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Thakkar Vithalbhai Hargovind and anr. Vs. Kachhia Jagjivan Motilal (Deed.) by His Heirs Bai Kashi and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtGujarat High Court
Decided On
Judge
Reported in(1969)10GLR288
AppellantThakkar Vithalbhai Hargovind and anr.
RespondentKachhia Jagjivan Motilal (Deed.) by His Heirs Bai Kashi and ors.
Cases ReferredShyamsingh Jaswantsingh v. Pralhadsingh Tikaram and Ors.
Excerpt:
- - the learned civil judge, junior division, padra held that the plaintiffs bad proved that the arbitrator bad acted illegally and that the arbitrator did not follow the provisions of the arbitration act in giving the award. it is well-settled that when parties enter into an agreement for settlement of their disputes by arbitration, its effect is to take the lis out of the hands of the ordinary courts of the land and to entrust it to the decision of a private tribunal. again if the parties who have referred their disputes to a private tribunal are satisfied by the arbitrator's award, it is open to them to jointly request the arbitrator not to file the award in court in order to save expenses. an award like a judgment is valid and binding as soon as it is pronounced. this award was.....b.g. thakor, j.1. the present letters patent appeal is filed by the defendants against the decision and judgment of our learned brother, bakshi, j. who was pleased to dismiss second appeal no. 1581 of 1960 which was also filed by the defendants. the suit out of which the present appeal arises was filed by the plaintiffs for dissolution of partnership and for taking accounts. one of the defences taken in the suit was that the subject matter of the suit was referred to arbitration and that the arbitrator had made an award and that therefore, the suit was not maintainable. the question raised in second appeal was whether it was open to the defendants to plead the existence of an award as a bar to the maintainability of a suit. his lordship bakshi, j. was pleased to hold that under the scheme.....
Judgment:

B.G. Thakor, J.

1. The present Letters Patent Appeal is filed by the defendants against the decision and judgment of our learned brother, Bakshi, J. who was pleased to dismiss Second Appeal No. 1581 of 1960 which was also filed by the defendants. The suit out of which the present appeal arises was filed by the plaintiffs for dissolution of partnership and for taking accounts. One of the defences taken in the suit was that the subject matter of the suit was referred to arbitration and that the arbitrator had made an award and that therefore, the suit was not maintainable. The question raised in Second Appeal was whether it was open to the defendants to plead the existence of an award as a bar to the maintainability of a suit. His Lordship Bakshi, J. was pleased to hold that under the scheme of the Arbitration Act, an award or an arbitration award could be treated as effective only if a decree was obtained on the award in accordance with the arbitration. The view taken was that an award which was not made a rule of the Court, could not validly be set up by the defendants as a bar to the plaintiffs' suit on the original cause of action. It was held that the defendants could not validly plead the maintainability of the suit. It is the correctness of this view which is challenged before us in the present Letters Patent Appeal. We might mention that this was the only point decided by our learned brother in the Second Appeal. It was held in the Second Appeal that in the present case the defendants had not taken the plea of accord and satisfaction of the award. It was also held that the defendants had not pleaded a subsequent agreement between the parties to abide by the award. The appeal, therefore, was disposed of on this ground which we have mentioned above.

2. In order to appreciate the real contentions between the parties, it is necessary to state a few facts. The original plaintiffs filled a suit, being Regular Civil Suit No. 26 of 1957 in the Court of the Civil Judge, Junior Division at Padra. The suit broadly speaking was for dissolution of the partnership and for taking accounts. The plaintiffs and the defendants started business in partnership in S.Y. 2000. It was registered under the name of Messrs Ishwarbhai and Vithaldas and Co. It was continued till S.Y. 2011 when it ceased to work. The learned Civil Judge, Junior Division, Padra held that the plaintiffs bad proved that the arbitrator bad acted illegally and that the arbitrator did not follow the provisions of the Arbitration Act in giving the award. He held that the suit was tenable despite the award of the arbitrator. He held that the plaintiff was entitled to take accounts and he passed a decree as mentioned in his judgment.

3. Feeling aggrieved by the decision and judgment passed by the learned Civil Judge, Junior Division, Padra, the defendants filed an appeal, being Civil Appeal No. 182 of 1959 in the Court of the Assistant Judge at Baroda. The learned Assistant Judge, Baroda, Mr. K.M. Satwani, by his order and judgment was pleased to hold that the award was duly proved and admitted in evidence. He observed in the course of his judgment that there was no dispute that the questions referred to the arbitrator were the same which were the subject matter of the present suit, viz. the question of taking accounts and dissolution of the partnership. He held that a suit to enforce the award could not be filed. He further held that an award, the terms of which were not incorporated into a decree under Section 17 of the Arbitration Act was a nullity and was of no effect and hence could not affect the original cause of action and hence such an award could not be set up by the defendants as a bar to the plaintiffs' suit. The learned Assistant Judge observed that the plea of the plaintiff that the signatures of the parties were taken before writing the award was not false. We will have occasion to show that this observation or finding of the learned Judge is perverse and is not at all supported by the evidence of the arbitrator. The learned Assistant Judge found that the procedure for extending the time for the making of the award was not followed la the present case. The learned Assistant Judge took the view that the award was liable to be set aside on this ground. The learned Assistant Judge also found that the award related to accounts upto the end of S.Y. 2011 while the reference was for accounts upto S.Y. 2010 only. In the view of the learned Assistant Judge, the award went beyond the scope of the reference and the same was vitiated on that ground also. We might mention that it was agreed before the learned Assistant Judge that the defendants had not pleaded a subsequent agreement between the parties to abide by the award and that the defendants had not raised a plea of accord and satisfaction. In the result, the learned Assistant Judge held that the plaintiff was not estopped from filing a suit on the original cause of action.

4. It is necessary to observe at this stage that although the learned Assistant Judge had dealt with the contention that the award was liable to be set aside, as it was filed after four months and although it was argued before the learned Assistant Judge that the award was invalid as being beyond the terms of the reference, the decision of our learned brother Bakshi, J. is given only on the ground that it was not open to the defendant that to set up an award as a bar to the maintainability of the suit. We might also mention that although the contention as it appears to have been taken and dealt with in the Second Appeal, was taken in the form as to whether the existence of an award can be pleaded as a bar to the maintainability of the suit, in the Letters Patent Appeal before us, this contention is developed and in this Letters Patent Appeal before us many questions are raised, but we might mention that although the questions which are raised before us appear to be many, they are not new questions or even different questions from the one which were raised in the Second Appeal. These questions only raise different aspects of the same question which was argued in the Second Appeal and we will be dealing with the same question which was raised in the Second Appeal, although it is possible that different solutions may be offered to the same question. The questions which are agitated before us are raised in the form as to whether a suit of the plaintiff who has been a party to an arbitration agreement and who has pushed his arbitration proceeding to an award can, after the award is made, get rid of it by filing a suit on the same cause of action by ignoring the award or impeaching its validity. Another form in which the same question is agitated before us is whether when the parties have referred a dispute between them to an arbitrator and the arbitrator has given his award relating to the dispute, it is open to any party to file a suit in respect of the same subject matter. Another aspect of the self-same question which is raised before us is whether it would be open to the defendants to raise a plea that the plaintiff's suit raises question about the existence, effect or validity of an arbitration agreement or award. The subsidiary question which will require our consideration is as to whether when the defendants raise a plea that the suit of the plaintiff raises question about the existence, effect or validity of an arbitration agreement or award, whether the defendant is presenting a question for decision upon the existence, effect or validity of an arbitration agreement or award. Another question is whether the defendants' plea that the suit is not maintainable is not a plea equivalent to the one that the plaintiff's suit is barred under Sections 32 and 33 of the Arbitration Act. Another question which arises is whether after the arbitrator has made and pronounced his award, the original cause of action merges in the award. These different aspects of the question will necessitate a consideration of the question as to what is the effect of an award given by the arbitrator which is not made a rule of the Court, whether it is effective or whether it is a scrap of paper or a dead letter. Another question which we will have to consider will be whether a person who has allowed an arbitration proceeding to culminate into an award can bring a suit in respect of the subject matter which is covered by the award. These are really and truly the several aspects of the one question which was considered by our learned brother Bakshi J. in the Second Appeal.

5. In order to appreciate the questions which arise for our decision in this Letters Patent Appeal, it will be necessary to refer to certain provisions of the Arbitration Act, 1940 (Act X of 1940). The title of the Act mentions that it is an Act to consolidate and amend the law relating to Arbitration. Section 2(a) defines an arbitration agreement to mean a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. Section 2(b) defines an 'award' to mean an arbitration award. Section 2(e) defines 'reference' as meaning a reference to arbitration. Section 3 which occurs in Chapter II dealing with arbitration without intervention of a Court, provides that an arbitration agreement, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference, unless a different intention is expressed. Section 5 provides that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. Section 8 deals with the power of the Court to appoint arbitrator. Section 14 which is material provides for the signing and the filing of the award, in Section 14(1) and Section 14(2). Section 15 deals with the power of the Court to modify an award and Section 16 deals with the power of the Court to remit an award. Section 17 provides when a judgment is to be delivered in terms of the award. Chapter V which is headed as a general section and which is to apply to all arbitrations provides for a power in the Court to enlarge the time for making of the award. Section 30 deals with the grounds for setting aside the award. Section 31 provides for riling an award in a Court which has jurisdiction. Section 32 deals generally with bar of suits and Section 33 deals with an application to contest the award or the arbitration agreement. Section 34 deals with the powers of the Court to stay legal proceedings where there Is an arbitration agreement. Section 39 which is not material deals with appeals. The First Schedule deals with the implied conditions of arbitration agreements and condition No. 3 thereof provides that in certain circumstances the award must be filed within four months.

6. It will also be necessary to refer to some provisions in the Second Schedule of the Civil Procedure Code and it will be necessary to refer to Clauses 17, 18, 19, 20, 21 and 22 of the Second Schedule.

