Skip to content


S.C.T. Al. Alagappa Chettiar Vs. S.S.C.T. Chidambaram Chettiar - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Reported inAIR1931Mad619
AppellantS.C.T. Al. Alagappa Chettiar
RespondentS.S.C.T. Chidambaram Chettiar
Cases ReferredW. Ramsden & Co. v. Jacobs
Excerpt:
.....the award amounted to a waiver of the right to object to such irregularities of procedure as the arbitrators may have committed. i think the learned subordinate judge is clearly right in rejecting the evidence of the arbitrator, p. 213) is that as the parties choose their own arbitrator to be the judge in the disputes between them they cannot when the award is good on its' face object to his decision either upon the law or the facts. 887: i think it better to adhere to the principle of not allowing awards to be set aside for mistakes and not to open a door to enquire into the merits or we have to do so in almost every case. 277, may be so palpable and gross as to afford strong evidence of misconduct, as that word is to be understood in para 15. but i am unable to agree that, short of..........set this point at rest. it contains clear proof that the defendant knew that the arbitrators had examined witnesses for the plaintiff, and there is no ground to suppose that in the short interval between the award and this notice the defendant acquired this information. he must have known it when he signed the award and known too of course that the witnesses were not examined in his presence.8. it must be presumed that he was aware that this was an irregularity, notwithstanding which he attached his signature. mr. varadachariar has endeavoured to argue that even in these circumstances it does not necessarily follow that the defendant condoned the irregularity and waived his right to object to it. he wishes us to infer from all the circumstances of the case, the fact that the award was.....
Judgment:

Curgenven, J.

1. The plaintiff and the defendant are brothers by blood, being the sons of one Subramaniam Chettiar, and first cousins by adoption, the defendant having been adopted by his senior paternal uncle, Chidambaram Chetty. Chidambaram Chetty and Subramaniam Chetty had a third brother Alagappa Chetty. Disputes arose between the two parties in regard to various matters including the division of three items of immovable property, a house and two vacant sites in the village of Pallattur. On 21st February 1925 they referred their disputes by means of muchilika, Ex. C, to three arbitrators residing in Devakotta and on 29th April the arbitrators presented their award. Under this the plaintiff was to have one of the sites (item 1) and the defendant the house and the other site (items 2 and 3). The defendant had acquired the interest of the third branch, that of Alagappa Chetty, in the property so that he held a two-thirds share to the plaintiff's one-third share. The value of the property assigned to him was however in proportion greater than this two-thirds share and, further, a sum of Rs. 4,000 was found due from him as principal and interest of a debt incurred for his marriage.

2. Consequently the arbitrators provided that he should pay to the plaintiff a sum of Rs. 23,000, the award permitting this payment to take the shape of a hundi. Both parties signed this award on the evening of 29th April and at the same time the defendant executed a hundi for the sum abovementioned. Very shortly afterwards, on 2nd May, the defendant sent a lawyer's notice to the plaintiff impugning the award for various reasons, one in particular being that he had signed it under compulsion and in ignorance of its purport. At the same time he stopped the hundi which was accordingly dishonoured. The plaintiff then filed a suit upon the hundi and an application under paras. 20 and 21, Schedule 2, Civil P. C, for an order that the award be filed in Court and a decree passed accordingly. He has succeeded in both these proceedings and the two appeals now before us are accordingly presented by the defendant.

3. The defendant attacks the award upon several grounds. The circumstance that he signed it must necessarily tell heavily against the acceptance of any contentions based upon irregularity of procedure and I will accordingly deal first with his allegation that his signature both to the award and to the hundi was obtained fraudulently and under coercion, and affixed with no knowledge of what the documents contained. The evidence shows that the three arbitrators some time after they had conducted an enquiry at Pallattur arrived at their conclusions at Devakotta on the forenoon of 29th April. One of them, Swaminatham Chetty, had then to leave the place. Later in the day the other two drew up the award according to what had been decided and obtained the signatures of the parties to it. Then after Swaminatham Chetty returned on the following day all the three arbitrators signed it. The defendant's version of how he came to sign these documents has not always been the same. In his first notice, Ex. 4 already referred to, he said that the two arbitrators compelled him to sign two sheets 'without giving any particulars,' which would seem to suggest that the sheets were blank. In a subsequent notice Ex. 4, sent on 1st July 1925 the arbitrators are accused of having:

pressed our client much and keeping the sheets covered, asked him to sign two sheets.

