Rikhabdas Vs. Ballabhdas & Ors
 INSC 322 (16 November 1961)
CITATION: 1962 AIR 551 1962 SCR Supl. (1) 475
CITATOR INFO :
R 1987 SC 841 (10)
Arbiration -Award-Arbitrator filing in court
unstamped award-Court's power to remit-Arbitration Act, 1910 (10 of 1940), ss.
13(d), 14(1), 15(b) (c), 16(1)(c), 20-Code of Civil Procedure, 1908(Act 5 of
An arbitration agreement was filed in court
under s. 20 of the Arbitration Act, 1940, and an order of reference was made
thereon. The arbitrator entered upon the reference and in due course filed his
award in court. The award was however, unstamped and on objection raised that
no judgment 476 could be passed on such an award, the trial court passed an
order remitting the award to the arbitrator for re-submitting it to the court
on duly stamped paper. The High Court took the view that want of stamp would be
an illegality apparent on the face of the award, which could therefore be
remitted under s. 16(1) (c) of the Act.
^ Held, that all unstamped award cannot be
remitted under s. 16(1) (c) of the Arbitration Act, 1940, to the arbitrator to
get it stamped, because want of stamp is a defect dehors the award or the
decision of the arbitrator and does not amount to an illegality apparent upon
the face of it within the meaning of that section.
Ramkumar v. Kushalchand, A.I.R. 1928 Nag. 166
and Lakshmichand v. Kalloolal, 1956 N.L.J. 504, disapproved.
Nani Bala Saha v. Ram Gopal Saha, A.I.R. 1945
Cal. 19, approved.
Held, further, that after making an award the
arbitrator is functus officio, and s. 151 of the Code of Civil Procedure cannot
therefore give the court power to direct the arbitrator to make a fresh award
and re-submit it after writing it on proper stamp paper.
Mordue v. Palmer, (1870) L.R. 6 Ch. App. 22,
relied on. Dubitante, it is doubtful if the fees and charges mentioned in s.
14(1) of the Arbitration act, 1940, include the stamp duty payable on the
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 144 of 1960.
Appeal by special leave from the judgment and
order dated July 26, 1957, of the Madhya Pradesh High Court in Civil Revision
No. 966 of 1955.
B. R. L. Iyengar and K. P. Bhatt, for the
G. S. Pathak, S. N. Andley, Rameshwar Nath
and P. L. Vohra, for the respondents.
1961. November 16. The Judgment of the Court
was delivered by SARKAR, J.-In this case an arbitration agreement had been
filed in court under s. 20 of the Arbitration Act, 1940, and an order of
reference made thereon. The arbitrator in due course entered 477 upon the
reference and made and filed his award in court on July 14, 1955. The award
concerned partition of certain properties between the wife and children of one
The award was however unstamped and
unregistered. An objection was taken to a judgment being passed on such an
award. On such objection, the trial court passed an order remitting the award
to the arbitrator for re-submitting it to the court on a duly stamped paper and
after getting it registered.
Against this order the High Court at Nagpur
was moved in revision. The learned Single Judge hearing the revision
application took the view that the award required to be stamped. But he felt
that it could not be remitted to the arbitrator under s. 16 of the Arbitration
Act, which is the only provision under which an award can be remitted to an
arbitrator. It appears that there was an earlier judgment of the Nagpur High
Court in the case of Ramkumar v. Kushalchand (1) in which it had been held that
where the award was unstamped it could under paragraph 14 of Schedule I to the
Code of Civil Procedure be remitted to the arbitrator with a direction to
re-write it on a stamped paper and re-submit it to court. The provisions of
that paragraph of the Code have now been substantially reproduced in s. 16 of
the Arbitration Act. The trial Judge had based himself on this earlier judgment
of the High Court. The learned Single Judge was apparently not satisfied with
the correctness of the decision in Ramkumar's case (1) and he referred three
questions for decision by a larger bench of that High Court. The questions
(a) Is the award made on a reference by the
Court on an application under section 478 20 of the Arbitration Act chargeable
to stamp duty? (b) Is such an award compulsorily registerable when it relates
to partition of immovable property of the value of one hundred rupees and
upwards? (c) Has the Court powers under section 16(1) (c) of the Arbitration
Act of 1940 or otherwise to remit an award to the arbitrator or umpire to get
it stamped and/or registered? The matter was thereupon heard by a Division
Bench of the High Court constituted by two learned Judges. Before them it was
agreed by both the parties that the award required to be stamped.
This disposed of the first question. The
learned Judges felt that it was not necessary at that stage of the proceeding
to answer the second question, namely, whether the award required registration.
In the result they only answered the third question as to whether an award
could be remitted under s. 16 (1) (c) of the Arbitration Act to the
arbitrator to get it stamped and they answered that question in the
affirmative. They held that a want of stamp would be an illegality apparent on
the face of the award and therefore the case would fall under s. 16(1)(c) of
the Arbitration Act. They also held, following the case of Lakhmichand v.
Kalloolal (1), that the copying of the award on a stamped paper was purely
ministerial, and making of an award did not deprive the arbitrator of the
authority to copy an award on the requisite stamp paper. They approved of the
decision in Ramkumar v. Kushalchand (1).
The present appeal is against this judgment
of the Division Bench. The only question argued at the bar was whether the
answer of the Division Bench to the third question was correct.