7. Before, however, we proceed to consider in detail the provisions of the Act, it will be necessary to consider the questions which are raised before us in the first place on general principles and apart from the authorities. It is well-settled that when parties enter into an agreement for settlement of their disputes by arbitration, its effect is to take the lis out of the hands of the ordinary Courts of the land and to entrust it to the decision of a private tribunal. Section 21 of the Specific Relief Act expressly says that except as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitration shall be specifically enforced, but if any person who has made such a contract and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit. The Scheme of the Arbitration Act, 1940 carries out this principle. The object of the Act is to prevent parties to an arbitration from reagitating the very question in the dispute referred to arbitration in a manner other than as provided by the Act. It will be seen from a perusal of Section 34 of the Arbitration Act that if there is an agreement to refer a matter to arbitration, then if any person who is party to an arbitration agreement commences any legal proceeding, then those proceedings are stayed and the scheme appears to be that this is because legal proceedings should not be carried out or proceeded with where there is an arbitration agreement. Putting the matter differently, the Arbitration Act 'seems tocontemplate that in respect of matters which are covered by the Arbitration agreement, a suit shall not be entertained and proceeded with or in any event, it should be stayed. The clear object, therefore, of the provisions of the Act appears to be that if a particular subject matter is shown to be a matter which is agreed to be referred to arbitration, then a suit in respect of the same subject matter is barred. This is what is provided in reference to what can be described merely as an arbitration agreement. It seems to us that when a party to an arbitration agreement has pushed the arbitration proceedings to an award, then the position appears to be that the particular dispute in reference to that cause of action is decided and determined by the award. It would seem, therefore, that the dispute has been merged in an award. This appears to us to be the object and scheme of the Arbitration Act. It seems to us clear under Section 14(1) of the Arbitration Act that the award when it is signed and when a notice is given of the making and signing thereof is complete and such an award would determine the dispute or Us and the cause of action would be merged in the award. It seems to us that it is not necessary before the award can be regarded as complete that it must be made a rule of the Court. When parties agree to go to an arbitrator, they agree to abide by his decision. They have voluntarily chosen the arbitrator to settle their dispute. We see no reason why honest and straight-forward persons who have referred their disputes to an arbitrator should not abide by the decision of the arbitrator without making the arbitration award a rule of the Court. It is easy enough to contemplate cases where it is not at all necessary for the parties to make the award a rule of the Court. In cases where an arbitrator holds that nothing is due by one party from the other, in such a case it would certainly be not necessary for the parties to go through the formality of filing the award in Court. Again if the parties who have referred their disputes to a private tribunal are satisfied by the arbitrator's award, it is open to them to jointly request the arbitrator not to file the award in Court in order to save expenses. That this appears to us to be the clear intention of the Arbitration Act is also clear as there is no duty cast on the arbitrator to file the award. It is only on the request of the parties that the Arbitrator is to file the award. In these circumstances, it does not seem to us that it would be proper or reasonable for us to infer that an award gets its efficacy only when it is made a rule of the Court. There are decisions to which we will presently refer which would show that an award has the effect of a judgment and there is a presumption in favour of the validity and regularity of the award. The wordings of Section 14(2) which provides that it is only at the request of any party to the arbitration agreement that the arbitrator will file the same in Court and give notice to the parties of the filing of the award, also make it clear that it is not compulsory to file the award. Merely because a power is given under the Act to file an award in Court, it would not be reasonable to hold that an award which is not filed in Court would have no efficacy. The award will become a judgment and will have its full efficacy unless it is set aside. It is not difficult to discover the object why the Arbitration Act has provided and given liberty to the parties to file the award in Court. The reason why parties are enabled to file the award in Court is because it may be easy enough for a person who wants to enforce it, if he makes it a rule of the Court. It is also important to remember that the right to file the award and to request the arbitrator to file the award in Court is given under the Act not only to the party who wishes to enforce the award, but it is also given to both the parties. A party who wants to contest the award under the provisions of the Arbitration Act and who thereby wants to get rid of the effect of the award has also got a right to request the arbitrator to file the award. An award like a judgment is valid and binding as soon as it is pronounced. The additional provisions which enable an award to be made a rule of the Court are made because it may be easy in the case of a party who wants to enforce the award to enforce it and because it may be easy in the case of a party who wants to object to the award or to contest the award or to get rid of the effect of the award, to have it set aside. The object therefore, why the award is made a rule of the Court is not difficult to find if we correctly appreciate the effect of the provisions of the Indian Arbitration Act. There is now no doubt or dispute that the Arbitration Act is a consolidating and amending Act relating to arbitration and it is also a self-contained Act. It, therefore, seems clear that if a party wants to enforce the award or If a party wants to get rid of the effect of the award, he must have recourse only to the provisions of the Indian Arbitration Act. It is for this reason that a provision is made in the Arbitration Act for the purpose of filing an award. It is only when an award is filed in Court that a Court gets jurisdiction either to remit the award, to amend the award, to hear objections on the award or to pass a decree in terms of the award. When a party to an arbitration agreement feels that it will be necessary for him to obtain the assistance of the Court, then only it will be necessary for him to approach the Court by requesting the arbitrator to file the same in the Court. We are unable to discover any provision in the Arbitration Act from which we can infer that the efficacy of an award depends on its being made a rule of the Court. On the contrary, if the provisions of the Arbitration Act are closely read, then it will be seen that for enforcing the award, for remitting the award, for amending the award, for raising objections to the award, and for getting a decree in terms of the award, it is necessary to file the same in Court. A party cannot file a suit in respect of the subject matter of the award unless he objects to the award and contests the award. As the making of the award creates serious consequences, the Legislature has provided that any party who wants to have an adjudication on the existence, effect and validity of the award, must make it a rule of the Court. The existence, validity and effect of an award can only be inquired into by the Court within the frame-work of the Arbitration Act. This would rather show that so far as any other Court is concerned, that other Court cannot go into the question of the existence, validity or effect of an arbitration agreement. The other Court must proceed on the basis that an award stands unless it is set aside in the prior proceedings before a competent Court. It will not be open to the other Court to ignore the award or to decide upon its existence., validity or effect. The clear position, therefore, which would emerge when a plaintiff files his suit in respect of the subject matter which is coveted by an award will be that he would have no cause of action because the cause of action is merged in the award. Unless, therefore, a plaintiff gets the award set aside in proper proceedings in a competent Court, it will stand as a bar to his suit. It will be open to a plaintiff to have the existence, validity and effect of the arbitration agreement or award determined and if it is held by the competent Court that the award is invalid, then of course his suit will be competent and can proceed. Under Section 32 of the Indian Arbitration Act, a suit to enforce an award is barred, but when a defendant pleads that an award bars a suit filed by the plaintiff, the defendant does not call upon the Court to determine the existence, validity or effect of the award or the arbitration agreement. The defendant pleads a bar to the suit because of there being an award which has determined the dispute and which has merged the original cause of action. The defendant is also pointing out in such a case that the subject matter of the arbitration agreement and of the suit is the same and therefore, a second action is barred. It is not correct to say that the defendant when he pleads or sets up a bar to the maintainability of the suit, he is asking the Court to adjudicate upon the existence, effect or validity of the award. We think, on first principles and apart from authorities that this is the clear legal position. We are unable to agree that an award which is not made a rule of the Court is a dead letter or a scrap of paper or is a nullity. On the contrary, as it has been held that such an agreement or award if acted upon is binding, it is certainly not a nullity. Having thus discussed the matter on first principles and apart from authorities, it will be necessary for us to refer to the authorities which have been cited before us and which have taken very divergent and different views.

8. Mr. V.J. Desai on behalf of the appellants has strongly urged before us that the present question which arises before us is completely covered by a decision of the Supreme Court in M/s. Uttam Singh Dugal and Co. v. Union of India and Another, in Civil Appeal No. 162 of 1962. Mr. M.C. Shah, on the other hand, has equally strenuously contended that the decision of the Supreme Court does not decide the present question. It will, therefore, be necessary for us to consider what the Supreme Court decision is and what is its effect. In the case before the Supreme Court, the appellant M/s. Uttam Singh Dugal and Co. had filed an application under Section 33 of the Indian Arbitration Act. The Union of India called upon the respondent No. 2 Col. S.K. Bose to adjudicate upon the matters in dispute between the respondent No. 1 and the appellant Company. The appellant's allegation was that this purported reference to respondent No. 2 for adjudication on the matters alleged to be in dispute between respondent No. 1 and the appellant was not competent because by an award passed by respondent No. 2 on the 23rd April 1962, all the relevant disputes between the appellant and respondent No. 1 have been decided. That is why by its application, the appellant wanted the trial Court to determine the effect of the said earlier award. Its case was that in law, the effect of the said earlier award was to make the present attempted reference incompetent. It is clear that on the 23rd of April 1962. the respondent No. 2 pronounced his award which was duly published. This award was also satisfied. A second reference was made and the respondent No. 2 directed the appellant to submit its case by 3rd October 1955 and that gave rise to the application which was filed by the appellant on the 13th October 1955. The application made by the appellant was allowed by the learned trial Judge who held that the claim was decided by the arbitrator or deemed to have been decided by him and the claim was merged in the award. Against this decision, an appeal or a revisional application was preferred before the Patna High Court. The High Court took the view in revision that the second reference was valid as it was not the subject matter of the earlier reference. The application of the appellant under Section 33 was dismissed. It was in dealing with this question that Their Lordships of the Supreme Court have pointed out that the application under Section 33 was competent. Their Lordships in considering this position have pronounced upon the true legal position of an award and this is what they have observed:

The true legal position in regard to the effect of an award is not in dispute. It is well settled that as a general rule all claims which are the subject matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award. After an award is pronounced, no action can be started on the original claim which bad been the subject matter of the reference. As has been observed by Mookerjee J, in the case of Bhajshari Shah Benikya v. Beharilal Basak, 'the award is in fact, a final adjudication of Court of the parties' own choice and until impeached upon sufficient grounds in an appropriate proceeding, an award which is on the face of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive. In reality, an award possesses all the elements of vitality even though it has not been formally enforced, and it may be relied upon in a litigation between the parties in relation to the same subject matter. 'This conclusion according to the learned Judge, is based upon the elementary principle that as between the parties and their privies, an award is entitled to that respect which is due to the judgment of a Court of last resort. Therefore, if the award which has been pronounced between the parties has in fact, or and in law, be deemed to have dealt with the present dispute, the second reference would be incompetent. This position also has not been and cannot be seriously disputed.

Then Their Lordships proceeded to consider the question as to whether the dispute was or was not covered and in. connection with this dispute. Their Lordships have observed as follows:

If that be the true nature of the claim now set up by the respondent No. 1, there can be little doubt that this claim is incompetent in view of the award pronounced between the parties.

In another portion of the judgment, Their Lordships have observed as follows:

That being so, we do not think that the claim now sought to be made on behalf of respondent No. 1 can be said to be so distinct and separate from the items of dispute referred to respondent No. 2 on the earlier occasion as to justify a second reference. As the award shows, respondent No. 2 examined the claim of respondent No. 1 in regard to the several recoveries and so it would be reasonable to hold that whole of the dispute between parties on the completion of the contract was the subject matter of the dispute of the first reference and so, after the award was pronounced, it is not open to respondent No. 1 to re-open the said dispute.

In another portion of the judgement, Their Lordships have observed as follows:

But this aspect of the matter does not assist respondent No. 1 because the clause does not permit two references to be made one after the other in respect of the same dispute between the parties. If a dispute arose between the parties in respect of any item and that dispute is, on reference decided by the arbitrator, that is the end of the dispute. If a new and distinct dispute arises thereafter it may be the subject matter of another reference. As we have already pointed out, the disputes in regard to overpayments which are sought to be referred to the arbitration of respondent No. 2 by the second reference, are not new disputes as they are disputes in regard to claims which the Chief Engineer should have made before the arbitrator under the first reference. Respondent No. 2 gave the Chief Engineer ample opportunity to do so and after exhaustive claims were made by the Chief Engineer in that behalf, respondent No. 2 proceeded to pronounce his award, it would be idle to suggest that it is open to the Chief Engineer to look at the accounts over and over again in the light of the technical examination reports and to reopen the question as to over-payments made to the appellant from time to time as it suits him. In our opinion, the trial Court was right in holding that the disputes which are now sought to be raised are covered by the first award and so, the present reference is incompetent in law.

We have set out the relevant portions of this judgment in extenso because it is contended on behalf of the appellants that this decision decides the question which is raised before us. It is, therefore, necessary now to consider what exactly is the point which was decided by the Supreme Court. The appellant was directed to submit his case before an arbitrator and the defence of the appellant was that the dispute was settled by a previous award. The second contention which was raised before the Supreme Court was that the earlier dispute and the second dispute were the same. It was in this context that Their Lordships were called upon to consider the true legal position of the effect of an award after the award was pronounced by the arbitrator. Their Lordships therefore, were specifically called upon to determine the effect of an award which was pronounced and published. The second question which Their Lordships were called upon to decide was as to whether the second reference was barred and that in its turn, depended on the question as to whether the matter of the second award was covered by the decision of the first award. These were the two essential questions which had to be determined by Their Lordships of the Supreme Court and Their Lordships have expressed themselves as to the true legal position of the effect of an award. Their Lordships have also dealt with the other question and that other question was that a second reference in respect of a matter which was determined by the first award was not competent. These were the only two questions which, in our opinion, arose for decision before Their Lordships of the Supreme Court. Reading the judgment in this context, we have no hesitation in holding that the Supreme Court has in terms determined what is the effect of an award which is pronounced under the Arbitration Act. The Supreme Court has also in terms decided that in respect of matters which are covered by the first award, a second action is not competent. In our opinion, therefore, this judgment, if properly read, decided these two points and if the judgment is read in this context, both these points form the basis of the decision of the Supreme Court. They are indeed the ratio of the Supreme Court decision.

9. But Mr. M.C. Shah on behalf of the respondents has tried to urge before us that the point which was decided by the Supreme Court in this case was decided on an application under Section 33 of the Indian Arbitration Act. According to Mr. Shah, the Court which is seized on an application under Section 33 is competent to pronounce upon the validity or otherwise of an award. Mr. Shah has urged before us that as we are not dealing in the present case with an application under Section 33 and as we are not a Court hearing a matter arising out of the Arbitration Act, it would not be open to us to adjudicate upon the effect of the award in the present case. Mr. Shah has also tried to urge before us that the observations made by Their Lordships of the Supreme Court in this judgment are really not the ratio of the decision because Their Lordships have pointed out that award in the case before them was satisfied. In that view of the matter that the award was satisfied and hence binding, it was not necessary for the Supreme Court to go into or decide the other points. And hence the remarks made by the Supreme Court on these two points are not the ratio but are mere obiter dicta not necessary for decision of the case. While we can appreciate the distinction which is sought to be made by Mr. Shah, we are unable to appreciate what difference it would make in so far as the binding nature of the decision of the Supreme Court is concerned. We are not trying to utilize this judgment of the Supreme Court in present proceedings for coming to a conclusion that the award in the present case is either valid or invalid. We are not trying to adjudicate upon the existence, legality cr validity of the award in the present case. All that we are holding is that this Supreme Court decision has considered and decided the question as to what is the true effect of an award. Their Lordships of the Supreme Court have considered the effect of an award under the Act of 1940 and Their Lordships have observed that an award which is pronounced has full efficacy. We are only giving effect to this observation of the Supreme Court. The other part which is decided by the Supreme Court is equally important from our point of view in the present case and that is that in respect of the subject matter covered by the first award, a second action would not lie. These are the two propositions which clearly emerge from a plain reading of the judgment of the Supreme Court and as we have observed above, this is according to us, the ratio of the decision and the basis of the Supreme Court. We do not think that from the mere circumstance that the Supreme Court has stated in its statement of facts that the award was satisfied, we would be justified in inferring that the decision of the Supreme Court is based on that circumstance. The Supreme Court has not based its decision on that circumstance and has clearly based its decision on those two points. What will bind us is the ratio of the decision, and we cannot undertake the task of speculating or imagining a new ratio for the decision on which the Supreme Court could have based its judgment.

