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Amir Bi Bi Vs. Arokiam and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported in45Ind.Cas.813; (1918)34MLJ184
AppellantAmir Bi Bi
RespondentArokiam and ors.
Cases ReferredSheo Narain v. Beni Madho I.L.R.
Excerpt:
- - the further question is whether the award of an arbitrator is only a contract between the parties who submitted their disputes to his decision, or whether it has the attributes of a judgment as well. these are cases in which it was held that the award can be varied like a consent judgment, in certain particulars. for the above reasons i am satisfied that even if an award is equivalent to, a judgment for some purposes in the sense that it may have the same effect as a judgment has in barring suits, it is not a judgment in any real meaning of the word, far less is it a decree......of the judicial committee point out that the fact that no application was made to make the award a decree of court did not render the award any the less valid. the logical result of this conclusion is to regard the award as binding in its nature as a judgment of court. in sornavalliammal v. muthayya sastrigal i.l.r. (1900) m. 598 the learned judges point out that the award is not simply a contract between the parties but had the effect of conferring title upon them. in jadunath choudry v. kaileschandra bhatta-charya (1909) i. l. b. 37 c. 68 it was held that the award can be pleaded in bar to a suit relating to the subject-matter covered by the award. sheo narain v. beni madho i.l.r. (1901) a. 285 is also to the same effect. see also krishna panda v. balarama panda i.l.r. (1896).....
Judgment:

Seshagiri Aiyar, J.

1. This is a suit on a hypothecation bond. The plaintiff alleges that in a family settlement between herself, her mother-in-law and brothers-in-law, the arbitrators chosen by them are alleged to have given an oral award under which this bond and some other bonds were allotted for her share. The hypothecation bond was originally executed to her father-in-law. She now sues on it.

2. The only plea of the defendant with which we are concerned, relates to the unsustainability of the suit on the ground that even if the award was true, as it was not followed by the execution of a conveyance, plaintiff is not entitled to maintain a suit to recover the money due under the bond. The learned District Judge has accepted this plea and has dismissed the suit. I am unable to agree with him.

3. There are two aspects of the question; one is that the award itself operates to vest the property in the plaintiff, and the other, an a ward not being one of the instruments specially dealt with in the Transfer of Property Act no writing or registration is necessary to give validity to the award. Upon the first question it may now be taken as settled law that an award may be oral. Kula Naghabushanam v. Kula Seshachalam (1863) 1 M.H.C.R. 178 , Savlappa v. Devchand I.L.R. (1901) B. 132, and Second Appeal 837 of 1916 have held that an oral award is as binding upon the parties as a written award. The further question is whether the award of an arbitrator is only a contract between the parties who submitted their disputes to his decision, or whether it has the attributes of a judgment as well. There are no doubt dicta in certain cases that an award of the arbitrators must be regarded as in the nature of a contract. These are cases in which it was held that the award can be varied like a consent judgment, in certain particulars. I do not think that these authorities lay down that an award has no greater effect' than a contract of the parties, It is true that under the English law, as pointed by Russell on Awards at page 311, 'An award of the arbitrators must be followed up by execution of the necessary documents to give efficacy to it.' As Mr. Krishnaswami Iyer pointed out, an examination of the cases cited as authorities for this proposition do not fully bear out this statement of the law, 'For example the case of Johnson v. Wilson (1740) Willes 248, was one in which a further act would have been required to give validity to the decision even if it had been regarded as one passed by a Court of law. But there are some cases which bear out the view enunciated. I do not think that these decisions should be followed in India. In this country, decisions by Panchayats have been accepted as binding long before the regular Courts were established by the British Government and there is nothing in the second schedule to the Code of Civil Procedure to suggest that the decisions of the arbitrators are not valid until they are followed by the execution of documents. Of course in cases relating to specific performance or where one of the parties sues another for the enforcement of a particular act the decree of the Court would still leave the parties under an obligation to perform the directions given in the judgment of the Court. But where a complete adjudication of the rights of the parties is given by the judgment, the parties are concluded by it and it is not incumbent upon either of them to take further steps unless they be the modes prescribed by processual law to give effect to the decree of the court. This is undoubtedly the position so fact as the judgments of the ordinary tribunals of the country are concerned. Is the position of the arbitrators different In my opinion the fact that the parties have chosen to invoke the aid of a private tribunal to settle their differences should not make any difference as regards the efficacy of the decision come to by such a tribunal. So long as the resort to such a tribunal is authorised by the law of the country, I can find no justification for not giving the same finality to the pronouncement of such a tribunal as is accorded to that of the ordinary tribunals. The fact that in submitting reference to arbitration no court-fee is paid does not in the least affect the question. There are authorities which support the conclusion at which I have arrived. In Muhammad Newazkhan v. Alain Khan I.L.R. (1891) Cal. 414 the question related to the applicability of the principle of res-judicata to awards of arbitrators. Their Lordships of the Judicial Committee point out that the fact that no application was made to make the award a decree of court did not render the award any the less valid. The logical result of this conclusion is to regard the award as binding in its nature as a judgment of court. In Sornavalliammal v. Muthayya Sastrigal I.L.R. (1900) M. 598 the learned judges point out that the award is not simply a contract between the parties but had the effect of conferring title upon them. In Jadunath Choudry v. Kaileschandra Bhatta-charya (1909) I. L. B. 37 C. 68 it was held that the award can be pleaded in bar to a suit relating to the subject-matter covered by the award. Sheo Narain v. Beni Madho I.L.R. (1901) A. 285 is also to the same effect. See also Krishna Panda v. Balarama Panda I.L.R. (1896) M. 290 and Subbaraya Chetti v. Sadasiva Chetti I.L.R. (1897) M. 490. In Bhau Rao v. Radhabai I.L.R. (1909) B. 401, the learned Judges relying upon the dictum of the Judicial Committee in Muhammad Newazkhan v. Alam Khan I.L.R. (1891) C. 414 came to the conclusion that no further instrument need be executed to give validity to the award of the arbitrators. I am prepared to follow this decision. As regards Talwar Singh v. Bahori Singh I.L.R. (1904) A. 497 the learned Judges themselves point out that something had to be done in pursuance of the decision of the arbitrators. It is upon that ground they distinguish Sornavalliammal v. Muthayya Sastrigal I.L.R. (1900) M. 593 am therefore of opinion that by virtue of the award of the arbitrators the right to recover upon the mortgage bond accrued to the plaintiff.

