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1979 DIGILAW 611 (ALL)

Karamat Husain and Sons v. Union of India

1979-05-17

H.N.SETH, N.N.MITHAL

body1979
JUDGMENT : 1. M/s. Karamat Husain has come up in appeal against the order of the Temporary Civil and Sessions Judge, Gorakhpur, dated 20th September, 1972, setting aside an award dated 22nd November, 1969 made by the Arbitrator, Sri R.K. Puri, directing that the arbitration be superseded and declaring that the arbitration agreement between the parties shall cease to be effective. 2. The dispute between the Appellant and the Respondents was referred to the Arbitrator, Sri R.K. Puri, Divisional Engineer, North Eastern Railway, Gorakhpur. He gave his award on 22nd November, 1969. The Appellant then moved an application u/s 14 of the Indian Arbitration Act praying for the filing of the said award. After the award was filed, it was found to be insufficiently stamped. Accordingly, the Court, vide its order, dated 20th September, 1969, (impugned order), quashed the award and set it aside. It also directed that the arbitration agreement shall stand superseded and will cease to be effective. Being aggrieved, M/s. Karamat Husain and Sons has come up in appeal before this Court. 3. Learned Counsel for the Appellant contends that in the circumstances of the case, the lower court was not justified in superseding the arbitration agreement and in declaring that the same would cease to be effective. 4. Section 19 of the Arbitration Act which is relevant for our purposes runs thus: Where an award has become void under Sub-Section (3) of Section 16 or has been set aside, the Court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred. 5. This Section gives a discretion to the civil court to after setting aside the award, make an order superseding the reference. It does not make it obligatory upon the court to make such an order in each and every case where it directs the setting aside of an award. The discretion has to be exercised in a judicial manner and not mechanically, as appears to have been done by the lower court. In the instant case, if the award filed before the court had been written on insufficiently stamped paper, neither of the two parties was at fault. It was a mistake committed by the Arbitrator in writing the award on paper which was not sufficiently stamped. In the instant case, if the award filed before the court had been written on insufficiently stamped paper, neither of the two parties was at fault. It was a mistake committed by the Arbitrator in writing the award on paper which was not sufficiently stamped. In case the arbitration agreement is superseded, law of limitation may come in the way of the Appellant and prevent him from enforcing his claim against the Railway Administration for no fault of his. We do not see how the ends of justice would be achieved by making an order superseding the reference and declaring that the arbitration agreement would cease to be effective. In the circumstances, we are not satisfied that there was any such material on the record which could justify the lower court to make an order superseding the reference and directing the arbitration agreement to be ineffective. The discretion in this regard does not appear to have been properly exercised by the learned Civil Judge. 6. In the result, the appeal succeeds and is allowed in part. While maintaining the part of the order under appeal, which sets aside the award on the ground that the same had been written on insufficiently stamped paper, we set aside that part of the order which directs super-session of the reference and declares that the arbitration agreement shall cease to be effective. As no one has appeared to oppose the appeal, we direct the parties to bear their own costs.