4. In his written statement he said that the arbitrators by coercion and undue influence made him sign certain incomplete papers without revealing their contents. He also alleged that the arbitrators had antedated the award. There is here no reference to the papers having been covered, but the allegation reappears in his evidence, where he says that both papers were covered and that though he pressed the arbitrators for about an hour to read them to him, they did not do so. An inspection of the award, Ex. A, will show that on the side on which the signatures occur there was in fact nothing material to conceal. So that this story that the papers were covered up, which appears in this intermittent manner, is not very plausible. There are two features about the hundi which go to show that the defendant was acquainted with its contents. One is that it is drawn upon his firm in Rangoon, the particulars of which according to the one arbitrator who has been examined were given by the defendant himself. The other is that payment and interest are deferred for one month, which can hardly have been otherwise than at the defendant's own instance. The evidence strongly supports the view that the assignment of the one site to the plaintiff and the two other properties to the defendant must have been in accordance with the wishes of the parties, the defendant in particular having spent a good deal of money in creating structures on or near the site allotted to him. That being so, it is probable, apart from any other consideration, that he knew the purport of the award and that he would have to pay a sum of money to the plaintiff. There seems to be this modicum of truth in the defendant's story, that the formal reading over of the award to the parties was deferred until Swaminatham Chetty returned. This is admitted by the plaintiff, but it does not go far to prove that the actual terms of the award, which had been settled by the three arbitrators earlier in the day, had not been communicated to the parties before they signed.

5. The learned Advocate-General for the respondent, has drawn our attention to certain English cases: Howatson v. Webb [1907] 1 Ch. 537, Howatson v. Webb [1908] 1 Ch. 1 and Blay v. Pollard and Morris [1930] 1 K.B. 628, in support of the proposition that a plea of non est factum' is not open to a party who has knowledge of the nature of the document which he is signing. But I think that in the present case the defendant must be taken to have known not only its nature but its actual effect. It may be added in general that the defendant is a Nattukottai Chetty aged about 66 and for all that appears was perfectly well able to take care of himself. He has given us no reason to suppose that the two arbitrators either desired or were able to coerce him by such means as he alleges into a settlement. I agree with the learned Subordinate Judge in finding against the truth of the story.

6. It is then said that the arbitrators examined each party in the absence of the other and examined the witnesses cited by the plaintiff in the absence of the defendant. Upon the former of these points, the plaintiff, examined as P. W. 1, stated in chief that they discussed the matter with each of them in the absence of the other, a version which he retracted later in his deposition. As regards the examination of the witnesses the plaintiff says that when the arbitrators were examining them he and the defendant remained aloof and did not hear what was spoken, and this is borne out by the arbitrator, who says that the procedure was to take the witnesses in private and question them privately without the hearing of the parties. These methods of proceeding were admittedly irregular, so that it is unnecessary to adduce authority in support of the contention. It may only be noted that, as has been held in Dobson v. Groves [1814] 6 Q.B. 637, the Court will in such circumstances set the award aside without taking into consideration the nature of the statements made or the probability of their having influenced the decision. In other words, it is not necessary to prove prejudice. There is no doubt too, however that irregularities of this description, and indeed of any description, may be cured by waiver.

7. On the question of waiver, there is good ground to suppose that the defendant knew at the time of the enquiry in what manner the arbitrators were conducting it. The local enquiry took place at Pallattur, and included an inspection of the properties and an examination of three witnesses cited by the plaintiff. The defendant states that the arbitrators omitted to examine his witnesses, but the arbitrator himself, whose word is at least as good as that of the defendant, denies that he named anyone for examination. The plaintiff says that when the arbitrators examined his witnesses he and his younger brother, (i. a., the defendant) were present though as I have already said ha admits that they did not hear what was said. The defendant himself confesses to having been present at Pallattur upon this occasion, although he minimizes the admission by asserting that he saw the arbitrators only when they were starting back to Devakotta. It seems pretty clear therefore that he was present at the time of the enquiry and must have known how it was being conducted. Apart altogether from this evidence however there is the circumstance that he signed the award and, as I believe, voluntarily signed it. Now it may well be that the mere signature to an award, as was held in Gunnu Meah v. Rahman A.I.R. 1929 Rang. 166, does not necessarily remove all objection to any irregularity which may characterize it. It must be clear that when the party attached his signature he was aware that the irregularity had been committed. I think that the terms of the notice, Ex. 4, set this point at rest. It contains clear proof that the defendant knew that the arbitrators had examined witnesses for the plaintiff, and there is no ground to suppose that in the short interval between the award and this notice the defendant acquired this information. He must have known it when he signed the award and known too of course that the witnesses were not examined in his presence.

