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Union of India (Uoi) Vs. K.P. Mandal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward Case No. 342 of 1952
Judge
Reported inAIR1961Cal118
ActsArbitration Act, 1940 - Sections 17 and 30
AppellantUnion of India (Uoi)
RespondentK.P. Mandal
Appellant AdvocateA.C. Bhabra, Adv.
Respondent AdvocateAjit Kumar Sen, Adv.
DispositionApplication allowed
Cases ReferredFatehchand v. Juggilal
Excerpt:
- .....from the bar in which it was ob-served that where a preliminary decree is set aside, the final decree passed 'ceases to exist' and it is not necessary to have the final 'decree formally set aside. the case of saudamino ghose v. gopal chan-dra ghose decided by a division bench of this court and reported in air 1915 cal 745 was an arbitration case under schedule ii of the code of civil procedure. there was an order filing an award in an arbitration without the intervention of the court, an appeal was taken against this order of filing the award which was allowed. it was contended on behalf of the respondent that since the passing of the order, a decree has been drawn up on the basis of the judgment which followed the order filing the award and the appeal had become infructuous,.....
Judgment:
ORDER

P.C. Mallick, J.

1. This Notice was taken out by the Union of India for an order that a judgment be passed in accordance with the award made by the Arbitrator on May 23, 1952 and a previous order passed by Sarkar J. on July 20, 1954 be recalled and/or set aside, if necessary.

2. Dispute between the parties of and relating to a contract containing an arbitration clause was referred to the arbitration of a Superintending Engineer one C. P. Mallik. The Arbitrator made his award on May, 23, 1952 in favour of the petitioner and the respondent was directed to pay the sum of Rs. 16,247/8/-. On January 15, 1953 the respondent made an application for setting aside the award. By his order dated June 16, 1954 Sarkar J. set aside the award. On July 20, 1954 Sarkar J. made a further order directing that no judgment be passed in terms of the award.

3. Against the order of Sarkar J. passed on June 16, 1954 setting aside the award, an appeal was taken by the Union of India. No appeal, however, was taken against the order dated July 20, 1954 refusing to pass a judgment on award. On April 3, 1958 the Appeal Court allowed the appeal and the order of Sarkar J. passed on June 16, 1954 was set aside. The award was confirmed and the application to set aside the award was dismissed. The Order dated July 20, 1954 passed by Sarkar J. was not however set aside inasmuch as no appeal was taken against it, nor was its existence brought to the notice of the Appeal Court while disposing of the appeal.

4. On July 20, 1959 the present Notice was taken out by the Union of India for an order that a judgment be passed in accordance with the award and that the order of Sarkar J. dated July 20, 1954 be set aside and/or recalled, if necessary.

5. It is contended in the petition that by reason of the decision of the Appeal Court confirming the award and dismissing the application to set asidethe award, the Subsequent order dated July 20, 1954 has been superseded and rendered ineffective, It necessary, this Court now should recall or set aside the order passed by Sarkar J. on July 20, 1954. Now that the application for setting aside the award has been dismissed and the award has been held to be a valid award by the Appeal Court, this Court now should pass a judgment in terms of the award in the usual course.

6. It is contended by the respondent On the other hand that inasmuch as no appeal was preferred against the order dated July 20, 1954, the said order remains fully effective and has not been superseded by reason of the appeal against the Order dated June 16, 1954 having been allowed. So long as the order passed by Sarkar J. on July 20, 1954 stands, another application for identical relief is not maintainable.

