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Balbir Singh Vs. All India Finance and Commerce Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCriminal Revision Appeal No. 225D of 1966
Judge
Reported in9(1973)DLT53
ActsArbitration Act, 1940 - Sections 14; Code of Civil Procedure (CPC), 1908 - Sections 115
AppellantBalbir Singh
RespondentAll India Finance and Commerce Ltd. and ors.
Advocates: Daljit Singh and; M.C. Gaind, Advs
Cases ReferredHari Singh v. Mst. Amroti. In
Excerpt:
.....without jurisdiction, as he had jurisdiction to decide rightly as well as wrongly. that being so, the petitioner cannot be in a better position when the plea or contention was not raised at all in the lower courts. clearly, the decision of the learned judge that the arbitrator has not exceeded his jurisdiction cannot itself import any question about the jurisdiction of the learned judge himself in the present revisional application......commerce ltd., respondent 2 is shri chet ram mittal and respondent 3 is koja singh(6) shri daljit singh, learned counsel for the petitioner, conceded fairly that the finding of the lower courts on issue no. 2 being one of fact, cannot be canvassed in this civil revision. he, however, sought to contend that the reference to the arbitrator was made unilaterally by respondent 1, the all india finance and commerce ltd. alone, and such an unilateral reference was not permissible in law, and consequently, the proceedings before the arbitrator and the award were all illegal and void for want of jurisdiction. this contention was not raised in the lower courts. it was, however, raised in the grounds set out in the memorandum of civil revision. shri daljit singh relied upon the decision of a full.....
Judgment:

T.V. R. Tatachari, J.

(1) This Civil Revision has been filed by Balbir Singh against the judgment of Shri M. L. Jain, Additional District Judge, Delhi, in Misc. Civil Appeal No. 241 of 1965, dismissing the said appeal and thereby affirming the order of Shri H. S. Bakshi, Subordinate Judge, 1st Class, Delhi, dated 29th March, 1965, whereby the learned Subordinate Judge dismissed the objections filed by Balbir Singh and passed a decree in terms of an award.

(2) The petitioner, Balbir Singh, entered into a hire purchase agreement with respondent I, Messrs All India Finance and Commerce Ltd, on 1st February, 1962. One Koja Singh was the guarantor. The agreement contained a term to the effect that any matter of difference arising out of the said agreement shall be referred to the sole arbitration of one Shri Chet Ram Mittal, Advocate. Disputes arose between the parties, and the same were referred by the Company to the arbitrator, who made an award in favor of the claimant-company on 6th November, 1963. After the award was made, the claimant-company filed an application, dated 23rd December, 1963, out of which this Civil Revision has arisen, in the Court of the Senior Subordinate Judge, Delhi, under sections 14 and 17 of the Arbitration Act for the filing of the award and for making it a rule of the Court. Balbir Singh was imp leaded as respondent 1, Koja Singh was imp leaded as respondent 2, and Shri Chet Ram Mittal was imp leaded as respondent 3. The application was dismissed for default of appearance on behalf of the company on 11th March, 1964. It was, however, restored by an order, dated 26th October, 1964. Thereafter, the award was filed into the Court, and a notice thereof was given to the parties. In response to the notice, the petitioner, Balbir Singh, alone filed objections. He denied that there was any arbitration agreement between the parties, and pleaded, inter alia, that the Court at Delhi had no jurisdiction to entertain and decide the application. According to him, the hire purchase agreement was arrived at Moga and, thereforee, the Court at Moga alone had jurisdiction to decide the matters arising out of the agreement. He also alleged that he was not served with any notice for appearance before the arbitrator, and that the arbitrator did not afford him any opportunity of pleading his case. The said objections were resisted by the claimant-company, which denied the allegations of Balbir Singh.

(3) On the aforesaid pleadings, the learned Subordinate Judge framed the following issues:- '1. Whether this Court has no jurisdiction? 2 Whether the award is liable to be set aside? ' 4. By his order, dated 29th March, 1965, Shri H.S. Bakshi, Subordinate Judge 1st Class, Delhi, held on issue No. 1 that the Court at Delhi had jurisdiction to decide the application. On issue No. 2, the learned Subordinate Judge observed that the only ground pressed by the learned counsel for the objector Balbir Singh on the said issue was that of no service of notice, and after considering the said ground decided the same against the objector Balbir Singh. In view of the said findings on the two issues, the learned Subordinate Judge dismissed the objections and directed that a decree shall follow in terms of the award. Against that order, Balbir Singh and Koja Singh preferred an appeal, M.C A. No. 241 of 1965, to the Court of Shri M.L Jain, Additional District Judge, Delhi.