10. Mr. M.C. Shah on behalf of the respondents has drawn our attention to a decision in the case of Slate of Orissa v. Sudhansu Sekhar Misra and others, reported in : (1970)ILLJ662SC , and the relevant observations are to be found at page 651. These observations are to be found in the judgment of Hegde, J. who delivered the judgment on behalf of the Bench. These observations are as follows:

A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury L.C. said in Quirm v, Leathern, 1901 AC 495:

Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all.

We entirely and respectfully agree with these weighty observations made by Their Lordships of the Supreme Court. Mr. M.C. Shah also strenuously urged before us that although in this Supreme Court judgment, observations were made as to what is the true effect of an award, the point was not fully considered by Their Lordships of the Supreme Court. He seemed to urge before us that the question of the effect of an award was dealt with by Their Lordships of the Supreme Court in a somewhat cavalier fashion, in the sense that Their Lordships bad not discussed and noticed the large number of cases which had held that an award which is not made a rule of the Court is a nullity and a scrap of paper. According to the contention, therefore, of Mr Shah, this point was not fully considered by Their Lordships and therefore, this decision was not binding upon us. In reference to this contention however, we might usefully refer to the observations made by Their Lordships of the Supreme Court in the case of Smt. Somawanti and Ors. v. The State of Punjab and others, reported in : [1963]2SCR774 . The judgment of Their Lordships of the Supreme Court was delivered by Justice Mudholkar and this is what his Lordship observed at page 160 in Para 22 of the judgment:

It is contended that none of the decisions has considered the argument advanced before us that a law may be protected from an attack under Article 31(2) but it will still be invalid under Article 19(i)(f) if the restriction placed by it on the right of a person to hold property is unreasonable. In other words, for the law before us to be regarded as valid it must also satisfy the requirements of Article 19(5) and that only thereafter can the property of a person be taken away. It is sufficient to say that though this Court may not have pronounced on this aspect of the matter we are bound by the actual decisions which categorically negative an attack based on the right guaranteed by An. 19(1)(f). The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the print with reference to which an argument was subsequently advanced was actually decided. That point has been specifically decided in the three decisions referred to above.

The contention of Mr. Shah, therefore, before us to the effect that as according to him, this point is decided by the Supreme Court without fully considering the same and without referring to authorities, the same is not binding, has also no substance because in our opinion, the Supreme Court has clearly decided this point. We may hasten to add also that there is no substance whatever again in the contention which is raised before us by Mr. M.C. Shah to the effect that Their Lordships of the Supreme Court have not carefully and fully considered the effect of an award. We also hold that Mr. Shah's criticism that Their Lordships of the Supreme Court have dealt with the question of effect of the award in a somewhat cavalier fashion is totally unjustified. We are of opinion that Their Lordships fully and carefully considered what is the effect of an award as also the question of what will be the effect of a second arbitration agreement when the first is covered by the award. The question which fell for determination before Their Lordships was a very simple question and Their Lordships have fully considered the effect of an award. We have no doubt whatever that Their Lordships of the Supreme Court were fully aware of the decisions though they might not have thought fit to refer to them. The mere circumstance or fact that Their Lordships have not considered the effect of several decisions which existed on this point would not detract from the weight or the binding effect of the decision of the Supreme Court. On the contrary the more proper and legitimate view which we would be entitled to take is that a long and elaborate argument was not advanced before Their Lordships because the point dealt with by Their Lordships was elementary and simple for decision. In any event, the authority of the Supreme Court is binding upon us and the binding effect of the decision of the Supreme Court does not depend on the circumstance as to whether Their Lordships had or had not considered the several cases. In the view which we have taken, the decision of the Supreme Court in terms decides the points which we are called upon to decide and as these points have been carefully and fully considered by Their Lordships of the Supreme Court, the decision of the Supreme Court would be equally binding on us as the very points which we are called upon to decide have been considered and decided by Their Lordships of the Supreme Court.

11. But even if it is assumed that these two points which have been decided by the Supreme Court in this decision do not form the ratio of the decision or they are not points considered and decided by the Supreme Court as they were not necessary to be decided, even so it would be useful to refer to Article 141 of the Constitution of India which says that the law declared by the Supreme Court shall be binding on all Courts within the territory of India, We have no doubt whatever that the Supreme Court has in unmistakable terms declared the law as regards the effect of an award which is pronounced under the Arbitration Act, 1940. We have also no hesitation in holding that the Supreme Court has also declared the law that a second action is not competent in respect of what has been decided in the first award. The effect of Article 141 as we read the same is that even the obiter dicta of the Supreme Court on a point raised and argued before it would be binding on us under Article 141. In other words, where the Supreme Court deliberately and with the intention of settling the law, pronounces upon a question, such a pronouncement of the law declared by the Supreme Court will be clearly binding on us under Article 141 of the Constitution of India.

12. The question as to the binding effect of an award was not decided by the Supreme Court for the first time in M/s. Uttam Singh Dugal v. Union of India and another in Civil Appeal No. 162 of 1962. Even as early as 1958 in the case of Hanskumar Kishanchand v. The Union of India, reported in 1959 Supreme Court Reports, 1177, which is equivalent to : [1959]1SCR1177 , Their Lordships of the Supreme Court had occasion to consider the effect of an award under the Arbitration Act. This case was heard by Their Lordships Venkatarama Aiyar, Gajendragadkar and A.K. Sarkar, JJ. The decision in that case was given on behalf of the Bench by Venkatarama Aiyar, J. The remarks made by Venkatarama Aiyar, J. In 1959 S.C.R. are to be found at page 1182. This is what Their Lordships have observed in regard to the effect of an award:

Before discussing the authorities cited on either side in support of their respective contentions, it will be useful to state the well-established principles applicable to the determination of the present question. When parties enter into an agreement to have their dispute settled by arbitration, its effect is to take the lis out of the hands of the ordinary Courts of the land and to entrust it to the decision of what has been termed a private tribunal. Such an agreement is not hit by Section 28 of the Contract Act as being in restraint of legal proceedings, because Section 21 of the Specific Relief Act expressly provides that-

Save as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.

There is a similar provision in Section 28 of the Contract Act which is applicable, where the Arbitration Act is not in force. Where an arbitration is held in pursuance of such an agreement and that results in a decision, that decision takes the place of an adjudication by the ordinary Courts, and the rights of the parties are thereafter regulated by it. It is true that under the law the Courts have the authority to set aside the awards made by arbitrators on certain grounds such as that they are on matters not referred to arbitration, or that the arbitrators had misconducted themselves, or that there are errors apparent on the face of the award. But where the award is not open to any such objection, the Court has to pass a decree in terms of the award, and under Section 17 of the Arbitration Act, an appeal lies against such a decree only on the ground that it is in excess of, or not otherwise in accordance with the award. In other words, it is the decision of the arbitrator where it is not set aside that operates as the real adjudication binding on the parties.

This decision of the Supreme Court was certainly present to the mind of Their Lordships when they decided the Civil Appeal. We might also mention that there are also similar observations to be found in the case of Jivarajbhai Ujamshi Sheth and Ors. v. Chintamanrao Balaji and Ors. reported in A.I.R. 1965 Supreme Court 215 which is equivalent to : [1964]5SCR480 . The case was heard by A.K. Sarkar, J., M. Hidayatullah, J. and J.C. Shah J. The judgment of the Court was delivered by Shah, J. It is not necessary to refer to the other passages in the judgment, but this is what Mr. Justice Shah has observed at page 493:

An award made by an arbitrator is conclusive as a judgment between the parties and the Court is entitled to set aside an award if the arbitrator has misconducted himself in the proceedings or when the award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 33 of the Arbitration Act or where an award has been improperly procured or is otherwise invalid: Section 30 of the Arbitration Act An award may be set aside by the Court on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.

It is not necessary to refer to the further passages in the judgment, but Mr. Justice Shah has clearly observed that an award is conclusive as a judgment between the parties. This is how the effect of the award is described in this decision. In the case of Kashinathsa Yamosa Kabadi etc. v. Narsingsa Bhaskarsa Kabadi, etc. reported in : [1961]3SCR792 , Mr. Justice J.C. Shah had occasion to consider the several authorities to some of which our attention has been drawn by the advocates in the present case. The relevant discussion is to be found in para. 19 at page 1083 of the report. This is what His Lordship has observed:

(19) Before the Arbitration Act, 1940 was enacted, an award made by arbitrators appointed out of Court even if it was not made a rule of the Court was regarded as equivalent to a final judgment and any suit filed on the original cause of action referred to the arbitrators was held barred.

(20) In Muhammad Nawas Khan v. Alam Khan 18 Ind. App. 73 it was held by the Judicial Committee of the Privy Council that an award is valid even if no party has sought to enforce it by the summary procedure.

(21) Since the enactment of the Arbitration Act, 1940, there has arisen wide divergence of judicial opinion among the High Courts on the question whether an award made in a reference out of Court can be set up as a defence to an action filed by a party thereof on the original cause of action when the award is not filed in Court. Section 31, Sub-section (2) of the Arbitration Act provides: 'Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be filed and by no other Court.

and Section 33 sets out the procedure to be followed for challenging the existence, effect or validity of an arbitration agreement or an award or to have its effect determined. It is manifest that questions relating to the validity, effect or existence of an award can be decided by the Court to which an application making it a rule of the Court lies.

(22) In S.K. Kuer v. B.N. Sinha : AIR1953Pat42 the Patna High Court held that by virtue of Section 32 of the Arbitration Act, 1940, an award made on a private reference to arbitration is not operative of its own force; it only becomes operative on being made a rule of the Court. It was held in that case that an award cannot be set up as a defence to an action unless it is filed in Court and a decree obtained thereon. Similar view was taken in Pamandass v. Manikyam Pillai : AIR1960AP59 , Venkatasubbayya v. Bapadu : AIR1951Mad458 and Firm Gulzarimal Gheesalal v. Firm Rameahchandra Radheshyam . On the other hand, in Suryanarayana Reddy v. Venkata Reddy ILR (1949) Mad. III : AIR 1948 Mad. 436 it was held that Sections 32 and 33 of the Indian Arbitration Act, 1940, did not preclude a defendant from setting forth an award which had been fully performed by him but which was not filed in Court under Section 14 and on which a judgment was not pronounced or a decree given under Section 17 of the Act, in answer to the plaintiffs claim which was the subject matter of the reference and the award. That view was accepted in Rajamanickam Pillai v. Swaminatha Pillai : AIR1952Mad24 . It is not necessary in this appeal to express a considered opinion on this disputed question. It may be sufficient to observe that where an award made in arbitration out of Court is accepted by the parties and it is acted upon voluntarily and a suit is thereafter sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute and that the agreement and the subsequent actings of the parties are binding.

We are only quoting these passages from the judgment in order to show that Their Lordships were aware of the judgments which existed and which had taken the view that an award which was not made a rule of the Court, could not be set up as a defence. This question was characterized by Mr. Justice Shah in this decision as being a disputed question inspite of the fact that His Lordship referred to several authorities which had determined the view, In the view which Their Lordships took of the defence in that case which was before them, it became unnecessary for Their Lordships of the Supreme Court to express any considered opinion on this disputed question. But this question was regarded by Their Lordships as being a disputed question. The authorities of the Supreme Court to which we have made reference above take the view that an award is a judgment and that an award decides the disputes between the parties and is effective without being made a rule of the Court. In M/s. Uttam Singh Dugal and Co. v. Union of India, Civil Appeal No. 162 of 1962, Their Lordships of the Supreme Court thought fit to decide this disputed question and they have decided this disputed question about the true effect and legal position of an award. The view taken by the Supreme Court appears to us, with great respect and in all humility, to be the only correct view that could be taken in view of the provisions of the Indian Arbitration Act. The definition of an arbitration agreement and an award under the Arbitration Act supports the view taken by the Supreme Court. As we have mentioned earlier, the provision in Section 14(2) that an award is required to be filed only at the request of the parties also shows that it is not compulsory for the arbitrator to file the award In Court. Even if we read Sections 32 and 33 which bar suits to contest an arbitration agreement, they do not refer to an award which is made a rule of the Court, but they in terms refer only to an arbitration agreement and an award. In any event, it is not necessary for us to discuss the question any further because we are in complete and respectful agreement with the weighty observations which have been made by the Supreme Court on the true legal position and effect of an award. Mr. M.C. Shah has contended before us that the observations of the Supreme Court were made in Civil Appeal No. 162 of 1962 in reference to a filed award. We see no justification for this statement made before us by Mr. Shah. Their Lordships have only staled that the award was pronounced and was duly published. We would not be justified in confining the remarks which were made by Their Lordships in reference to a pronounced award to an award which was filed in Court. Besides, the fact that in that case the award was satisfied would also make no difference, for the decision of the Supreme Court does not proceed on the basis of the award being satisfied. In this view of the matter, it would seem clear that if there is an award which has dealt with the subject matter of the present suit, then the present suit would be clearly not maintainable. In our statement of the facts, we have referred to the observations made by the learned Assistant Judge who was trying Civil Appeal No. 182 of 1959 where he has clearly observed in the course of his judgment that there was no dispute that the questions referred to the arbitration were the same which were the subject matter of the present suit, viz. the question of taking accounts and dissolution of partnership. We see no reason whatever why we should not accept this statement made by the learned Assistant Judge in his judgment.