7. Mr. Bhabra appearing for the petitioner contended that it was not imperative and not necessary for his client to file another appeal against the order dated July 20, 1954 over and above the appeal filed against the order dated June 16, 1954. The order dated July 20, 1954 is an order dependent and consequential to the order dated June 16, 1954. The learned Judge having by his order dated June 16, 1954 set aside the award, had no other option than to dismiss the application for judgment upon award and this he did by his order dated July 20, 1954. When the first order dated June 16, 1954 setting aside the award is itself set aside by the Appeal Court and the award is declared to be a valid and binding award, the order dated July 20, 1954 is automatically superseded and it was neither necessary to prefer an appeal against the said order nor get an express order of supersession of the same. Reference was made to the cases in which it was held that when an appeal is taken against the preliminarydecree in which a final decree was passed subsequently an appeal is competent against the preliminary decree only and it is not necessary to file another appeal against the final decree also. In the Case of Taleb Ali v. Abdul Aziz decided by a Full Bench of this Court and reported in : AIR1929Cal689 , Rankin C. J., observed:

'that when the preliminary decree is set aside, the final decree is superseded whether the appeal (against the preliminary decree) was brought before or after the passing of the final decree and that in my judgment an appellate court when setting aside or varying the preliminary decree can and indeed should give directions for setting aside or varying the final decree if the existence of the final decree is brought to its notice as in all cases it ought to be.'

The principle relied on is that a subordinate or dependent decree comes to nothing when the decree on which they are dependent is set aside and if the appellate court has power to deal with the preliminary decree, i. e. to reverse or vary it, it has also the power to reverse or vary the final decree as well which is wholly dependent on the preliminary decree. It was held in this case that it is not necessary for a party aggrieved by the preliminary decree to appeal against both the preliminary and final decrees. To file an appeal against the preliminary decree would be enough. There are other cases also cited from the Bar in which it was ob-served that where a preliminary decree is set aside, the final decree passed 'ceases to exist' and it is not necessary to have the final 'decree formally set aside. The Case of Saudamino Ghose v. Gopal Chan-dra Ghose decided by a Division Bench of this Court and reported in AIR 1915 Cal 745 was an arbitration case under Schedule II of the Code of Civil Procedure. There was an order filing an award in an arbitration without the intervention of the Court, An appeal was taken against this order of filing the award which was allowed. It was contended on behalf of the respondent that since the passing of the order, a decree has been drawn up on the basis of the judgment which followed the order filing the award and the appeal had become infructuous, Ashutosh Mookerjee J. in Overruling this argument observed as follows at page 747:

'No appeal has ever been preferred against the decree, as there is no reason to hold that the decree is in excess of or not in accordance with the award. In these circumstances it has been argued on behalf of the respondent that if the present appeal is entertained and allowed, the decree will still remain operative, and that consequently, it would be idle to hear this appeal on the merits. This argument is manifestly fallacious. If this appeal is allowed, the decree will become infructuous: the whole foundation of the decree will disappear; and it will be competent to this Court to declare that the decree had been vacated, because the order on which it was passed had been cancelled. We hold, accordingly, that this appeal is competent, and this view is in accord with that adopted in Sabitree Dabi v. Pro-moda Prosad, AIR 1915 Call 398 and Khetternath v. Usha Bala Dasi AIR 1914 Cal 899'.

The case reported in AIR 1914 Cal 899 referred to in the above judgment is a judgment of the Division Bench consisting of Chatterjee and Teunon JJ. It was held in this case

'that a decree based upon the award is no doubt final if it is in accordance with the award; but the validity of the decree depends on the validity of the order directing the order to be filed, and if the latter is set aside the decree must be declared to be inoperative'.

8. Both the cases cited above are cases under Schedule II of the Code of Civil Procedure and order for filing the award was made in both the cases under Para 21 of the Schedule II -- both the arbitrations being cases of arbitration without the intervention of the Court. There is hardly any difference between the old law as laid down in the Second Schedule of the Code of Civil Procedure and the new law as laid down in the Arbitration Act, 1940 on the point we are considering in this case and the cases under Schedule II of the Code of Civil Procedure can well be cited as authorities on the same or similar questions under the Arbitration Act of 1940. Mr. Bhabra therefore submitted that it was not obligatory for his client to file an appeal against the order dated July 20, 1954 rejecting the application for judgment on award. The order of July 20, 1954 is an order dependent on the previous order dated June 16, 1954 setting aside the. award. The result of the previous order having been set aside on appeal is that the dependent order is superseded and ceases to exist as it were in law. If it stands superseded and ceases to exist in law, it cannot operate as a bar to the present application even though the order has not been formally declared to be ineffective by the Appeal Court. It necessary, this Court is quite competent to declare that the order has become ineffective and then to pass judgment on the award which has been declared to be valid award by the Appeal Court. This submission was made on the strength of the authorities cited and noticed above.

9. Mr. Sen appearing for the respondent submitted that the order dated July 20, 1954 refusing to pass a judgment on award is not an order dependent on the order dated July 16, 1954 by which Sarkar, J. set aside the award. When after dismissing an application for setting aside an award the Court makes an order passing a judgment upon award, the second order can well be characterised as a dependent order on the first. The power of the Court to pass a judgment upon award is entirely dependent under Section 17 of the Arbitration Act upon the Court dismissing the application for setting aside the award. But when the Court allows the application for setting aside the award and thereafter dismisses the application for judgment upon the award, it cannot be said that the dismissal is wholly dependent on the previous order whereby the award was set aside. The application for judgment upon award can well be dismissed on other grounds -- for example, on the ground that notice as required by the Act has not been properly served. It is submitted, therefore, that the authorities cited by Mr. Bhabra and noticed before are authorities on which Mr. Bhabra cannot rely. Mr. Sen further submitted that the converse case which we are considering is not covered by any direct authority. Mr. Sen is not, however, correct in making this submission. In the case of Fatehchand v. Juggilal, decided by the Appeal Court consisting of Chakravarti, C. J. and Lahiri, J. reported in : AIR1955Cal465 , tho facts were practically identical. There was an application to set aside the award which was allowed by S. R. Das Gupta, J. Against this order an appeal was taken and the Appeal Court allowed the appeal and passed an order in the following terms :

'The order passed by S. R. Das Gupta, J. setting aside the award and purporting to dismiss an application for judgment on award is set aside. The matter for judgment on award will now bo dealt with on the merits and we direct that the same be placed on the appropriate list.'

10. In the cited case Mr. Kar appearing for the respondent raised the point that the appeal was incompetent and would be ineffective inasmuch as no appeal had been preferred from the order passing judgment on award. The appeal was only against the order rejecting the other portion of the order. Chakravartti, C. J. overruled the objection taken by Mr. Kar with the following observation :

'Here the learned Judge never reached tho stage of passing a judgment on the award. It will appear from Section 14(2) of the Act that when the arbitrators have made their award, they must give to the parties a notice in writing and then cause the award to be filed in court. When the award has been filed in Court, a notice is given to the parties and the parties are free at that stage to apply for setting aside of the award or for its adjudgment as a nullity, if they are so advised. It no such application is made and if the Court finds no reason either to set aside or to remit the award, it becomes the duty of the Court to pass a judgment on the award and a decree in accordance therewith. If no application is made before the Court impugning the award it would appear that the court would be bound to pass judgment on the award of its own motion and as a part of its own duty. As I have said, the stage of passing judgment upon the award never arrived in the present case. After the award had been filed, an application was made to the learned Judge for setting it aside and ho set it aside dismissing the application for judgment on the award by the same order.'

11. The only point on which the cited case differs from the instant case is that whereas in the cited case the same order while setting aside the award dismissed the application for judgment on the award as well; in the instant case there are two different orders one of June 16, 1954 for setting aside the award and the other of July 20, 1954 dismissing the application for judgment on award. It is however to be noted that in the cited case there was no appeal against the order dismissing the application for judgment on award.

