DEWAN AMOLAK SINGH v. LAJPAL — 1966 DIGILAW 6 (DEL)

H. R. Khanna ( 1 ) THIS is an appeal under section 39 of the Arbitration Act against the order of Subordinate Judge 1st Class, Delhi, whereby he dismissed the objections of the appellant to the award, and with a very slight modification directed that the award be made a rule of the Court and a decree be awarded in terms of the award for recovery of the amount in question with future interest at the rate of 7 percent till the date of realisation. ( 2 ) THE brief facts of the case are that on 26th July 1962 the appellant executed a registered mortgage deed with regard to a house situated in East Patel Nagar, New Delhi, for Rs. 25. 000. 00 in favour Lajpal son of Lakhmi Dass respondent. It was mentioned in the deed that the mortgage money would carry interest at the rate of annas ten per cent per mensern. The deed also contained a clause that if any dispute arose with regard to any matter covered by the mortgage deed, the same would be decided by Shri Sant Ram Ghai, Advocate, who would be the sole arbitrator and whose award would be binding upon the parties. On 19th November 1962 a notice was issued on behalf of the respondent to the appellant that only Rs. 256/25 np. had been paid towards interest that the balance of the amount due on the basis of the mortgage had not been paid. The appellant was, accordingly, called upon to pay the amount within a week failing which legal proceedings would be taken against the appellant. A letter was thereafter addressed on behalf of the respondent to Shri Sant Ram Ghai to enter upon the reference. Shri Sant Ram Ghai after that sent registered notice dated 27th April 1963 to the appellant intimating that he had entered on the reference. The appellant was called upon to attend at the residence of Shri Ghai on 19th May 1963 at 10 a. m. On 3rd June 1963 the appellant as well as Lakhmi Dass, father and attorney of the respondent, appeared before the arbitrator. Some proceedings took place before the arbitrator on 3rd June 1963, 16th June 1963 and 23rd June 1963. Thereafter orders were made by the Court extending the time for making the award. Some proceedings took place before the arbitrator on 3rd June 1963, 16th June 1963 and 23rd June 1963. Thereafter orders were made by the Court extending the time for making the award. Some further hearing then took place before the arbitrator and on 26th December 1963 gave his award. According to it, Rs. 26,946/25np consisting of Rs. 25,000. 00 on account of principal and Rs. 1,946/25 np on account of interest upto 26th Novamber 1963 at the agreed rate of annas ten percent per mensem were awarded in favour of the respondent against the appellant. It was also directed that the amount would carry interest at the rate of annas ten per cent per mensem till full payment. The appellant was also directed to pay Rs. 150. 00 on account of the arbitration proceedings. An application under section 14 of the Arbitration Act was thereafter made by the respondent for making the award rule of the Court and passing a decree in terms of the award. The application was resisted by the appellant and objections were filed to the award. Objection was also raised that the application was not maintainable in the Court in Which it had been filed. ( 3 ) FOLLOWING issues were framed by the Court below :- 1. Whether this Court has no jurisdiction to entertain the petition ? 2. Whether the award in question is liable to be set aside on the grounds of mentioned in. the objection petition ? 3. Relief. 3. Issue No. 1 as well as issue No. 2 except with respect to one minor matter to which reference would be made hereafter, were decided against the appellant and in favour of the respondent. It was held that the arbitrator could not award future interest. His award was modified to this extent. Decree in terms of the award with the above modification was granted, and it was directed by the court that the appellant would pay future interest on the amount of award till the date of payment. ( 4 ) IT has been argued, in appeal, on behalf of the appellant that he put in appearance before the arbitrator on 19th May 1963 and though a record was prepared of the proceedings on that day, the same have been deliberately withheld by the arbitrator. This conduct on the part of the arbitrator, it is urged amounts to misconduct. This conduct on the part of the arbitrator, it is urged amounts to misconduct. In this respect I find that the statement of Shri Sant Ram Ghai, who was examined as C. W. 1, goes to show that the appellant did not appear before him on 19th May 1963 and that no sitting was held on that day nor was any record of proceedings prepared on that day. I see no particular reason to disbelieve the statement of the arbitrator in this respect. ( 5 ) OBJECTION has been taken that the arbitrator did not write the statement of witnesses. In this connection I find that the record of the arbitration proceedings shows that on 3rd June 1963 the appellant stated before the arbitrator that he paid Rs. 70. 00 to Lakhmi Dass, father and attorney of the respondent. The appellant did not have a statement of account about the payments made to Lakhmi Dass and accordingly he prayed for an adjournment. The case was then adjurned to 16th June 1953. The appellant on that day mentioned certain dates on which, according to him, he had made the payments. The appellant also on that date paid Rs. 156/25 np by means of a cheque. The case was then adjourned to 23rd June 1963. On that day the appellant made a statement that he could not give any particulars about the payments made by him. The appellant added that the statement of Lakhmi Dass be taken on oath and in case the receipt be held to be payable by the appellant. Lakshmi Dass thereafter made a statement on oath where in stated that he had received only Rs- 397. 