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Nani Bala Saha W/O Narayan Chandra Saha Vs. Ram Gopal Saha and anr., Minors, Represented by Pleader Guardian Babu Kumar Gurukrama Mozumdar and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata
Decided On
Reported inAIR1945Cal19
AppellantNani Bala Saha W/O Narayan Chandra Saha
RespondentRam Gopal Saha and anr., Minors, Represented by Pleader Guardian Babu Kumar Gurukrama Mozumdar and a
Cases ReferredHodgkison v. Fernis
Excerpt:
- .....one of the parties was not prompt in depositing the money required to purchase the stamp for the award, the arbitrators asked the magistrate to make the necessary order and after making the award, they filed the award and the papers connected therewith in the court of the said magistrate. the last order recorded by the arbitrators in their order-sheet also indicates, what we have noticed above, that the parties and the arbitrators were under the impression that the arbitration was on a reference made by the magistrate. this impression was not without foundation. it had for its support the order of the learned magistrate dated 15th december 1940, which we have recited in the earlier part of our judgment. this fact will have a material bearing on the interpretation of the last part of.....
Judgment:

1. Two persons Patit Paban Saha and Narayan Chandra Saha, were co-owners of extensive properties. The former died leaving him surviving his widow, Mon Mohini and two minor sons, Ram Gopal and Gour Gopal, and the latter died leaving a widow, Nani Bala, as his heiress. The heirs of Patit Paban and Narayan Chandra did not pull on well. Their differences, or it may be the differences between their supporters and advisers, became very acute with the result that towards the end of 1940 proceedings under Section 107, Criminal P. C, were started in the Court of the Sub-divisional Magistrate of Magura. The parties to the criminal proceedings were Becharam Saha and Mon Mohan Saha, Kiran Chandra Bandopadhya, Chhodau Sardar, Surendra Kumar Saha and Bhupati Ch. Saha, officers, relations and partisans of the aforesaid heirs of Patit Paban and Narayan Chandra. The Sub-divisional Magistrate having formed the opinion, and we think rightly, that the continuance of those proceedings would not be conducive to the interest of the family, which consisted of ladies and minors, but would Only further the selfish interest of outsiders suggested a settlement of the disputes and differences relating to the property and affairs of the family through arbitration. The parties accepted his commendable suggestion and agreed to the arbitration of two pleaders, Mr. Satish Chandra Bose and Mr. Kanti Chandra Biswas. Thereupon the learned Magistrate recorded the following order on 4th December 1940:

Both parties pitch upon (1) Satish Ch. Bose and (2) Kanti Oh. Biswas as the arbitrators. They will abide by the decisions of the arbitrators. An agreement to that effect will be filed to-morrow. Parties will please rateably share the costs incurred by the arbitrators as also their fees.

2. The agreement for reference to arbitration was thereafter executed not by the heirs of Patit Paban and Narayan Chandra but by the persons who were the parties to the criminal proceedings and whose names we have mentioned above. On 15th December 1940, the learned Magistrate recorded the following order:

Copy with the two agreements--one executed by Kiran Chandra Banerjee and three others and the other executed by Becharam Saha and another --forwarded to Babu Satish Chandra Bose, Pleader, Magura, for favour of information and necessary action. The case has been adjourned to 17-12-1940.

3. On receipt of the papers referred to in the above order the two pleaders expressed their willingness to act as arbitrators. They started with an order-sheet headed thus:

Award and proceedings in Case No. 32/M of 1940 under Section 107, Cr. P. C.

Emperor

versus

Becharam Saha and another -- 1st party

Surendra Nath Saha and 2 others -- 2nd party.

4. It at once struck the arbitrators that the agreements for reference to arbitration which had been forwarded to them by the learned Magistrate had not been executed by the necessary parties. They therefore asked the necessary parties, the widow and the sons of Patit Paban and the widow of Narayan Chandra to execute a fresh agreement for reference. That document, called the achalnama, was executed by them on 10th January 1941 and filed before the arbitrators. It did not fix any time limit for the arbitration. The proceedings of the arbitrators indicated that the parties and the arbitrators thought that the arbitrators were acting on a reference made to them by the Sub-divisional Magistrate. When one of the parties was not prompt in depositing the money required to purchase the stamp for the award, the arbitrators asked the Magistrate to make the necessary order and after making the award, they filed the award and the papers connected therewith in the Court of the said Magistrate. The last order recorded by the arbitrators in their order-sheet also indicates, what we have noticed above, that the parties and the arbitrators were under the impression that the arbitration was on a reference made by the Magistrate. This impression was not without foundation. It had for its support the order of the learned Magistrate dated 15th December 1940, which we have recited in the earlier part of our judgment. This fact will have a material bearing on the interpretation of the last part of the achalnama on which the learned advocate for the appellant has based an important argument.

