Research › Browse › Judgment

Patna High Court · body

1976 DIGILAW 147 (PAT)

Ramautar Sah And Another v. Vidya Sagar Prasad

1976-07-21

HARI LAL AGRAWAL

body1976
Judgment HARI LAL AGRAWAL, J. 1. By this application under Sec.115 of the Code of Civil Procedure, defendants first party is challenging the order of the learned Additional Subordinate Judge remitting back an award to the arbitrators to decide the extent of debt payable by their erstwhile firm. The question urged for consideration is that the order remitting back the award is wholly without jurisdiction and the Court below should have decided the question itself. The relevant facts are as follows:- 2. Some dispute arose between the partners co-owners of a rice mill known as Jai Hind Rice Mills, who decided to get the same settled by arbitration out of court. When the arbitrators gave their award, an application was made by the plaintiff-opposite party under Sec.17 of the Arbitration Act, 1940 praying for making the same a rule of the court. The trial Court by its judgment dated 25th April, 1957, refused to pass a decree in terms of the award. The plaintiff thereafter preferred Miscellaneous Appeal No. 230 of 1967 in this Court, which was allowed and by its order dated 13th July, 1961, it was directed to pass a decree in terms of the award dated 13th January, 1954. When execution was levied of this decree, a dispute was raised by the present petitioners that the decree was not executable. The Executing Court decided the issue in favour of the opposite party and the petitioners came to this Court in Miscellaneous Appeal No. 36 of 1967. 3. The objection was raised in this way. The award which was made a rule of the Court, provided that the Rice Mill together with its assets should be sold by public auction, but in case the bid did not exceed Rs. 56,000.00 it would be deemed to have been sold to the Managing Director of Beyahut Co. Ltd., one of its co-owners, in lieu of Rs. 56,000/-. It further contained a clause No. 6 which reads as follows:- "It has also been arrived at that the amount which is due by Jai Hind Rice Mills will firstly be set off against the sale money and the balance of the amount will be paid to the share-holders." 4. The petitioners then filed an execution for realisation of their half share of the sale proceeds after deduction of Rs. The petitioners then filed an execution for realisation of their half share of the sale proceeds after deduction of Rs. 4,500/-, being one of the debts payable by the Rice Mills to one of the creditors, out of the deemed sale of the properties for Rs. 56,000/-. One of the objections taken by the plaintiff-opposite party was that unless the entire debt payable by the Rice Mills in pursuance of clause 6 of the award was not determined and surplus, if any, becomes known and available, the execution cannot be levied for the realisation of the sum of Rupees 28,000/-, being half of Rs. 56,000/-. In Miscellaneous Appeal No. 36 of 1967 (disposed of on the 14th May, 1969) a Bench of this Court held as follows: "............. The question whether any surplus was, in fact, available or not for division between co-sharers, in terms of Clause 6, could only be determined after evidence was gone into in a proceeding other than the execution proceeding, which might be in nature of a proceeding to pass a final decree. In our opinion, the decree incorporating Clause 6 of the award, was merely a preliminary decree declaring the rights of the share-holders, and before an execution could be levied, it was necessary to bring into existence a final decree which would ultimately determine the amount which might be payable to one or the other party." 5. In pursuance of the above findings and directions of this Court, the Court below proceeded to take evidence in the matter in order to determine the amount of debt payable by the Rice Mills. But later on, by the impugned order, the learned Additional Subordinate Judge took a view that the award given by the arbitrators which was made a rule of the Court, as stated earlier was in the nature of an interim award within the meaning of Sec.27 of the Arbitration Act and, therefore, in pursuance of the powers conferred under Sec.16 (1) (b) of the Act, he had the necessary power to remit the award to the arbitrators for a reconsideration as to whether it was indefinite and incapable of execution within the meaning of clause (b) of Sec.16 (1) aforesaid. 6. 6. Having heard learned counsel for the parties and on examining the earlier orders passed by this court and the scheme of the Arbitration Act, it appears to me that the Additional Subordinate Judge committed a serious error of jurisdiction in directing remission of the award to the arbitrators. 7. According to the scheme of the Arbitration Act, on the filing of the award in Court, notice has to be given to the parties as to why the same be not made a rule of the Court. Sec.15 of the Act empowers the Court to modify or correct an award in the circumstances enumerated therein. Sec.16 provides for remission of the award to the Arbitrators for reconsideration if it thinks that (a) the award has left undetermined any of the matters referred to arbitration or (b) the award is so indefinite as to be incapable of execution; or (c) it suffers from any illegality apparent upon the face of it. If the court does not find any of the infirmities indicated in Sec.16, it has to pass a judgment in terms thereof. Sec.17 provides that where the court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, against which no appeal lies. 8. From the above discussion I feel inclined to take a view that the power to refer back the matter to the arbitrators must be exercised by the Court on any of the grounds enumerated in Sec.16 of the Act, before passing a judgment in terms of the award, and once the stage of passing a judgment is reached, the Court ceases to have any power to remit the award for any of the matters covered by Sec.16 of the Act. 9. Reference may be made to Sec.27 of the Act which has been relied upon by the Court below. This section authorises the Arbitrators to make an interim award before deciding the entire matter at one time. It is nobodys case that the award in question made by the arbitrators was an interim award in the sense of the term. 9. Reference may be made to Sec.27 of the Act which has been relied upon by the Court below. This section authorises the Arbitrators to make an interim award before deciding the entire matter at one time. It is nobodys case that the award in question made by the arbitrators was an interim award in the sense of the term. The arbitrators had decided the entire issue between the parties which was referred to them and had simply indicated some matters to be gone into by the parties which was indicated in Clause 6 of their award, and that was with reference to the question of finding out what dues were payable by the firm. Perhaps there might not be any apparent dispute between the parties with respect to the actual dues payable by the firm and the matter might be even outside the scope of the reference. In such circumstance, there could be hardly any justification for the Court to think that the undecided matter must be referred to the arbitrators. This amounts to taking for granted that this question was also a matter in dispute between the parties and fell for decision by the arbitrators. There is no other provision in the whole of the Arbitration Act for referring back the matter to the arbitrators. 10. Reference in this connection may usefully be made to the provisions contained in Sec.34 of the Arbitration Act also which contemplates of staying of legal proceedings where there is an arbitration agreement. In order to oust the Courts general civil jurisdiction, the existence of the conditions laid down in Sec.34 of the Act have got to be established, and still the court has got the discretion to grant or not to grant stay. In the earlier Miscellaneous Appeal No. 36 of 1967, a Bench of this Court, as already quoted above, had clearly observed that the nature of the decree in question was preliminary and the question of availability of any surplus should be determined after evidence was gone into in a proceeding other than the execution proceeding, and which might be in the nature of a proceeding, of a final decree. It was, therefore, very much, intended by this court to get this question decided by taking evidence by the Court below. It was, therefore, very much, intended by this court to get this question decided by taking evidence by the Court below. The Court below proceeded to act upon this direction and allowed the parties to adduce evidence in the matter, but subsequently taking an entirely erroneous view, refused to decide the matter itself and has referred the question back to the arbitrators. In my considered opinion, the learned Additional Subordinate Judge has committed an apparent error of jurisdiction and his order cannot be sustained. 11. I would, accordingly, allow this application, set aside the order of the Court below and direct the learned Additional Subordinate Judge to decide the question himself. The petitioners will be entitled to their costs. Hearing fee Rs. 55.00 only.