50 np. on account of interest from the appellant and he had not received any other amount. The parties thereafter took some time for compromise. Proceedings were then taken for getting the time, for making the award, extended by the Court. After the time had been extended the appellant put in appearance before the arbitrator on 14th December 1963 and 16th December 1963. Some further objections were thereafter filed by the appellant but the arbitrator refused to take them into consideration on the ground that they were the result of an afterthought. After the time had been extended the appellant put in appearance before the arbitrator on 14th December 1963 and 16th December 1963. Some further objections were thereafter filed by the appellant but the arbitrator refused to take them into consideration on the ground that they were the result of an afterthought. It would thus appear from the above that on 23rd June 1963, the position taken by the appellant was that he should be given credit of only that much amount of which the receipt was admitted by Lakhmi Dass and that no other objection was then raised by the appellant. As Lakhmi Dass made a statement in terms of the above stand of the appellant, the question of recording any evidence by the arbitrator did not arise. The evidence of Shri Sant Ram Ghai Advocate shows that he fully heard the parties before the making of the award and that no further opportunity was asked for by any of the parties. I, therefore, find no substance in the contention advanced on behalf of the appellant that no evidence was recorded on his behalf. ( 6 ) LASTLY, it is argued that the dispute was REFERRED TO the arbitration of Shri Sant Ram Ghai Advocate unilaterally by the respondent and that as the appellant did not join in making the reference, the reference was not valid. Reliance in this connection is placed upon a recent Bench decision of this court in Madhu Sudah Ltd. v. Ram Parkash, decided by Dulat and Harbans Singh JJ. on 24th December 1965. The learned Judge in that case considered the following observations of the Supreme Court in Thawardas Pherumal and another v. Union of India. "a reference requires the assent of both sides. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the Court under section 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub section (4 ). In the absence of either, agreement by both sides about the terms of reference, or an order of the court under section 20 (4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. In the absence of either, agreement by both sides about the terms of reference, or an order of the court under section 20 (4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. Therefore, when a question of law is the point at issue, unless both sides specifically agree to refer it and agree to be bound by the arbitrator s decision, the jurisdiction of the Court to set an arbitration right when the error is patent on the face of the award is not ousted. The mere fact that both parties submit incidental arguments about a point of law in the course of the proceedings is not enough. " It was, accordingly observed by the leared Judges in Madhu Sudan s case- ". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . here the question is whether, if reference to the arbitrator is only by one of the parties to the agreement without the consent of agreement of the other party and without other party submitting to the arbitrator s jurisdiction, the arbitrator can validly proceed with the matter, and, as far as that question goes, the only anwser is to be found in the observations of the Supreme Court which I have already REFERRED TO at some length, and the meaning, in my opinion is that such a reference must be with the consent of both the parties, and in the absence of such consent only a Court s order under the Arbitration Act confine jurisdiction to the arbitrator, and, apart from these two contingencies, the arbitrator has no jurisdiction. " In my opinion, the appellant can derive no assistance from. the above mentioned observations, for in the present case the appellant submitted to the jurisdiction of the arbitrator. The appellant made statement before the arbitrator and sought reduction of the amount which was claimed from him on the ground that he had made certain payments to the respondent. " In my opinion, the appellant can derive no assistance from. the above mentioned observations, for in the present case the appellant submitted to the jurisdiction of the arbitrator. The appellant made statement before the arbitrator and sought reduction of the amount which was claimed from him on the ground that he had made certain payments to the respondent. The appellant having submitted to the jurisdiction of the arbitrator and having taken a chance of getting a decision in his favour, cannot now urge that the reference to the arbitrator was not valid because of its having been unilaterally made on behalf of the respondent. The necessity of resort to section 20 of the Arbitration Act and of avoiding unilateral reference to arbitration arises, according to the view expressed in the cases of Thawardas Pherumal and Madhu Sudani (supra), where one. of the parties is recalcitrant and refuses to submit itself to the jurisdiction of the arbitrator. Where however, an arbitrator is named by both the parties to the dispute and they both submit to his jurisdiction and take part in the proceedings before the arbitrator thus availing of the chance to have a decision in their favour, the award given by the arbitrator cannot be held to be invalid and set aside on the ground that he entered on the reference on having been moved by only one of them. ( 7 ) THE appeal consequently, fails and is dismissed. In the circumstances, I leave the parties to bear their own.