479 Now s. 16(1)(c) of the Act is in these
S. 16 (1): The Court may from time to time
remit the award or any matter referred to arbitration to the arbitrators or
umpire for reconsideration upon such terms as it thinks fit-
(c) where an objection to the legality of the
award is apparent upon the face of it.
We think that the Division Bench of the High
Court was clearly in error. Under s. 16 of the Arbitration Act an award can be
remitted to the arbitrators only for reconsideration. When it is remitted for
re-writing it on a stamped paper, it is not remitted for reconsideration.
Reconsideration by the arbitrators
necessarily imports fresh consideration of matters already considered by them.
Now they can only consider and give a decision upon matters which are referred
to them under the arbitration agreement. It follows that the reconsideration
can only be as to the merits of the award. They reconsider nothing when they
re-write the award on a stamped paper. We think the matter was correctly put by
Mitter, J., in Nani Bala Saha v. Ram Gopal Saha (1) in the following
"That cl. (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" and "Want of registration is a defect
dehors the award or the decision of 480 the arbitrator, and so in our judgment
is not covered by cl. (c) of S. 16 (1), Arbitration Act of 1940".
What was said there about a want of
registration is clearly equally applicable to a want of stamp.
Mr. Pathak appearing for the respondent
contended that under s. 14 (1) of the Arbitration Act it was clearly the duty
of the arbitrator to inform the parties of the amount of stamp duty payable on
the award. Section 14 (1) is in these terms:
Section 14 (1) When the arbitrators or umpire
have made their award, they shall sign it and shall give notice in writing to
the parties of the making and signing thereof and of the amount of fees and
charges payable in respect of the arbitration and award.
We are unable to see how this section can
provide the basis for the order made in this case. It only says that the
arbitrators shall inform the parties of the fees and charges payable. Even
assuming that the word 'charges' includes duty payable for the stamp to be
affixed to the award, at best, this section would support an order directing
the arbitrators to supply this information. It would not justify an order
requiring the arbitrators to inscribe the award afresh on a stamped paper and
re-submit it to court. As at present advised, we have grave doubts if the fees
and charges mentioned in s. 14 (1) include the stamp duty payable on the award.
Section 17 of the Stamp Act requires that stamping should be at the time of
execution. Under s. 14 (1) of the Arbitration Act it is only after the singing
of the award that is its execution, that the arbitrators are required to supply
the information about the fees and charges. It is, of course, no part of the
duty of the arbitrators under the Act or otherwise to find the costs of stamp
themselves. Therefore 481 it is difficult to appreciate how the word `charges'
mentioned in this section includes stamp. But on this question it is not
necessary for us to express any final opinion in this case.
Mr. Pathak contened that even if the case did
not come within s. 16 (1) (c) of the Arbitration Act, the order
in the present case can be supported under s. 151 of the Code of Civil
Procedure which preserves the inherent power of a court to make such orders as
may be necessary for the ends of justice. It is true that s. 41 of the Arbitration
Act makes the provisions of the code of Civil Procedure applicable to
proceedings before a court under the Arbitration Act. But it is well known that
after making his award the arbitrator is functus officio. To cite one authority
for this proposition we may quote the observations of Mellish, L. J., in Mordue
"I think the result of the cases at law
is that when an arbitrator has signed a document as and for his award, he is
functus officio, and he cannot of his own authority remedy any mistake."
In the present case, ex-hypothesi, the award has already been made and the
arbitrator has therefore become functus officio. It is that award which
requires stamp. Section 151 of the Code cannot give the court power to direct
the arbitrator to make a fresh award; that would be against well- established
principles of the law of arbitration.
It would again be useless to have another
copy of the award prepared and stamped for the copy would not be the award and
no action in a court can be taken on it. The order cannot therefore be
supported by s. 151 of the Code. It is of some interest to read here the
following passage from Russel on Arbitration 14th Ed., p. 325.
482 "The usual practice in preparing an
award is to have two copies made of it. One the arbitrator signs, which then
becomes then the original award, and this is delivered to the party who takes
up the award. The other copy is available for the other parties if they apply
for it." "The original award, before it is available for any purpose
whatsoever, must be duly stamped, but there is no obligation upon the
arbitrator to stamp it, and he does not usually do so." We should observe
here that the last paragraph in the aforesaid quotation does not appear in the
16th edition of Russel's work. Perhaps this is because in England an award is no more required to be stamped by virtue of s. 35 Sched. 8, of the
Finance Act, 1949, which was passed after the 14th edition was published.
Lastly, Mr. Pathak tried to support the order
under ss. 13 (d) and 15 (b) and (c) of the Arbitration Act. A bare perusal of
the provisions mentioned would show that the order made in this case cannot be
based on any of them. Section 13 (d) deals with correction of clerical mistakes
or accidental slips in the award, neither of which we think an omission to
stamp is. Furthermore, s. 13 is only an enabling section giving certain powers
to the arbitrator. The arbitrator cannot be compelled to exercise these powers.
Section 15 deals with a court's power to modify or correct an award. In the
present case, the Court did not purport to exercise that power.
We, therefore, think that the Division Bench
was in error in thinking that an order could be made remitting the award to the
arbitrator with a direction to re-write it on a stamped paper and resubmit it
to court. That is the only point that we decide in this case.
483 In the result this appeal is allowed. The
orders of the Courts below remitting the award are set aside. The appellant
will get the cost throughout. Nothing that we have said in this judgment will
affect the right of the parties to take such steps, if any are available to
them at law, for curing the defect arising from the award being on an unstamped