5. The arbitrators made an unanimous award, on 5th June 1942. By the award they declared title to immovable property worth more than Rs. 100 and partitioned between the parties immovable property of considerable value. The award was impressed with a stamp worth Rs. 40. It was not registered under the Registration Act, though it dealt with immovable property worth more than rupees one hundred. It was filed by the arbitrators in the Court of the Sub-divisional Magistrate on 6th June 1941. On 31st July 1941, Nani Bala, the widow of Narayan Chandra, filed an application in the Court of the Subordinate Judge, Jessore, within whose jurisdiction the immovable properties dealt with in the award were situate, purporting to be under para. 20 of Schedule 2, Civil P. C. The award was not filed with the application. Her prayer was as follows:

Order may be passed on the said arbitrators, Babu Satish Chandra Bose and Babu Kanti Chandra Biswas, pleaders of Magura, for filing the said award, and after getting it filed and after service of notice on the opposite parties, judgment and decree may be passed in accordance with the said award.

6. In pursuance of an order made by the learned Subordinate Judge the arbitrators filed their award in his Court on 11th September 1941. The widow and sons of Patit Paban thereafter filed objections. They challenged the submission and the award on various grounds. One of their objections to the filing of the award rested on the non-registration of the award. The learned Subordinate Judge framed five issues but without taking any evidence took up issue 4 as a preliminary issue. That issue runs thus: 'Are the achalnama, solenamah and award invalid for want of proper stamp and registration?' He decided that issue against the applicant.

7. His findings are : (i) that the arbitration was governed by the Arbitration Act (10 of 1940); (iii) that the award was void inasmuch as it had been made after four months from the date when the arbitrators had entered on the reference; (iii) that the award has been inadequately stamped; (iv) that the award 'was liable to be set aside on the ground of non-registration alone,' and (v) that in view of Section 19, Arbitration Act, 1940, the reference itself was liable to be superseded.

8. On these findings he not only refused to file the award but has set it aside and superseded the reference by using the discretionary powers contained in Section 19. Nani Bala has preferred this appeal against his, judgment and decree. We may at once say that the learned Subordinate Judge was right in holding that the Arbitration Act of 1940 governed the arbitration proceedings, inasmuch as the reference was made after that Act had come into force. We also agree with him that, the applicant cannot be allowed to take her stand on Article 158, Limitation Act, as amended by Schedule 4, Arbitration Act, 1940, and say that the opposite parties' challenge to the award is beyond time. By reason of the wrong procedure she had adopted--that is to say, by applying under Schedule 2, Civil P. C, which had then been repealed--she misled the opposite parties and the Court. In these circumstances she cannot turn round and say that the opposite parties should have followed the procedure laid down in the Arbitration Act of 1940 and ought to have filed an application to set aside the award within the time limited by Article 158. We may also at once say that the learned Subordinate Judge ought not to have recorded what we have numbered as the second finding. That finding went beyond issue 4, which only he took up for consideration as a preliminary issue. As no contrary intention had been expressed in the agreement for reference the provisions of Rule 3 of Schedule 1, Arbitration Act of 1940, were no doubt attracted and the arbitrators were bound to make, their award within four months of their entering upon the reference, unless the Court had extended the time. But if an arbitrator makes an award beyond time, the delay may be condoned at any time by the Court in a proper ease, for Section 28 of the Act gives power to the Court to extend time even after the award had been made. If the award made in this case was otherwise a good award and there was no legal impediment to its being filed, the learned Subordinate Judge ought to have reserved consideration of this point at a later stage, when after the evidence had been led by the parties on the merits he would have been in a better position to exercise the discretionary power given by Section 28.

9. His third finding is not a material one, for inadequacy of stamp could have been made good by following the procedure laid down in the Stamp Act. The real points in the case appear to us to be (1) whether the award is compulsorily registrable and (2) if so, what is the effect of its non-registration.

