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Pamudurthi Suryanarayana Reddi and ors. Vs. Pamudurthi Venkata Reddi and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai
Decided On
Reported inAIR1948Mad436; (1948)1MLJ317
AppellantPamudurthi Suryanarayana Reddi and ors.
RespondentPamudurthi Venkata Reddi and ors.
Cases ReferredSubbaraju v. Venkataramaraju
Excerpt:
- - the argument on behalf of the plaintiff would involve our holding that, even in a case where both parties to an award are satisfied with it and it is fully carried out and there is therefore no need for getting a decree passed in its terms and none is passed, one of the parties can subsequently change his mind and enforce the original cause of action and the defendant cannot resist the suit......as otherwise provided in this act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the court in which the award under the agreement has been, or may be, filed, and by no other court, (3) all applications.regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the court where the award has been or may be, filed, and to no other court.(4) notwithstanding anything contained elsewhere in this act or in any other law for the time being in force, where in any reference any application under this act has been made in a court com-petent to entertain it, that court alone shall have jurisdiction over the.....
Judgment:

Govindarajachari, J.

1. The question in this appeal is whether, by reason of the provisions of the Indian Arbitration Act, 1940, a defendant is precluded from putting forward an award which has been fully performed by him but which was not filed under Section 14 and according to which a judgment was not pro-nounced or a decree given under Section 17 of the Act, in answer to the plaintiff's claim which was the subject-matter of the reference and the award.

2. The short facts are as follows: The plaintiff, the first respondent here, is the son of one Bayappareddy by his first wife. The appellants who were defendants 1 to 4 in the Court below are Bayappareddy's sons by his second wife. The fifth, sixth and seventh defendants are respectively the younger brother, the second wife and the mother of Bayappareddy who died on 14th March, 1942. The plaintiff claimed a partition of the suit properties on the ground that the fifth defendant, his uncle, is entitled to a half share, and the plaintiff and defendants 1 to 4 are entitled to the other half in five equal shares. The plaint mentioned a reference to arbitration made by the plaintiff and defendants 1 to 4 by an agreement, dated 9th December, 1942, which resulted in an award dated 9th March, 1943. The plaintiff however alleged several grounds of invalidity against the award. These were found against by the Court below, and the decision of the lower Court in this respect has not been challenged before us. The plaint went on to state that, notwithstanding the award which had earlier been stated to be invalid, the plaintiff was entitled to a partition decree. The fifth defendant alleged that he and Bayappareddy became divided in 1941 and that he had thereafter no con-cern with the properties which had been taken by Bayappareddy for himself and his sons. Defendants 1 to 4 supported the fifth defendant in this regard and relied principally on the award in bar of the plaintiff's claim. They had been directed to pay Rs. 19,000 to the plaintiff under the award, on or before 25th April, 1943. On that date the amount was tendered by the first defendant but the plaintiff refused to receive it, and the amount was thereupon deposited in the Anantapur Co-opera-tive Central Bank, due notice of which was given to the plaintiff. The award was also registered.

3. All these facts were found in favour of the defendants by the Court below. The learned Subordinate Judge however held that the defendants' plea based on the award could not be entertained in view of the provisions of the Arbitration Act. In this view, he proceeded to pass a preliminary decree for a division into five shares of the properties described in Ex. D-4 series and Ex. D-3 and gave certain directions regarding the liabilities of the family, the claims of the sixth and seventh defendants for maintenance and the marriage expenses of an unmarried sister of the plaintiff and defendants 1 to 4.

4. On behalf of defendants 1 to 4 who are the appellants in this appeal the prin-cipal argument is that the Arbitration Act does not prohibit the raising by a defendant of such a plea as has been raised by them in this case. The appellants' counsel, Mr. Subba Rao has referred to Bhajahari Saha Banikya v. Behary Lal Basak I.L.R. (1906) Cal. 881 and certain earlier and later decisions to the effect that before the coming into force of the Arbitration Act, 1940, a valid award was operative even though neither party sought to enforce it by a suit or by an application under the appropriate provision in the Code of Civil Procedure and that after the giving of such an award, no party could fall back on the cause of action which was the subject-matter of the reference to arbitration and which was merged in and extinguished by the award. It is argued that the position is in no way different even after the Arbitration Act, when, at any rate a defendant who has carried out his obligation, under the award asserts it in defence of a claim based on the cause of action in respect of which the award is given. The first respondent's counsel, Mr. Somasundaram, does not dispute that before the Arbitration Act the position was as contended for by the appellants, but maintains that the Arbitration Act has made a material-change, and that neither a plaintiff nor a defendant can rely on an award when it has not been filed in accordance with the provisions of the Arbitration Act and a decree obtained in its terms. The principal reliance for the first respondent is on Moolchand Jothajee v. Rashid Ramshed Sons & Co. : AIR1946Mad346 , which upheld on appeal under the Letters Patent the judgment of Somayya, J., in Rashid Jamshed Sons & Co. v. Moolchand Jothajee : AIR1945Mad371 . In that case, however, the award was put forward by the plaintiffs who sought a decree in terms of it, and the learned Judges held that the plaintiffs' allegation regarding the final conclusive and binding character of the award necessarily raised a question with regard to its existence and validity and that the suit was therefore barred by Section 32 of the Arbitration Act.