(5) As stated earlier, by his judgment, dated 20th December, 1965, the learned Additional District Judge dismissed the appeal. In his Judgment, the learned Additional District Judge noted that the finding of the trial Court on issue No. 1 was not contested before him in the appeal by the petitioner's counsel, and that it was only contended that the service of the notice said to have been sent by the arbitrator was never effected on the petitioner Balbir Singh. On a consideration of the evidence, the learned Additional District Judge agreed with the view of the learned Subordinate Judge which was against Balbir Singh. In the result, he dismissed the appeal It is against that appellate judgment that the present Civil Revision has been filed by Balbir Singh alone. Respondent 1 in the Civil Revision is All India Finance and Commerce Ltd., respondent 2 is Shri Chet Ram Mittal and respondent 3 is Koja Singh

(6) Shri Daljit Singh, learned counsel for the petitioner, conceded fairly that the finding of the lower courts on issue No. 2 being one of fact, cannot be canvassed in this Civil Revision. He, however, sought to contend that the reference to the arbitrator was made unilaterally by respondent 1, the All India Finance and Commerce Ltd. alone, and such an unilateral reference was not permissible in law, and consequently, the proceedings before the arbitrator and the award were all illegal and void for want of jurisdiction. This contention was not raised in the lower Courts. It was, however, raised in the grounds set out in the Memorandum of Civil Revision. Shri Daljit Singh relied upon the decision of a Full Bench of this Court in P C Aggarwal v. Banwari Lal. It was held by the Full Bench in that case that on an unilateral reference by one of the parties the arbitrator acquires no jurisdiction to enter upon the arbitration proceedings and make an award. On the basis of the said decision, Shri Daljit Singh contended that the entire proceedings before the arbitrator including the award were without jurisdiction, and consequently the orders of the lower courts making the award a decree of the Court were also invalid.

(7) In answer to the above contention of Shri Daljit Singh, Shri M.C. Gaind, learned counsel for respondent No. 1, urged two contentions. The first contention was that the new ground of attack against the arbitration proceedings and the award should not be permitted to be raised for the first time in this Civil Revision. He referred to the decision in Hari Singh v. Mst. Amroti. In that case, a suit for a declaration that certain sale deeds were not binding on the plaintiffs was referred to arbitration, and an award was made. Subsequently, a decree in terms of the award was passed by the trial Court. In an appeal against that decree, the Additional District Judge allowed an objection to be raised that in-as-much as the suit was one for declaration, it could not be referred to arbitration at all, and consequently the reference to arbitration was invalid. The learned Additional District Judge accepted the said objsction, and sent the case back to the trial Court for disposal on merits. Against that order of remand, a Civil Revision was filed in the High Court of Lahore. A preliminary objection was raised in the revision that the revision was not competent under section 115 of the Code of Civil Procedure. Dealing with the said objection, Abdur Rahman J. observed that the objection that a suit for declaration could not be referred to arbitration was not taken on behalf of the defendants before the trial Court and should not have been permitted to be raised for the first time in appeal, and that the consideration of an objection to the legality of an award which had not been raised before the trial Court was material irregularity and in permitting such an objection to be raised for the first time, the Additional District Judge must be held. to have acted in the exercise of his jurisdiction with material irregularity. Shri M.C Gaind relied upon the said observation and contended that what could not be done in appeal cannot be done in Revision. It is true that it was observed in the aforesaid judgment that the consideration of an objection to the legality of an award which was not raised before the trial Court, was a material irregularity, and in permitting such an objection to be raised for the first time the Additional District Judge had acted in the exercise of his jurisdiction with material irregularity. It has, however, to be noted that the question raised in that case was only as regards the legality of the award and not as regards the jurisdiction of the arbitrator. That was why the learned Judge held that such a question could not be raised for the first time in the appellate Court, presumably because it would involve an investigation into facts. A question as regards jurisdiction, however, stands on a different footing as it would, if accepted, go to the root of the proceedings before the arbitrator. It is a well settled principle that a question of jurisdiction which does not involve any investigation into facts can be raised at any stage. In this connection, Shri Daljit Singh referred to the judgment of Ansari J. in Uma Dutt v. R C. Sardana. pronounced on 19th August, 1971, in F A.O 188-D of 1963 on the file of this High Court. In that case, a dispute arising out of a mortgage was referred to arbitration by one of the parties to the mortgage. A notice sent by the arbitrator was not served on the other party and the arbitrator proceeded with the reference ex parte. He gave an aware and, en an application under section 14 of the Arbitration Act, the award was made a rule of the Court. Against that decree, an appeal was filed in the High Court. In that appeal, it was sought to be contended that the arbitrator had no jurisdiction to enter upon the arbitration proceedings or to pass an award in as much as only one of the parties to the agreement had made an unilateral reference to the arbitrator. The said ground was not taken in the lower Court. Ansari J held that although the ground was not taken in the lower Court, it was open to the appellant to take the objection in the appeal as it involved a question of jurisdiction of the arbitrator to enter upon the reference and to pass an award, and also because the question did not involve any fresh investigation into question. of fact.

