Baijnath Prosad Shah v. Gajanand Agarwalla — 1980 DIGILAW 341 (CAL)

JUDGMENT B.C. Chakrabarti, J. This is an appeal by the defendant. The plaintiff respondent (hereinafter called the plaintiff) instituted a suit, being M.S. No. 9/1971 of the Court of learned Subordinate Judge at Malda, claiming a sum of Rs. 12,259.17 allegedly due to him on khata account. Both the plaintiff and the defendant are traders having business in grocery. The plaintiff has a wholesale business and the defendant, who is a retailer had credit transactions with the plaintiff. There is no dispute with regard to this. The plaintiff however alleged that during the period from 20.5.68 to 11.8.68, the defendant had purchased articles from the plaintiff of the total value of Rs. 21,889.17 out of which a sum of Rs. 9,630/- only had been repaid on different dates between 29.5.68 to 11.8.68, leaving a balance of 12,259.17. It is also averred in plaint that prior to the institution of the suit there was, by common consent a reference to arbitration and the arbitrators made an award in favour of the plaintiff for a sum of Rs. 11,277.59p and directed the defendant to pay the sum in three instalments. The defendant not having accepted the award and not having paid any sum in terms thereof, the plaintiff instituted the suit founding his claim on the original demand. 2. The defendant resisted the claim on two-fold grounds. Firstly, while admitting that he had business dealings with the plaintiff on credit, he contended that upto the end of 1375 B.S., the total dues as per the defendant's own accounts, came to Rs. 2491-3 pies and that after payment to the plaintiff in instalments in 1376 B.S., there was only a balance of Rs. 657/- which sum too was paid on 14.7.1969. On receipt of the said amount, the plaintiff granted a clear receipt to the defendant. Besides this plea of payment, the defendant also took an objection as to the maintainability of the suit itself. It was pleaded that since the award was not filed in Court and made a rule of the Court, the suit founded on the original demand is not maintainable. 3. Besides this plea of payment, the defendant also took an objection as to the maintainability of the suit itself. It was pleaded that since the award was not filed in Court and made a rule of the Court, the suit founded on the original demand is not maintainable. 3. It will be relevant to mention here that the defendant bas set up the award as a bar, his own case with regard to the award is that the arbitrators did not look into his account papers, and that the arbitrators in making the award have acted in a most arbitrary fashion and with a positive bias for the plaintiff. 4. Both parties adduced evidence both oral and documentary upon a consideration of the same, the learned Subordinate Judge, accepted the plaintiff's evidence and found that Rs. 12,259.17 was due to the plaintiff. The defence plea of payment was disbelieved. The receipt for Rs. 657 which according to the defendant was the last and final payment in discharge of all liabilities, was however found to be not genuine. This finding stood corroborated by the opinion of the handwriting expert who had examined the questioned receipt and compared the same with the admitted writings of the defendant. In spite however, of the finding on fact, the learned Subordinate Judge dismissed the suit by upholding a technical objection as to the maintainability of the suit. Relying on the authority of a Bench decision of this Court in the case of Kripasindhu v. Sudhasindhu (A 1973 Cal. 496), the learned Subordinate Judge held that the cause of action for the suit having merged in the award, the suit founded on the original demand is barred under S. 32 of the Arbitration Act. In that view of the matter, the suit was dismissed even though the claim was proved on merits. 5. Being aggrieved at the decision, the plaintiff preferred an appeal, being M.A. 10 of 1174 of the Court of the learned District Judge, Malda. The learned appellate Court upon a consideration of the evidence came to the same finding so far as the merits of the claim is concerned. He too disbelieved the plea of payment and found the receipt set up by the defendant to be forged and fabricated. With regard to the other objection, the learned District Judge disagreed with the view taken by the learned Subordinate Judge. He too disbelieved the plea of payment and found the receipt set up by the defendant to be forged and fabricated. With regard to the other objection, the learned District Judge disagreed with the view taken by the learned Subordinate Judge. He found, relying on the case of Kashinathsa v. Narsingsa reported in A 1961 SC 1077 that the defendant who has not accepted the award and has not acted in pursuance thereof cannot be heard to say that the suit is based on the original demand is barred. Accordingly the learned District Judge allowed the appeal, set aside the judgment of the learned Subordinate Judge and decreed the suit in full. 6. Hence the appeal by the defendant. 7. So far as the factual position is concerned, both the courts below have concurrently found that the plaintiff's claim has been proved. Both Courts have disbelieved the plea of payment. This being essentially a question fact the matter is no longer open for reconsideration in this second appeal. And Mr. Ghosh Roy appearing in support of the appeal did not attempt to do that either. The only point urged on behalf of appellant was as to the maintainability of the suit in view of a prior award made on a reference by both the parties. 