5. In regard to an arbitration without the intervention of Court as in the present case, the Arbitration Act lays down the procedure for the successive stages from the commencement of the arbitration to the passing of a decree in terms of the award. Sections 8 to 12 provide for the appointment or removal by Court of arbitrators or umpire in certain cases. Section 13 confers certain powers on them. The award is required to be signed by the arbitrators or umpire, and notice in writing to the parties of the making of the award is enjoined by Section 14(1). If any party so desires, the arbitrators or umpire are directed by Section 14(2) to file the award into Court and to give notice to the parties of such filing. By an amendment by the Arbitration Act, of Article 178 of the Limitation Act, the period for filing an award in Court is go days from the date of service of the notice of the making of the award. The power of the Court to modify the award or to remit it is dealt with in Sections 15 and 16, and under Article 158 of the Limitation Act as amended by the Arbitration Act, an application to set aside an award or to get an award remitted for reconsideration must be filed within 30 days of the date of service of the notice of filing of the award. If the Court sees no cause to set aside an award or remit it, it shall, under Section 17, proceed to pronounce judgment according to it, after the time for making an application to set aside has expired or if such application has been made, after refusing it. Upon the judgment so pronounced a decree shall follow.

6. The material sections however on which the point raised in this appeal turns are Sections 31, 32 and 33 which have to be set out in full:

'31. (1) Subject to the provisions of this Act, an award may be filed in any Court having juris-diction in the matter to which the reference relates.

(2) 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 an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court,

(3) All applications.regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been or may be, filed, and to no other Court.

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court com-petent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court.

32. Notwithstanding any law for the time being in force, no suit shall lie on any ground what-soever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act.

33. 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 deter-mined shall apply to the Court and the Court shall decide the question on affidavits:

Provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also and it may pass such orders for discovery and particulars as it may do in a suit.

Section 31 lays down certain rules and imposes certain restrictions as to the Court to which applications regarding the conduct of arbitration proceedings or other-wise arising out of such proceedings may be made or in which an award may be filed. Sub-section (2) of Section 31 provides inter alia 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. This, however, raises no difficulty in this case, as it is conceded that the lower Court is a Court having jurisdiction in the matter to which the reference relates and therefore the Court in which the award may be filed. There can be no doubt that Section 31 merely regulates the forum, and we notice that this is the view which found acceptance in Bengal Jute Mills Co., Ltd. v. Jewraj Heeralal I.L.R. (1943) Cal. 392, where McNair, J., pointed out that Section 31 is not an enabling section but a section which merely defines the jurisdiction.

7. Turning to Sections 32 and 33 it must first be observed that while Section 33 provides for an application by a person

desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined.

Section 32 uses what may be regarded as somewhat wider language that

no suit shall lie...for a decision upon the existence, effect or validity of an arbitration agreement or award.

It is a fundamental principle of statutory interpretation that when the right of suit is taken away and the remedy by way of an application is substituted for it, the prohibition would ordinarily be presumed to be co-extensive with the new remedy that is provided. An analogical case is where the jurisdiction is taken away from Civil Courts and conferred on Revenue Courts, the extent to which it is conferred on the latter being regarded as determining the extent to which the former are deprived of it. Vide Sections 13 and 21 of the Madras Hereditary Village Officers Act of 1895 and Muvula Seetham Naidu v. Doddi Ramu Naidu (1909) 20 M.L.J. 91 : I.L.R. 33 Mad 208. It would therefore seem as if Section 32 notwithstanding its apparently wider language, has to be read only as precluding a suit praying for the relief for which an application is provided under Section 33.

8. Apart from this however and taking the language of Section 33 as it stands, it is difficult to hold that the words ' no suit shall lie ' should be read as prohi-biting a defence which involves a decision upon the existence, effect or validity of an award. As held in Moolchand Jothajee v. Rashid Jamshed Sons & Co. : AIR1946Mad346 a person who relies on an award may be said to be seeking a decision upon its existence, effect or validity; but the question that arises is whether the inhibition in Section 32 is not confined merely to a plaint by which such decision is sought. We are inclined to think that it is so confined. There is nothing in Moolchand Jothajee v. Rashid Jamshed Sons & Go. : AIR1946Mad346 inconsistent with this view, that decision, as already stated, being concerned with a suit in which the plaintiffs sought to enforce the award. Mr. Somasundaram lays some emphasis on the observations occurring in that decision that,

The scheme of the Act is to prevent the parties to an arbitration from agitating questions rela-ting to the arbitration in any manner other than that provided by the Act.