13. [His Lordship after stating the facts, further observed.]

14. The position therefore, that emerges from the present discussion is that there is an award given by the arbitrator which is not made a rule of the Court. There is a suit filed by the plaintiffs in respect of the same subject matter. The question, therefore, is whether the present suit filed by the plaintiffs would be barred in view of the existence of an award which is not made a rule of the Court. There is no doubt that in view of the clear pronouncement of the Supreme Court in Civil Appeal No. 162 of 1962, and in view of the decisions of the Supreme Court to which we have already referred to, an award even if it is not made a rule of the Court, would certainly bar the suit.

15. As however several decisions have been cited before us, we will only very briefly refer to some of the decisions which take the one or the other view.

16. We will first deal with the case of Shyamsingh Jaswantsingh v. Pralhadsigh Tikaram and others, reported in : AIR1962MP66 . This was a case decided by Dixit, C.J. and this case supports the conclusion to which we have come to independently of the authorities to which we have been referred to. This case decides that a plaintiff who has been a party to an arbitration agreement and who has pushed the arbitration proceedings to an award in the hope of getting an award favourable to him, cannot, after the award is made get rid of it by filing a suit on the same cause of action by ignoring the award or impeaching its validity. This case points out that the scheme and the object of the Arbitration Act is to prevent parties to an arbitration from reagitating the very questions in the disputes referred to arbitration in a manner other than as provided by the Act. Sections 32 and 33 provides that an arbitration agreement or award can only be contested by an application and not by a suit. This case also points out that a party cannot by dexterous pleading avoid the bar imposed by Sections 32 and 33 of the Act. Whatever the pleadings may be, if the suit is one in essence to enforce an award duly given by arbitration dealing with the very dispute which is the subject-matter of the suit or to get rid of it in anyway, it would not be competent. It is not necessary to refer in detail to the judgment delivered by Their Lordships, but the view taken by the Madhya Pradesh High Court supports the view which we are inclined to take, even apart from the authorities of the Supreme Court which we have discussed above.

17. A view contrary to the view which we have taken is taken by the Full Bench of the Madras High Court in the case of O. Mohamed Yusuf Levai Saheb v. S. Hajee Mohamed Hussain Rowther (died) and Ors. reported in . The reasoning of this judgment is given at page 4 : AIR1964Mad1 , para. 12 which runs as follows:

An award as such not actually being a judgment of a Court it will be only on the principle that a valid award duly and properly obtained effects a merger of the cause of action that the original cause of action could be regarded as completely extinguished. Then alone, the party who has the benefit of the new cause of action on the basis of the award will be precluded from instituting an action upon the original cause of action. If the award does not, by reason of any statutory provision or of the contract between the parties, have effect of merging in it the original cause of action, it stands to reason that the latter should subsist notwithstanding the award.

Their Lordships have observed at page 5 of the judgment as follows:

Suppose for example in answer to a suit, the defendant were to set up a mythical award, it would be unreasonable and indeed a mockery of justice, if the Court were to be prevented from going into the question whether there is an award or not, but that the plaintiff should first be asked to go to the appropriate Court, obtain a declaration in the form of a negative relief, namely, that there is no award in existence and then come back to the Court to pursue the suit. To obviate that absurdity a more limited scope of Section 32 should be put. We consider that the word 'award' in Section 32 of the Act should be read as meaning an award which may be or can be filed under Section 14. This was the view taken by Subrahmanyam J. in Duraiswami v. Kistappa AIR 1958 Mad. 420. A non-existent award cannot come within that section. But where there is a real award Sections 31 to 33 make it clear that no suit can be brought either to enforce or challenge it and that all proceedings with regard to the arbitration agreement or award have to be taken as provided in the Act and before the Court indicated therein.

The distinction, therefore, that is sought to be made by Their Lordships of the Madras High Court is that because some injustice may result to the parties if a mythical award is set up by the defendant, therefore, they have tried to limit the words of Section 32 as being an award which may be or can be filed under Section 14. Every award under Section 14(2) of the Arbitration Act may be and can be filed, The scheme of the Arbitration Act is that it is at the request of the parties that an award can be filed. Any award which is obtained may not be filed if the parties request the arbitrator not to file the same, Their Lordships have pointed out that It is only when a mythical award is set up that this construction should be adopted. Where on the other hand, a real award exists, then the procedure that Their Lordships have laid down should be followed is that which is laid down in Sections 31, 32 and 33. Now, we see no justification for drawing this distinction between a mythical or a sham award and an award which is real. If we hold and as we must hold from the authorities and from the interpretation of the sections of the Arbitration Act that the Arbitration Act is a complete and exhaustive Code and a self-contained one and provides a complete remedy for arbitration questions to be decided, then we cannot make a distinction that in respect of a sham transaction a Court which has no jurisdiction can decide upon the invalidity or bogus nature of the transaction. Besides, these decisions over-look that an award does not depend upon its efficacy on its being made a rule of the Court. The Legislature has provided a remedy to a person who wants the award to make it a rule of the Court and to take appropriate proceedings. We do not see that any injustice would be caused to a party who goes to the Court as a plaintiff against whom a sham award is put up because he will be able to show that the award is sham in appropriate proceedings. We cannot accede to the proposition that a Court which has no jurisdiction to deal with an award can assume jurisdiction if an award is alleged to be sham. It is, however, not necessary for us to deal with this decision or decisions which take this view any further because as we have pointed out already, we are bound to follow the authoritative pronouncement of the Supreme Court as to the true nature and effect of an award as it has been set out in these cases. To the same effect is the case of Sail Pamandass Sugaaram v. T.S. Manikyam Pillai, reported in : AIR1960AP59 . The reasoning on which that decision is based and which takes a view contrary to the view which we have taken is to be found in the judgment of Srinivasachari J. at page 64 of the judgment and this is what has been observed in Para 22 of the judgment:

There can be no doubt that under the law prior to the passing of the Arbitration Act of 1940 a valid award operated to extinguish all claims, which were the subject matter of the reference to arbitration and the award alone furnished the basis by which the rights of the parties could be determined and any action on the original cause of action was barred-The Arbitration Act of 1940 effected a change in that it prescribed the procedure for getting an award enforceable. The effect of this change was that the passing of the award by itself did not extinguish the rights of the parties until such award was subjected to the process mentioned in the Act. The decisions relied upon by the Learned Counsel were cases which related to awards prior to the Act of 1940. Those rulings must be held to be not applicable now. They cannot apply to the facts of the present case.

The basic ground, therefore, on which this decision is based is that an award does not attain efficacy unless it is made subject to the process mentioned in the new Arbitration Act. This case has clearly stated that the rulings under the old law could not be held to be applicable because of this change effected by the Act of 1940. As we have shown, there is no justification for holding that an award gets efficacy only on its being made a rule of the Court. The view which we have taken is now supported by the observations of the Supreme Court in the judgment to which we have referred and which has relied with approval on a decision in I.L.R. 33 Calcutta, 88. The observations, therefore, made by the learned Judge in the Andhra Pradesh Court must be deemed to have been overruled either expressly or impliedly by the observations made by Their Lordships of the Supreme Court.

18. Our attention has also been invited to a decision in the case of Kapgal Konda Gireanna and Anr. v. Kapgal Konda Basappa, reported in A.I.R. 1964 Mysore 238. This ruling proceeds on the principle that the Scheme of the Arbitration Act is to prevent persons from agitating questions except in the manner provided in the Arbitration Act. The assumption that it thereafter makes is that it is necessary under the Arbitration Act that a party must take steps to file an application and to make the decree a rule of the Court. It holds that a defendant cannot set up an award because he has not taken appropriate proceedings under the Arbitration Act to make it a decree of the Court. As we have already shown, there is nothing in Section 14(2) which compels a party to make an award a rule of the Court. An award does not depend for its efficacy on its being made a rule of the Court, Besides, we have also given another reason why a defendant, when he set up an award is not asking the Court to adjudicate upon the existence, effect or validity of the award. He is only pleading a bar to the suit of the plaintiff by virtue of an award. 19. Our attention has also been invited to a decision in the case of Rambilas Mahto and Ors v. Babu Durga Bijal Prasad Singh and Ors. reported in A.I.R. 1965 Patna at page 289. The observations made in that case are to the effect that the stage for making an application under Section 33 cannot arise unless the award has been filed in Court. It follows, therefore, that an award that has not been filed or made a rule of the Court is wholly ineffective and the parties are relegated to the position as if there was no arbitration and no award. The view which has appealed to Their Lordships of the Patna High Court is that an award which has not gone through the processes subsequent to Section 14 i.e. Section 17 and others, is a mere scrap of paper. This case also seems to lay down that if a defendant was allowed to set up an award in defiance, he would be given a better position than the other party who has taken no steps to have the award filed in Court. The basis of this judgment is that under the Act of 1940, an award which is not filed or made a rule of the Court is wholly ineffective. Their Lordships were conscious of the fact that this conclusion could not be reached on a reading of Section 32 of the Arbitration Act. Their Lordships have, therefore, pointed out that Section 32 should not be read in isolation, but should be read in accordance with the entire scheme of the Act. The reasoning which is given is that if a party does not choose to file an award in Court and make it a rule of the Court but he chooses to lie by and allows time to lapse, then he cannot plead the award. This decision also over-looks what is the true effect of an award and proceeds on the basis that an award gains efficacy on its being made a rule of the Court. This view is now exploded by the decision of the Supreme Court to which we have referred to above. The observations of the Patna High Court, therefore, to the extent to which they are in conflict with the observations of the Supreme Court cannot be followed by us.

19. Mr. Shah, however, has strongly relied upon the case of Chandrabhaga Sadashiv Veralkar v. Bhikuchand Hansaji, reported in 61 Bombay Law Reporter 364 and he has stated before us that this case is a binding authority by which we are bound. It was observed in that case as follow:

a dispute between the plaintiff and the defendants relating to a breach of agreement by the defendants to sell certain property to the plaintiff and the refund of earnest money to the plaintiff was referred to arbitration by the parties. When the award made by the arbitrators was sought to be filed in Court under the Arbitration Act, 1940, the Court refused to pass a decree in terms of the award on the ground, alleged by the defendants, that the award which was compulsorily registrable was not registered. The plaintiff then filed a suit against the defendants to recover the earnest money paid by him to the defendants On the question whether the suit was barred under Sections 31, 32 and 33 of the Arbitration Act, 1940, by virtue of the award:

Held, that as the award had no legal existence, it did not bar the plaintiffs suit which was based on his original cause of action.

It will be necessary to bear in mind before dealing with this case that in this case, the assistance of the Court was sought by the arbitrators who wanted the award to be filed in Court, but the Court refused to file the award in Court, on the ground that it was not registered. It is necessary to see the decision in the light of this context of the facts. The question which Their Lordships had to consider in that case was whether the suit of the plaintiff was barred on the original cause of action because of the award. Mr. Justice Patel who delivered the judgment in the Letters Patent Appeal has observed after considering the scheme of the Act as follows:

These sections do not by express language or by implication provide that a suit on the original cause of action after an abortive or incomplete arbitration would not lie.

In that case, therefore, Their Lordships were not dealing with an award, but they were dealing with an abortive or incomplete arbitration. Indeed, there are some observations in the judgment which would seem to show that Their Lordships held that recourse to the previous law and general principle was not permissible. Their Lordships have observed,

Even assuming however it is open to consider the general principles, for the reasons mentioned before, even according to general principles, unless the award is legally effective, it would not merge in itself the original cause of action, the determination of which question in any suit is by express terms of Section 32 of the Act prohibited.

Their Lordships have held that suit on the original cause of action was not barred under the provisions of Sections 31, 32 and 33 of the Act. We might mention that in the judgment of Mr, Justice Bavdekar, it was clearly mentioned that the award set up by the defendant as a bar to the plaintiff's suit had no legal existence and it had no legal existence because although the arbitrator wanted to file the same in Court, such filing was not permitted by the competent Court because the award was not registered, and therefore, as being inadmissible in evidence. Mr. Justice Gokhale in a concurring judgment has agreed with this decision of Mr. Justice Bavdekar that the award set up by the defendant as a bar to the plaintiff's suit had no legal existence and therefore, could not make the plaintiff's suit incompetent, as being the correct view. This decision, therefore, of the Bombay High Court does not deal with an award which is prima facie valid. Besides the parties in that case had approached the competent Court which had refused to make it a decree of the Court. This case, therefore, is clearly distinguishable and is no authority in reference to an award which is prima facie valid and the invalidity of which cannot be considered except by the competent Court, In that case as the competent Court did not pass a decree in terms of the award, the award did not exist.

20. It now remains to consider one contention which was seriously urged before us by Mr. M.C. Shah. The contention which was raised by Mr. M.C. Shah was to the effect that the Arbitration Act was a consolidating and amending Act and was a complete Code in itself and the contention, therefore, was that all questions relating to the validity, existence and effect of an arbitration award could not be decided by any other Court. Now, so far as the position that the Arbitration Act is a self-contained Code and provides for a complete machinery for adjudication on the questions relating to the existence, validity and effect of an arbitration agreement and award is concerned, we are in respectful and complete agreement with that proposition. In the case of Madan Lal (dead) by his legal representative v. Sunder Lal and another, reported in : [1967]3SCR147 , Their Lordships of the Supreme Court had occasion to deal with the scheme of the Arbitration Act. Mr. Justice Wanchoo who delivered the judgment of the Court in that case, has observed at page 1235, in column 2, Para. 8 as follows:

It is clear, therefore, from the scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in Section 30 it must apply within 30 days of the date of service of notice of filing of the award as provided in Article 158 of the Limitation Act. If no such application is made the award cannot be set aside on any of the grounds specified in Section 30 of the Act. It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But if an objection like this has been filed after the period of limitation it cannot be treated as an application to set aside the award, for if it is so treated it will be barred by limitation.

The position, therefore, is clear that it is only the Court set up by the Arbitration Act which can decide upon the question of the effect, validity and existence of the award. We might also mention that although there is a divergence of opinion amongst the various High Courts, the position that the Arbitration Act is a self-contained Code is agreed to by most of the authorities to which our attention has been drawn. There are also observations to be found in a case of Jawahar Lal Barman v. The Union of India, reported in : [1962]3SCR769 , where it has been observed at page 381 as follows by Justice Gajendragadkar who delivered the judgment on behalf of the Bench:

Therefore, stated broadly, it would be correct to assume that the main object of introducing the new provisions of Sections 31, 32 and 33 was to entrust the decision of the relevant disputes to the specified Court and to require the parties to bring the said disputes for the decision of the said Court in the form of petitions. Remedy by a regular suit is intended to be excluded.

We are in respectful and complete agreement that the Arbitration Act of 1940 is a self-contained Act and which consolidates and amends the law relating to arbitration.

21. Mr. M.C. Shah next argued that if the Arbitration Act was a self-contained Code, then the result of that would be that it would not be open to any other Court to look at the award. His contention was that if we look at the award, or if we allow the defendant to plead an award, or we hold that the suit of the plaintiff was barred by the award, then we were really dealing with the existence, effect and validity of an arbitration agreement and this according to him, we have no jurisdiction to do. We have already held in the previous part of our judgment that when we say that an award stands, we are not determining the existence, effect or validity of the arbitration agreement. When an award which stands is pleaded as a bar to the suit, the Court is really not deciding upon the existence, validity and effect of an award. We are only saying that an award which stands and which is not set aside by the competent Court and in competent proceedings stands in the way of the suit and bars the suit of the plaintiff.

22. In this connection, Mr. M.C. Shah leaned heavily on the observations made in the case of Narbadabai and Ors v. Natverlal Chunilal Bhalakia and Anr. reported in : AIR1953Bom386 . He has relied upon the passage which occurs in the judgment of Chief Justice Chagla, J. to this effect:

In our opinion, the expression 'effect of the award' is wide enough to cover a suit to enforce an award, he does call upon the Court to give a decision upon the effect of the award. Unless the Court can give such effect it would not be possible for the Court to enforce the award. Although the party may not in terms ask for a decision of the Court to give effect to the award, the very fact that the party is asking the Court to enforce the award must result in the Court giving a decision upon its effect.

He has also relied on the passage in the judgment of Chief Justice Chagala which occurs at page 389 as follows and is to the following effect:

The Arbitration Act, in our opinion, does not merely furnish a summary procedure to a party who wishes to avail himself of it, but the Arbitration Act contains the whole law with regard to arbitration and also contains the only procedure which can be resorted to with regard to all matters arising out of arbitration agreements and awards made as a result of arbitration agreements.

There are these observations also in the judgment of Chief Justice Chagla at the botton of page 389:

Mr. Desai is undoubtedly right that before the Act of 1940 the view was taken that an award did not lose its efficacy merely because it was not filed and no action was taken on it by proceedings under the Arbitration Law. But the question is whether that view is possible after the Arbitration Act came into force and the Legislature enacted Section 32.

These observations made by the Bombay High Court were made in reference to the maintenance of an action to enforce the award. It is not necessary for us to discuss this case because the basis on which this decision proceeds is that after the passing of the Arbitration Act of 1940, an award loses its efficacy unless it was filed in the Court. Now this view which was taken by the Bombay High Court and which was taken by several other High Courts has now been found to be not correct by the Supreme Court. There is also other distinction which we have taken from the judgment of the Madhya Pradesh High Court that when a party pleads that a suit is barred by an award, he does not ask for the determination of the existence, validity or effect of the award, but he only pleads that a suit is barred because an award stands and which is not set aside. We are in respectful and complete agreement that if an award were to be set aside, then the only procedure that has to be followed is under the Arbitration Act. But if an award is effective on its being passed, then it would not be open to a Court to ignore that award and so long that award stands, a suit in respect of the subject matter covered by the award would not be maintainable. It has also been held by the Supreme Court that an action in respect of the matters covered by the first award cannot lie.

23. Mr. M.C. Shah has then contended that if we take the view which we are inclined to take, then his client would suffer because Mr. M.C. Shah says that unless an award is filed in the Court, his client would get no opportunity to contest the award and in the present case, as the plaintiff did not take any steps to file the award, he was entitled to ignore the same and that it would work great hardship on him, if now the award is sought to be treated as valid because he has lost his right of contesting the award. In this connection, Mr. Shah relied on the observations of Chief Justice Chagla in the case of Ratanji Virpal and Co. v. Dhirajlal Manilal, reported in 44 Bombay Law Reporter 175. That case lays down that under the Indian Arbitration Act, 1940, it is not competent to a party to apply to a Court for setting aside an award before it is filed in Court. He has relied on the observations which are made by Chagla J. at page 176 of the report as., follows:

Further, under the present Act no proceedings can be taken on the award till after it has been filed, and I fail to see bow a party can possibly be prejudiced by the existence of an award which has not been filed in Court.

Mr. Shah says that it was in view of this state of the law that he ignored the award, and if now the award is allowed to come in the way of his suit, then he would be obviously prejudiced. It is not necessary for us to deal in any detail with the obervations made by Chagla, J. In this judgment. The observations of the learned Judge proceed on the footing that an award which is not filed in Court has no efficacy and is a nullity. This view which was taken by the Bombay High Court and by the several other High Courts was not justified by the terms of the Indian Arbitration Act. Further, in taking this view, the Courts had proceeded that under the Arbitration Act, of 1940, an award will have no efficacy unless it was filed in Court. That view taken is now found to be not correct and the Supreme Court has now stated what is the true legal position and effect in reference to an award under the Arbitration Act If while giving effect to the true provisions of the Act, a party suffers we may regret the result, but we cannot help him. Any way, we cannot allow considerations of hardship to befog our minds while interpreting the provisions of the Arbitration Act. On the interpretation which we have given to the provisions of the Arbitration Act, the scheme of the Arbitration Act appears to us to be clear end our reading of the Arbitration Act is that it is necessary for a party who wants to enforce an award as also a party who want & to get rid of its effect, to seek the assistance of the Court by filing the same in Court. If a party suffers, it suffers because it has not taken the proper steps which it was open to it to take. In this connection, Mr. Shah also strenuously urged before us that as it is not obligatory on a party to make the award a rule of the Court, it would be wrong on our part to assume that he was bound to take the step and that if be did not take the staps which the law did not enjoin upon him, he should not be made to suffer. It is not necessary for us in the present proceedings to see whether he would have any other remedy or not. At present we are only accepting the contention which is raised by him to the effect that the only Court which can adjudicate upon an award or an arbitration agreement is the Court which is created under the provisions of the Indian Arbitration Act. If we cannot adjudicate upon the existence, effect and validity of the award, then it is not necessary for us to go into that question.

24. Having come to this position, Mr. Shah somewhat inconsistently with the position which he had taken up, urged before us that in the present case, even if it was not open to go into the question of the existence or validity of the award, it will still be open for him to show that the award was a nullity. He urged before us that the award in the present case was a nullity en two grounds. According to him, under the terms the Arbitrator was authorized to settle accounts only upto 6th June 1964. The arbitrator settled the accounts, according to him, upto 14th November 1965. He urged that the arbitrator failed to declare the accounts as on the 6th June 1964 and therefore, the award was a nullity. He also urged that the arbitrator referred to certain matters which were not referred to him and as those items were not separable from the other, the whole of the award is a nullity. Against this contention which depends for its determination on a consideration of the evidence before us, Mr. V.J. Desai on behalf of the appellants strenuouly contended that the reference was not limited in the way in which Mr. M.C. Shah contends. Mr. Desai contended before us that under the reference, as all accounts 'cmiH f&ttltH;' were to be settled and as the arbitrator was also, given liberty to give up certain things 't>UU&U; mini ^i d' and as the partnership agreement refers to all differences or disputes in reference to any matter in reference to the partnership, what the partners had agreed to refer was not the limited question as contended by Mr. M.C. Shah but a more general one. Apart from it, it was a contention which was raised before us by Mr. Desai that after all, in a case like the present, It would not be proper for us to judge of the matters referred to the arbitrator only from the arbitration agreement. It would be necessary for us to go into the question as to whether any additional jurisdiction was given to the arbitrator by virtue of the arbitration proceedings before him. The question as to what was the dispute which was referred to the arbitrator in the present case is one which it is not easy for us to find out from a mere perusal of the reference. Even the reference which we have read is not clear but is couched in ambiguous language. It would not be possible, therefore, for us to determine the question as to what were the disputes which were actually referred to the arbitrator without going into several other questions which would be necessary to understand the terms of the reference. It is needless to say that a contention which is raised and which requires for its determination not only a long argument but a reference to several documents and the conduct of the parties is not an objection which is one which can be regarded as affecting the jurisdiction of the Court. In any event, a contention like the present one Is not one which we can allow a party to take when he is arguing a point of nullity. In this view of the matter, it is not necessary for us to refer to the authorities to which our attention was drawn by Mr. M.C. Shah to the effect that an arbitrator derives the source of his authority from the arbitration agreement and it would not be open to us to look into the other questions. Without entering into any controversy, it is clear that If the reference itself is couched in ambiguous terms, it would be necessary for us to refer to the evidence. In the circumstances, there is no substance in the contention raised before us by Mr. M.C. Shah to the effect that the award in the present case is a nullity. The mere use of the word 'nullity' in a loose sense will not enable us to exercise our jurisdiction, unless we find that the award is a nullity in the true and legal sense.

25. It is rather unfortunate that the learned Assistant Judge has made casual observations to the effect that the award goes beyond the terms of reference and is a nullity, without understanding the implication of what a nullity means. We think that the observations made by the learned Assistant Judge to the effect that the award in the present case goes beyond the reference are not at all justified on the facts of the present case.

26. The next question raised by Mr. Shah was to the effect that the award was invalid because it was not given within four months after the date on which the arbitrator entered the reference. His contention here again is that the award having been given more than four months after the date on which the arbitrator entered upon the reference is a nullity. He has also urged before us that the time is not extended by the Court. Here again, although Section 23(2) of the Indian Arbitration Act provides that any provision in an arbitration agreement whereby the time for making the award is enlarged, is to be treated as void and of no effect, unless the parties agree or consent thereto. Power is given to the Court to enlarge the time for making the award. What is made void is a provision in the arbitration agreement. What is declared to be void under Section 28 is not an award. Further it seems to us that the word 'void' is used in the sense of voidable because it is clear upon authorities that even if an arbitrator has given an award beyond the time which is mentioned, the Court has got the power to extend the time and the time can also be extended after the period has expired, and even post facto. The essential distinction between an order which is a nullity and which is void in the real sense of the term and the thing which is invalid is that in the one case. It can be made effective and in the other it cannot be. The mere fact, therefore, that it is provided that an arbitration given after that time can be validated, would rather suggest that it was not the intention of the Legislature to treat it as a nullity. But here again it is contended before us by Mr. Desai on behalf of the appellants that in the present case the adjournments were taken several times by the parties. Mr. Desai has also urged before us that the Legislature has not laid down as to in what way the parties may agree to the time being extended. In these circumstances, Mr. Desai has strenuously urged before us that the conduct of the parties which is evidenced from the perusal of the Rojnama which in the present case is also signed by the parties would clearly show that the parties had agreed to extend the time of the period. Mr. Shah, in order to show that an award which is made after four months is void and of no effect, has referred us to the case of Hari Shanker Lal v. Shambhu Nath and Ors reported in : [1962]2SCR720 . He has referred us to the observations made by Subba Rao, J. speaking on behalf of himself and others and the observations are to be found at page 81, para. 10 as follows:

The third alternative in R. 3 shows that an award can be made within the extended time allowed by the Court. Section 28 of the Act enables the Court to extend the time for the making of the award; extension of time may be given even after the award has been factually made. So till the time is extended an award cannot be made, though when extended, the award factually made may be treated as an award made within the time so extended. To put it differently, if time was not extended by Court, the document described as an award would be treated as non est.

He has also referred us to the observations of the same learned Judge who has summarized the position and has observed at the bottom of para. 11 in the following way:

And (d) in that event, after the expiry of the said 4 months the arbitrators become functus officio, unless the period is extended by Court under Section 28 of the Act; such period may also be extended by the Court, though the award has been factually made.

27. Mr. Shah has strenuously contended before us that in view of the very emphatic words used by the learned Judge to the effect that the award, if time was not extended, would be treated as a non est. He has also placed reliance on the observations that the arbitrator became functus officio after four months. From these observations Mr. Shah has argued that we are bound to hold that an award which is not given within four months is a nullity. It is not necessary for us to interprets the meaning of the words 'non est' and, ''functus officio'. If the observations of the Supreme Court are read in their context, then the clear effect which is envisaged by Their Lordships is that even though this award has become non est and even though the arbitrator has become functus officio, even so If time is extended afterwards, the award which is non est and the arbitrator who has become functus officio, would be able to act The observations, therefore, do not seem to support the view for which Mr. Shah is contending that Their Lordships intended to treat such an award as a nullity. Mr. Desai on the other hand has drawn our attention to the observations of Raghubar Dayal, J. who has expressed himself differently in para. 19 of the judgment at page 83. This is what Raghubar Dayal, J. has observed:

In this view, it is not necessary to consider whether the notice to act served after the period of four months bad expired, is a good notice or not or whether the arbitrators are competent to act in expectation of getting the time extended by the Court or not. I am, however, inclined to the view that in view of the provisions of Section 28, it is not possible to say that the arbitrators are not competent to act after the expiry of the period of four months from the date of their entering on the reference. The provisions of this section contemplate the arbitrators having made the award beyond the period of limitation without having previously obtained the order of the Court extending the time of making the award. This implies that the arbitrators would have carried on their proceedings and would have made the award subsequent to the expiry of the period during which they should have made the award. The competency of the arbitrators to act in pursuance of the reference arises out of the reference made by the parties and is not dependent on the period during which they ought to make the award. So long as the power vested in them to decide the dispute between the parties is not withdrawn, they continue to be competent to act on the reference in expectation that the period for making the award would be extended by the Court.

We might also mention that the view expressed by Raghubar Dayal, J. gets support from Section 5 of the Indian Arbitration Act. Section 5 says that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. It is not necessary for us to consider the effect of this Supreme Court judgment in detail because at present we are dealing with a very limited contention which is raised before us by Mr. M.C. Shah. It is not contended and it could not be contended that an arbitrator who enters upon a reference has no initial jurisdiction to enter upon the reference. The contention of Mr. M.C. Shah even taken at its highest is that the arbitrators who had jurisdiction till the period of four months have ceased to have jurisdiction thereafter. This is, therefore, not a case of inherent lack of jurisdiction at the out set. In this view of the matter also, there is no substance in the contention which is raised before us that an award which is given by the arbitrator after period of four months is a nullity and of no effect. Besides, as we have already pointed out, in the present case it is not possible for us to decide the question as to whether the arbitrator had exceeded the period of four months with or without the consent of the parties. Mr. Shah has also relied on the case of Arba Hindustan Steel v. Appejay Pr. Ltd., reported in : AIR1967Cal291 . The observations of the Calcutta High Court are to the effect that the arbitrator became functus officio after a period of four months and therefore, no question of revoking the authority of the arbitrator arises. It is not necessary for us to consider as to whether this decision goes contrary to Section 5 of the Arbitration Act. As against this decision, Mr. V.). Desai has relied on a decision in the case of M/s. Bokaro and Ramgur Ltd. v. Dr. Prasun Kumar Banerjee, reported in : AIR1968Pat150 . The Patna High Court has made observations to the effect that in considering this question it will be necessary to consider the conduct of the parties and whether they have agreed. Mr. Shah has also stated that the distinction which is drawn by the Patna High Court is not warranted by the observations of the Supreme Court. It is, however, not necessary for us to go into that question, for in our view, the Supreme Court has not unequivocally stated that an award made after the lapse of four months is a nullity. It is only that limited question with which we are concerned and we, cannot, therefore, allow Mr. M.C. Shah to raise this contention before us.

28. Mr. Shah has lastly urged before us a vexed question as to how much jurisdiction would be retained by the Civil Court even when the other jurisdiction is barred. According to him, if the arbitrator has acted in excess of jurisdiction or without jurisdiction, that is a question which It would be open to us to consider. In this connection, be has relied on several cases including the cases of Jivarajbhai Ujamshi Sheth and Ors v. Chintamanrao Balaji and Ors. reported in : [1964]5SCR480 , The Indian Minerals Co. v. The Northern India Lime Marketing Association, reported in : AIR1958All692 and R. Prince and Co. v. Governor General in Council, reported in A.I.R. 1955 Punjab 240. As, however, we have taken the view that in the present case we are not satisfied that the arbitrator had acted in excess of jurisdiction or without jurisdiction, and as we are not satisfied that his award is a nullity, the question as to how far this Court which is not the Court competent to decide upon the existence, validity and effect of the award, can go into the question, does not arise. The learned Assistant Judge in the course of his judgment has made a loose statement that in the present case, the award was not signed by the parties. He has stated that a look at the award shows that the plea of the plaintiff that signatures of the parties were taken before writing the award is not false. We have looked at the award and we have come to a different conclusion. The arbitrator who has been examined in the present case has not been asked a single question on this point. The arbitrator had, on the contrary, clearly stated in his evidence at Ex. 31 as follows:

It is not true that I have not heard the evidence produced by him.' He has also deposed that the adjournments were given with their consent. We are surprised that the learned Assistant Judge should have allowed the parties to raise this question when in the plaint also in para. 4 when the plaintiff refers to the award, no such plea in reference to the award was taken by him. No questions have been asked to the arbitrator on this point and the arbitrator was the only person who could have clarified this situation. The arbitrator has clearly stated that the award was signed by the parties after it was pronounced. This observation, therefore, of the learned Judge if it is to be regarded as a finding, is preverse and is totally unjustified on the evidence. Even the trial Court has found that the parties were present when the award was made.

29. These were all the contentions which were raised before us. We might mention that when the Second Appeal was argued before our learned brother Bakshi, J. all these aspects of the question were not argued. In fact, our learned brother Bakshi J. had not the benefit of the judgment of the Supreme Court to which we have referred in the case of M/s, Uttam Singh Dugal and Co. v. The Union of India and Anr. The view taken by our learned brother was in accordance with the view taken by several Full Bench decisions of several High Courts. Besides, when the Second Appeal was argued before our learned brother Bakshi J. there were decisions of the Bombay High Court which had taken the view which his Lordship has taken. We cannot, therefore, say that our learned brother Bakshi J. was at all in error in coming to the conclusion to which he came when he decided the Second Appeal. Indeed on the state of the authorities as they were cited at the time when the Second Appeal was heard, it was not possible for our learned brother Bakshi J. to come to a different conclusion. His Lordship had not the benefit of the Supreme Court judgment. At the time of the hearing of the Letters Patent Appeal we had the benefit of the judgment of the Supreme Court and we have considered several other aspects of the question and after considering the true and proper legal effect of that judgment we have come to The conclusion that the view taken by our learned brother Bakshi J. was erroneous in view of this weighty pronouncement contained in the judgment of the Supreme Court.

30. The result of the aforesaid discussion, therefore, is that the present Letters Patent Appeal must be allowed and the suit of the plaintiff will have to be dismissed.

31. This brings us to the question of the costs. Mr. Shah has contended before us that we should not award costs against his client because the Letters Patent Appeal is being allowed by reference to a Supreme Court judgment which was not cited before His Lordship at the time of hearing of the Second Appeal. Ordinarily we would have acceded to this request of Mr. Shah, but in the present case, we think that we would be failing in our duty if we do not dismiss the plaintiffs' suit with costs throughout. This is because In the view which we have taken, we can find no sympathy for a plaintiff who, after pushing the arbitration agreement into an award, wants to go back-upon the award. It may be that some technical contentions may have helped him, but that would really be no ground for us In not awarding costs to the other side. A plaintiff who, disregarding the award has gone to the Court should only thank himself if he is made to pay the costs of the suit throughout.

32. The appeal is allowed with costs throughout. In the Civil Application, the rule is discharged, but there will be no order as to costs in the Civil Application.

Shelat, J.

33. I agree with the order passed by my learned brother.

34. Since this appeal involves a point of some importance, I propose to add a few words. The material point that arises to be considered in this Letters Patent Appeal, is, as to the effect of an award which has not been filed in Court under the provisions of the Arbitration Act, 1940, and that way, not obtained the rule of the Court, on a suit filed by a party thereto in respect of the same subject-matter, and whether it is a scrap of paper which has no vitality as described in some of the decisions of different High Courts, or that while it has no enforceability in law, it can still serve as a good defence to such a suit on the ground that the original subject-matter has merged in that award.

35. A few facts leading to this appeal may well be set out. The parties to the Civil Suit No. 26 of 1957 filed in the Court of the Civil Judge (J.D.) at Padra, had formed a partnership firm as per the terms of an agreement, dated 9th April 1951 and they carried on business in agricultural operations and supplying water with the help of an enginepump. One of the terms of that partnership agreement was that in case of any dispute arising between them in respect of their partnership business, that shall be referred to the decision of an arbitrator. Since there arose some disputes, they came to be referred to the arbitration of one Dahyabhai Bapubhai Shah, the firm's Income-tax Adviser as per the reference dated 6th June 1954. He was required to take accounts in respect of the partnership business from S.Y. 2000 to Vaisakh Sudi 3rd of S.Y. 2011 and determine the rights and liabilities of the partners after going through all the account books, other documents etc., adding further that they would abide by whatever decision he gave. The proceedings before him went on and it was on 13-7-56 that he finally gave his award. By that award, the original plaintiff was required to pay a certain amount to the defendants. That award was read over by him to the parties, and below it he had obtained their signatures on that day. It appears that the award remained with the arbitrator, as none of the parties wanted to move in the matter by going to the Court as it would unnecessarily involve expenditure. In other words, the award was neither filed in Court at the instance of the defendants for obtaining a decree in terms thereof under Section 17, nor was it got filed in Court for having the same set aside or reconsidered at the instance of the plaintiff under the provisions of the Act. The award thus remained as an unfiled award with the arbitrator. Some time after, after giving a notice to the defendants, the plaintiff filed the suit from which this appeal arises, for dissolution of the partnership and for taking accounts in respect of partnership business against the defendants. In para. 4 of the plaint, he made certain averments about their disputes having been referred to the arbitration of Shri Dahyabhai and his having given the award which, according to him was invalid.

36. This suit was resisted by the defendants on various grounds and one of them was that in view of the award given by the arbitrator to whom the disputes of their partnership firm were referred to, the suit in respect of the same subject-matter was not maintainable, inasmuch as that award was valid and it bound the parties, as the same was not set aside by any Court at the instance of the plaintiff, as required under the provisions of the Arbitration Act.

37. Issue No. 2 regarding the maintainability of the suit was heard by the trial Court as a preliminary issue, and it was found that the suit was tenable. The trial Court then proceeded with the hearing of the other issues. He considered the question as to whether the award was Invalid as given after a period of four months as prescribed under Rule 3 read with Section 28 of the Act, and found that the arbitrator had no right to extend the time, even though parties agreed to the same, and consequently he found that it was invalid. He then passed a preliminary decree for dissolution of the partnership firm and appointed a commissioner to take accounts of the partnership firm from its start till the last day of the S.Y. 2011 and to determine the liability of the parties inter se in accordance with the terms of partnership agreement Ex. 49 in the case. Feeling dissatisfied with that decision, the defendants preferred Civil Appeal No. 182 of 1959 in the Court of the District Judge at Baroda. That appeal was heard by the learned Assistant Judge, who took the view that such a defence about the existence of an award was not permissible to be raised in law. He also went into the question relating to the validity of the award and found that it was invalid on two grounds viz., that the arbitrator had exceeded the terms of reference and that he had no right to extend the time within which he in law was required to file an sward. In the result, he confirmed the decree passed by the trial Court. Aggrieved by that decision passed on 17th August 1960 by Mr. K.M. Satwani, Assistant Judge, Baroda, the defendants filed Second Appeal No. 1521 of 1960 in this Court. The contention raised before the Court by the defendants appellants was that while the provisions of the Arbitration Act created a bar to a suit on the basis of an award between the parties to the suit, they do not bar a plea in defence based on the existence of an award between them. Our learned brother Bakshi J. who heard the appeal, agreed with the view taken by the learned Assistant Judge, following the decision of the Bombay High Court, and held that the defendants could not validly plead the existence of an award as a bar to the maintainability of the plaintiff's suit and that way he dismissed the appeal with costs. No other questions were gone into. On a request made for leave to appeal under Letters Patent, it was granted, and it is that way that this Letters Patent Appeal No. 15 of 1967 has come up before this Bench.

38. The contention of Mr. Desai, the learned advocate for the appellant before this Court, is of two-fold character. The first is that the suit in respect of the same subject-matter in respect of which the award was passed by an arbitrator under a reference made by the parties to the suit, is not maintainable in law, and for that he has relied upon the decision of the Supreme Court in Civil Appeal No. 162 of 1962 (M/s. Uttam Singh Dugal and Co. v. The Union of India and Anr.) decided on 11-10-1962. The other ground is that before a Court could validly pass a decree in the suit, it will have to consider and decide questions relating to the existence, effect and validity of the award, which cannot be done by the Court, for the reason that such questions can only be decided by the Court competent to do so having regard to the provisions contained in Sections 31, 32 and 33 of the Arbitration Act. This latter contention arises in this way. It was the contention of Mr. Shah, the learned advocate for the plaintiff-respondent, that the Arbitration Act of 1940, hereinafter to be referred to as 'the Act' is a self-contained Code and provides for a complete machinery for adjudication of questions relating to the existence, validity and effect of an arbitration-agreement and award, and therefore when any such questions relating to an award arise, they can only be determined in proceedings taken under that Act, and by no other Court, and, as the award is not made rule of the Court, it cannot be set up as a defence to a suit on the original cause of section. Thus the decision of Bakshi J. in that regard has its basis on the decisions of different High Courts, including that of the Bombay High Court, which binds this Court. But contended Mr. Desai, that apart from raising a defence about the existence and effect of an award, before any decree can be passed by the Court, it has to consider the effect of an award Ex. 32/4 referred to by the plaintiff himself in Para 4 of his plaint, and when that is so, such a suit in which these questions arise to be decided cannot lie, for all such questions can only be decided by proceedings under the Arbitration Act. It is this way that the maintainability of the suit is required to be considered, in addition to the ground viz. that no suit can lie, the subject-matter whereof has merged in an award. We would, therefore, deal with this aspect of the matter first.

39. Now it is clear on a plain perusal of Sections 31 to 33 of the Act, that where the questions arise to be decided relate to the existence, effect and validity of any award, they must be decided by a competent Court in appropriate proceedings taken under the Act itself and in no other manner. This finds support from various reported decisions reported in Sait Pamandas Sugaram v. S. Manikyam Pillai and Ors. : AIR1960AP59 , Rambilas Mahto and Ors v. Babu Durga Bijal Prasad Singh and Ors. : AIR1965Pat239 , Mohamed Yusuf Levai Saheb v. S. Hajee Mohammed Hussain Rawther : AIR1964Mad1 , and Chandrabhaga Sadashiv Veralker v. Bhikhachand Hansaji 61 B.L.R. 364. Similarly if these questions were essential to be decided in the suit, such suit cannot lie in any such Court if it were to cover the same subject-matter as the one that was before the arbitrator who gave the award. It would be on a stronger footing as Section 32 expressly refers a bar to such a suit than what it can in respect of a defence to the suit. In either case such questions cannot be decided by this Court. So far there is no difficulty, and even Mr. Shah cannot take exception to the same.

40. The plaintiff has set out in his plaint that a reference to the arbitration was made by them and the award was given by the arbitrator Dabyabhai in respect of the disputes relating to their partnership business. He has then added that the award was not given in time as required in law and that it has not been filed in Court, and that, therefore, it, was invalid. With regard to those recitals made in para. 4 of the plaint, the defendants stated that in pursuence of an agreement entered into by the parties the disputes were referred to the decision of the arbitrator Shri Dahyabhai and that he had given an award. As to the delay they said that the parties had agreed to the extension of time from time to time and even the award was made in their presence. The parties had agreed to go by it saying that they did not desire to have it filed in Court as as it would unnecessarily involve expenses. The award, according to them, was perfectly valid and the plaintiff cannot file such a suit in respect of the same subject-matter which came to be decided by the Arbitrator at their instance. It is thus the plaintiff challenges the validity of the award in his plaint and if that is to be decided before any decree can be passed in the suit, that cannot be done in this suit. Section 32 of the Act obviously bars the suit as any such questions can be determined by taking appropriate proceeding under the provisions of that Act. Thus two positions arise. One is that questions relating to validity and effect of award cannot be decided in this suit, by the Court having no jurisdiction to do so, and secondly, it should make no difference whether they are required to be decided either as raised in defence or referred to in the plaint and required to be gone into before any decree can be passed in any such suit in respect of the same subject-matter which was before the arbitrator and that way merged in the award.

41. Those decisions referred to hereabove need not be separately considered for, after all, they go on certain common grounds which can well be set out here. They are:

(1) The Act is a self-contained Code making all provisions in regard to even arbitration outside the Court.

(2) That it is a scrap of paper and is of no effect as between the parties unless it has obtained the rule of Court.

(3) That there is no bar under any of the provisions of the Act to file a suit on the original cause of action as the Madras decision observes; and

(4) That Section 32 bars any suit which requires a decision on the existence, validity and effect of an award and therefore impliedly bars a defence set up in that respect on the ground that if a defence were allowed, it would put the plaintiff to a disadvantage as against him.

42. Taking the last ground first, Section 32 of the Act provides that 'Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration, agreement or award be set aside, amended, modified or in any way affected other wise than as provided in this Act. 'Now, as already pointed out hereabove, the plaintiff refers to the award being invalid in Para. 4 of his plaint, obviously realising that his suit cannot proceed until that question is decided. The defendants have also set such an award in defence by saying that it is valid and effective as between the parties thereto and that no such suit on the same subject-matter can lie. Thus it is clear that if the question relating to the validity or otherwise of the award has to be gone into and decided by the Court in this suit, it can only be done by a Court competent to decide in appropriate proceedings under the provisions of the Act. This bar is notwithstanding any right to a party to file any such suit given under any other law such as under Section 9 of the Civil Procedure Code. In our view, therefore, it is not merely a defence set up on the basis of an arbitration agreement or award that is barred, but any such suit where such questions arise, are required to be considered and determined is barred. The plaintiff cannot escape the effect thereof by even ignoring any such arbitration agreement or an award in the matter. So far we agree with those decisions relied upon by Mr. Shah.

43. The real question then, is, whether the plaintiff's suit can be said to be such a suit in which he would be entitled to the reliefs sought for, without requiring the Court to consider the effect of the award which admittedly had come to be made by the Arbitrator, though no doubt not filed in Court. The other three grounds arise to be considered in that regard, and for that I may refer to some relevant and material part of certain provisions of the Act which in our view, with great respect, appear to have been over-looked in some measure while giving effect to the same.

44. The term 'award' has been defined in Section 2(b) of the Act as meaning 'an arbitration award,' and it may be mentioned here that at no place in any of the provisions of the Act, it has been expressly or even by implication said that such award shall only be recognised as having some force or vitality as between the parties thereto unless it has received the rule of the Court. The award means nothing more than an arbitration award and it would be too much to read something more in any of the provisions to give a restricted meaning by saying that it is only that which has received the rule of the Court or else shall remain a scrap of paper and thus ineffective even though valid.

45. The Act covers provisions relating to three types of arbitrations. While Chapter II relates to arbitration without the intervention of a Court, Chapter III deals with arbitration with the intervention of a Court where there is no suit pending. Chapter IV relates to arbitration in suits before a Court. Then comes Chapter V which contains general provisions, and as stated in Section 26, 'save as otherwise provided in this Act, the provisions of this Chapter shall apply to all arbitrations. 'Now Section 5 of Chapter II of the Act makes the authority of an appointed arbitrator or umpire irrevocable except by leave of the Court. It follows from this provision that once an arbitrator is appointed by the parties to decide their disputes referred to him, he becomes a judge of their choice, and his authority to decide the disputes continues unless in the meantime it is revoked before award is given by him, with the leave of the Court. Then come the important provisions contained in Section 13 to 17. Section 13 confers certain powers on the arbitrator so as to enable him to discharge his duties as an arbitrator. Section 14 in this Chapter relates to making, signing and filing of an award. Sub-sections (1) and (2) thereof read thus:

14. (1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.

(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if as directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.

Now Sub-section (1) requires the arbitrator concerned to make his award and sign the same. That no doubt requires him to consider the disputes referred to him and the relevant material placed by the parties before making an award. It further provides for giving notice in writing to the parties of his having made and signed the award. Be it said here, that the award in this case was made and signed not only in the presence of the parties, but as the arbitrator Dahyabhai's evidence discloses, it was read over to the parties and they had, after admitting the same, put their signatures thereto. Not only that, but according to him, since the parties did not want to have the matter taken to the Court as that would involve unnecessary expenditure, the award was allowed to remain with him. In those circumstances, it would be too much to say, as attempted to be urged by Mr. Shah, that a separate notice in writing was essential to be given to the parties about the award made by the arbitrator, particularly when they were there before the arbitrator who had read over the same and in turn the parties, after having admitted the same, had put their signatures thereto. They had thus notice of the award contemplated under Section 14(1) of the Act. Sub-section (2) thereof relates to the filing of an award by the arbitrator or umpire. It contemplates the filing of the award by the arbitrator or umpire as the case may be, firstly at the request of any party to the arbitration agreement or any person claiming under such party, and secondly if he is directed by the Court. In these two circumstances, he has no option and has to file the award in Court. That makes it obligatory on him to do so as the use of word 'shall' indicates. When that is done, the Court shall thereupon give notice to the parties of the filing of the award. It would thus appear that there may arise cases in which parties may not desire or require an award being filed in Court and would prefer or like to go by it without even recourse to Court. In that event, there is no obligation cast on the arbitrator to file the award. That has happened in this case and the award thus was not filed. It is this aspect arising from Section 14(2) of the Act, which appears to have been overlooked by Their, Lordships of different High Courts in their decisions referred to above. Those decisions proceed, as it were, on the basis or on the assumption that the award is required to be filed by the arbitrator, irrespective of the fact whether any party calls for it or the Court directs him to do so. The party in whose favour the award is passed would ask the arbitrator to file it in Court, if he requires a decree to be passed by the Court under Section 17 of the Act, or by the other party who intends to challenge it's correctness or validity thereof as contemplated under the provisions of the Act. in case he does not file it in Court, though called upon to do so by any party thereto, any such party can move the Court to get it so filed in Court by the arbitrator. The Court has thereafter, as provided further, to give notice to the other party and determine its validity or otherwise and act in accordance with the subsequent provisions contained in Sections 15, 16 and 17 of the Act. While we do agree that the Act provides for an integrated Code, but with respect, it has not become possible for us to say that it is so complete as to negative the effect of an award which parties do not desire to have it filed before the Court either for having decree passed, or for having the same remitted for reconsideration or even set aside on grounds contemplated under the provisions of the Act. This aspect, and more particularly the words 'at the request of any party' occurring in Section 14(2) of the Act, which have considerable significance in the sense that those words exclude any obligation on the part of the arbitrator to file an award in Court unless required by any of the parties or by the Court itself, appear to have been overlooked.

