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1963 DIGILAW 333 (ALL)

Janki Rice Mills v. Dwarika Prasad Asharfi Lal

1963-12-11

S.S.DHAVAN

body1963
JUDGMENT S.S. Dhavan, J. - This is a second appeal from the concurrent decisions of the courts below rejecting the appellants' objections to an award filed in court of the ground that these were time barred. The facts, which are somewhat complicated, very briefly are these. The dispute between the parties was referred to arbitration and the arbitrators gave their award in favour of the plaintiff-respondents allowing their claims for Rs. 2,481/8/-. Their award was filed in court on 15th July 1955. The trial court directed objections to be filed within 30 days, but none were filed and on 18th May 1955 the award was confirmed and a decree for Rs. 2,481/8/- passed in favour of the plaintiff-respondent. On 18th July 1955 the defendant appellants appeared and filed an application for the setting aside of the award or the direction of the court to file objections. In fact they alleged that they had no knowledge even of the making of the award.They also prayed that after setting aside the decree the court should grant them time for filing objections to the award. The application was supported by an affidavit. The plaintiff-respondent filed no counter-affidavit. On 22nd September 1955 the court allowed this application setting aside the ex-parte decree on the ground that the appellants had no knowledge of the filing of the award and that there had been an omission to serve notice on them. Simultaneously the court granted the appellants time till the 11th October 1955 for filing their objections. This time was twice extended by the court on payment of costs and ultimately the defendants filed their objections on the 22nd of October 1955. On 4th November, 1955, the court dismissed these objections on the ground that they had been filed beyond the period of limitation prescribed under Article 158 of the Limitation Act. It took the view that the defendants must be deemed to have had notice of the filing of the award on 18th July 1955 when they appeared before the court and asked for time to file objections against it. The court one against passed a decree in terms of the award. The defendants appeal was dismissed by the learned Civil Judge and they have now come to this Court in second appeal. 2. I have heard Mr. Brij Lal Gupta for the appellants and Mr. U.S. Awasthi for the respondent. Mr. The court one against passed a decree in terms of the award. The defendants appeal was dismissed by the learned Civil Judge and they have now come to this Court in second appeal. 2. I have heard Mr. Brij Lal Gupta for the appellants and Mr. U.S. Awasthi for the respondent. Mr. Gupta contended that the view of the courts below that the appellant must be deemed to have served with notice of the award on 18th July 1955 is erroneous in view of the mandatory provisions of Section 14 of the Arbitration Act, that the court must issue notice to the parties. Counsel argued that having knowledge of the proceedings it is not equivalent being served with the formal notice and in this formal notice was necessary. 3. I am not much impressed with this argument but I think the appeal must be allowed on another ground. Under Article 158 of the Limitation Act the period of limitation for filing an application to set aside an award is 30 days from the date of service of the notice of the filing of the award. The courts below have taken the view that as the appellants went to court on 18th July, 1955 with an application for the setting aside of the award they must be deemed to have been served with the notice on that date, and it followed that the time for filing the objection expired on the 17th of August 1955 and the court could not entertain an objection filed beyond time. 4. Both the courts below overlooked the vital fact that the appellants application dated 18th July 1955 was primarily one for the setting aside of an ex parte decree and their allegation that they had no knowledge of the proceedings before the said date was accepted by the court. The courts also overlooked the legal effect of the decree on the award itself. After a decree is passed in terms of an award, the award was no longer in existence having merged in the decree. The courts also overlooked the legal effect of the decree on the award itself. After a decree is passed in terms of an award, the award was no longer in existence having merged in the decree. When the court, on the application of a party sets aside an ex parte decree based on an award in arbitration proceedings and permits that party to file objections to the award, the limitation under Article 158 of the limitation Act for filing the objection does not commence when the application is filed but when the ex parte decree is set aside, because the award having merged in the ex parte decree no application could have been filed to set aside a non-existence award. It is only after the decree is set aside and the award emerged once again and objections can be filed against it. The fact that the applicant had knowledge of the award when he filed the application to set aside the decree will not make the limitation run from the date of the application because no objection was maintainable as long as the decree existed. 5. The courts below have relied on a decision of the Calcutta High Court and Mr. Awasthi cited another decision of the Andhra Pradesh High Court, Bhola Nath Mallick v. Mahadeo Mallick, A.I.R. 1952 Cal. 226, Kasiraju Lakshmikanta Rao v. Dendukuri Venkateswarlu and another, A.I.R. 1960 A.P. 576. But these decisions have no application to the case before me as in both of them there was an award in existence and it was held that the party concerned knew of it and could have filed objections. In this case there was no award in existence before the 22nd of September 1955 and it is difficult to see how limitation could run against a party when the law made it impossible for him to file any objections. The Andhra Pradesh High Court observed that knowledge on the part of a party for the purpose of Article 158 of the Limitation Act can be assumed only if there is a valid award in court. It follows in my opinion, that if the award is non est, limitation for filing objection against it does not commence unless and until it comes into existence again. In the present case the award did not exist between 18th of May 1955 and the 22nd of September 1955. It follows in my opinion, that if the award is non est, limitation for filing objection against it does not commence unless and until it comes into existence again. In the present case the award did not exist between 18th of May 1955 and the 22nd of September 1955. The appellants had knowledge on the 18th of July that some proceedings had taken place resulting in the passing of an ex parte decree, but they could not have filed objections until the award was resuscitated. In my opinion limitation began to run against him on 22nd September 1955 but he filed his objection within time. 6. I allow this appeal, set aside the decree of the lower court and direct that the record shall be sent back to the trial court with a direction to dispose of the appellant's objection against the award on merits. The appellants shall have their costs from the respondents in all courts.