8. It must be presumed that he was aware that this was an irregularity, notwithstanding which he attached his signature. Mr. Varadachariar has endeavoured to argue that even in these circumstances it does not necessarily follow that the defendant condoned the irregularity and waived his right to object to it. He wishes us to infer from all the circumstances of the case, the fact that the award was unfavourable to the defendant and the plaintiff's admission that before signing it he raised many objections that the defendant was an unwilling signatory, and was in fact made to sign by some unfair kind of pressure. I do not think, that in view of the attitude which the defendant himself has taken up this plea can 'be accepted. When a man signs a document with knowledge that he might have objected to it on the score of some irregularity, his act is prima facie evidence that he waives the objection. It lies on the defendant to displace this general presumption by adducing special circumstances. But in order to do this it is essential I think that he should give to the Court a perfectly open, true and candid account of what took place. Instead of adopting that course he has given a false version of the facts and in the face of that version I do not think that we can be asked to substitute some other version not established by the evidence as a ground to hold that he was coerced or over persuaded into signing.

9. The conclusion must be therefore that with the knowledge of the procedure which had been adopted he voluntarily signed the award. It is worth noting that the specific objection that the witnesses were examined behind his back does not appear throughout the subsequent proceedings, neither in the two notices nor in his written statement nor in his examination as a witness. Even the grounds of appeal contain nothing more definite than will be found in the grounds 9, 10 and 11. It seems plain therefore that the defendant although aware of this irregularity from the beginning never complained of it until every possible means of attacking the award came to be pressed into service. His conduct appears to me to amount clearly to an implied waiver. What will amount to waiver must of course be decided on the circumstances of each case and the numerous authorities brought to our attention are not of much assistance in reaching a decision. For the appellant reference has been made to Dobson v. Groves already cited because in that case it was held that the failure of a party to protest before the award is made does not necessarily imply waiver if it appears that the occasion which should have given rise to protest has gone by and the opportunity of setting right what is irregular is past. I do not think that that case intends to lay down that a party cannot waive an irregularity on learning subsequently that it has been committed. But as I think that there is evidence here sufficient to show that the defendant knew at the time what was happening it is unnecessary to discuss this point further.

When it comes to the knowledge of a party that the arbitrator has examined witnesses in his absence he should at once either abandon the reference or apply in chambers to revoke the submission for if he continued to attend the subsequent proceedings this will be waiver: (Redman, Edn. 4, p. 155.)

10. In Ameer Begum v. Badruddin Hussain A.I.R. 1914 P.C. 105 it was held by the Privy Council that

it is generally desirable that an arbitrator should make and retain for subsequent use notes of the proceedings before him but there is no warrant for holding that in the absence of such notes an award should be sot aside at the instance of one of the parties who must be held to have known the general course of procedure and who did not make any protest until after the making of the award with the terms of which she was not satisfied:

11. See also Mills v. The Master &c.; of Society of Bowyers 69 E.R. 1024 and Parish of Rathwen v. Parish of Elgin 2 H.L. Scott App. 535 for other in-stances of waiver.

12. I hold that the appellant's failure to make 'any protest coupled with his signature to the award amounted to a waiver of the right to object to such irregularities of procedure as the arbitrators may have committed.

13. The next objection has reference to a mistake in calculation made by the arbitrators. I think the learned Subordinate Judge is clearly right in rejecting the evidence of the arbitrator, P. W. 2, as to the circumstances in which he and his companions arrived at the figure Rs. 23,000 which the defendant was required to pay. The arbitrator says that they thought it necessary to show a false method of computation in order that the parties should not be staggered at the largeness of the amount. I think it is clear that what really happened was that they erroneously added the sum due by the plaintiff to ' the defendant in respect of the latter's two-thirds share in the first site. Instead therefore of amounting to Rs. 23,000 the award should have been for a sum of Rs. 16,000. The question is: 'What are the powers of the Court in the case of an award not made through Court which discloses an error of this kind? There is I think no doubt that even in England the law as stated in Russel (Edn. 11, p. 213) is that as the parties choose their own arbitrator to be the judge in the disputes between them they cannot when the award is good on its' face object to his decision either upon the law or the facts. There is indeed one case, In Re: Hall and Hinds 133 E.R. 887 where in the case of a gross mistake made by the arbitrators the Court interfered to rectify it. But this has not been followed where similar circumstances have arisen more recently as for instance in Phillips v. Evans 152 E.R. 1216. In that case Baron Parke observes, after commenting upon In Re: Hall and Hinds 133 E.R. 887:

I think it better to adhere to the principle of not allowing awards to be set aside for mistakes and not to open a door to enquire into the merits or we have to do so in almost every case.