46. In the case before us, it appears clear from the evidence of the arbitrator that none of the parties required him to file an award in Court with the result that no decree enforceable at law could be passed in favour of the defendants and also it has not set aside at the instance of the plaintiff by taking proceedings under Section 33 of the Act, on grounds permissible under Section 30 of the Act. The effect thereof is that the defendants cannot enforce the award against the plaintiff for recovering any amount thereunder, as he did not obtain decree on that basis. His remedy for recovering any amount would be barred. At the same time, since it remained to be set aside by the plaintiff under the provisions of the Act, that award has to be taken as a valid one creating rights of the parties though not enforceable in Court. In fact, even it was possible for the plaintiff to have the award or any part thereof modified, corrected or even remitted back for reconsideration to the arbitrator on any of the grounds contemplated under Sections 15 and 16 of the Act. Some of the grounds raised by Mr. Shah, the learned advocate for the plaintiff-respondent, with regard to the validity of the award in question can well be covered under Section 16(1) of the Act, for instance, according to him, the arbitrator bad determined the amount due on accounts by taking into account the accounts of S.Y. 2011 though referred to upto end of S.Y. 2010, or about the validity of the award on the ground of his having not submitted within a. period of four months contemplated under Rule 3 of the First Schedule to the Act. No such attempt on that basis has been made by the plaintiff in that behalf by taking appropriate proceedings under the Act. Such questions cannot now be gone into by this Court-having no jurisdiction in absence of any proceedings taken under the provisions of the Act. It was urged by Mr. Shah that since the defendants did not get the award filed in Court under Section 14 for obtaining a decree thereon under Section 17 of the Act, he got no opportunity of challenging it. That argument has no merit, for the reason that as shown above the award could have been got filed at his instance, and if he did not do so either under Section 14(2) or take action under Section 33 of the Act, he cannot be justified in saying that he got no opportunity to have it set aside or corrected. The parties to the award have been given opportunity and right to have such questions determined by the Court under the provisions of the Act. Not having done so, cannot render an award a scrap of paper having no vitality or effect as between parties thereto. In our view, therefore, when there is no obligation under any of the provisions of the Act requiring the arbitrator to file an award in any event, whether parties want it or not, it cannot be said that the award becomes a scrap of paper having no vitality or effect as between the parties thereto. Nor do we find any provision in the Act that the award, if not filed in Court, is a nullity having no effect as between the parties thereto, that it can be said that it is a scrap of paper and has no vitality as observed in some of those cases. It remains valid and if not gut rid of, it can well be put up as a defence saying that it bars a suit-the subject-matter whereof was referred to the arbitration and an award was given by the arbitrator. Not to allow a plea is to put a premium on such unscrupulous persons to file a suit after the defendants did not obtain a decree thereon. Before therefore the plaintiff can file a suit in respect of the same subject-matter against the same party to the award, he must have got the award set aside and having not done so, it would bar his suit. The grounds of its invalidity cannot be considered by the Court in such a suit. In this respect, as observed in the case of Madan Lal v. Sunder Lal and Anr. A.I.R. 1967 Supreme Court 1223, any party wishing to have an award set aside on the ground that it was improperly procured or other wise invalid has to make an application under Section 33 read with Section 30 of the Act, and that if no such application is made the award cannot be set aside on any of the grounds specified in Section 30 of the Act. Then later on it has been observed that it is clear, therefore, from the scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in Section 30 it must apply within the period provided in Article 158 of the Limitation Act. If that is not availed of, it would not be open to him to allege much less establish that the award was either procured improperly or that it was invalid on any other ground as suggested by the plaintiff in his plaint.

47. In this connection, it would be worthwhile to refer to Section 34 of the Act, which reads thus:

34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still, remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.

The effect of this provision is that it entitles a party to an arbitration agreement to claim any such legal proceedings stayed by the Court for the purpose of seeing that the agreement is complied with by the party, and the Court, on being so satisfied, may refer the matter to the arbitration of any particular person as agreed to by the parties thereto. When the Court has to go by any such agreement between them and refer the matter for arbitration, it would be too much to say, that plaintiff can justifiably file a suit in respect of the same subject-matter when even an award is passed by the arbitrator under a reference made by parties thereto. The idea behind it is that a solemn agreement entered into by parties cannot be set at naught at the desire of one party to the same and for which proper remedies are given under the provisions of the special Act.

48. The effect of all the provisions, in our view comes to this. Where nothing of the kind takes place either by revocation of any such agreement or reference of the arbitration of any such arbitrator agreed to be appointed by the parties under Section 5 of the Act, or where no action is taken by a party affected thereby for setting aside the same under Section 33 read with Section 30, or having it reconsidered by the arbitrator under Sections 15 or 16 of the Act, the award, though not made the rule of Court by having it filed under Section 14(2) and having obtained a decree thereon under Section 17 of the Act, so as to make it enforceable by any competent Court, it stands as valid award as between the parties in respect of the subject-matter entrusted to him. The validity thereof is presumed, and it cannot be challenged in a suit or proceeding other than the one taken under the provisions of the Act. While it may not be an enforeceable one in the sense that it has not merged in a decree under Section 17 of the Act so as to be executable by any competent Court, it does not lose its existence as between the parties, thereto. It may bar a remedy for enforcing the same, but it cannot bar or take away the right of a party thereto to challenge the maintainability of a suit by the other party ignoring the award, in respect of the same subject-matter which was entrusted to the decision of an arbitrator and when in fact, an award has been given by him. It binds the parties.

49. I may incidentally refer to two decisions which describe the efficacy of an award. The pertinent observations in the case of Hanskumar Kishanchand v. The Union of India 1959 S. C.R. 1177, are as under:

When parties enter into an agreement to have their disputes settled by arbitration, its effect is to take the is out of the hands of the ordinary Courts of the land and to entrust it to the decision of what has been termed a private tribunal...Where an arbitration is held in pursuance of such an agreement and that results in a decision, that decision takes the place of an adjudication by the ordinary Courts, and the rights of the parties are thereafter regulated by it.

Later on, it has been observed that it is the decision of the arbitrator where it is not set aside that operates as the real adjudication binding on the parties, and it is with a view to its enforcement that the Court is authorised to pass a decree in terms thereof.

50. The next case is of Bhojshri Saha Banikya v. Behary Lal Basak I.L.R. 33 Calcutta 882, and the relevant observations are at page 888. They are:

The award is in fact a final adjudication by a Court of the parties' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the face of it regular, is conclusive upon the merits of the controversy substituted, unless possibly the parties have intended that the award shall not be final and conclusive in reality, it possesses all the elements of vitality even though it has not been formally enforced, and it may be relied upon in a litigation between the parties relating to the same subject-matter.' These observations have been quoted, and if we were to say so, endorsed completely by Their Lordships of the Supreme Court in an unreported decision in Civil Appeal No. 162 of 1962 (M/s. Uttam Singh Dugal and Co. v. The Union of India and Anr) decided on 11-10-1962, by saying that 'if the award which has been pronounced between the parties has, in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incompetent' These observations do not In any manner restrict the application thereof to any award which has been filed in a Court, or to put it in the words used in the various decisions 'having received the rule of the Court.

They are intended to apply to any award given by an arbitrator chosen by the parties for deciding the disputes referred to him either through Court or without it. It was urged that the averments made in para. 4 of the plaint may be ignored, and much though they relate to the arbitration agreement and award, his right to file the suit on original subject-matter is not taken away by any provision under the Act. Now even if no such averments were made in the plaint, he cannot avoid or get rid of any such award passed by the arbitrator in respect of the disputes referred to him by the parties. We find support from the observations made in the case of Shyamsingh Jaswantsingh v. Pralhadsingh Tikaram and Ors. : AIR1962MP66 , wherein it has been observed that 'a party cannot by dexterous pleadings avoid the bar imposed by Sections 32 and 33 of the Act, Whatever the pleadings may be, if the suit is one In essence to enforce an award duly given by arbitration dealing with the very dispute which is the subject-matter of the suit or to get rid of it in any way, it would not be competent. 'In the present case, as already stated hereabove, the plaintiff wants to get rid of it in any way so as to entitle him to claim a decree on the basis of the original cause of action in the suit which in fact was referred to the decision of an arbitrator Shri Dahyabhai and an award was made by him. It is, therefore, plain that he is required to get rid of that award before he can claim any such decree in his favour. Not having done so, his suit would obviously be hit by the provisions contained in Section 32 which provides a bar to the suit wherein the existence, effect or validity of an arbitration agreement or award is required to be considered and decided. In our view, therefore, a suit in which the effect or validity of any such award is required to be considered and decided is equally hit by Section 32 of the Act. Unless he can get rid of any such award the Court cannot pass any decree in a suit of this character.

51. Mr. Desai then invited a reference to the unreported judgment in Civil Appeal No. 162 of 1962 which came to be decided by the Supreme Court on 11-10-1962 where the position of law in this regard has been set out. The observations relied upon by him run thus:

It is well-settled that as a general rule, all claims which are the subject-matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award. After an award is pronounced, no action can be started on the original claim which had been the subject-matter of the reference.

Then they have made a reference to the decision in I.L.R. 33 Calcutta 881 (Supra) and as already observed hereabove, having endorsed the observations made therein, they said that 'if the award which has been pronounced between the parties has, in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incompetent. These observations have been made in the judgment given by His Lordship Gajendragadkar J. speaking for the Bench consisting of five Judges of the Supreme Court. We may observe that they do not appear to be mere observations so as to style them as in any way obiter, but they have in fact, having regard to the subject-matter involved therein, taken the view as based on these observations. They refer to 'an action' that may be taken in respect of the same subject-matter on a reference to arbitration, and thereby include any such suit as we have before this Court. They do not, in our view, confine to an application, as urged by Mr. Shah, to be made in respect of the same subject-matter under the provisions of the Arbitration Act as such, though they may apply to the same. The other significant words used therein are 'the award which is pronounced', and if it is in relation to the same subject-matter for which a subsequent claim is made, no such action can lie. They do not, therefore, relate to any award which has been made the rule of the Court as we find it said in most of the decisions relied upon by Mr. Shah, the learned advocate for the respondents. It is the award which is pronounced that matters and it is that award which is called an 'arbitration award' defined in Section 2(3) of the Act. What was urged with regard to this decision laying down a well-recognised principle was that the matter which had gone in appeal before the Supreme Court arose from an application made under Section 33 of the Arbitration Act and that, therefore, those observations were confined to any such action sought to be taken under the provisions of that Act with regard to the said subject-matter. The other point made out by Mr. Shah was that the award in that case was not only valid but that it had been acted upon and even satisfied. I am unable to agree with Mr. Shah in that regard, as already pointed out just hereabove that the expressions used do not confine to any such action under the provisions of the Act, or that they have been on the basis of any such award acted upon and satisfied by the parties. The observations are wide enough and in fact the observations of Mukerjee J. in the Calcutta case referred to above, have been amply endorsed. To say that they did not have in mind any such thing as to cover any such suit would hardly be proper. Nor would it make any difference by reason of the fact that this decision has not been so far reported or that the decisions of the different High Courts referred to above were not considered. Those observations apply in all fours to the facts of the present case and they bind this Court. We agree therewith for the reasons already stated by me and a suit in respect of the same subject-matter cannot, therefore, lie in the face of a valid award as between the parties thereto. In these circumstances, with great respect, we are unable to agree with the decisions relied upon by Mr. Shah before us.

52. Now it is clear as observed by the learned Assistant Judge that the subject-matter of the suit has been the same as it was one referred to the arbitration of Mr. Dahyabhai in the case. When that is so, such a suit in respect of the same subject-matter cannot lie for the simple reason that it has merged in the award which has remained valid and not got rid of by the plaintiff. Such an award would, thus, serve as a good defence to any such action taken by unscrupulous party after allowing himself to stand by it, and as such cannot be helped by any Court. This is not a case in which the defendants seek to enforce the award by saying that a decree may be passed in their favour. They are required to meet the suit because the plaintiff has been out to ignore the effect of the award by the mere fact that he had not obtained the rule of Court and obtained the decree under Section 17 of the Act. It is not always that the parties to an arbitration award would necessarily like to go to a Court of law and have the award filed. There may be persons who would stand by it in the pious hope that the other side shall equally go by it. But when such a hope is frustrated by an action on dexterous pleadings in respect of the same subject-matter after the period of limitation for obtaining the decree therein has passed, he cannot be allowed to proceed with any such suit for the reason that the subject-matter has merged in the award. Much though the defendants would not be able to enforce it in a Court of law, they can certainly, even if the plaintiff had not made any the slightest reference about it, have the right to show that an arbitration award was arrived at the instance of the parties so as to defeat the claim of the plaintiff in respect of the same subject-matter.

53. It, is thus clear that the suit is not maintainable in respect of the same subjcet-matter which was referred to in the arbitration of Dahyabhai, and that it is liable to be dismissed. Since the suit also involves the consideration of the questions such as of the effect or validity of the award referred to in the plaint itself and since they cannot be decided by this Court by reason of Section 33 read with Section 31 of the Act, no suit can lie and no decree can be passed by the Court ignoring the award. In any view of the case, therefore, in our view, the suit is liable to be dismissed.

54. The appeal is allowed and the decree passed by the Courts below shall be set aside. The suit shall stand dismissed. The plaintiff shall pay the costs of the defendants and bear his own all throughout.


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