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1983 DIGILAW 615 (ALL)

Shiv Narain Mehta v. Jupiter Chit Fund (P) Ltd. Kanpur

1983-09-06

K.P.SINGH

body1983
ORDER K.P. Singh, J. - This is a defendant's application in revision against judgment of Sri Naseem Uddin, Addl. JSCC, Kanpur dated 14.9.1977 in Civil Appeal No. 136 of 1976, M/s. Jupiter Chit Fund (P) Ltd. v. Shiv Narain Mehta and others. It arise out of a suit for recovery of money. The plaintiff is a Chit Fund Private Limited Company. The defendant-applicant was a member. It appears that he failed to pay the instalments as agreed, hence the plaintiff referred the matter to the named Arbitrator who gave an award. The award was sought to be made a Rule of the Court and the defendant-applicant opposed the Prayer on various grounds namely that the award was various grounds namely that the award was time barred and void, and that the arbitrator was not an independent person, and that the amount of Rs. 2250/- was never paid to the defendant and that there was no dispute which could be referred to the arbitrator and so on. 2. The 2nd Additional Munsif, Kanpur through his judgment date 25.2.1976 gave judgment in favour of the defendant by setting aside the award dated 22.5.1969. Against the judgment of the trial court the Against the judgment of the trial court the plaintiff when in appeal and the appellate court has allowed the appeal and decreed the plaintiff's suit through its judgment dated 14.9.1977. Against the judgment of the appellate court the defendant has approached this Court through the above-noted revision petition. 3. The learned counsel for the applicant has challenged the judgment of the appellate court only on the ground that the dispute between the parties was referred to the arbitrator without concurrence of the defendant, hence the reference of the defendant, hence the reference being unilateral was bad in law and the award given by the arbitrator in pursuance of such reference is also bad in law and the appellate authority has acted illegally and with material irregularity in decreeing the plaintiff's claim in the circumstances of the present case. 4. The learned counsel for the applicant has invited my attention to the following observation of a learned single Judge of this Court in Civil Revision No. 1284 of 1977 (All), Jupiter Chit Fund v. S.N. Mehta :- "...In the present case the plaintiff company itself referred the matter to the Arbitrator. 4. The learned counsel for the applicant has invited my attention to the following observation of a learned single Judge of this Court in Civil Revision No. 1284 of 1977 (All), Jupiter Chit Fund v. S.N. Mehta :- "...In the present case the plaintiff company itself referred the matter to the Arbitrator. It did not give any notice to the defendant opposite party requiring him to join in the reference. Such unilateral reference was not permissible in law. Hence there was no valid reference to arbitration. Consequently in cannot be said that the arbitration proceedings ever commenced validly. 5. The learned counsel for the applicant also placed reliance upon the observation of their lordships of the Supreme Court in AIR 1955 SC 468 Thawards Pherumal v. Union of India to the following effect (Para 18) :- 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 the court under S. 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub-sec. (4). In the absence of either, agreement by both sides about the terms of reference, or an order of the Court under S. 20(4) compelling a reference, the arbitrator is not vested with necessary exclusive jurisdiction." 6. It has also been emphasised by the learned counsel for the applicant that according to the Division Bench of this Court reported in AIR 1963 All. 242 Om Prakash v. Union of India a reference to arbitrator out of Court cannot be made by one party alone hence in the present case the reference of the dispute by the plaintiff to the arbitrator given in such a reference deserves to be set aside. 7. 242 Om Prakash v. Union of India a reference to arbitrator out of Court cannot be made by one party alone hence in the present case the reference of the dispute by the plaintiff to the arbitrator given in such a reference deserves to be set aside. 7. The applicant's counsel in the present case also placed reliance upon the ruling reported in AIR 1973 All 49 , Jagannath Kapoor v. Premier Credit and Instalment Corporation (P.) Ltd. and has emphasised on para 7 of the aforesaid ruling which reads as below :- It may be pointed out that the case law is also a very important source of law and even though there is no specific provision in the Arbitration Act for a joint reference by the parties, yet the Supreme Court of India and our own High Court have clearly indicated that it is necessary that the contesting parties should not only appoint an arbitrator out of Court by common consent but they should also make a joint reference of their dispute to him for adjudication. The authorities have also laid down time and again that where an objection goes to the very root of the matter and affects the inherent jurisdiction of a particular tribunal the same can be allowed to be raised at any stage, provided it can be decided upon the materials already before the court and does not involve the taking of further evidence or remanding the case or any issue for a decision of a question of fact. It is further well settled that where there is inherent want of jurisdiction in a tribunal, no amount of consent can confer the same on it, nor the mere fact that the challenging party had appeared before such tribunal and had even taken part in the proceedings at some stage would amount to estoppel, acquiescence or waiver. 