8. Section 32 of the Arbitration Act provides that "notwithstanding any law for the time being in force no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement, nor shall any arbitration agreement or award be enforced, set aside amended, modified or in any way affected otherwise than as provided in this Act". Section 33 of the Act provides a remedy to a party objecting to a reference or an award. Instead of filing a suit for the purpose he can now merely move an application far the purpose. Mr. Ghosh Roy contends that since the award was not set aside or modified, the claim founded on the original demand is unenforceable and is barred in view of the provisions of S. 32 of the Arbitration Act. He contends that as the plaintiff did not apply for filing of the award so as to make it a rule of the Court, the award by itself cannot be enforced. He contends that as the plaintiff did not apply for filing of the award so as to make it a rule of the Court, the award by itself cannot be enforced. In the same breath it is contended that none the less the award is not a mere scrap or waste paper and cannot be ignored at the option of the plaintiff. 9. Mr. Ghosh Roy referred to a number of decisions of different High Courts and of the Supreme Court to support his contention. Before coming to the legal aspect of the question however it may be mentioned here and now that the stand taken by the defendant is against all principles of justice, equity and good conscience. He would challenge the award as arbitrary and would not accept the same but at the same time set up the award as a bar to a suit. Such a stand, to speak the least is highly immoral. 10. Be that as it may it will be presently seen that in view of the peculiar circumstances of the case it would be clearly unnecessary for us to refer to those decisions cited by Mr. Ghosh Roy nor would it be necessary to enter into the controversy as to whether in every case an award made on a reference, by the parties and irrespective of whether it is accepted or not, could be set up a bar to a regular suit founded on the original demand. Mr. Mukherjee appearing on behalf of the respondent argued that for the purpose of setting up the award as a bar, it is essential that the award should be brought into evidence. He was keen on the point because according to him the award is on the face of it invalid. In view of the rival contentions of the parties, we felt it necessary to have the award on the record. Mr. Ghosh Roy very fairly did not object to it and the award has accordingly been taken as an additional evidence without any objection and on waiver of formal proof. It has been marked Ext. 10. 11. The award shows that five arbitrations were appointed of whom one, being the father of the defendant declined to act. The award was therefore signed by only four out of five arbitrators. In the case of Bhojahari v. Beharilal (ILR 33 Cal. It has been marked Ext. 10. 11. The award shows that five arbitrations were appointed of whom one, being the father of the defendant declined to act. The award was therefore signed by only four out of five arbitrators. In the case of Bhojahari v. Beharilal (ILR 33 Cal. 881), it has been observed that "the award is, in fact, a final adjudication of a court of the parties own choke and until impeached upon sufficient ground in an appropriate proceeding an award which is on the face of it regular is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive ............ in reality, an award possesses all the elements of vitality even though it has not been formally enforced and it may be relied upon in a litigation between the parties relating to the same subject matter". This view taken as far back as in 1909 has received the approval of the Supreme Court on principle, although the law of arbitration has undergone a major change by the Act of 1940 (Satish Kumar v. Surindar, A 1970 SC 833). Mr. Mukherjee therefore argued that even for the purpose of setting up an award as a bar to a suit, whether it is made a rule of the court or not, the award must on the face of it be regular. Since the award has been signed by only four out of five arbitrators, it is argued that it is patently invalid and inoperative. 12. In support of this contention Mr. Mukherjee relied on several decisions the earliest of which is reported in 14 CLJ 143 (Benod v. Pran). This decision lays down that the absence of one of the arbitrators from a part of the hearing vitiates the judicial character of the proceeding, where the absent arbitrator signs a blank paper on which the decision is written out by the other arbitrators the award is void. In the Instant case before us the position is even worse. Here one of the arbitrators did not participate in the proceedings at all. 13. The next case relied on by Mr. Mukherjee is reported in 22 CWN 301. (Abu Hamid v. Golam Sarwar). In the Instant case before us the position is even worse. Here one of the arbitrators did not participate in the proceedings at all. 13. The next case relied on by Mr. Mukherjee is reported in 22 CWN 301. (Abu Hamid v. Golam Sarwar). This case lays down the principle