Madan Lal Vs. Sunderlal & ANR
 INSC 60 (9 March 1967)
09/03/1967 WANCHOO, K.N.
CITATION: 1967 AIR 1233 1967 SCR (3) 147
CITATOR INFO :
R 1974 SC 968 (51)
Arbitration Act 10 of 1940--S. 30, objection
on filing award--containing grounds for setting it aside-Whether Art.
158 Limitation Act applicable.
An arbitration award in respect of certain
disputes between the appellant and the respondents was filed in Court and
notice of the filing served on the appellant on September 30, 1957. 'Me
appellant filed an objection on November 3, 1957 attacking the validity of the
award on various grounds.
The respondents contended before the trial
Court that the objection was in the nature of an application to set aside the
award and contained grounds which fell under s. 30 of the Arbitration Act 10 of
1940; therefore, as the objection was filed more than 30 days after notice was
served on the appellant., it was barred by limitation under Art. 158 of the
Limitation Act No. 9 of 1908. The trial Court upheld the appellant's objection
and an appeal to the High Court was dismissed.
On appeal to this Court,
HELD:Dismissing the appeal, The Arbitration
Act contemplates making of an application to set aside an award on grounds
mentioned in s. 30. This application must be made within 30 days of the date of
service of notice as provided in Art. 158 of the Limitation Act. An objection
petition in the nature of a written- statement may in appropriate cases be treated
as such application provided it is filed within the period of limitation
prescribed. Even if the court has the power to set aside an award suo motu that
power cannot be used to set aside an award on grounds falling under s. 30, if
taken in a petition filed more than 30 days after the service of notice, for in
that case the limitation provided would be completely negatived. [151 E, G-H;
152 D-E] Hastimal Dalichand Bora v. Hiralal Motichand Mutha, A.I.R.
(1954) Bom. 243, Saha & Co. v. Ishar
Singh v. Kripal Singh, A.I.R (1956) Cal. 321 and Mohan Das v. Kessumal, A.I.R.
(1955) Ajm. 47, distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 990 of 1964.
Appeal from the judgment and decree dated
April 15, 1963 of the Allahabad High Court, Lucknow Bench in First Appeal from
Order No. 30 of 1960.
B. C. Misra and C. P. Lal, for the appellant.
P. K. Chatterjee, for respondent No. 1.
S. P. Sinha and P. K. Chatterjee, for
respondent No. 2.
148 The Judgment of the Court was delivered
by Wanchoo, J. This is an appeal on a certificate granted by the Allahabad High
Court and arises in the following circumstances. On May 20, 1965, an agreement
was entered into between the appellant and the respondents referring certain
differences between them to the arbitration of three persons. On January 19,
1956, an award was made, signed by two out of the three arbitrators as the
third arbitrator had refused to sign the award. The award was filed in court on
September 7, 1957 and the respondents prayed for a decree in accordance with
the award. Notice of filing of the award was issued to the appellant and was
served upon him on September 30, 1957. On November 3, 1957, the appellant filed
an objection in the nature of a written statement. By this objection the
appellant attacked the validity of the award on various grounds. But the
objection did not contain any prayer at the end, nor did it indicate what
relief the appellant desired, though there were as many as 43 paragraphs
therein. When the matter came to be heard in the trial court, the respondents
contended that the so-called objection was in the nature of an application to
set aside the award and contained grounds coming under s. 30 of the Arbitration
Act, No. 10 of 1940, (hereinafter referred to as the Act). Therefore, as the
objection was filed more than 30 days after the notice was served on the
appellant, it was barred by limitation under Art. 158 of the Indian Limitation
Act, No. 9 of 1908.
The trial court held that the appellant's
objection was not maintainable, as his remedy was to apply under s. 33 of the
Act, if he wanted the award to be set aside on the grounds raised in the
objection. As he had not done so and as the objection was itself filed more
than 30 days after the service of notice on him, he was barred from raising any
ground for setting aside the award which fell under S. 30 of the Act. The trial
court also held that the objection could not be treated as an application under
s. 33 of the Act in view of the fact that it was beyond 30 days as required by
Art. 158 of the Limitation Act. The trial court therefore passed a decree in
terms of the award.
The appellant then went in appeal to the High
Court, and the main question urged there was whether the appellant could
maintain his objection when he had failed to make an application under s. 33 of
the Act for setting aside the award on grounds contained in the objection. It
seems that there were other points. also before the High Court, but the High
Court held that if the main question was answered against the appellant it
would not be necessary to go into other points. It seems therefore that other
points were not pressed before the High Court. The High Court came to the
conclusion that the award could not be set aside on grounds which fell under s.
