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Kosaraju Thirupathirayudu and ors. Vs. Kosaraju Venkatasubbayya and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai High Court
Decided On
Case NumberA.A.O. Nos. 58 & 59 of 1948
Judge
Reported inAIR1951Mad678; (1950)IIMLJ812
ActsArbitration Act, 1940 - Sections 5 and 30
AppellantKosaraju Thirupathirayudu and ors.
RespondentKosaraju Venkatasubbayya and ors.
Appellant AdvocateM.S. Ramachandra Rao, Adv.
Respondent AdvocateK. Kotayya, ;Y.G. Krishnamurthy and ;G. Venkatarama Sastri, Advs.
DispositionAppeal dismissed
Cases ReferredLawrence v. The Bristol and North Somerset Rly Co
Excerpt:
- - we are not satisfied that the further terms of the reference can be. we are not satisfied that that is a proper construction. we are not satisfied that there are any legal principles on which this discretion exercised by the learned judge can be interfered with......1945 six persons referred the disputes between them to an arbitrator and in that document various points in dispute have been recited which the arbitrator had to decide and pass an award. one of the points was with regard to the cash in the possession of one of the executants by name venkatasubbaiah, who was the second executant of ex. a. 1. subsequently, on 7th october 1945, there was another document styled 'an agreement of further reference' ex. a. 2 by which it was stated that if venkatasubbaiah were to pay rs. 10000 in the manner mentioned in that document into the hands of the arbitrator in order that the same may be paid over to the other partners in full satisfaction, he should not thereafter have any concern in respect ofthe profits or losses of the mill and that the others.....
Judgment:

Govinda Menon, J.

1. By an agreement, Ex. A. 1, dated 20th September 1945 six persons referred the disputes between them to an arbitrator and in that document various points in dispute have been recited which the arbitrator had to decide and pass an award. One of the points was with regard to the cash in the possession of one of the executants by name Venkatasubbaiah, who was the second executant of Ex. A. 1. Subsequently, on 7th October 1945, there was another document styled 'an agreement of further reference' Ex. A. 2 by which it was stated that if Venkatasubbaiah were to pay Rs. 10000 in the manner mentioned in that document into the hands of the arbitrator in order that the same may be paid over to the other partners in full satisfaction, he should not thereafter have any concern in respect ofthe profits or losses of the mill and that the others will have nothing to do with the cash balances then with him. The arbitrator, after an elaborate consideration, was of opinion that Ex. A, 2 the further document of reference, was the result of fraud, and did not act upon it. On the evidence the arbitrator found that Venkatasubbaiah was liable to pay a sum of Rs. 25000 to the other partners for the sums appopriated by him and which he had no authority to do. Thereafter, under s. 33 Arbitration Act, Venkatasubbaiah filed a petition to the Subordinate Judge to set aside the award and the learned Judge has found that the arbitrator had no jurisdiction not to abide by the terms of the further agreement and held that the award was not binding upon Venkatasubbaiah. This appeal is by the aggrieved parties praying that the award should be restored after the decision of the Subordinate Judge is set aside.

2. Mr. Ramachandra Rao for the appellants raises two points, the frist of them being that under Section 5 of the Indian Arbitration Act it is not open to the parties, when once an agreement of reference has been made and accepted by the arbitrator, to revoke the same except with the leave of the court unless a contrary intention was expressed in the arbitration agreement itself. It is plain that Ex. A. 1 does not contain any such intention to revoke it. Therefore the learned advocates contends that the subsequent document Ex. A. 2 should be construed as one revoking the earlier one and as such invalid. We are not satisfied that the further terms of the reference can be. construed as one revoking the earlier agreement. All that the subsequent document says is that with regard to one of the points in dispute between the parties there is an agreement and the arbitrator has to take note of that. By that agreement if Venkatasubbaiah pays Rs. 10000 he is completely absolved from all liability so far as the profits and losses of the rice mill are concerned. In our opinion it cannot be said that the provisions of Section 5 of the Indian Arbitration Act can be called in aid to invalidate the second document.

3. The next point on which Mr. Rama-chandra Rao relies is that on a true and proper construction of Ex. A. 2 it should be held that Rs. 10000 mentioned therein is only the liquidated amount which Venkatasubbaiah had in his possession at the time the reference was made, though it is stated in the accounts that he had only a sum of Rs. 45 and odd. According to the learned advocate Ex. A. 2 crystallises and fixes the amount that was with. Venkatasubbaiah and it is only that portion of the dispute between the parties that the arbitrator need not thereafter go into. We are not satisfied that that is a proper construction. As we have already stated, all the rights and liabilities in the rice mill have been settled so far as Venkatasubbaiah was concerned by the payment of the sum of Rs. 10,000. If that were so, the question arises as to whether such an agreement between the parties pending an arbitration should be taken note of by the arbitrator. In 'Makund Ram v. Sallgram', 21 Cal 590 :21 IA 47 , the Privy Council has observed that the parties to an arbitration can waive one of the points in dispute that have arisen between them leaving only the otherpoints for decision by the arbitrator. Their Lordships observe as follows :

'If the arbitrators had done this by their own authority only, the, cases referred to by Mr. Finlay might have been applicable, but it was competent to the parties, when they were before the arbitrators to agree to the division being made by steps, and that each division shouldbe final. It was a convenient plan and it was for their interest to adopt it. They might waive the condition that a complete partition must be made of the whole of the property. The ground upon which an award which doesnot dispose of all the matters referred has been held to be invalid appears to be that ther.e is an implied condition that it shall doso.'

This decision has been followed in 'Jnanendra Nath v. Sureschandra' : AIR1928Pat7 There is also authority for this position in the case reported in 'Lawrence v. The Bristol and North Somerset Rly Co', (1867) 16 LT 326. Following these authorities, we are of opinion that what Ex. A. 2 contemplated is that one of the points in dispute between the parties and which had been referred to the arbitrator for settlement has been settled among themselves and the arbitrator is requested to take note of that agreement & incorporate that agreement in the award. The arbitrator would be guilty of misconduct if he fails to incorporate such an agreed solution of the point in dispute between the parties. We are of opinion that the learned Subordinate Judge was right in allowing the application. The award itself says that Venkatasubbaiah has paid Rs. 10000 into the hands of the arbitrator and in such circumstances it is unnecessary to remit the case back to the arbitrator for passing a proper award. It is not open to Venkatasubbaiah in view of our decision to claim any portion of this Rs. 10000 back at all. The appeal therefore fails and is dismissed withcosts of the first respondent.

4. The memo of cross-objections filed by the respondent relates to the learned Judge's discretion in awarding only Rs. 5 as costs to the successful party. We are not satisfied that there are any legal principles on which this discretion exercised by the learned Judge can be interfered with. In the circumstances, the memorandum of cross objections fails and is dismissed but without any order as to costs.

5. C. M. A. No. 59 of 1948 : In view of our decision in C. M. A. No. 58 of 1948 this appeal does not arise for consideration and hence is dismissed. In the circumstances we make no order as to costs.


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