12. I am unable to accept the argument of Mr. Sen that the order of July 20, 1954 is not an order dependent on the order of June 16, 1954. The distinction sought to be made by Mr. Sen between the two classes of cases seems to be unreal. When an application to set aside an award is dismissed and judgment on award is passed, the order passing the judgment on award is clearly dependent on the order dismissing the application to set aside the award. In the reverse case, when the Court allows the application and sets aside the award, the Court cannot but dismiss the subsequent application for judgment on award, having regard to its own finding that no valid award was in existence. This order of dismissal of the application for judgment on award is, therefore, a dependent and consequential order on the previous order whereby the award was set aside. It is not necessary for me to consider in the instant case the hypothetical question posed by Mr. Sen that the application for judgment on award can be dismissed on such other ground as the failure to serve notice under Section 14(2) of the Indian Arbitration Act. In the instant case-there is no question that there was no such defect and Mr. Sen could not suggest any reason why the application for judgment on award could have been dismissed except the ground that the award was invalid. I have no doubt, therefore, that the order dated July 20, 1954, passed by Sarkar, J. was wholly dependent on the order passed by him on June 16, 1954, setting aside the award. The authorities cited by Mr. Bhabra can very well be cited in support of Mr. Bhabra's contention that on the appeal against the order dated June 16, 1954 hav-ing been allowed and award having been confirmed, the order dated July 20, 1954, which was a dependent order, is superseded and ceases to exist, as it were, in law. The application could not have been dismissed on any other ground. If the application could not have been dismissed on any other ground, then in dismissing the application for judgment on award on July 20, 1954, the Court must he deemed to have adjudicated one and only one question, namely, that there being no valid award in existence on that date, the application was premature and the award-holder had no cause of action to make an application at the point of time he made the application. No other question could have been adjudicated in that application at that time. This dismissal, in my judgment, cannot operate as a bar to the making of a proper application when the right to apply accrues and the came of action arises later, on when the award is confirmed and held to be valid in law by the Court of Appeal. The dismissal of a premature application cannot operate as a bar to the making of a proper application when the right to apply has matured.

13. According to the authorities noticed before, a dependent order is superseded and ceases to exist, as it were, when the order on which it is dependent is set aside in appeal. Even though tho dependent order was not before the Appeal Court, the Court, while varying or setting aside the order under appeal, is empowered to give suitable direc-tions with respect to the dependent order, if it is brought to its notice. The direction that the Appeal Court would give is that all subsequent proceedings be taken on the basis of the Appeal Court decision and on the footing that the order under appeal having been set aside, the dependent and consequential order stood superseded and became ineffective in law. The dependent order is superseded and becomes ineffective as a result of and in consequence of the order on which it is dependent being set aside. When the dependent order is brought to the notice of the Appeal Court and the Appeal Court records that it has become ineffective and gives direction for further proceedings, it is making no fresh adjudication, but is merely recording formally the result of the appeal having been allowed on other proceedings dependent on the order appealed against. In doing so, the Court of Appeal does nothing other than regularising the records. If it is nothing more than regularising the records, a Court, other than the Appeal Court, is equally competent to do it. I do not see any reason why the trial Court should not be equally competent to do it, when its attention is drawn to the fact that the main order setting aside tho award having itself been set aside, the foundation of the dependent order is knocked off and it has become ineffective. The trial court, in my judgment, is bound to take note of it and to proceed to take steps in the matter. To regularise the records, the Court is competent to declare the order passed previously, consequential to the main order, as ineffective in law and, if necessary, to recall the said order. The failure on the part of the Appeal Court to record a formal order, in my judgment, does not affect the right of the parties or the duty of the Court under Section 17 of the Indian Arbitration Act to pass a judgment on award, now that the award has been affirmed by the Appeal Court. In my judgment, a formal setting aside of the previous order by the Appeal Court is not imperative in law and this Court is now equally competent to recall its own order dated July 20, 1954, on being satisfied that the order of June 1954, on which the said order was dependent, has been superseded as a result of the decision of the Appeal Court. If the matter was brought to the notice of the Appeal Court, it would have recorded a formal order setting it aside or declaring it to be ineffective. But that was only, as I stated before, to regularise the records. If that was not done by the Appeal Court, I this Court is equally competent to regularise the record by recording a formal order that the order. dated July 20, 1954 has become ineffective recall the said order and then to pass a judgment on award. The Court has inherent power to recall, its own order under Section 151 of the Code of Civil Procedure to do justice between the parties and, in my judgment, in the instant case, tho Court would be justified in doing it.

14. For reasons given above, the application succeeds and there will be an order In terms of paragraphs (a), (b), (c) and (d) of this Notice. The parties will bear the costs of the hearing of this application.


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