring objections under section 3 of the Act, in cannot resort to an appeal to revive the challenge, the right to which is lost by not invoking section 33 of the Act within the period of Limitation prescribed by Article 119 of the Limitation Act.

(5) The next contention is that even though the petitioners had not filed any objections the court was bound to decide the objections filed by another party to the arbitration agreement. The counsel's submission would have made meaning if respondent No. 1 who had preferred the objections had continued with the constest. A reference to the record shows that when the parties counsel appealed on 31st July, 1969, on their request the proceedings were adjourned for a compromise to 13th August, 1969. When the parties counsel appeared on 13th August, 1969, their statements were recorded and the name of respondent No.1 was directed to be deleted, thereafter there was no one be fire the court challenging the validity of the award and the court had to make it the rule of the court. Even if the petitioner had appeared on the date when one of the parties who had filed the objections made the choice of resiling from them, it could have been said that he objections should have been taken to have been preferred by the parties which were appearing before the court in order to join the proceedings. In this case it is conceded that the petitioners never appeared before the trial court and allowed the award to be made the rule of the court. The trial court was in a situation where there was no one present before it to substantiate any challenge to validity of the award. There was no occasion to act in vacuum. The award had to be made the rule of court. Reference is also made to Madan Lal (dead) by legal representatives v. Sunder Lal', wherein it was observed that if a parly wanted an award to be sel aside on any of the grounds mentioned in section 30, it n,ust apply within 3) days of the date of service of notice of filing of the award for obtaining an adjudication that the award deserved to be set aside. Where parties to an arbitration agreement are notified that an application has been moved for making the award the rule of the court and they do not file the objections within the period prescribed by law and where the particular party never appears before the trial court and permits the award to be made the rule of the court, it will have no locus standi to challenge the award by filing an appeal.

(6) It is doubtful if the appeal could a tall be maintainable. Section 39 of the Act is :-

'39.(1) An appeal shall lie from the following orders passed under this Act (and from not others) to the Court authorised by law to hear appeals from original decrees of the Court passing the orders: - An order- (i) superseding an arbitration ; (ii) on an award stated in the form of a specified case ; (iii) modifying or correcting an award ; (iv) filing or refusing to 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 an award : Provided that the provisions of this section shall not 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 nothing in this section shall affect or take away any right to appeal to the Supreme Court.'

It is only clause (vi) in section 39(1) of the Act which is relevant to the contentions raised before me. This was not a case where the trial court had refused to set aside the award on any subsisting objections before it. No objections had been preferred by the petitioners. The objections preferred by respondent No. 1 no longer remained alive and the impugned order neither amounted to the setting of the award not to a refusal to set it aside. When the impugned order was passed there was no one before the court whose contention to set aside the award may be said to have been refused.

(7) At this stage the learned counsel for the petitioners reiterates his earlier submission that if a court dealing with the making of an award tbe rule of the court is faced with any objections, a duty is cast upon it to deal with the same when the award is patently illegal. A court has the duty to look at the award for purposes of sections 15 and 16 of the Act. Section 33 also persuades me to the view that where there are objections which are being urged before the court it becomes the duty of the court to decide them. The fate of this petition does not turn upon that contention. Whether the Court had the duty to deal with the objections or not, the petitioners lost the locus- standi to throw the challenge to the validity of the award because they did not make the choice of the invoking section 33 within the period of limitation. I am also of the view that if objections are filed under section 33 of the Act, whatever may be the duty cast on the court, where the party filing the objections decamps from the scene of litigation and offers no evidence to substantiate the objections, the court would be rendered powerless and in that event it would have to pass a decree in accordance with the award unless it exercises its powers under sections 15 and 16 of the Act. I am not persuaded that there is any merit in this petition. The same is dismissed in liming.


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