8. It is further well settled that where there is inherent want of jurisdiction in a tribunal, no amount of consent can confer the same on it, nor the mere fact that the challenging party had appeared before such tribunal and had even taken part in the proceedings at some stage would amount to estoppel, acquiescence or waiver. 8. In reply to the arguments raised on behalf of the applicant the learned counsel for the opposite party has invited my attention to the decision in Civil Revision No. 1025 of 1972 (All), Jagannath Garg v. M/s Jupiter Chit Fund Private Ltd. and has contended that pleas about invalidity of the reference as raised in the present case has not been accepted by the learned single Judge on the ground that the aggrieved party who had not joined in the reference of dispute to the arbitrator had not joined in the reference of dispute to the arbitration proceedings, hence he was estopped from challenging the award when the award was against him. 9. The learned counsel for the contesting opposite party also invited my attention to the decision in Civil Revision No. 149 of 1978 M/s. Jupiter Chit Fund Pvt. Ltd. v. Smt. Raj Rani Kapur and has contended that the plea of reference of dispute to the plea of reference of dispute to the arbitrator unilaterally and leading to illegality in similar Circumstances has not been accepted. 10. My attention has also been drawn to the decision in Civil Revision No. 1633 of 1974 Jagdish Narian Shukla v. M/s Jupiter Chit Fund Pvt. Ltd. and others and it has been emphasised that unilateral reference of the dispute to the Arbitrator has not been considered as bad in law in similar circumstances as are present in the present case. 11. In rejoinder the learned counsel for the applicant has contended that the observations of the learned single Judge in Civil Revision No. 1025 of 1972 (All), Jagannath Garg v. M/s Jupiter Chit Fund Private Ltd. are against the decision of their Lordships of the Supreme Court in AIR 1962 SC 1810 , Khardah Company Ltd. v. Raymon and Co. (India) Pvt. Ltd. wherein it has been observed as below vide para. (India) Pvt. Ltd. wherein it has been observed as below vide para. 14 :- "...But what confers jurisdiction on the arbitrators to hear and decide a dispute is an arbitration agreement as defined in Sections 2(a) of the Arbitration Act, and where there is no such agreement, there is an initial want of jurisdiction which cannot be cured by acquiescence. It may also be mentioned that the decision in (1860) 30 LJ Bcy 10 has been the understood as an authority for the position that when one of the parties to the submission is under a disability that will not be a ground on which the other party can dispute the award if he was aware of it. Vide Russell on Arbitration 16th Edition 320 We, Russell on Arbitration 16th Edition 320. We, are, therefore, unable to accept the contention of Mr. Sanyal that the respondents are estopped by their conduct from questioning the validity of the award:" 12. I also think that a party cannot be estopped from challenging the validity of award in pursuance of an illegal reference to the arbitrator merely because the party had participated in the proceedings before the arbitrator. If the party succeeds in demonstrating that the reference to the arbitrator was bad in law and did not confer jurisdiction upon the arbitrator to proceed with the resolving of the dispute, it can challenge the award of the arbitrator. The party can raise such a plea even before the last court which should entertain and decide it. 13. The learned counsel for the applicant also stresses that facts in Civil Revision No. 1633 of 1974 and in Civil Revision No. 149 of 1978 were different, hence the decisions therein would not apply to the facts and circumstances involved in the present revision petition. 14. I have considered the contentions raised on behalf of the parties, and I have gone through the decisions cited on behalf of the parties. I am unable to agree with the contention of the learned counsel for the applicant that the unreported decisions in Civil Revisions Nos. 1633 of 1974 and No.. 149 of 1978 inapplicable to the facts and circumstances of the present case. 15. I am unable to agree with the contention of the learned counsel for the applicant that the unreported decisions in Civil Revisions Nos. 1633 of 1974 and No.. 149 of 1978 inapplicable to the facts and circumstances of the present case. 15. In my opinion the facts and circumstance in the present case are almost similar to the facts and circumstances involved in the above-mentioned two revision petitions Civil Revision No. 1633 of 1974 and No. 149 of 1978, Moreover, in AIR 1975 Delhi 54, P.C. Agarwal v. K.B. Khosla, a Division Bench of that Court has indicated as to when a reference can be said to be unilateral. Para 7 of the aforesaid ruling reads as below :- It therefore, the consent of the parties to the reference of the further disputes to arbitration can be given in advance before the disputes have arisen, does this consent enure for the benefit of both the parties when the disputes actually arise? or whether a fresh consent has again to be given to the reference after the disputes have actually arisen? As already stated above, no difference between the existing and the future disputes has been made in the law of arbitration in India at all as far as the reference of these disputes to arbitrator is concerned. It would follow, therefore, that the advance consent given by the parties to the reference of future