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Rashid Jamshed Sons and Co., by Its Proprietor, S.R. Ahestani Vs. Moolchand Jothajee - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported inAIR1945Mad371; (1945)2MLJ98
AppellantRashid Jamshed Sons and Co., by Its Proprietor, S.R. Ahestani
RespondentMoolchand Jothajee
Cases ReferredIn Deoki Nandan Dalmia v. Basantlal Ghanshyamdas
Excerpt:
- - the respondent's learned advocate while claiming a right of separate suit to a successful party, maintains that the remedy of the unsuccessful party is only to proceed under the act if he wishes to challenge the validity of the award. i am inclined to accept the argument of the respondent's counsel that if a person who is unsuccessful wishes to question the existence, validity or effect of the award, he is bound to do so only by resort to sections 32 and 33 of the act......before he can get relief. when the other side questions the existence or validity or effect of the award, a question regarding the existence, validity or effect of the award is directly raised. if an award is alleged by the plaintiff, obviously the defendant must be allowed to raise the question of the existence of the award. but under section 31, clause (2) even the existence of the award shall not be determined by any court except the court in which the award may be filed. this provision indicates that even a successful party to whom a relief is given under the award must seek to enforce it in the court in which the award may be filed, that is, by proceeding under section 14. of the act.4. decisions before the act are obviously of no help. the only help that we have on this subject is.....
Judgment:

Somayya, J.

1. The question involved in this appeal is whether a separate suit lies to enforce the reliefs granted by an award passed under the Indian Arbitration Act (X of 1940) or whether the procedure under Section 14 of the Act must be resorted to.

2. There were disputes between the parties regarding certain contracts which they entered into for sale by the plaintiff-respondent and for purchase by the defendants-appellants of certain quantities of Japan camphor. The case of the respondent is that the appellants did not take delivery of the camphor contracted for, that subsequently he sold the camphor and sustained loss which the appellants would not pay, that the disputes between the parties were referred to the arbitration of the Madras Kirana Merchants Association in accordance with a clause contained in the contracts to that effect and that an award was passed by the arbitrators. The suit is for recovery of the sum adjudged by the arbitrators by the award. The defence is that the respondent is confined to the remedy under the Indian Arbitration Act of 1940, which, it is the common case of both the parties, applies to this case. The lower Court held that a separate suit lies and granted a decree. The defendants appeal, and the only point for decision is whether a separate suit lies to recover a sum of money adjudged by the award in favour of a party to the arbitration.

3. It is undoubted that before the Indian Arbitration Act (X of 1940), where there was an arbitration and an award, two remedies were open to the successful party. One was to have the award filed into Court under the Indian Arbitration Act of 1899 or under Schedule II of the Code of Civil Procedure and to have it made a rule of Court. The other was to file a suit for the recovery of the sum adjudged or of the property given by the award. It is equally clear that in a suit filed by the successful party, the defendants had before this Act a right of challenging the validity of the award, on the ground that all the arbitrators did not act together or on other grounds open to them. The respondent's learned advocate while claiming a right of separate suit to a successful party, maintains that the remedy of the unsuccessful party is only to proceed under the Act if he wishes to challenge the validity of the award. He also contends that in a suit by the successful party for getting the relief which is given under the award the defendant cannot even raise the question of the validity of the award and that he must submit to a decree without any defence. Thus stated the position is rather anamolous, but if the law says so, the respondent's contention must be upheld. But before the Court arrives at this rather anamolous result, the provisions of the Act must be closely scrutinised. Under Section 14 of the Act where the arbitrators have made an award, they are to sign it and give notice in writing to the parties of the making and signing of the award. Clause 2 provides:

the arbitrators shall . at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court. . cause the award or a signed copy of it .. to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.

Section 15 and 16 provide that the Court may modify or correct an award in certain cases or remit the award on any matters referred to arbitration for reconsideration. Section 17 provides that where the Court sees no cause to remit the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced, a decree shall follow. Section 31, Clause (1) of the Act provides that an award shall be put into Court having jurisdiction in the matter to which the reference relates. Clause (2) of Section 31 is important and it may be set out in full--

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 the award .shall be decided by the Court in which the award under the agreement has been, or may be, filed and by no other Court.

Section 32 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 and that no arbitration agreement or award can be modified, or amended otherwise than as provided in the Act. Section 33 says that--

Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits.