14. Here in India authority for the same view is to be found in Shiam Lal v. Parshottam Das [1920] 42 All. 277, and may further be derived I think from the language of Schedule 2, Civil P.C. The circumstances in which the Court should order an award made without the intervention of the Court to be filed are stated in para. 21 the course is to be adopted: 'where no ground such as is mentioned or referred to in para 14 or 15 is proved.'

15. An error in calculation, to use the language of Walsh, J., in Shiam Lal v. Purshotam Das [1920] 42 All. 277, may be so palpable and gross as to afford strong evidence of misconduct, as that word is to be understood in para 15. But I am unable to agree that, short of accepting a presumption of this kind, a mistake in calculation can be brought within that provision. In the case of arbitration in suits, para 12 enables the Court to correct a clerical mistake or an error arising from an accidental slip or omission, and it seems to me that what I must consider to be the intentional restriction of this provision to awards of that class shows that it was intended to assimilate the procedure with that which prevails in England and not to invest the Court with power either to correct such errors, or to reject an award which contains them, when the award is not upon a reference made through Court. I am unable therefore to accept this objection. It is then objected that in awarding a sum of Rs. 4,000 against the defendant in respect of a debt of Rs. 1,000 incurred for his marriage, the arbitrators have acted in defiance of the law of limitation. It has no doubt bean laid down by the Privy Council in Ramdutt Ramkissen Dass v. E.D. Sassoon & Co. A.I.R. 1929 P.C. l03, that the Limitation Act applies to arbitration proceedings, but that is not to say that all awards which have not been decided in accordance with the terms of that Act are invalid. The evidence gives no reason to suppose that the defendant raised any such plea, and indeed the arbitrator states that he admitted orally that he had borrowed the money from the plaintiff and agreed to repay the principal. The point is not referred to either in Ex. 4 or in Ex. 6 or in the defendant's written statement. It is a well-established proposition of law, for which Champsey Bharai & Co. v. Jivra Balloo Spinning and Weaving Co. A.I.R. 1923 P.C. 66, may be cited, that an error of law will invalidate an award only if it appears upon the face of it, a condition not satisfied in the present case. I think that this objection also fails.

16. The only point remaining has to do with the absence of Swarninathan Chetty at the time when the award was drawn up. But Mr. Varadachariar concedes that if the evidence is accepted that he was present when the conclusions ware actually arrived at earlier in the day, this objection will not stand. Upon this point I prefer the evidence of the plaintiff and the arbitrator (who however goes too far) to the assertion of the defendant that this arbitrator was not present at all upon that day.

17. My conclusion is accordingly that the order of the lower Court directing that the award be filed, and the decree upon the hundi, should both be confirmed and the appeals dismissed with costs (advocate's fee only in A.S. 14 of 1929).

Cornish, J.

18. I agree that the appeal fails. It is clear from the evidence that there has been misconduct, in the legal sense of the term, by the arbitrators and that this misconduct would, upon the authorities, justify the setting aside of the award. But it has been contended for the respondent-plaintiff that the appellant must be taken to have passed over the irregular conduct of the arbitrators and has therefore lost his right to object to the award. The principles governing the determination of this question are clear enough. In Mills v. Bowyers 3 K.&J.; 66, Vice-Chancellor Page-Wood observed:

I accede to the view that it would be a great deal too dangerous to allow any arbitrator to have communications with some of the parties without the knowledge of the other parties to the reference and then to say that he was not influenced by anything that took place. But in this case it appears that the only thing which took place was one which every person knew of at the time, and they allowed the reference to proceed without making any objection.

19. And in Dobson v. Groves, there occurs this passage in the judgment:

It has been suggested that the complaining parties waived their right to object by not protesting before the award was made. Where an irregularity takes place at a meeting of all the parties and is passed over, that observation may apply. But where a party wishing to be present has been excluded from the meeting, the opportunity of setting right. what was an irregularity is past.