disputes to arbitration can be acted upon when the disputes actually arise. Human nature being what it is, it would be unrealistic to expect that even after the disputes have arisen both the parties will again agree to make a reference of the disputes to arbitration. For, after the disputes have arisen, one party would be a claimant and the other would be a respondent. It is the claimant alone who is interested in referring the disputes to arbitration and getting a decision thereof with a view to realise his claim form the opposite party. But the non-claimant would be tempted to delay the reference could not have, therefore, made a doctrinaire approach to the subject of arbitration and required a fresh consent of the parties to reference even though an advance consent had already been given to the reference before the disputes arose. But the non-claimant would be tempted to delay the reference could not have, therefore, made a doctrinaire approach to the subject of arbitration and required a fresh consent of the parties to reference even though an advance consent had already been given to the reference before the disputes arose. It is because the Legislature knew that a second consent of both the parties would not be forthcoming or would be very difficult to obtain that the Legislature did not insist on such a consent. It is clear, therefore, that the pervious consent of the parties to the reference of the disputes to arbitration binds them throughout and no fresh consent is necessary after the disputes have arisen. Therefore, when in a case like the present one, both the parties have consented that the reference to arbitration should be made in a particular manner and have given their consent in advance, the actual reference to arbitration according to the procedure agreed by both the parties in the comprehensive arbitration agreement has to be regarded as a bilateral reference in as much as it is based on the agreement of parties which includes not only the bare arbitration agreement but also the reference of future disputes to arbitration. Such a reference cannot, therefore, be said to be unilateral. A truly unilateral reference would arise when the agreement between the parties is restricted to the simply fact that disputes between the parties could be decided by arbitration but the agreement does not include the reference of disputes to arbitration. To decide, therefore, whether the reference in a particular case is based on the previous consent of the parties or whether it is a unilateral reference by one of the parties, the agreement between the parties would have to be construed. It is only if it does not include the reference that the question of unilateral reference would arise." 16. In pare 6 of the above ruling the Judges have indicated that in the Acts of 1899 and 1940 there is no such differentiation between the existing and future disputes in making reference to arbitration. Hence it has been inferred that the consent of the parties can be given in advance in referring future disputes to arbitration. 17. In the present case the appellate court while dealing with Issues Nos. Hence it has been inferred that the consent of the parties can be given in advance in referring future disputes to arbitration. 17. In the present case the appellate court while dealing with Issues Nos. 2 and 3 has observed as below: - "It was the contesting defendant and the other defendants who wrote letters to the plaintiff company confirming the fact that in case of any `claim' or `dispute' the matter shall be referred to the sole arbitrator, Sri Shiv Shekhar Dixit. The original letter signed by the contesting defendant is on record. In this letter contesting defendant clearly mentioned as follows: "I further confirm that kin case of `claim' or `dispute' of any nature whatsoever the matter will be referred to the sole arbitration of Sri Shiv Shekhar Dixit, son of Sri R. N. Dixit, resident of 7/116 Swaroop Narain, Kanpur, whose decision shall be final and binding on all of us. The costs of the arbitration shall be borne and subscribed by me." 18. In View of the aforesaid letter and the discussion in AIR 1975 Delhi 54, P.C. Agarwal v. K.N. Khosla, I think that the reference of the dispute between the parties to arbitration of Sri Shiv Shekar Dixit in the present case is not unilateral, and the sole point urged on behalf of the applicant attacking the judgment of the appellate court fails. 19. Even if for the sake of arguments it is assumed that reference of the dispute between the parties by the plaintiff to the named arbitrator in the agreement is bad in law, the learned counsel for the applicant has not been able to attack the findings given by the arbitrator and confirmed by the appellate authority on merits. 20. Even if there is some technical defect in making reference of the dispute by the plaintiff to the arbitrator I am not inclined to exercise my powers under Section 115 of the Civil P.C. No argument has been advanced before me to demonstrate the incorrectness or illegality in the findings recorded by the appellate court on Issue No. 11 Since the defendant-applicant wrongly denied the payment of principal amount of Rs. 2250/-. I think that the defendant has no just claim to press in the present revision petition. 2250/-. I think that the defendant has no just claim to press in the present revision petition. On this ground also, the applicant's claim fails as the has disentitled himself to invoke the jurisdiction of this Court under Section 115 of the Civil P.C. 21. In the result, the revision application fails and it is hereby dismissed with costs.