In our opinion that sentence should not be taken out of its context and must be understood to have reference only to the particular situation which the learned Judges were called upon to deal with.

9. Some other decisions have also been cited; but they do not need anything more than a passing reference. In Ratanji Virpal & Co. v. Dhirajlal Manilal I.L.R. (1942) Bom. 452, Chagla, J., of the Bombay High Court held that under the Indian Arbitration Act, 1940, till the award has been filed it is not competent to a party to an arbitration to file a petition for setting aside the award. To the same effect is the judgment of McNair, J., in Bengal Jute Mills Co., Ltd. v. Jewraj Heeralal I.L.R. (1943) 2 Cal. 392. In Nanhelal v. Gulabchand I.L.R. (1944) Nag. 340, Pollock, J., of the Nagpur High Court held that Section 32 of the Arbitration Act does not bar a suit to enforce an arbitration award; but this is directly opposed to the decision of the Division Bench of this Court in Moolchand Jothajee v. Rashid Jamshed Sons & Co. : AIR1946Mad346 . In Balwant Singh v. Ramcharan Singh I.L.R. (1944) All. 375, a Bench of the Allahabad High Court held that if a party files an application under Section 33 of the Arbitration Act challenging the existence or validity of an award, the procedure laid down in Sections 14, 15 and 16 of the Act is not thereby made immediately applicable and that proceedings under Section 33 are entirely different from pro-ceedings under Sections 14, 15, 16 and 17. None of these decisions is of any help in deciding the point under consideration in this case.

10. Mr. Somasundaram points out that the award contemplates the payment of Rs. 19,000 to the plaintiff on 25th April, 1943 and simultaneously with it the execution of a document of relinquishment by the plaintiff and argues therefrom that the defendants must be taken to be seeking to enforce the award. In the first place such a document is suggested only by way of further assurance and abundant caution. Its absence will in no way prejudice the rights of the defendants, nor will it enable the plaintiff to claim a partition of the properties even after receiving the amount. The award would afford a complete answer to the plain-tiff's claim for partition when, at any rate, the defendants carry out on their side the direction contained in it.

11. A possible case was hinted at or just suggested in the course of the arguments. If an award intends that the original cause of action should be extinguished only when what is directed by it is carried out by the party seeking to rely on it, what, it is asked, would be the relative position of the parties? In such a case it would seem on the principle of accord and satisfaction that a party seeking to rely on the award in resistance of a claim based on the original cause of action must neces-sarily plead and prove performance of the award by him and a reliance on the award without the defendant fulfilling its terms on his part would be unavailing as it will be accord without satisfaction.

12. However, the point in this case turns entirely on the construction of Section 32. As previously indicated, its language does not, in our opinion, extend to a defence as opposed to the filing of a suit. The argument on behalf of the plaintiff would involve our holding that, even in a case where both parties to an award are satisfied with it and it is fully carried out and there is therefore no need for getting a decree passed in its terms and none is passed, one of the parties can subsequently change his mind and enforce the original cause of action and the defendant cannot resist the suit. It seems to us that the provisions of the Act do not entail such a result.

13. As stated, the defendants offered to pay the amount which they had been directed to pay by the award, and are now willing to have a decree passed for it in the plaintiff's favour. We therefore hold that the defence should have been upheld by the lower Court. In this view it is unnecessary to deal with Mr. Subba Rao's alternative argument that the registered award embodies a family settlement and that on the principle laid down in Subbaraju v. Venkataramaraju : AIR1928Mad1025 , it may even if not entertainable as an award, be dealt with as a family settlement.

14. The result is that the appeal must be allowed and the decree of the lower Court reversed with costs of both the Courts payable by the plaintiff to defendants 1 to 4; but there will be substituted for the decree of the lower Court a decree dismissing the suit for partition but directing the payment by defendants 1 to 4 to the plaintiff out of their family properties Rs. 19,000 with interest thereon at 3 per cent. per annum from 25th April, 1943, till 30th November, 1943, during which period the amount was lying in fixed deposit in the Co-operative Bank and could have been drawn by the plaintiff and interest at 4 per cent. per annum thereafter.

15. We desire finally to observe that if the Legislature intended or intends to forbid reliance on an unfiled award even by way of defence the language of Sections 32 and 33 would require suitable modification.


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