(8) In the preset case. it was not disputed by Shri Gaind that the reference was made unilaterally by the All India Finance and Commerce Ltd. to the arbitrator. The contention sought to be raised by Shri Daljit Siagh was based only on that undisputed fact. It was a question of jurisdiction of the arbitrator and did not involve any fresh investigation into questions of fact. It was, thereforee, open to Shri Daljit Singh to urge the said conteation.

(9) Coming to the contention itself, it is now settled by the decision of the Full Bench in P.C. Aggarwal's case (supra) that an arbitrator has no jurisdiction to enter upon a reference on an unilateral reference by one of the parties. In the present case, the reference was admittedly made by the company, respondent 1, alone unilaterally to the arbitrator, Shri Chet Ram Mittal. The proceedings before him and the award made by him were, thereforee, without jurisdiction. The question, then, is whether in the circumstances the orders of the lower courts dismissing the objections and making the award a rule of the Court were also without jurisdiction, and can be interfered within the present Civil Revision under section 115 of the Code of Civil Procedure. Shri Gaind contended that the absence of jurisdiction in the arbitrator had nothing to do with the jurisdiction of the lower courts which acted under the provisions of the Arbitration Act, and that they had jurisdiction to pass the impugned orders. There is considerable force in the said contention. The proceedings before the arbitrator were separate and distinct from the proceedings before the lower courts. The proceedings before the learned Subordinate Judge, Delhi commenced with the application filed by the company (respondent 1), on 23rd December, 1953, under sections 14 and 17 of the Arbitration Act. No doubt, the application was for making the award a rule of the Court. But, the jurisdiction of the Subordinate Judge to entertain the application, consider the objections thereto and pass an order thereon was by virtue of the statutory provisions in the aforesaid sections of the Act. The validity or invalidity of the award due to absence of jurisdiction in the arbitrator had nothing to do with the jurisdiction of the Subordinate Judge under the aforesaid sections of the Act. The Subordinate Judge had the jurisdiction to uphold or reject the objections to the award and to make or refuse to make the award a rule of the Court. If the invalidity of the arbitration proceedings and the award due to absence of jurisdiction in the arbitrator had been pleaded before him, he would have considered the plea and decided the same. Even if he had decided wrongly on such consideration, his decision would not have been one without jurisdiction, as he had jurisdiction to decide rightly as well as wrongly. Similarly, on appeal from the judgment of the Subordinate Judge, the jurisdiction of the Additional District Judge to decide the appeal was by virtue of the provisions in section 39 of the Act. He had the jurisdiction to decide the appeal rightly or wrongly. A wrong decision by him also could not have been said to be one without jurisdiction. It is thus clear that if the contention of Shri Daljit Singh that the arbitration proceedings and the award made by the arbitrator were without jurisdiction had been raised before the lower Courts, their decisions thereon would not have imported any question of jurisdiction so far as the orders of the lower Courts are concerned which would call for interference in revision under section 115 of the Code of Civil Procedure. In other words, this Court could not have interfered in revision with the decision of the lower courts. That being so, the petitioner cannot be in a better position when the plea or contention was not raised at all in the lower courts. It follows that the orders of the lower courts making the award a rule of the Court cannot be interfered within this Civil Revision under section 115 of the Code of Civil Procedure.