20. The judgment in W. Ramsden & Co. v. Jacobs [1922] 1 K.B. 640, proceeds upon the same grounds.

21. The particular act of misconduct took place at Pallattur when two of the arbitrators privately examined three of the plaintiff's witnesses. It is not clear how long this was before the parties signed the award and the appellant executed the hundi in pursuance of the award. But it is in evidence that the Pallattur incident took place some 10 or 15 days before the mother of the two parties was examined by the arbitrators, and this latter examination appears to have been made some days before the arbitrators gave their award. The plaintiff who was examined as P. W. 1 gave the following evidence upon the Pallattur incident:

When the arbitrators came here and examined, I accompanied them. I specified the persons whom they should examine. I know that they went to the persons whom I suggested and examined them. They were staying in A. M. P's house. We asked Arunachalam Chettiar, Somu Govindan Chettiar and his elder brother. The three arbitrators'(that is wrongly for only two were present) my younger brother (i.e., appellant) and myself were present....When they were talking my younger brother and myself remained aloof. We did not hear what they spoke. I do not know whether or no my younger brother suggested any persons who should be asked.

22. P.W. 2, one of the arbitrators, in his evidence, says (p. 37):

I remember the persons examined (naming them). We merely asked them orally, as it was the custom among Chettiars not to record in writing as it is done in Court. We used to take them in. private and to ask them privately without the hearing of the parties. Except the said three persons we did not ask any other. ...It took us three hours to examine those three persons.

23. And then (p. 38) he explains the difference between that examination and the subsequent examination of the parties mother by saying: 'Unlike in Pallattur, the mother was examined by us in the presence of the parties.' This witness also said that the appellant did not ask the arbitrators to examine any particular witness, and that on the three or four occasions when the arbitrators met the parties were present and were heard in the presence of each other. According to the appellant's evidence he had no knowledge of the arbitrator's visit to Pallattur until they were on the point of departure. He says:

I saw them only just when they were starting on their return journey. They had not informed me of their visit. I told them that I had witnesses and I asked them to examine them. They said they knew everything and went a way.

24. And he says further that he did not know whether the arbitrators came to Pallattur at plaintiff's request or whether .plaintiff brought them there.

25. Now the appellant was admittedly at Pallattur on this occasion, and I think it is a reasonable inference that he was present because he knew that the arbitrators ware there on the business of the arbitration. It is impossible to believe that the appellant, who is a man of affairs and was obviously deeply interested in the arbitration would not have made a point of being present when the arbitrators went to inspect the property which was the subject-matter of the reference. P. W. 2 says that both parties were present on all the occasions when the arbitrators met and I think that this evidence gives support to what the plaintiff has testified, that the appellant was present on the occasion of the examination of the plaintiff's witnesses. P. W. 2 denies the appellant's story that he asked the arbitrators to examine witnesses on his behalf, and as the appellant has been discredited by the learned Sub-Judge in other material parts of his story, I prefer to accept the evidence of P. W. 1 and P.W. 2 as to what took place at Pallattur. Then if he was present, as I think he was, during the examination of the plaintiff's witnesses by the arbitrators he must have known what was taking place, and he could have, had he wished, objected to the private examination of the witnesses and have insisted upon the witnesses being examined in his presence. That he raised no protest or objection suggests that the appellant passed over the irregularity of the arbitrators.

26. I am the more inclined to this view by his subsequent conduct. It is true that in Ex. 4, the lawyer's notice which he sent to the arbitrators on 2nd, May, four days after he had signed the award, there is a complaint that the arbitrators 'consulted only the direct opponents of the said Alagappa Chettiar and yield to their evil advice.' This might conceivably be taken as a reference to the private examination of the plaintiff's witnesses at Pallattur, though in his cross-examination (p. 49) the appellant could only point to one of the three witnesses as having any ground for the enmity towards him. But in Ex. 6 the lawyer's notice which was sent to plaintiff on 1st July, and which may be regarded as the appellant's considered and deliberate case against the award, there is no mention whatever of misconduct by the arbitrators in examining witnesses for the plaintiff without the knowledge or presence of the appellant. Nor was it part of his case in his written statement, for it would be unreasonable to my mind to put any other construction upon para 4 (c) of the written statement than which the learned Sub-Judge put upon it.

27. In my opinion therefore the irregularity took place in the presence of the appellant and was passed over by him, and he cannot now be allowed to assail the award on that ground.

28. Upon the other matters raised in the appeal I agree with the conclusions of my learned brother, and do not wish to add anything to what he has said.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //