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1968 DIGILAW 299 (KER)

Thomas Mathan v. Joseph Thomas

1968-12-03

V.R.A.KRISHNA IYER

body1968
JUDGMENT V.R. Krishna Iyer, J. 1. The present second appeal stems out of certain arbitration proceedings where an Award has been made, but no decree in terms of the Award has been passed. Although considerable argument has been addressed on both sides, relating to various questions arising under the Arbitration Act, What falls for decision is the course to be adopted when law seems to conflict with justice in a matter of procedure. In my view, such a conflict should be obviated as far as possible, because courts of law function to promote justice, though according to law. It has been rightly pointed out long ago by so eminent a Judge as Mahinood, J. in Narsingh Das v. Mangal Dubey I.L.R. 5 All. 163 that .. the Courts are not to act upon the principle that every procedure is to be taken as prohibited unless it is expressly provided for by the Code, but on the converse principle that every procedure is to be understood as permissible till it is shown to be prohibited by the law. As a matter of general principle, prohibitions cannot be presumed.. In this case, a suit was filed after the Award was made by the Arbitrator, seeking to enforce the Award, as it were although the prayer has been drawn inartistically and not very much in conformity with the provisions of the Arbitration Act. If this suit, could be permitted to be treated as or converted into an application under the appropriate sections of the Arbitration Act, the plaintiff would be entitled to relief, but if .the Court insists on treating it as a suit only, the plaintiff, will have to be denied relief, because a suit as such is not maintainable. 'If all the requisite averments for an application under the relevant provisions of the Arbitration Act have been made in what is styled as the plaint and if there is no bar of limitation or other prejudice that will be caused to the defendant, there should be no impediment, in the way of the Court treating the plaint as an application and giving relief, if it is otherwise due. I am inclined' to apply the principle laid' down by Mahmood, J. and treat the plaint as an application, subject to the consideration of the points raised before me which I will deal with presently. 2. I am inclined' to apply the principle laid' down by Mahmood, J. and treat the plaint as an application, subject to the consideration of the points raised before me which I will deal with presently. 2. The plaint, in what has been numbered as a suit O.S. No. 84 of 1961, sets out that facts leading up to the Award and states that the defendants are not paying the plaintiff the amounts due under the Award and therefore he is constrained to move the Court for a decree. The reliefs prayed for in the plaint may be bodily extracted here : xxx xxx xxx It is seen that the plaintiff first wants a declaration that the Award is binding on the parties and that the amounts payable by the defendants to the plaintiff are therefore recoverable, that the Award should be made a rule of the Court and thereby rendered enforceable as a decree of Court, and that there should be a direction to the defendants to pay to the plaintiff the sum of Rs. 2,380, As provided in the Award (and other miscellaneous reliefs). In a latter portion of the plaint it has been stated that although a copy of the Award is being produced along wish the plaint, the Court should direct the Arbitrator to produce the Award and connected documents into Court. Strictly speaking, a suit for the reliefs prayed for will not lie on account of the bar contained in sections 32 and 33 of the Arbitration Act as has now been authoritatively laid down by the decision of the Supreme Court in Jawhar Lal Barman v. The Union of India A.I.R. 1962 S.C. 378. The position was somewhat dubious prior to this pronouncement, as is seen from an earlier decision reported in Ganga Ram v. Radha Kishan A.I.R. 1956 Punjab 145. The position was somewhat dubious prior to this pronouncement, as is seen from an earlier decision reported in Ganga Ram v. Radha Kishan A.I.R. 1956 Punjab 145. In the Travancore area, the Travancore Civil Procedure Code provided for arbitrations and Order 39, rule 20 there of provided for applications which are now provided for in section 14 (2) of the Arbitration Act; but, Order 39, rule 20 (2) laid down that " The application shall be in writing and shall be numbered and registered as a suit between the applicant as plaintiff and the other parties as defendants Habits die hard in matters of procedure ; and it is represented before me by counsel for the appellant that even now proceedings under section 14 (2) of the Arbitration Act are often times registered as suits, although what is really meant is only :an application. Even in the decision in Hastimal Dalichahd Bora v. Hiralal Motichand Mutha A.I.R. 1954 Bombay 243 His Lordship Mr. Justice Gajendragadkar, as he then was, has observed : " It has come to our notice in several cases that though the Arbitration Act was passed in 1940, Courts below do not seem to take judicial notice of the change which has been effected by the passing of this Act. Very often when Awards are filed, proceedings are taken pursuant thereto as though the provisions of schedule II to the Civil Procedure Code were still in force. In the present case the learned Judge has virtually adopted the same procedure. " Schedule II to the Civil Procedure Code is, more or less the same as Order 39 of the Travancore Civil Procedure Code. Thus, it is clear that, notwithstanding the passing of the Arbitration Act, parties and Courts and practitioners, have still been resorting to the more obsolete procedure prevalent under the Civil Procedure Code. All this is mentioned by the counsel for the appellant only to explain how his client happened to file a suit although the facts stated therein are sufficient to attract the relevant provisions of the Arbitration Act. However, since there is a reference to a decree for a certain sum of money and for direction to the defendant to pay that sum to the plaintiff, one cannot so easily swallow the disingenuous part of this submission. However, since there is a reference to a decree for a certain sum of money and for direction to the defendant to pay that sum to the plaintiff, one cannot so easily swallow the disingenuous part of this submission. It must really be where the party has mixed up a desire to enforce the Award as if it were a decree and to secure a decree on the Award and in this process of jumbling up, has instituted the present suit. Even so, the party should not be denied relief merely because he has been tripped in his procedure, on the benevolent principle I have already stated in the beginning. 3. The real questions are firstly, as to whether the allegations in the plaint are sufficient to attract any of the provisions of the Arbitration Act like section 14 (2), section 17 and section 33 of the Arbitration Act ; secondly, as to whether the proceeding would otherwise be barred under the Limitation Act, in which case the defendant is entitled to rely on it; since his case appears to be that the Award is invalid ; thirdly, do the defendants suffer any prejudice on account of the conversion of the suit into an application under the Arbitration Act, if so, the conversion should not be ordinarily countenanced. 4. Before me, the question of limitation has been argued at some length. Article 178 of the Limitation Act (the old Act applies to this case) a period of 90 days is prescribed, the terminus a quo being the date of service of the notice of the making of the Award. Even if I am inclined to convert the suit into an application and treat the proceeding as one filed under section 14 (2) of the Arbitration Act we have to ascertain whether the 90 days period has expired. The question then is what is the date of service of notice of the making of the Award. The scheme of the Act appears to be that when the Arbitrator has made his Award he shall sign it and shall give notice in writing to the parties the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and Award. The scheme of the Act appears to be that when the Arbitrator has made his Award he shall sign it and shall give notice in writing to the parties the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and Award. Within 90 days of receipt of this notice any party may move the Court to direct the Arbitrators to cause the Award or, a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court. Of course, it is open to the Arbitrators to file the Award into the Court also at the request of a party. On the Award being filed the Court shall give notice to the parties of the filing of the Award. The next stage is for the Court to consider whether it should modify or correct the Award for all or any of the reasons mentioned in section 15 of the Act or whether it should remit the Award or any matter referred to arbitration to the Arbitrator or umpire for reconsideration for any of the reasons mentioned in section 16 of the Act. It is also permissible for the Court suo motu, or on an application, to find put whether the Award should be set aside for all or any of the reasons mentioned in section 30. If the Count sees no reason to remit the Award or to set it aside., the Court shall, after the time for making an application to set aside the Award has expired, or such an application having been made after refusing it, proceed to pronounce judgment according to the Award. A decree shall follow upon such judgment and thereafter the decree will become executable. Once the Award comes into Court, it is largely the duty of the Court to act in the manner set out above and the culmination is the passing of a ' decree under section 17, or the supersession of the reference under section 19 whereupon the arbitration agreement, shall cease to have effect. When the court is moved by parties to the arbitration agreement for relief, there is an obligation on its part to act in according with the scheme set out above. 5. When the court is moved by parties to the arbitration agreement for relief, there is an obligation on its part to act in according with the scheme set out above. 5. Now, is the application under section 14 (2) assuming that the present plaint is to be regarded as one under section 14 (2) of the Arbitration Act barred by limitation? I think not. There is a sharp distinction between., the manner of service of notice contemplated under section 14 (1) and that under section 14 (2). There cannot, be any dispute now that under section 14 (2) informal, and even oral notice, is sufficient. For, it has been so laid down by the Supreme Court in Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti A.I.R. 1962 S.C. 666 section 42 of the Arbitration Act prescribes the mode of service of the notice, required by this Act to be given otherwise than through the Court, by a party to an arbitration agreement or by an arbitrator or umpire. That provision insists that if the arbitration agreement does not provide for the manner of service of notice, service should be effected by delivering the notice to the person on whom it is to be served or by sending it by registered post addressed to the person at his usual or last known place of abode or business in India. It is admitted in this case that service of notice was effected on the Advocate who appeared before the Arbitrator and so the question arises as to whether that is sufficient notice to set the law of limitation in motion for computing the 90 days specified. Dealing with section 14 (2) of the Act I may mention that that provision contemplate notice by Court t and not by part or Arbitrator the Supreme Court observed: " We see no ground to construe the expression ' date of service of notice' in column 3 of Article 158 of the Limitation Act to mean only a notice in writing served in a formal manner. When the Legislature used the word ' notice ' it must be presumed to have borne in mind that it means not only a formal intimation but also an informal one. Similarly, it must be deemed to have in mind the fact that service of a notice would include constructive or informal notice. When the Legislature used the word ' notice ' it must be presumed to have borne in mind that it means not only a formal intimation but also an informal one. Similarly, it must be deemed to have in mind the fact that service of a notice would include constructive or informal notice. If, its intention were to exclude the latter sense of the words ' notice ' and ' service ' would have said so explicitly. It has not done so here. Moreover, to construe the expression as meaning only a written notice served formally on the party to be affected, will leave the door open to that party, even though with full knowledge of the filing of the Award he has taken part in the subsequent proceedings, to challenge the decree based upon the Award at any time upon the ground that for want of a proper notice his right to object to the filing of the Award has not even accrued. Such a result would stultify the whole object which underlies the process of arbitration the speedy decision of a dispute by a tribunal chosen by the parties." 6. But, in the same ruling, section 42 of the Arbitration Act has also been adverted to and this is what the Court has to say on it: " We have been referred to section 42 of the Arbitration Act for the modes of serving notice. This section the giving of notice by Courts. It applies to the service of notice by a party to an arbitration agreement or by an arbitrator or umpire." Thus, the Supreme Court is not prepared to equate notice under section 14 (1) with notice under section 14 (2). Once the statute prescribes a particular manner in which notice should, be served, other modes of service cannot be resorted to as substitutes. The decision in Gottimakkula Chetti Venkatraju v. Gottemakkula Ramabhaddirraju A.I.R. 1942 Madras 403, dealing with a different enactment though', but with a kindred subject matter, support this stand of the appellant. Their Lordships observed: " It must, we think, be inferred that the special provisions of this order, in so far as they are in conflict with the provisions of the other parts of the Code, must prevail and must govern the procedure in preference to these general provisions. Their Lordships observed: " It must, we think, be inferred that the special provisions of this order, in so far as they are in conflict with the provisions of the other parts of the Code, must prevail and must govern the procedure in preference to these general provisions. Seeing that rule 6 of Order 41-A excludes a notice of appeal from the category of processes which can be properly served by being left at the address for service of the party to be served, the inference is that such a notice must be served regularly either on the respondent or on his advocate and that service by merely leaving in the office of the advocate is not service on the party or his pleader, for purposes of limitation. It is urged that this view of the rules will result in inconvenience to practitioners and to Courts. The remedy in our view is not to read the rules so as to suit the convenience of parties but to modify the rules in such a manner as may be desirable,, We are dealing now with a question of limitation. Under Order 41, rule 22 the period of limitation is one month from the date of service on the respondent or his pleader of notice of the date fixed for hearing the appeal. We cannot regard service of notice on the pleader's clerk as the correct starting point for limitation in the absence of a special provision to that effect. In the result, therefore, we hold that the memorandum of cross-objections has been presented in time. The petition excuse the delay is dismissed." The rulings reported in Misri Lal v. Bhagwati Prasad A.I.R. 1955 All. 573 Para 13, Firm Kapur and Sons v. Raj Kumar Khanna A.I.R. 1955 Punjab para 10, Chouthmal Jivrajjee Poddar v. Ramachandra Jivrajjee Poddar A.I.R. 1955 Nagpur 126, paras 12 ar.d 13, Ram Bharosey v. Pearey Lal A.I.R. 1957 All. para 8 and Ratnawa v. Gurushiddappa Gurushantappa A.I.R. 1962 Mysore 135 reinforce the submission of the counsel for the appellant. In the Mysore case. Mr. para 8 and Ratnawa v. Gurushiddappa Gurushantappa A.I.R. 1962 Mysore 135 reinforce the submission of the counsel for the appellant. In the Mysore case. Mr. Justice Hegde, as he then was, observed after a review of the case law on the point as follows: " In our opinion before time begins to run under Article 178 of the Limitation Act, the parties concerned must have been notified by means of a notice in writing as contemplated in section 14(1) read with section 42 of the Act'." In fact, the contention urged before me by the respondent in this appeal, relying strongly on the ruling of the Supreme Court in Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti A.I.R. 1962 S.C. 666 [which, as I have already stated, dealt with section 14 (2) notice and not section 14(1) notice], is that once the party comes to know about the Award, he has had notice, and time begins to run. Certainly, there is the force of commonsense behind, it. But, when the statute takes pains to make express provision regarding the mode of service of notice one cannot supersede law by commonsense. This very point was dealt with by the Mysore decision. The Court observed : " It has been urged on behalf of the respondents that the notice contemplated under Article 178 is the same as the knowledge of the party about the making of the Award. In other words, it was urged that the limitation for filing an application under section 14 (2) of the 'Act' begins to run from the date the party comes to know about the making of the award. This contention cannot be accepted." Their Lordships dealt with section 14(1) and section 42 to establish that the contention cannot be accepted. I choose to fall in line with the Mysore decision and the other rulings already adverted to and hold that the notice served in this case on the advocate is not notice as contemplated under section 14 (1) read with section 42 and therefore limitation has not started running and the sands of time have not run out for the institution of a proceeding by the appellant under section 14 (1). 7. Nor do I find any prejudice to the defendant by the conversion of these proceedings. 7. Nor do I find any prejudice to the defendant by the conversion of these proceedings. It would appear that the respondent has filed a counter statement wherein he has challenged the award on various grounds. Indeed, he is entitled to assail the award, for the misconduct of the Arbitrator and for other reasons. He states that the award itself was rendered long after the period within which the Arbitrator was enjoined to make the award. What its legal effect would be is not a matter for me to consider here. What the merits of the other contentions regarding the invalidity of the award pleaded by the respondent are, also do not fall for decision here. All that one need say is that if, for any reason, the respondent would be precluded from getting an opportunity to attack the award on account of the metamorphosis of the suit into an application under the Arbitration Act, I should hesitate to direct the change, but treating the suit as an application leaves us in a state where the award will have to be filed in Court together with all the other documents. Whereupon, the objections or counter statements filed by parties will have to be considered by the Court. In fact, there is no particular form prescribed for an application to set aside an award. This has been pointed out in the ruling reported in Ramaswami Servai v. Muthirolayee A.I.R. 1954 Madras 560 following certain earlier cases. Thus, the Court would be bound to consider all the objections and attacks of the respondent to the validity, of the award but that stage will arrive only when the award is filed in Court. It is pointed out to me by counsel for the appellant that on a notice issued to the Arbitrator from the Court the award has already been filed and that therefore we may treat that filing as sufficient for purposes of section 14 (2) of the, Arbitration Act. This argument is countered by respondent's advocate, relying on the ruling reported in State of Kerala v. Kannan Devan Hills Produce Co. 1960 K.L.T. 1347 by urging that the filing of the award in this case is not really on a direction of the Court under section 14(2) nor pursuant to the request of a party. This argument is countered by respondent's advocate, relying on the ruling reported in State of Kerala v. Kannan Devan Hills Produce Co. 1960 K.L.T. 1347 by urging that the filing of the award in this case is not really on a direction of the Court under section 14(2) nor pursuant to the request of a party. Maybe he is right, although two rulings of the Andhra Pradesh High 'Court reported in Puppalla Ramulu v. Nagidi Appalaswami A.I.R. 1957 A.P. 11 and Bedarla Ramakrishnamma v. Vattikonda Lakshmibayamma A.I.R. 1958 A.R.497 have held, that where the award is in Court already and the only relief asked for is the passing of a decree in terms of that award, the case falls under section 17. Moreover, an application under section 17, Arbitration Act, would riot attract Article 178, Limitation Act, which applies only to an application for filing an award into Court under section 14 of the Arbitration Act. Of course, it is interesting to note that in Puppalla Ramulu v. Nagidi Appalaswami it has been laid down that even for an application under section 14 the terminus a quo is service of notice of the making and signing of the award etc, The fact, that the award came to the knowledge of the parties would not dispense with the necessity of service of notice in order to invoke the penalty of dismissal under Article 178 Limitation Act. In the later case i.e. in Beearla Ramakrishnamma v. Vattikonda Lakshmihayamma the Court held that,: " The Article of the Limitation Act in the present form (Article 178) does not apply to an arbitrator filing the award either on his own motion or on the request of the party, but only to an application by a party under, sub-section (2) of section 14.... and once it is filed the Court is required to give notice to the parties of the filing of the award." The provision relating to the giving of notice is a mandatory duty of the Court, according to the said decision, but I have already dealt with this aspect. If the Court fails to give notice of the filing of the award, the parties would be deprived of an opportunity to move for making the award a rule of Court or to invalidate it on grounds provided in the Act, thus leading to an injustice. 8. If the Court fails to give notice of the filing of the award, the parties would be deprived of an opportunity to move for making the award a rule of Court or to invalidate it on grounds provided in the Act, thus leading to an injustice. 8. For the reasons already given by me, I am inclined to regard the suit filed by the plaintiff-appellant as an application under section 14(2) and section 17. Strictly speaking, it is only after filing the award that the stage of section 17 arrives. In the present case, it may well be. that the award filed by the Arbitrator maybe treated as sufficient compliance of section 14(2) or the court may still direct him to produce all the subsidiary documents. On this basis it must be open to the respondent to file his detailed objection to the award. He has already filed a written statement in answer to the plaint where he has raised objection to the award and since there is no particular form prescribed for an application seeking to set aside an award the written statement can be treated as sufficient for the purpose. In conclusion, I direct that the plaint will be treated as an application under section 14(2) and section 17 of the Arbitration Act. I direct the trial Court to treat the written statement as an application seeking to set aside the award under section 39, but the respondents will be given a further opportunity to file a regular application under section 30 read with section 33, if he has supplementary, grounds to put forward against the award. The concession that is shown to the appellant has to be on hard terms. As rightly pointed out by the respondents counsel no regular application for treating the suit as an application under the Arbitration Act was moved before the trial Court or even in the appellate Court. Of course, a feeble argument had been made in appeal that his suit should be treated as an application. But, on a misconception about service of notice the Court held that even as an application, the proceeding was hopelessly barred. It is only in this Court in C.M.P. No. 9074 of 1968 that an application has been filed to convert the plaint into an Application under the Arbitration Act. I allow the petition but on payment of Rs. But, on a misconception about service of notice the Court held that even as an application, the proceeding was hopelessly barred. It is only in this Court in C.M.P. No. 9074 of 1968 that an application has been filed to convert the plaint into an Application under the Arbitration Act. I allow the petition but on payment of Rs. 75 as costs to the other side payable within two weeks from today. On compliance with this, condition, the application for conversion would stand allowed and the order of the Court below set aside. The trial Court will take up the proceeding, 'renumber it as a petition under the Arbitration Act, and continue it according to law and in compliance with the direction given above. There will be no other order as to costs in this appeal.