30 of the Act, except on an application under s. 33 149 of the Act within
thirty days of the service of notice of filing of the award as required by Art.
158 of the Limitation Act. The High Court further held that the objection of
the appellant could not be treated as an application under s. 33, as, if it was
treated as such application, it would be barred by time. The High Court
therefore dismissed the appeal, but granted a certificate to the appellant to
appeal to this Court.
We have heard learned counsel for the
appellant on the main.
question raised in the High Court. We may add
that learned counsel wanted to raise other points which were not pressed before
the High Court, but we have not permitted him to do so.
We are of opinion that this appeal must fail.
The Act was passed in 1940 and as the long title shows it is an Act to
consolidate and amend the law relating to arbitration.
Before 1940, the law relating to arbitration
was mainly contained in the Second Schedule to the Code of Civil Procedure,
which was repealed by the Act which is now a self-contained code in the matter
of arbitration. The scheme of the Act is to divide arbitration into three
classes. The first consists of arbitration without intervention of a court and
is contained in Chap. 11 of the Act which has 17 sections from s. 3 to s. 19.
The second consists of arbitration with intervention of a court where there is
no suit pending, which is in Chap. III of the Act, and there is only one
section (s. 20) therein, as sub-s. (5) thereof applies the other provisions
contained in the Act to this type of arbitration also so far as they can be
made applicable. The third type of arbitration is contained in Chap. IV,
namely, arbitration in suits. This chapter contains 5 sections, and s. 25
thereof applies the other provisions of the Act so far as they can be made
Chapter 11 makes various provisions with
respect to arbitrations of the first type. Reference may be made to a few which
are material for our purpose. Section 5 lays down that the authority of an
appointed arbitrator or umpire shall not be revocable except with the leave of
the court, unless a contrary intention is expressed in the arbitration
agreement. Section 8 gives power to court to. appoint an arbitrator or umpire
in certain circumstances. Section 11 gives power to court to remove an
arbitrator or umpire in certain circumstances and s. 12 gives consequential
power to court to appoint persons to fill vacancies which may have arisen.
Section 13 provides for powers of the arbitrators and s. 14 provides for the
award to be signed and filed.
When the award is filed the court has to give
no ice to the parties of the filing of the award under s. 14(2). Under s. 15,
the court is given power to modify or correct an award and under s. 16 the
court can remit the award for reconsideration. Section 17 provides for judgment
in terms of the award and reads thus :- 150 "Where the court sees no cause
to remit award on any of the matters referred to arbitration for
reconsideration or to set aside the award, the court shall, after the time for
making an application to set aside the award has expired, or such application
having been made, after refusing it, proceed to pronounce judgment according to
the award, and upon the judgment so pronounced a decree shall follow and no
appeal shall lie from such decree except on the ground that it is in excess of,
or not otherwise in accordance with, the award." Section 19 gives power to
the court to supersede the arbitration agreement in certain circumstances.
This analysis of the relevant provisions of
the Act contained in Chapter 11 which apply mutates mutandis to arbitrations of
the other two types shows that the court has to pronounce judgment in
accordance with the award if it sees no cause to remit the award or any of the
matters referred to arbitration for reconsideration, or if it sees no cause to
set aside the award. The court has to wait for the time given to a party to
make an application for setting aside the award and where such an application
has been made the court has to decide it first and if it rejects it the court
proceeds to pronounce judgment according to the award.
It is clear therefore from s. 17 that an
application to set aside the award is contemplated therein and it is only when
no such application has been made within the time allowed or if such an
application has been filed and has been rejected that the court proceeds to
pronounce judgment in terms of the award. The Act therefore contemplates the
making of an application to set aside an award and the grounds on which such an
application can be made are to be found in s. 30.
The grounds on which an application can be
made for setting aside the award are-(a) that an arbitrator or umpire has mis conducted
himself or the proceedings, (b) that an award has been made after the issue of
an order by the court superseding the arbitration or after arbitration
proceedings have be-come invalid under s. 35, or (c) that an award has been
improperly procured or is otherwise invalid. These are the only grounds on
which an award cat be set aside under s.
30 and it will be seen that if a party wants
an award to be set aside on any of these grounds it has to make an application.
Thus any party wishing to have an award set aside on the ground that it was improperly
procured or otherwise invalid has to make an application. We may also refer to
s. 32 which lays down that "notwithstanding any law for the time being in
force, no suit shall lie on any ground whatsoever 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.".