10. By reason of the exception contained in Sub-section (2), Clause (vi) of Section 17, Registration Act, an award did not before 1929 require registration, but by reason of the amendment of that clause in 1929 by which the phrase 'any award' was deleted from that clause, a private award would require registration if it comes within Clause (b) of Sub-section (1) of that section. A private award is a non-testamentary instrument. It would require registration if it purports or operates to create, declare, limit or extinguish, --any right, title or interest to or in immovable property of the value of one hundred rupees or upwards.' The award which we have before us deals with title to immovable property worth more than Rupees 100 and so would prima facie require registration. The learned advocate for the appellant, however, contends that the award in this case by its own force has not the effect of creating, declaring or limiting right to the immovable properties mentioned in the award for the parties in referring their disputes to arbitration intended that the Court should make a decree on the award and that it is only when such a decree had been made that the rights of the parties would be regulated in the manner indicated in the award by the force of that decree. The substance' of the contention is that the parties intended that the decree of the Court on the award and not the award would create, declare or limit as the case may be, the rights of the respective parties in what was formerly their joint immovable properties or what was claimed as joint immovable property of the family. This contention requires the construction of the achalnama, by which the parties referred their disputes to arbitration. The material portions of that document, which for convenience we indicate by numericals are as follows:

(1) 'We, both parties, shall be bound and shall abide by the settlement with respect to title, share and possession of us, both parties, which may be made by you; (2) The unanimous decision of both of you in these matters in which you both would agree shall be binding on Us, and if you cannot agree on any matter, then you shall appoint a third person according to your choice as umpire, for the decision of these matters. We, both parties, shall be bound by the decision made by the majority of you; (3) You the two arbitrators, and if necessary then you and the umpire appointed in the aforesaid manner, shall make final decision regarding claim, title, share and possession of us, both parties, on all the disputed matters amongst us; if necessary you shall divide the properties according to shares, and properly according to circumstances; (4) If it is found that any One is benamidar for another with respect to any matter in dispute, then you shall settle and decide as to who is the real owner thereof and what title and share and possession any one amongst us, both the parties, shall exercise; (5) You shall file in Court your award and one true copy thereof for the purpose of enabling us to get them, and you will indicate who amongst the parties would get which (that is, which party would get the original and which the true copy) as you deem proper.'

The last clause has been mistranslated in the paper book. We have seen the vernacular and the translation is ours. In our judgment the last-clause, which we have numbered as (5), means that the arbitrators were to file the award not in the civil Court with a view to get a decree passed on it, but in the Court of the Sub-divisional Magistrate, at whose instance the matters in dispute were referred to arbitration. We have already pointed out in the earlier part of our judgment that both the parties and the arbitrators thought that the Sub-divisional Magistrate had made the reference to arbitration. The word 'Court' in Clause (5) meant the Court of that Magistrate. This view of ours gets support from the fact that the arbitrators had to file in Court two copies -- the original award and a true copy thereof--as there were two parties, and to say which party was to get the original and which the true copy. This last mentioned fact would have had no meaning if the intention of the parties were that the award was to be filed by the arbitrators in the civil Court having jurisdiction for the purpose of enabling a decree to be passed on the award, for, in that case, the original award would have to be made a part of the decree and would remain in Court as an annexure of the original decree and both parties would get only the certified copies of the award as part of the certified copies of the decree. The parties agreed, as the first four clauses indicate, that the award itself would have effect on their title. We accordingly hold that the award was compulsorily registrable in view of Section 17(1) (b), Registration Act, as it has dealt with title to immovable property worth more than Rs. 100.

11. Section 49(c), Registration Act, prevents the applicant Nani Bala from adducing it in evidence in support of her application for filing it in Court with a view to get a decree on it. This view of ours is supported by the decision of this Court in Jitendra Nath De v. Nagendra Nath De : AIR1934Cal815 , of the Patna High Court in Badri Chaudhuri v. Mt. Champa Chaudhurain ('37) 24 A.I.R. 1937 Pat. 183, and of the Bombay High Court in Chiman Lal Girdhar v. Dahyabhai Nathubhai ('38) 25 A. I. R. 1938 Bom. 422. It is not necessary for us to consider whether the view expressed in Jitendra Nath De v. Nagendra Nath De : AIR1934Cal815 that an award made in pursuance of a submission in a suit would not require registration is correct or not, as in the case before us the award is not of that character. No doubt by the Arbitration Act of 1940, the law governing a private award dealing with moffusil properties have been placed on the same footing as an award dealing with properties situate in Presidency towns with the result that the supervising powers of the civil Court with regard to these awards have been enlarged and the procedure for filing such awards and the subsequent proceedings in the civil Court have been changed, but those changes do not affect the question, which we are now dealing with, because the provisions of Section 17, Registration Act, have not undergone any change by way of further amendment since 1929. The authority of the decision in Jitendra Nath De v. Nagendra Nath De : AIR1934Cal815 , in so far as it decides that a private award has to be registered before it can be filed in the civil Court for the purpose of obtaining a decree thereon has not been shaken by the repeal of Schedule 2, Civil P. C, and the enactment of the Arbitration Act of 1940.

