Skip to content


Vulson Vs. Kelukutty and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKerala High Court
Decided On
Case NumberC.M.A. No. 244 of 1957
Judge
Reported inAIR1959Ker174
ActsArbitration Act, 1940 - Sections 13, 29 and 30; Code of Civil Procedure (CPC) - Sections 34
AppellantVulson
RespondentKelukutty and anr.
Appellant Advocate T.K. Lakshmana Iyer,; T.L. Viswanatha Iyer,; N.K. Venkat
Respondent Advocate K.V. Surianarayana Iyer, Adv. General,; S. Nataraja Iyer and;
DispositionAppeals dismissed
Cases ReferredSee Venkitachellam v. Suryanarayanamurty
Excerpt:
- - indeed the principle is otherwise well settled tbat a suit by a firm on a pro-note in favour of one of the partners is perfectly maintainable. the appeals fail in the result and are dismissed with costs......shall be paid, and may tax or settle the amount of costs to be paid or any part thereof and may award costs to be paid as between legal practitioner and client.'the argument is that costs are confined by virtue of this rule, to the costs of the reference and award alone, so as not to include the costs of the suit anterior to the submission. there is a distinction no' doubt, between costs of the cause,costs of reference and costs of award, so when a cause is referred, the costs of the cause comprise the costs incurred in the cause up to the time of the submission the costs of the order of reference and the costs of ulterior proceedings in the cause, if any, after the award. and there is also the rule that when 'all matters in difference between the parties' including the question of.....
Judgment:

Varadaraja Iyengar, J.

1. These two appeals are by the common defendant in two connected suits O. S. Nos. 50 and 53 of 1954 on the file of the Subordinate Judge of Kozhikode and are directed against two similar orders passed by the court below, refusing his motion to set aside the award made in favour of the plaintiffs by the sole arbitrator in the case.

2. O. S. 50 of 1954 was instituted by two plaintiffs, viz., (I) K. Kelukutty -- a partnership firm and (II) K. Kelukutty one of the; partners of the 1st plaintiff-firm. The plaintiffs in O. S. 53 of 1954 were similarly the firm of U.K. Sankunny and U.K. Sankunny a partner thereof. O. S. 50 of 1954 was for recovery of Rs. 6300 with interest and costs from the sole defendant C. C. Vulson, on the basis of a pro-note dated 27-5-1951 executed by the latter, in favour of the 2nd plaintiff, K. Kelukutty. O. S. 53 of 1954 was based on a pro-note, of same date and for same amount and executed by the same defendant but in favour of Sankunny the 2nd plaintiff in that suit. In both suits, the plaintiffs averred that the consideration for the pro-notes concerned, moved from the respective 1st plaintiff-firms, though the 2nd plaintiff in each actually paid the same.

Decrees were accordingly prayed for in both the suits, in favour of the respective 1st plaintiff-firms and only alternatively in favour of the 2nd plaintiffs. In view to the single origin of the transactions in the two suits and same contention raised by the common defendant, the two suits were being jointly tried together. While so, the disputes in both were referred to Mr. P.S. Bharatha Iyer, sole arbitrator of the parties' choice. The plaintiffs in the two cases were represented by two separate advocates before the arbitrator, who finally submitted his award to court on 10-9-1956. The 1st defendant thereupon filed the objection herein questioning the validity of the award on various grounds. It is the order rejecting these objections that forms the subject-matter of the appeals and we are concerned with some only of the grounds so raised and disallowed. We will deal with these grounds in the order in which they were raised before us.

3. Firstly, in regard to the interest provision in the award : The plaint in both the suits prayed for grant of future interest from date of suit and the arbitrator had, conformably, granted the same. The award does not mention that any question was raised in this connection. The defendant, in his objection raised however, the point that Section 29 of the Indian Arbitration Act, 1940 forbade the grant of future interest at all, after suit. Section 29 runs as follows :

'Where and in so far as an award is for the payment of money, the Court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree.'

The Court below, dealing with the matter, thought that the section prevented only the grant of interest from the date of the award, and so it disallowed the same, while confirming the order of the arbitrator to the extent of the future interest from date of plaint up to the date of the award. The contention is raised before us that the court below should have struck down even this portion and learned counsel referred to Thawardas Perumal v. Union of India, (S) AIR 1955 SC 468. We think this argument is entitled to succeed. For the arbitrator is not a court which has been given special power to give interest after suit under Section 34, C. P. C. In the absence of that section, even a court would not have power to give future interest.

4. Next as regards the costs of the suit. In regard to this matter, the arbitrator allowed costs in both the suits in favour of the respective plaintiffs and fixed for himself a fee of Rs. 1500 payable in equal thirds by the respective 2nd plaintiffs in the two suits and the common defendant. The defendant did not dispute the fees of Rs. 500 ordered as against himself in favour of the arbitrator. But he questioned his liability to pay anything towards the cost of the suit. The court below accepting this contention to certain extent, directed that the costs incurred by the parties under the award shall not be made part of the costs of the suit. The plaintiffs in the respective suits were accordingly allowed only the schedule fees as vakil's fee, along with the rest of their costs of the suit. Before us the contention is raised that there is no authority for the arbitrator to grant costs of the suit at all. Now Rule 8 of Schedule I of the Act (which deals with the implied conditions of Arbitration Agreements) which is the relevant provision says:

'The costs of the reference and award shall be in the discretion of the arbitrators or umpire who may direct to, and by whom, and in what manner, such costs or any part thereof shall be paid, and may tax or settle the amount of costs to be paid or any part thereof and may award costs to be paid as between legal practitioner and client.'

The argument is that costs are confined by virtue of this rule, to the costs of the reference and award alone, so as not to include the costs of the suit anterior to the submission. There is a distinction no' doubt, between costs of the cause,costs of reference and costs of award, So when a cause is referred, the costs of the cause comprise the costs incurred in the cause up to the time of the submission the costs of the order of reference and the costs of ulterior proceedings in the cause, if any, after the award. And there is also the Rule that when 'all matters in difference between the parties' including the question of costs are referred as here to an arbitrator, he has the power to deal with all the costs of the cause. See Basu's Indian Arbitration Act, 2nd Edn. p. 763. Even assuming that the Arbitrator has, as contended for, no power to deal with the costs incurred up to the Reference, the Court below had still jurisdiction, in our opinion, to make appropriate provision in this regard in the decree giving effect to the award. There is therefore no substance in this contention.

5. Next, in respect to the lack of power in the arbitrator to decide for himself the question of law involved in the case viz., as to whether the suits were maintainable as framed. For on the plaint allegations themselves, according to the defendant, neither of the plaintiffs were entitled to sue. The 1st plaintiffs-firm who were the alleged beneficiaries could not, because their name did not appear on the face of the instrument and the respective 2nd plaintiffs were precluded, because theyclaimed to have acted for the 1st plaintiffs.

According to the arbitrator, the prayer in the plaints that decree may be passed in favour of one or other of the plaintiffs, rendered the question raised by the defendant as of no significance, though ultimately he passed a decree in favour of the 2nd plaintiff in both the suits. The court be-low in dealing with this aspect, held that therewas really no Question of law before the arbitrator. It was only the question of fact as to whether both the plaintiffs or any of them were entitled to sue on the pro-notes. But even assuming for the purpose of argument that there was aquestion of law involved, the Court below was willing to hold that that question only incidentally arose and the arbitrator was not, under the circumstances, bound to refer it to the Court for decision.

It seems to us that the question is of no substance in this case, for whether it is a question of law or fact it was comprised in the matter in dispute between the parties, and the arbitrator was accordingly clothed with power to decide it. It may be that if there was a mistake of law on the face of the award arising from the decision on this question, the Court might have opportunity to interfere and correct it, unless of course the question of law is held to have been specifically referred, as a point of difference for decision of the arbitrator as such. See (S) AIR 1955 SC 468 already cited where it was held :

'If no specific question of law is referred, either by agreement or by compulsion, the decision of the arbitrator on that is not final however much it may be within his jurisdiction and indeed essential, for him to decide the question incidentally.'

And it was not suggested before us either, by learned counsel that there was anything fatal in the frame of the suit. Indeed the principle is otherwise well settled tbat a suit by a firm on a pro-note in favour of one of the partners is perfectly maintainable. See Brojo Lal Sahe v. Budh Nath, AIR 1928 Cal 148.

6. Finally as regards the validity of the reference: The point was that there was only one reference though there were two suits and eventhat reference contained a cause title mentioning only the names of the individuals Kelukutty and Sankunny, as parties plaintiff's in the reference. The court below got over the difficulty by saying that there were two petitions for reference in the respective suits properly signed by the parties therein and further the body of the reference specified both suits as having been referred. We think the answer of the court below was sufficient to meet the question raised.

In any event, the parties understood the matter correctly when they appeared before the arbitrator in pursuance of his notice and conducted their case before him. Learned counsel is correct in saying that it is open to a party to canvass the validity of a reference in proceedings under Section 30 of the Act as here, but a court would be unwilling to assist any party who with full knowledge of the circumstances allows an arbitrator to proceed and take part in it and seeks in evade it by raising a number of objections which never occurred to him before. See Venkitachellam v. Suryanarayanamurty, AIR 1941 Mad 129.

7. No other point was taken before us. The appeals fail in the result and are dismissed with costs. Counsel's fee one set in each case.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //