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Natvarlal Maganlal AmIn (Deed. Through His Heirs and Lrs.) and ors. Vs. AmIn Thakorbhai Maganbhai - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtGujarat High Court
Decided On
Judge
Reported in(1985)1GLR533
AppellantNatvarlal Maganlal AmIn (Deed. Through His Heirs and Lrs.) and ors.
RespondentAmIn Thakorbhai Maganbhai
Cases ReferredKashinathsa v. Narsingsa (supra
Excerpt:
.....it is pertinent to note that the division bench has specifically observed that such an award, if not filed in court, remains valid and if not got rid of, it can well be put up as a defence saying that it bars a suit. i fail to understand how this decision of the orissa high court could have been pressed into service by the learned trial judge. the learned trial judge after taking into consideration the provisions of the arbitration act has therefore rightly come to the conclusion that when the deceased defendant has not taken any steps finder the arbitration act to get the award set aside in collateral proceeding like the present suit, defence having effect of attacking the award will not be available to the defendant......and not by any other independent act. the trial court dismissed the suit of the plaintiff but the learned judge of the first appellate court decreed the suit and held that the parties were in separate possession of the property allotted to them by the award and the award and the deed of gift were acted upon. the high court held that it was a finding of fact by the court below on full consideration of the evidence that the properties were divided by metes and bounds by the arbitrator and the parties were in possession of their respective properties allotted to them, and then after referring to the decision of the supreme court in kashinathsa v. narsingsa (supra) held that the ratio of the decision of that case fully applied to the case before the orissa high court, it thus appears from.....
Judgment:

J.P. Desai, J.

1. The facts leading to the filing of this Second Appeal have been stated in details in the judgment of the Courts below; and hence I do not propose to reiterate them. I will briefly state the facts so far as they are necessary fur understanding the questions of law involved in this Second Appeal, which questions have been formulated as substantial questions of law at the time of the admission of this appeal by this Court.

2. Amin Natvarlal Maganlal (original defendant) who died pending the suit was the real brother of the plaintiff Amin Thakorbhai Maganbhai. There was dispute between the parties about some joint family properties and the dispute was referred to two arbitrators, viz. Jashbhai Shivabhai Amin and Jamnadas Chhotabhai Amin. They gave their award on 7-7-1961. The award was accepted, according to the plaintiff, while the defendant did not admit that it was accepted by him. The plaintiff and the defendant both signed in token of accepting the award as per the say of the plaintiff, but that was denied by the defendant. Some of the terms of the award were acted upon and the defendant Natvarlal passed a sale-deed on 2-7-1963 in favour of the wife of the plaintiff, the consideration whereof has been incorporated in the sale-deed as per the terms of the award dated 7-7-1961. The plaintiff offered Rs. 3500/- to the defendant in April 1968 and requested the defendant to execute a document in his favour as per the terms of the award, but the defendant did not accept the same. A notice by registered post was served on the defendant and even then the defendant did not accept the amount nor did he execute any document in favour of the plaintiff as regards the lands as per the terms of the award. The plaintiff, on these allegations, filed the suit for getting a sale-deed in his favour as per the terms of the award.

3. The suit was resisted by the defendant, vide his Written Statement. The defendant raised several contentions with which we are not concerned in this Second Appeal. The main contention of the defendant was that the award was not made the rule of the Court under the provisions of the Arbitration Act, 1940 and, therefore, the suit based on that award was barred by the provisions of Sections 31 to 33 of the Arbitration Act. He also raised the contention that the suit was barred by limitation,

4. The learned trial Judge held that even though the award was not made the rule of the Court, the suit was maintainable treating the award as an agreement between the parties. He also negatived the contention of the defendant about limitation. The trial Court accordingly passed a decree in favour of the plaintiff. Being dissatisfied with the same, the defendant carried the matter in appeal before the District Court, Kheda at Nadiad. The learned Extra Assistant Judge who heard the said appeal being Regular Civil Appeal No. 72 of 1977 raised four points for his determination, the first point being whether the plaintiff was entitled to get the suit land on payment of Rs. 3500/- to the defendant and the second point being about the question of limitation. We arc not concerned with the other two points raised by the learned Extra Assistant Judge looking to the fact that only two questions of law have been formulated as substantial questions of law at the time of admission of this appeal, as stated by me earlier. The learned Extra Assistant Judge held that the plaintiff was entitled to get a document of sale on payment of Rs. 3500/- to the defendant and also held that the suit was not barred by limitation. He also held against the defendant on the other two points raised by him and confirmed the judgment decree passed by the trial Court and dismissed the appeal. Being dissatisfied with the same, this Second Appeal has been filed by the heirs of the original defendant who were brought on record as heirs of the defendant in the trial Court as the defendant, as stated earlier, died during the pendency of the suit.

5. The learned trial Judge did consider the relevant provisions of the Arbitration Act but relying upon some decisions cited before him which he has discussed in his judgment reached the conclusion that the suit was (maintainable because the award can be treated as an agreement between the parties. The learned Extra Assistant Judge, with due respect to him, did not address himself to this aspect at all. He has proceeded on the footing that the directions given in the award were sort of suggestions and rest of the part of the award was acted upon by the parties, in that a sale-deed. Ex. 144 was executed by the defendant in favour of the wife of the plaintiff and, therefore, the plaintiff was entitled to a decree which was granted to him by the trial Court.

6. The original award purported to bear the signatures of the two arbitrators is produced with list. Ex. 25 by the plaintiff. Ex. 169 is a copy of the award produced at Ex. 25/1. and it also purports to bear the; signatures of the two arbitrators. It is dated 7-7-1961. It purports to bear the signatures of the plaintiff and the defendant. But it is pertinent to note that those signatures appear to have been given only in token of having received a copy of the award. The endorsement in Gujarati above the signatures of the plaintiff and the defendant is as follows:

There is nothing anywhere in this award, Ex. 169 to show that the parties accepted the award. Simply because 'the parties signed on the award below the above endorsement, it cannot be said that they accepted the award. All that we can say from these signatures is that they received the copies of the award. There is also no other evidence on record to show that the parties accepted the award. But I shall show later on that even if we take it that the parties accepted the award, then also it will not make any difference so far as the objection to the maintainability of the suit in view of the provisions of Section 32 of the Arbitration Act is concerned. There is not even an allegation that any separate agreement was entered into between the parties incorporating the terms of this award, It is true that the sale-deed. Ex. 144 executed by the defendant in favour of the wife of the plaintiff shows that the document was executed in pursuance of some of the terms of the award, except the term on the basis of which the suit has been filed. There is no mention in the sale-deed, Ex. 144 that this document was executed in pursuance of the award given by the arbitrators. There is even no reference to the award in the sale-deed. Ex. 144. But the consideration mentioned in this document, when read with the award. Ex. 169, does show that it was in pursuance of some of the terms of the award. This would only show that the terms of the award, except the term on the basis of which the present suit has been filed, were acted upon by the parties. The question is as to what is the effect of this, so far as the maintainability of the present suit on the basis of the award is concerned.

7. Section 32 of the Arbitration Act, 1940 reads as follows:

Notwithstanding any law for the time being in force, no suit shall he 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 enforced, set aside, amended, modified or in any way affected otherwise than as provided in this Act.

Section 31 of the Arbitration Act lays down that an award play be filed in any Court having jurisdiction in the matter to which the reference relates. Section 33 of the Act lays down that an arbitration agreement or award can be contested only by an application to be filed under the Act.

8. It is an admitted fact in the present case that the award was not filed in the Court as required by the provisions of the Arbitration Act. In other words, the award has admittedly not been made the rule of the Court. On the face of it, therefore, the suit is barred by the provisions of Section 32 of the Arbitration Act. Looking to the frame of the suit, it is clear that it is filed to obtain a decree on die basis of the award in view of the 'provisions of Section 32 of the Arbitration Act, such a suit is, on the face of it, not maintainable.

9. The learned advocate Mr. V.B. Patel appearing on behalf of the respondent (original plaintiff) drew my attention to a decision of the Madras High Court reported in Chavakula Yanadamma v. Chavakula Venkateswarlu AIR 1947 Madras 168 and submitted that as per this decision of the Madras High Court, an award does not stand on a higher footing than an agreement to transfer some property in future and, therefore, die suit would be maintainable. Now, the question which the Madras High Court was required to consider in that matter was whether the award was required to be registered. It was in that context that the Madras High Court held that the award does not stand on a higher footing than an agreement to transfer property in future because by the award no transfer was effected and, therefore, it did not require registration. In fact, para 9 of the judgment of the Madras High Court shows that the plaintiffs wanted to amend the plaint in that suit to convert the suit into an application under Section 17 of the Arbitration Act and the High Court directed that the trial Court shall give the plaintiffs an opportunity to do so if they so desire. This decision of the Madras High Court thus does not help the respondent so far as the question of maintainability of the suit is concerned.

10. Mr. Patel also drew my attention to another decision of die Madras High Court reported in Tha. Duraiswami Naidu v. Kishtappa Naidu A.I.R. 1958 Madras 420 in support of his submission that the suit is maintainable taking the award as an agreement. It appears that in that case, on, the award itself the parties made an endorsement that they with one mind accepted the decision and the suit was to enforce the agreement endorsed on the award. The Madras High Court held that the suit was, therefore, not barred by Section 32 of the Act. The Madras High Court 'referred to a decision of the Bombay High Court reported in Bai Narbadabai v. Natvar Lal Chunilil : AIR1953Bom386 and observed that in that case it was conceded that the suit was filed to enforce an award and that on that statement of the plaintiff, it was held that the suit was clearly not a suit to enforce an agreement which was in any way independent of the award. Now, the decision of the Bombay High Court rendered prior to 1-5-1960 is binding to this Court and, therefore, I have looked into that decision of the Bombay High Court. The decision of the Bombay High Court is rendered by a Division Bench of that Court on 12-12-1952. The Division Bench has in terms held that an award continues to be so notwithstanding that parties accept it and agree to abide by it and that the acceptance and agreement to abide by do not change it into an agreement in which it becomes merged. The Division Bench has held that once parties have referred their disputes to a domestic forum, it is that domestic forum alone that can decide upon those disputes and that the forum may decide upon those disputes by adjudicating upon those disputes or it may decide those disputes if the parties consent to take a decision on an agreement and whether in one case or the other, the decision of the domestic forum, whether by consent or in invitum, is an award and has all the characteristics of an award, observed the Division Bench in that case. The Division Bench also held that the expression 'effect of the award' is wide enough to cover a suit to enforce an award. In that case, it appears that the parties accepted and agreed to the award and signed the same in token thereof. The plea of the plaintiff was that the award was accepted and agreed to. It was not the case of the plaintiff that any agreement was entered into subsequent to the award. The Division Bench observed that at the highest this plea can only mean that the parties agreed not to challenge the award and to abide by the award. But the acceptance of the award and the agreement to abide by the award cannot change the nature of the award, observed the Division Bench. It was contended before the Division Bench that on the parties accepting to abide by the award, the award merged in the agreement and, therefore, the suit based on that award was maintainable as a suit based on agreement. This contention was rejected by the Division Bench. The ratio of this decision of the Bombay High Court is that if after the passing of the award by the arbitrators the parties enter into a separate agreement with regard to the terms of the award, then a suit to enforce such an independent agreement may be maintainable, but a suit is not maintainable taking the award or endorsement of the parties as an agreement simply because the parties might make an endorsement that they accepted and agreed to such award and signed any such endorsement. This decision of the Bombay High Court rendered prior to 1-5-1960 is a complete answer to the contention of the plaintiff that the suit should be treated as based on an agreement and not on an award.