(10) Shri Gaind referred in this connection to the decision in Hastimal Dglichand Bora V. Hiralal Matichand Mutha. In that case, a dispute was referred to an arbitrator without the intervention of a Court, and the arbitrator made an award whereby he held that the transaction between the parties was one of mortgage and directed the mortgagors to pay a certain amount to the mortgagees and also gave directions for realization of the amount by sale of the mortgaged properties in case of non-payment. Thereafter, on an application by the mortgagees, the award was filed in the Court of Civil Judge, Ahmadnagar, and the mortgagor raised an objection that the arbitrator had no jurisdiction to pass a virtual decree on the mortgage as he had purported to do. The objection was rejected, and a decree in terms of the award was directed to be drawn. Treating the judgment as amounting to an order refusing to set aside the award, an appeal was preferred to the High Court. In the alternative, a revision application was also preferred to the High Court against the decree which was subsequently drawn in terms of the award. A division Bench of the High Court, Gajendragadkar and Chainani JJ. held that the order of the trial court was not one refusing to set aside an award, and, thereforee, no appeal lay under section 39 of the Arbitration Act. We are, however, concerned with that part of the judgment which dealt with the revisional application. The learned Judges held that under section 17 of the Arbitration Act an appeal lies against a decree which has been drawn in accordance with the judgment, pronounced on the award only On the ground that the decree is in excess of or is not otherwise in accordance with the award, that no other ground can legitimately be urged in such an appeal, and that it would be illogical to hold that the jurisdiction of the revisional court should be wider than the jurisdiction of the appellate Court. The learned Judges further held as under :-

'BUT,apart from that, even if it was open to us to entertain a plea of jurisdiction in a revisional application against such a decree, we do not see how a plea of jurisdiction can properly be raised under Section 115 in the present revisional application, because the plea is no more than this, that the arbitrator has exceeded his jurisdiction in making the award which he has made. This point was specifically raised before the learned Judge and he has held that the arbitrator has not exceeded his jurisdiction. Clearly, the decision of the learned Judge that the arbitrator has not exceeded his jurisdiction cannot itself import any question about the jurisdiction of the learned Judge himself in the present revisional application. Assuming in Mr. Kotwal's favor that the view of the learned Judge that the arbitrator acted within jurisdiction is wholly wrong, that would not be enough to justify Mr. Kotwal's argument that the learned Judge's order is without jurisdiction, and calls for interference at our hands under Section 115. The learned Judge had jurisdiction to consider the point raised by him ; indeed it was his duty to decide it ; and he had decided it in the light of the terms of reference agreed upon between the parties. All that Mr Kotwal can say at the highest is that the learned Judge has misconstrued the said terms ; but that cannot obviously import any question of jurisdiction. thereforee, we must hold that the revisional application also is incompetent and the preliminary objection raised in that behalf must be upheld.'

(11) The above observations support the view taken by me.

(12) The second contention of Shri Gaind was that the contention of Shri Daljit Singh that an unilateral reference confers no jurisdiction upon the arbitrator to enter upon the reference is an additional objection to the award being made a rule of the Court, and as such is barred bylimitation. He pointed out that the application under section 14 of the Arbitration Act for directing the award to be filed in the Court was filed on 24th December, 1963, and the objections thereto were filed on 26th October, 1964, and that the new objection sought to be urged in the Revision is barred by the limitation of thirty days prescribed in Article 158 of the Limitation Act, 1908 (corresponding Article in the Limitation Act, 1963, being 119). In reply thereto, Shri Daljit Singh argued that Article 158 prescribes limitation only for an application to set aside an award, that there is no period of limitation prescribed for raising an additional ground of objection, and that in any case an application, oral or written, for challenging the validity of an award on the ground of its having been made without jurisdiction and hence being void, is not covered by Article 158. The learned counsel referred to the decision in Prem Sagar Chawla v. M/s. Security and Finance (P.) Ltd, in support of his argument. In that case, it was held by a Full Bench of this Court (Hegde C. J.. S. K. Kapur and S. N. Andley JJ.) that an application under section 33 of the arbitration Act challenging the validity of an award on the ground of non-existence of the arbitration agreement, is not governed by Article 119 of the Limitation Act, 1963. It is, however, not necessary to deal with the second contention of Shri Gaind in the view taken by me regarding his first contention.

(13) For the above reasons, the Civil Revision fails, and is dismissed with costs.


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