151 It is clear therefore from the scheme of
the Act that it a party wants an award to be set aside on any of the grounds
mentioned in S. 30 it must apply within 30 days of the date of service of
notice of filing of the award as provided in Art. 158 of the Limitation Act. If
no such application is made the award cannot be set aside on any of the grounds
specified in s. 30 of the Act. It may be conceded that there is no special form
prescribed for making such an application and in an appropriate case an
objection of the type made in this case may be treated as such an application,
if it is filed within the period of limitation.
But if an objection like this has been filed
after the period of limitation it cannot be treated as an application to set
aside the award, for if it is so treated it will be barred by limitation.
It is not in dispute in the present case that
the objections raised by the appellant were covered by S. 30 of the Act, and
though the appellant did not pray for setting aside the award in his objection
that was what he really wanted the court to do after hearing his objection. As
in the present case the objection was filed more than 30 days after the notice
it could not be treated as an application for setting the award, for it would
then be barred by limitation. The position thus is that in the present case
there was no application to set aside the award as grounds mentioned in S. 30
within the period of limitation and therefore the court could not set aside the
award on those grounds. There can be no doubt on the scheme of the Act that any
objection even in the nature of a written-statement which falls under s. 30
cannot be considered by the court unless such an objection is made within the
period of limitation (namely, 30 days), though if such an objection is made
within limitation that objection may in appropriate cases be treated as an
application for setting aside the award.
Learned counsel for the appellant however
urges that S. 17 gives power to the court to set aside the award and that such
power can be exercised even where an objection in the form of a written
statement has been made more than 30 days after the service of the notice of
the filing of the award as the court can do so suo motu.He relies in this
connection on Hastimal Dalichand Bora v. Hiralal Motichand Mutha(1) and Saha
& Co. v. Ishar Singh Kripal Singh (2). Assuming that the court has power to
set aside the award suo motu, we are of opinion that power cannot be exercised
to set aside an award on grounds which fall under s. 30 of the Act, if taken in
an objection petition filed more than 30 days after service of notice of filing
of the award, for if that were so the limitation provided under Art. 158 of the
Limitation Act would be completely negatived. The two cases on which the
appellant relies do not in our opinion support him. In Hastimars case(1) it was
(1) A.I.R. 1954 Bom. 243.
(2) A.I.R. 1956 Cal. 321.
152 observed that "if the award directs
a party to do an act which is prohibited by law or if it is otherwise patently
illegal or void it would be open to the court to consider this patent defect in
the award suo motu, and when the court acts suo motu no question of limitation
prescribed by Art.
158 can arise". These observations only
show that the court can act suo motu in certain circumstances which do not fall
within s. 30 of the Act.
Saha & Co.'s case(1) was a decision of
five Judges by a majority of 3 : 2 and the majority judgment is against the
appellant. The minority judgment certainly takes the view that the
non-existence or invalidity of an arbitration agreement and an order of
reference to arbitration may be raised after the period of limitation for the
purpose of setting aside an award because they are not grounds for setting
aside the award under s. 30. It is not necessary in the present case to resolve
the conflict between the majority and the minority Judges in Saha & Co.'s
case(1), for even the minority judgment shows that it is only where the grounds
are not those falling within s. 30, that the award may be set aside on an
objection made beyond the period of limitation, even though no application has
been made for setting aside the award within the period of limitation. Clearly
therefore where an objection as in the present case raises grounds which fall
squarely within s. 30 of the Act that objection cannot be heard by the court
and cannot be treated as an application for setting aside the award unless it
is made within the period of limitation.
The Saha & Co.'s case(-') therefore also
does not help the appellant.
Learned counsel for the appellant also relies
on Mohan Das v. Kessumal(2). In that case the objection which was made more
than 30 days after the service of notice was that the award had been filed by a
person not authorised by the arbitrator to do so. The court held that such an
objection did not fall within s. 30 of the Act and therefore Art. 158 of the
Limitation Act did not apply. On these facts the decision in that case may be
right. But-the court seems to have made a general observation that Art. 158
cannot apply to a written-statement by a defendant in reply to an application
to have the award made a rule of the court. If by ,that general observation the
court means that even if the objection is of the nature falling within s. 30
and is filed more than 3O days after service of notice, it would be open to the
court to set aside the award on such objection, we are of the opinion that the
view is incorrect.
In the result the appeal fails and is hereby
dismissed with costs.
R. K. P. S.
(1) A.I.R. 1956 Cal. 321.