Research › Browse › Judgment

Gujarat High Court · body

1987 DIGILAW 75 (GUJ)

ORIENTAL INSURANCE CO. LTD. v. BALINDRA NATH SHARMA

1987-08-28

S.N.PHUKAN, T.C.DAS

body1987
JUDGMENT T. C. Das, J. - This revision petition is directed against the order and decree dated 14-10-1985 passed by the learned Assistant District Judge No. 1, Gauhati in Miscellaneous (Arbitration) Case No. 6 of 1985 making the award passed By the Arbitrators "a rule of the Court" and passing a decree in terms of the award against the petitioner. The dispute arose between the parties, as is revealed from the petition, when the opposite party preferred a claim of Rs. 41,266.71 Ps. against the present petitioner (The Oriental Insurance Company Ltd.) as compensation for damage of a truck bearing No. AMA 2976 belonging to opposite party No. 1 which met with an accident on 29-1-83. The said vehicle was insured with the petitioner company. However, the petitioner company estimated the cost at Rs. 11,750 less Rs. 500 as "excess clause" of the policy. The amount so assessed was based on survey of an authorised surveyor. However, the amount was not accepted to be fair and adequate by the opposite party No. 1 and the opposite party No. 1 sought for invoking the arbitration clause as per policy agreement. Ultimately, the opposite party No. 1 approached the court, namely, the court of Assistant District Judge No. 1 at Gauhati with an application under Section 20 read with Section 8(2) of the Arbitration Act for appointment of an Arbitrator. Notice was issued to the opposite party (present petitioner herein) and after bearing the parties the learned Assistant District Judge No. 1 at Gauhati appointed two Arbitrators as named by the parties. The Arbitrators entered into reference and thereafter passed an award in terms of the reference. The award was filed in court and in pursuance thereof and upon hearing the parties, the learned Assistant District Judge No. 1 at Gauhati set aside award and remitted back the matter for a fresh award by the same Arbitrators on the basis of the objection filed by the present petitioner. Against the aforesaid order passed by the learned Assistant District Judge, the petitioner preferred an appeal in this court which was numbered as M.A. (F) 90/84. After hearing the learned counsel of the parties a consent order was passed the appeal was disposed of by a Division Bench of this court on 2-8-1985. Against the aforesaid order passed by the learned Assistant District Judge, the petitioner preferred an appeal in this court which was numbered as M.A. (F) 90/84. After hearing the learned counsel of the parties a consent order was passed the appeal was disposed of by a Division Bench of this court on 2-8-1985. While disposing of the appeal this court at the consent of the parties, though did not disturb the impugned order, but appointed Shri S. K. Sen, Senior Advocate and Shri D. K. Talukdar, Advocate of this court as new Arbitrators in place of the former Arbitrators. This was done as agreed to and named by the respective counsel of the parties in the said appeal. The Court further directed the new Arbitrators to dispose of the matter within two months from the date of order. By the said order the remuneration to be paid to the Arbitrators by the respective parties was fixed at Rs. 2,000 each. The remuneration was directed to be paid within 15 days from the date of order. A further direction was issued to send down the records to the learned Assistant District Judge No. 1 for transmitting the necessary records to the newly appointed Arbitrators. Thereafter, in pursuance of the order passed by this court as aforesaid, the Arbitrators entered into the reference afresh and upon hearing the parties passed the award and submitted the same in the court of learned Assistant District Judge No. 1 at Gauhati for necessary orders. On receipt of the award the learned Assistant District Judge issued notices to the parties. The claimant (present opposite parties) appeared in the Court, but the opposite party (present petitioner) failed to appear though notice was duly served and no objection was filed. The learned Assistant District Judge passed the impugned order on 14-10-1985 which runs as follows: "Counsel for the Claimants is present. Notice to the two claimant and the O.Ps. have been returned duly served. Seen report on the notices. No steps are there on behalf of O.Ps. The claimant has also not filed any objection against the award. So the award of the arbitrators is made part of the decree. Let a decree be drawn up in terms of the award of the arbitrators. have been returned duly served. Seen report on the notices. No steps are there on behalf of O.Ps. The claimant has also not filed any objection against the award. So the award of the arbitrators is made part of the decree. Let a decree be drawn up in terms of the award of the arbitrators. The claimant will also be entitled to interest @ 12% p.a. from the date of reference till realisation." It is against this order, this revision is preferred by the petitioner challenging the legality and propriety of the said order. Mr. Banerjee, learned counsel for the petitioner has at the out set of his argument has submitted that the learned Assistant District Judge has no jurisdiction to pass a decree in terms of the award as because the Arbitrators were appointed by this court and therefore