But the Court may direct further evidence, as it may do in a suit. These are the provisions which are relevant for the decision of the question at issue. I am inclined to accept the argument of the respondent's counsel that if a person who is unsuccessful wishes to question the existence, validity or effect of the award, he is bound to do so only by resort to Sections 32 and 33 of the Act. Section 33 expressly provides that a person who desires to question the validity or existence of the award shall apply to the Court and that the Court shall decide the question. Section 32 says-that no suit shall lie for a decision upon the existence, effect or validity of an award and it also says that no award shall be set aside, modified or amended or in any way affected 'otherwise than provided in the Act. It is clear therefore that a person who wants to challenge even the existence of an award must do so by resort to an application under Section 33. This view receives additional support from the provisions of Section 31, Clause (2) which says that--

all questions regarding the validity, effect or existence of an award. . shall be decided by the Court in which the award has been or may be filed and by no other Court (The italics are mine).

That being so, the question is whether the successful party is bound to have the award filed in Court under Section 14 and to get a decree under Section 17 of the Act. Where a successful party files a suit to obtain the relief that is granted to him by the award, it cannot be gainsaid that the plaintiff must prove the fact of the award, i.e., its existence, before he can get relief. When the other side questions the existence or validity or effect of the award, a question regarding the existence, validity or effect of the award is directly raised. If an award is alleged by the plaintiff, obviously the defendant must be allowed to raise the question of the existence of the award. But under Section 31, Clause (2) even the existence of the award shall not be determined by any Court except the Court in which the award may be filed. This provision indicates that even a successful party to whom a relief is given under the award must seek to enforce it in the Court in which the award may be filed, that is, by proceeding under Section 14. of the Act.

4. Decisions before the Act are obviously of no help. The only help that we have on this subject is the decision of Pollock, J., in Nanhalal Anandilal v. Singhai Gulabchand I.L.R. (1944) Nag. 340. The learned Judge held that a successful party may file a suit without resort to proceedings under the Act. That is no doubt a direct decision in favour of the respondent. But the judgment is very short and the learned Judge does not advert to Section 31, Clause (2). First he refers to the fact that it was open to a person interested in an award to sue for the enforcement of the award before the Act. Then he dealt with the argument put before him that Section 32 of the Arbitration Act took away the right. He dealt with that question and pointed out that as indicated by the marginal note to that section, the section applies only to the case of a person who desired to challenge the validity of the award and not to a case where a person wanted to enforce the award.

5. It is urged that the wording of Section 32 is wide enough to cover a case of a successful party seeking the reliefs granted by the award and that the marginal note ought not to be allowed to control the effect of the plain wording of the section. It is unnecessary to go into this question because, in my view, Section 31, Clause (a) contains a clear indication that even a successful party has no right of a separate suit.

6. In Deoki Nandan Dalmia v. Basantlal Ghanshyamdas (1941) a Cal. 123, a party to a contract containing an arbitration clause filed a suit for a declaration that the contracts were wagering contracts and therefore illegal. The suit was filed after a reference was made by the other party to the Bengal Chamber of Commerce, the arbitrators named in the contracts. The real object of the suit was to restrain the defendant from proceeding with the arbitration before the Bengal Chamber of Commerce. Lort Williams, J., held that after Act X of 1940, the suit does not lie and that the only remedy is an application under the Act. After setting out Sections 32 and 33 of the Act, the learned Judge said this:

The prosecution of the claims of the plaintiff will undoubtedly affect the arbitration agreement and a decision in his favour would result in a declaration that the agreement did not exist, or a decree setting it aside.

7. Referring to decisions before the Act, the learned Judge said:

That act was intended to and did alter the law and one of the main objects of the Act was to provide that claims to set aside arbitration awards or challenge arbitration agreements should be made by applications to Court.

8. This was a decision dealing with the right of a party who wanted to getround the arbitration agreement. The ground of decision is that though in form it was a suit to declare the contract illegal on the ground of its being a wagering contract, the declaration if given would affect the validity of the arbitration agreement and that this question can be decided only in a proceeding under the Act. Similarly if a party to whom some reliefs are given by the award seeks to enforce them as a plaintiff and the defendant says that the award does not exist or that it is not valid or that the effect of the award is not what the plaintiff claims to be in his plaint, that question cannot be gone into by any Court other than 'the Court ' indicated by the Act.

9. The decree of the lower Court is reversed and the suit is dismissed with costs here and in the lower Court.


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