12. As the award is inadmissible in evidence by reason of the provisions of Section 49, Registration Act, on the principle that 'of things that do not appear and things that do not exist the reckoning in a Court of law in the same,' Seaton v. Burnand (1900) 1900 A. C. 135 at p. 139 and Radha Kishun v. Khurshed Hossein ('20) 7 A. I. R. 1920 P. C. 81 at p. 16, it must be taken, so far as these proceedings are concerned, that the award does not exist. No question of either setting it aside or of remitting it to the arbitrators therefore can arise. Moreover, the Court can remit an award to the arbitrator only in the circumstances mentioned in Section 16(1), Arbitration Act of 1940. Clauses (a) and (b) of that sub-section admittedly are inapplicable to this case. It can only be remitted if the case comes within Clause (c). To bring it within that clause there must be 'an objection to the legality of the award appearing upon the face of the award.' The same phrase occurred in para. 14 of Schedule 2, Civil P. C, which defined the power of the Court to remit an award made in pursuance of a submission in a suit. That Clause (c) means this and nothing more: namely, that where the Court finds an error of law in the award itself or in some document actually incorporated thereto on which the arbitrator had based his award, that is to say, finds the statement of some erroneous legal proposition which is the basis of the award, it can remit the award to the arbitrator for reconsideration. The cases in British Westinghouse Electric and . v. Underground Electric Railways Co. of London, Ltd. (1912) 1912 A. C. 673 and Sreelal Mangtulal v. J. P. Madan : AIR1925Cal599 are the type of cases that that clause was intended to cover. The precise scope of the principle underlying that clause has been noticed by Lord Dunedin in Champsey Bhara & Co. v. Jibraj Balloo Spinning and Weaving Co. ('23) 10 A. I. R. 1923 P. C. 66, and some of the important cases have been reviewed in this Court in U.M. Choudhury & Co. v. Jiban Krishna Ghosh & Sons. ('22) 9 A. I. R. 1922 Cal. 447 and by the Patna High Court in Satish Chandra v. P. N. Das & Co. ('38) 25 A. I. R. 1938 Pat. 231. In the first mentioned case Sanderson C. J. summarised at pages 654 to 655 of the report the four grounds on which an award can be remitted. The first ground, namely, where 'the award is bad on the face of it' means and includes only the case where the award, that is to say, the decision of the arbitrator is bad on account, of its being based on an erroneous proposition of law appearing on the face of the award or a document incorporated thereto. It means nothing more or less. The error must be the statement of an erroneous proposition of law and not a wrong conclusion on a question of fact, for the general principle is that

where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and fact.

To that there is only one exception, which though to be regretted is now firmly established, namely, where the award is based on a statement of an erroneous legal proposition made by the arbitrator and on that proposition of law the award is based, Hodgkison v. Fernis (1889) 3 C. B. (N. S.) 189 at p. 202. Want of registration is a defect dehors the award or the decision of the arbitrator, and so in our judgment is not covered by Clause (c) of Section 16(1), Arbitration Act of 1940. The purpose of remitting the award is for enabling the arbitrator to reconsider his decision and the illegality must be one connected with his decision as contained in the award. It must not relate to a matter which has no connexion with his decision or to put it succintly, his decree. We therefore hold that the learned Subordinate Judge was not right in setting aside the award on the ground of nonregistration. He should have simply ignored the award in view of Section 49, Registration Act. For the reasons given above, we cannot also accept the argument of the learned advocate for the appellant that the learned Subordinate Judge ought to have remitted the award to the arbitrators for reconsideration.

13. As the learned Subordinate Judge was not right in setting aside the award for its nonregistration and as the award cannot be set aside on that ground he was not right in superseding the arbitration. The only legal order which he could have made and which we hereby make was simply to dismiss the application for filing the award on the ground that there was no legal evidence to show what the award was. The result is that we modify the decree as made by the learned Subordinate Judge. The decree so far as it has set aside the award and so far as it has declared the arbitration agreement or the achalnama to have ceased to have any effect with respect to the difference referred is set aside but the decree dismissing the application for filing the award is maintained. In the circumstances of this case, we direct the parties to bear their respective costs of this Court and of the Court below.


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