4. As I stated at the outset, there is also another aspect from which the award can be viewed. It has been held that oral partitions can be enforced notwithstanding the fact that there is no writing or registration, to evidence such a partition. See Thiruvengadachariar v. Ranganath Iyengar (1908) 13 M.L.J. 500, Alamelu Ammal v. Balu Ammal (1914) 28 M.L.J. 685, Latchmiammal v. Gangammal I.L.R. (1910) M. 72, and Gyannessa v. Mabarakannessa I.L.R. (1897) C 210. It was also held that an oral dedication of property to an idol is valid. See Pallayya v. Ramavadhanulu : (1903)13MLJ364 . The principle of these decisions is that the Transfer of Property Act is not exhaustive of all modes of transfer and if there is a transfer of property which does not come within the special modes discussed in the Transfer of Property Act, the conditions as to. writing and registration prescribed by the Act have no application. The mode of transfer by an award is not dealt with by the Transfer of Property Act. Consequently the decision of the arbitrators by which they are said to have given the mortgage bond to the present plaintiff is enforceable between the parties if there is an oral award. In this view also plaintiff would have acquired a title to sue upon the hypothecation bond.

5. For both these reasons I am of opinion that the judgment of the District Judge must be reversed and the appeal should be sent back to him for disposal on the merits. Costs to abide the result.

Napier, J.

6. This Second Appeal arises out of the refusal of the District Judge of Salem to recognize an award as passing title to the appellant in the suit and thus enabling her to sue a third party on the strength of it. The case before the court was that there was an oral submission to arbitration by certain members of a family of their claim to various properties and that an oral award was given by the arbitrators by which, among other arrangements, the property in question in the suit was given to the appellant although she was not a party to the submission and that the value of the property is below Rs. 100. On these facts it is contended before us that the award operated to vest title in her and the contention was sought to be supported on two grounds, first, that the award operated as a judgment, secondly, that the property being under Rs. 100 in value, the arbitrator nominated by the parties had authority to transfer it orally and this award had had that effect.