that an award made by a majority of arbitrators appointed by the parties without consulting the others is not a valid award, even when the reference authorises the arbitrators to make a majority award. The principle behind the decision is that all the arbitrators should be present at all the meetings and particularly at the last when the final act of arbitration is done, though as a result of this united deliberation there may be an award by a majority of them. It will bear repetition that in the case before us there was no question of the majority opinion prevailing. Here the award is bad for the simple reason that one of the arbitrators did not act at all. 14. The next case cited by Mr. Mukherjee also lays down the same principle viz., that it is essential that all the arbitrators should deliberate together and then arrive at a certain decision. The case, however, goes on to say that even if, after due deliberation, some of the arbitrators disagree and refuse to sign the award it will not materially affect the award where the parties are to be governed by the decision of the majority. 15. To counter these arguments Mr. Ghosh Roy referred to a case reported in A 1922 Cal. 181 (Ramnath v. Ramranjan). In this case it was held that if a party to an arbitration proceedings fails to take an objection to the absence of one out of several arbitrators, he will be deemed to have waived his right to take objection to the whole of the irregularity caused thereby. This was a case which arose out of an application under schedule II of paragraph 20 of the old Code of Civil Procedure to file a private award. In this case one of the arbitrators was found absent during the major part of the deliberations, even though he appears to have signed the award. This was a case which arose out of an application under schedule II of paragraph 20 of the old Code of Civil Procedure to file a private award. In this case one of the arbitrators was found absent during the major part of the deliberations, even though he appears to have signed the award. A question arose whether the defendant waived his right to have his case tried by the continuous presence of that arbitrator and factually it was found that the defendant had waived his fight, with the result that the award was filed. In the case before us there was no question of waiver of the objection as to the continuous absence of one of the arbitrators. The position is that one of the arbitrators did not participate at all in the proceedings and the question of waiver of his absence never came up for consideration. 16. The next case relied on by Mr. Ghosh Roy is reported in A 1923 Rangoon 187 which lay down that a party having knowledge of an irregularity cannot lie by without objection and take his chance of an award in his favour and then when he finds that the award has gone against his seek to set it aside on the ground of the irregularity to which he failed to object. A similar view was taken in the case of Bajjuri Ramakishtam v. Bhoopati A 1932 Andhra Pradesh 492. In these cases the objections as to validity of the award on the aforesaid ground was taken in connection with applications to direct the arbitrators to file the award into court and to make the award a rule of Court. While considering the objections it was held, in the facts and circumstances of the case that the objection regarding the absence of some of the arbitrators on a few occasions was waved. The facts of the case before us are entirely different in the sense that the award was not filed and not sought to be made a rule of the court at the instance of any of the parties. In fact the position is that neither party stood by the award. The defendant, who now seeks to set up the award as bar to the suit, himself never accepted the award. In fact the position is that neither party stood by the award. The defendant, who now seeks to set up the award as bar to the suit, himself never accepted the award. This is why we had occasion to comment once before that the stand taken by the defendant is not any iniquitous but highly immoral. Such a position cannot be allowed to be taken in the circumstances of the case. 17. Upon a consideration of the facts and circumstances and the law on the subject we find that the award is on the face of it irregular. Russel on the Law of Arbitration (19th Ed. p. 246) lays down that "on a reference to more than one arbitrator, when there is no provision for an award made by less than all being valid, each of them must act personally in performance of the duties of his office, as if he were sole arbitrator; for as the office is joint, if one refuses or omits to act, the other can make no valid award". 18. Consequently, such an award cannot operate as a bar to a regular suit based on the original claim. It has already been observed that the claim of the plaintiff has been found to have been proved by both the courts below and that is a finding of fact which is conclusive between the parties. 19. In that view of the matter the decree passed by the learned District Judge must be upheld and the appeal dismissed though on different considerations. The appeal is, therefore, dismissed with costs. 20. In view of the dismissal of the appeal no order on the application filed on 11.7.80 by the defendant is called for. Anil K. Sen, J.-I agree. Appeal dismissed.