11. In the case of Kashinathsa v. Narsingsa Bhaskarsa : [1961]3SCR792 the question was whether if the parties accepted the award made by the arbitrators and acted upon it 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 available to 'the defendant or not. The Supreme Court held that the defence in such a suit was 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 parlies are binding. It appeal's that in that case the arbitrators had divided the properties by metes and bounds and the parties had entered into possession of the respective properties allotted lo them and one of the parties filed a suit seeking to avoid the terms of the award which were already acted upon. The defendant resisted the suit and it was contended that the defendant was not entitled to raise such a defence in view of the provisions of Section 32 of the Arbitration Act and the Supreme Court held that the defendant was merely seeking to set up a plea that the property was divided by consent of parties and such a pica was not precluded by Section 32. In the present case, the plaintiff has filed the suit to enforce the award. His suit is on the face of it, not maintainable simply because the remaining terms of the award have been acted upon by the parties. One might be inclined to say that the defendant will be estopped from denying the claim of the plaintiff when other terms of the award have been acted upon by the parties. Now, the question is not whether there is any bar of estoppel against the defendant. The question is whether the suit is maintainable and the answer to that question must obviously be in the negative.

12. It appears that the question which was 'decided by the Supreme Court in the above case also arose for consideration before this Court in the case of Thakkar Vithalbhai Hargovind v. Kachhia Jagjivan Motilal 10 G.L.R. 288. In that case also it appears that the plaintiff filed a suit, for dissolution of partnership and accounts and one of the contentions raised by the defendant was that the suit was not maintainable because the parties had referred the disputes to arbitrators and the arbitrators had given their award. A learned single Judge of this Court held that looking to the scheme of the Arbitration Act, such a defence was not available to the defendant. But a Division Bench of this Court in Letters Patent Appeal against the said decision of the learned single Judge of this Court held, relying upon the decision of the Supreme Court in Kashinathsa v. Narsintgsa (supra), that such a defence was available though a suit to enforce the award was not maintainable. It appeared that it was in this context that the Division Bench observed that it does not 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. The Supreme Court further observed that it remains valid and if not got, rid of it can, well be put up as a defence that it bars a suit the subject matter whereof was referred to arbitration and an award was given by the arbitrator. There was no question of any agreement between the parties accepting the award either in the case before the Supreme Court or in the case before this Court, but I have referred to these two decisions because the learned trial Judge who has relied upon the decision of this Court in Vithalbhai v. Jagjivan (supra) does not appear to have carefully read this judgment of this Court and has, therefore, not properly understood the ratio of this decision. The learned trial Judge has simply taken into consideration the observations by the Division Bench that the award if not filed in Court is not a scrap of paper. The learned trial Judge, with respect to him, lost sight of the fact that the above observations were made by the Division Bench while dealing with the question whether the award can be set up as a defence or not. It is pertinent to note that the Division Bench has specifically observed that such an award, if not filed in Court, remains valid and if not got rid of, it can well be put up as a defence saying that it bars a suit. This decision of this Court thus does not in any way support the contention that the suit based on an award is maintainable even if the award is not made the rule of the Court.

13. The learned trial Judge has also relied upon a decision of the Orissa High Court reported in Govinda Gouda v. Kalu Hondo : AIR1966Ori228 in reaching the conclusion that the suit was maintainable. It appears from the facts of the case which came up before the Orissa High Court that the case of the plaintiff was that though the award was not made a rule of the Court, it was acted upon, the properties were divided by metes and bounds and Sulla and the defendant respectively possessed 'Ka' and 'Kha' schedules of land as allotted to them under the award, and after the registered deed of gift, plaintiff No. 1 was in possession of the property gifted to him by Sulla. The plaintiff filed a suit for declaring his title and possession in respect of the suit land and for recovery of the deposit made in the Criminal Court and for subsequent mesne profits. The defendant raised a contention that the award was not made a rule of the Court and was not acted upon, Sulla and the defendant continued in joint possession of the entire Ka and Kha schedule properties, referred to in the award and that on the death of Sulla, defendant was entitled to the entire properties. The trial Court recorded a finding that partition was effected between Sulla and the defendant only by the award and not by any other independent act. The trial Court dismissed the suit of the plaintiff but the learned Judge of the first Appellate Court decreed the suit and held that the parties were in separate possession of the property allotted to them by the award and the award and the deed of gift were acted upon. The High Court held that it was a finding of fact by the Court below on full consideration of the evidence that the properties were divided by metes and bounds by the arbitrator and the parties were in possession of their respective properties allotted to them, and then after referring to the decision of the Supreme Court in Kashinathsa v. Narsingsa (supra) held that the ratio of the decision of that case fully applied to the case before the Orissa High Court, It thus appears from the facts of the case before the Orissa High Court that the suit was filed in respect of the very same properties which were actually divided by metes and separate possession was handed over to the respective parties to whom the respective properties were allotted and in that view of the matter, held that the suit was not barred. This decision of the Orissa High Court is thus not of any assistance to the plaintiff in the present case. It is true that the parties in the present case also have acted upon a part of the award by the defendant executing the sale-deed. Ex. 144 in favour of the wife of the plaintiff, but we are not concerned with that part of the award. We are concerned with that part of the award which has not been acted upon and it cannot be said that the suit is maintainable simply because the remaining part of the award is acted upon. I fail to understand how this decision of the Orissa High Court could have been pressed into service by the learned trial Judge.

14. The learned trial Judge has in his judgment observed at para, 13 of his judgment that both the parties, viz. the plaintiff and the defendant had signed the award and agreed to act as per the terms of the award. There is nothing on record to show that the parlies did so. In fact, the parties only signed the endorsement, as stated by me in the beginning, that they had received a copy of the award and nothing more. The learned trial Judge has observed at para 14 of his judgment that it was for the defendant to show that the award was unjust, unfair and there was misconduct. He also observed that once we accept that there was award and arbitration, then it was for the party challenging it to prove that the award was not binding to the parties. Now, the plaintiff was relying upon the award for enforcing his claim and, therefore, it is difficult to understand as to how the learned trial Judge made these observations. With respect, the learned Extra Assistant Judge has also made similar observations at para. 12 of his judgment. The learned Extra, Assistant Judge has observed as follows at para. 12 in this regard:

The learned trial Judge after taking into consideration the provisions of the Arbitration Act has therefore rightly come to the conclusion that when the deceased defendant has not taken any steps finder the Arbitration Act to get the award set aside in collateral proceeding like the present suit, defence having effect of attacking the award will not be available to the defendant.

It is difficult to understand how the learned Extra Assistant Judge made these observations confirming the view taken by the learned trial Judge. The question of the defendant attacking the award does not arise for consideration when the suit based on the award is not maintainable, when, the award is not made the rule of the Court. If the award was made the rule of the Court, then certainly the defendant could not have raised any objection to the same. The learned Extra Assistant Judge also, with respect to him, fell into an error in reaching this conclusion. He lost sight of the fact that the question was whether the suit for enforcing the award was maintainable when a bar was created by Section 32 of the Arbitration Act, 1940. The learned trial Judge, it appears from his judgment, did apply his mind to the question whether the suit was maintainable when there was a bar created by Section 32 of the Arbitration Act, but the learned Extra Assistant Judge, with respect to him, does not appear to have considered this aspect at all.

15. In view of the discussion made above, I answer the first substantial question of law formulated by this Court at the time of admission against the plaintiff and hold that the lower Appellate Court was not right in law in confirming the decree of specific performance on the basis of the award when the award was not made the rule of the Court. When this question is answered against the plaintiff, the question of bar of limitation does not survive for consideration because when the suit is not maintainable, it is required to be dismissed assuming that it is not barred by limitation. In view of this, I do not propose to enter into the question whether the suit was barred by limitation. The result of the aforesaid discussion is that the Second Appeal should be allowed and the judgment and decree passed by the trial Court and confirmed by the District Court are required to be set aside and the suit of the plaintiff is required to be dismissed. Looking, however, to the facts and circum-stances of this case, I think it just and proper to leave the parties to bear their own costs throughout. The Second Appeal is accordingly allowed, the judgment and decree passed by the trial Court and confirmed by the District Court are hereby set aside and the suit of the plaintiff is dismissed. The parties to bear their own costs throughout.


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