7. It is undoubtedly settled law that an oral award is as binding between the parties as a written award, though the further question might arise whether even if a written award could operate as a judgment, an oral award would have the same effect. The contention that an award operates as a judgment and the further contention that qua judgment it can pass title, is one that would have such far-teaching results that I think it necessary to examine it carefully.

8. The first difficulty to be met is as to the effect of a judgment alone as passing title. The primary effect of a judgment is to give a right to have the adjudication of the. court embodied in a decree under Section 33 of the Civil Procedure Code. ' Judgment' is defined in the Civil Procedure Code as ' the statement given by the Judge of the grounds of a decree or order ' and I know of no process by which a judgment can be rendered effective without a decree or order having been passed. I must assume therefore that when the word ' judgment' is used it is intended to convey the idea of a decree or order made by a person constituted by agreement of the parties as a Court ad hoc. Assuming that this is so I am unable to see how the matter is carried any further. Decrees and orders of a court have to be executed by the court and elaborate provisions are contained in the Civil Procedure Code regulating the procedure. It has not been contended before us that the provisions of Part II of the Code or Order 21 are applicable to awards by an arbitrator, and it would be a strange result that whereas execution of a decree entitling a person to recover property has to be by delivery of the property specifically decreed under Section 61, the award of an arbitrator should be a judgment and a decree capable of passing property without delivery.

9. Another difficulty in the way of this contention is that no period of limitation would affect the efficacy of this judgment or decree. The only provisions in the Limitation Act which touch awards are Articles 45, 46, and 158. The first has a reference to a suit to contest an award, the second to a suit to recover any property comprised therein and the third to an application to set aside an award under the second schedule of the Civil Procedure Code. None of these articles has any application.

10. The next difficulty is that the Code expressly provides a method by which an award made on a reference to arbitration without the intervention of a court may become a judgment within the meaning of the Code. That is Clause 21 of the second schedule which provides for the court pronouncing judgment and a decree following. On such a decree execution would follow and limitation would apply. This is, of course, the only method by which execution can be procured on an award, and that being so, I cannot see how an award on which a Court has not pronounced judgment and issued a decree can be a judgment capable of passing rights. In Krishna Panda v. Balarama Panda I.L.R. (1896) M 290 the learned Judges used the phrase ' an award duly passed in accordance with a submission of the parties is equivalent to a final judgment, ' but that language is only used as introductory to the proposition that ' to give effect to it the subsequent consent or approval of neither party is required.' I do not think that this dictum helps the appellant on this point. I am unable to find any other case in this court whore language of this sort has been used. The case in Jadunath Chowdry v. Kailaschandra Bhattacharjee I.L.R. (1909) Cal. 63 was also relied upon. In that case an award on a private reference was held to be sufficient answer to a suit to recover property. Their Lordships however did not put it on the ground that the award operated as a judgment, but on the ground that the value of the property being under Rs. 100, the provision of the Registration Act of 1908 did not prevent title passing. The case reported in Sheo Narain v. Beni Madho I.L.R. (1901) A 285 has also no bearing on this point and nothing was said in it to suggest that the award was a judgment.

11. Reference was made to the English Law on the subject and I agree that if authority could be found in England for the proposition that an award on a voluntary reference operated as a judgment, the argument of the learned vakil for the appellant would receive great support, for it must be borne in mind that under the English procedure a judgment is not merely the statement given by the judge but is the formal adjudication on which execution issues. The authority is however all the opposite way. It would be sufficient to refer to Section 12 of the Arbitration Act which deals with reference by consent oat of court, and provides that an award on such submission may by leave of the Court or a Judge be enforced in the same manner as a judgment or order to the same effect, a provision analogous to that contained in Clause 16 of the second schedule to the Civil Procedure Code, It is common knowledge that the Courts of Law in England have in times past strenuously opposed the idea that the parties could by any agreement between themselves oust the jurisdiction of the Court. The only method by which the arbitration proceedings could be made in any way efficacious for process by the Court was by making the submission a rule of Court. When that had been done the Court would, in a proper case and on application made, enforce an award by attachment as proceedings in contempt. No formal execution for the recovery of the money or land would however issue even where a submission had been made a rule of Court, and of course far less so where there had been no rule, After the passing of the Judgments Act of 1838 the practice began in cases where submission had been made a rule, of applying after the passing of the award to the Court for a rule calling upon the party to show cause why he should not pay the amount of the award, (Vide Russell on Arbitration, page 352) and on this rule execution-would issue. An old case, Owen v. Hurd (1788) 2 T.R. 643 is instructive on the difference between awards made without a rule of court and those with. In that case there had been a submission between A and B which had been made a rule of Court. The arbitrator had not however proceeded and C who was the person really interested agreed with B for a second arbitration and they appointed an arbitrator. This submission was however not made a rule of court. On the arbitrator making the award, attachment was moved against one of the parties for not obeying the award. But the court pointed out that the submission on which the award had been made had not been made a rule of court and stated that the award was a mere nullity. This proposition may be too broad but it is sufficient to dispose of any suggestion that such an award could operate as a judgment, while a modern case is indicative of the same idea even after the passing of the Arbitration Act. The case is In re a Bankruptcy notice (1907) 1 K.B. 479. The party to an arbitration procured an order under Section 12 of the Arbitration Act that award be enforced in the same manner as a judgment, and then applied to the Registrar in Bankruptcy to issue a bankruptcy notice, he having served on the debtor a notice requiring him to pay the judgment-debt in accordance with the terms of the judgment as required by Section 4 Clause (g.) of the Bankruptcy Act, 1883, The Court of Appeal upheld the Registrar's refusal to do so and Vaughan Williams, L.J. states the law as follows; ' All that is done by Section 12 of the Arbitration Act is to give the successful party under the award the right to enforce it as if it were a judgment and I have grave doubts whether there was any jurisdiction to enter judgment in this case,' while Fletcher Moulton, L.J. says as follows :-'The arbitration was one outside the Court altogether. The powers of the Court in such a case are defined by Section 12 of the Act which provides that an award on a submission may by leave of the Court be enforced in the same manner. But it gives no power to turn such an award into a judgment.' This expression of opinion as to the present state of the law even after the passing of the Arbitration Act is conclusive as to the view which the English Courts take as to the character of an award made on a voluntary submission. For the above reasons I am satisfied that even if an award is equivalent to, a judgment for some purposes in the sense that it may have the same effect as a judgment has in barring suits, it is not a judgment in any real meaning of the word, far less is it a decree.

12. The next question is whether the award could pass title without any further action by the parties on any other footing. In my opinion the appellant is entitled to succeed on this point, both on principle and on authority. The parties by their submission agreed to be bound by the decision of the arbitrator and constituted him their agent for the purpose of doing such things as are specifically or by implication embodied in the terms of the submission. This doctrine is laid down by Lord Ellen borough in Hunter v Rice 15 T Re 102. In that case an arbitrator as on a voluntary submission had awarded that the tenant should deliver to the landlord certain hay stacked on the premises. The landlord assuming that title has passed to him brought a suit against the tenant for conversion. The court held that on the terms of the award no title passed and his remedy was on the award. Lord Ellen borough in delivering judgment said as follows :-'There is a difference between property awarded to be transferred by the owner and the property which is actually transferred by the contract of the owner through the medium of his agent.' 'We have here, apart from the distinction, the foundation of an arbitrator's powers, namely, contract and agency. There are limitations to the exercise of these powers due to the formal requirements of the law, such as, in England, requirements of a conveyance by deed for land and, in India, the provisions of the Transfer of Property Act and the Registration Act but, outside these limitations it must be held that an arbitrator legally authorised can carry out the directions of the parties as their agent.

13. Apart from principle, there is abundant authority, vide Subbaraya Chettiar v. Sadasiva Chettiar I.L.R (1897) M. 490 and Sornavalliammal v. Muthayya Sastrigal I.L.R. (1900) M. 598. In this latter case the court pointed out the same distinction as was the basis of the judgment in Hunter v. Rice 15 Te Re 102. The language is 'The award does not provide for the execution of any instruments between the parties or the performance of any conditions precedent to the plaintiff's enjoyment of the land. In other words the plaintiffs acquired under the award a complete title to the land on the date of the award and were entitled to take possession thereof from that date,' and the same view was taken in Sheo Narain v. Beni Madho I.L.R. 23 All. 285. For the above reason I think the appeal must succeed. It is to be noted that it was only ascertained in this Court that the property was under the value of Rs. 100; for the District Judge bases his refusal to accept the award as conferring title on the absence of a fully registered instrument, which have only reference to the requirements of Section 54 of the Transfer of Property Act, I agree with the order proposed by my learned brother.


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