this court had full control of the arbitration proceedings and to pass the following orders in respect of the award. The learned Assistant District Judge, as submitted by Mr. Banerjee, was wrong in entertaining the award and pass a decree by making the same a rule of court being absolutely without jurisdiction. It is further submitted by Mr. Banerjee that any subsequent order and/or any followup order in the arbitration matters relating to the award was to be passed by this court and not by any other court as the court had appointed the Arbitrators at the instance of the parties in M.A. (F) No. 90/84. Therefore, according to the learned counsel there appears to be a jurisdictional error for which the entire decree is vitiated and is liable to be set aside. It is further submitted that this court had the complete control over the proceeding before the Arbitrators as the Arbitrators were appointed by this court at the instance of the parties with a further direction to dispose of the matter of reference by the Arbitrators within a specific period and the parties were directed to pay the remuneration to each appointed Arbitrators. In that position, as submitted by the learned counsel for the petitioner, this court only had the jurisdiction to pass the subsequent order on the basis of the award passed by the Arbitrators and not by the learned Assistant District Judge. Therefore, the impugned decree, as submitted by the learned counsel, is liable to be set aside. In support of the above contention Mr. Therefore, the impugned decree, as submitted by the learned counsel, is liable to be set aside. In support of the above contention Mr. Banerjee, learned counsel for the petitioner has drawn our attention to the decision of the Supreme Court in almost a similarly situated case as reported in M/s. Guru Nanak Foundation v. M/s. Ratan Singh and Sons ( (1981) 4 SCC 634 ). In that case, an order passed by the Delhi High Court in an arbitration matter was challenged. The Lordships of the Supreme Court appointed a sole arbitrator by removing the former arbitrator with a direction to dispose of the arbitration proceeding afresh within a specified period. When the award was passed, a question arose in which court the award would be filed. Their Lordship in interpreting the provisions of Sections 31(4), 14(2) and 2(c) of the Arbitration Act precisely held in paragraph 18 thus : "After the disposal of the appeal, C.M.P. No. 896 of 1977 was presented to this court for clarification and/or modification of the Order of the court dated January 5, 1977. This court by its Order dated February 10, 1977, gave further directions and a specific time-limit was fixed by this court directing the 3rd respondent as arbitrator to conclude the proceedings within four months from the date of Order of the court. Even with regard to the conduct of proceedings this court directed that the 3rd respondent should proceed with the reference from the stage where it was left by the 2nd respondent and that not only that he may permit additional evidence to be led but he must consider the pleadings and evidence already placed before the previous arbitrator. This will indisputably show that this court had complete control over the proceedings before the arbitrator." A further reference in this perfect can be had from the decision of the Supreme Court in State of Madhya Pradesh v. M/s. Saith and Skelton (P) Ltd. and others ( AIR 1972 SC 1507 ). Their Lordships of the Supreme Court held, that when an arbitrator is appointed by a court to make an award it is quite natural that the forum for taking further action is only in that court which appoints the arbitrator. In paragraph 19 of the aforesaid judgment their Lordships held : "According to Mr. Their Lordships of the Supreme Court held, that when an arbitrator is appointed by a court to make an award it is quite natural that the forum for taking further action is only in that court which appoints the arbitrator. In paragraph 19 of the aforesaid judgment their Lordships held : "According to Mr. Shroff the award should have been filed not in this court, but in the court of the Additional District Judge, Mandsaur, as that is the court which will have jurisdiction to entertain the suit regarding the subject-matter of the reference. We are no inclined to accept this contention of Mr. Shroff. It should be noted that the opening words of Section 2 are 'In this Act, unless there is anything repugnant in the subject or context'. Therefore the expression 'court' will have to be understood as defined in Section 2(c) of the Act, only if there is nothing repugnant in the subject or context. It is in that light that the expression 'court' occurring in Section 14(2) of the Act will have to be understood and interpreted. It was this court that appointed Shri V. S. Desai on January 29, 1971, by consent of the parties as an arbitrator and to make his award. It will be seen that no further directions were given in the said order which will indicate that this court had divested itself of its jurisdiction to deal with the Award or matters arising out of the Award. In fact the indications are to the contrary. The direction in the order dated January 29, 1971, is that the arbitrator is 'to make his Award'. Surely the law contemplates further steps to be taken after the Award has been made, and quite naturally the forum for taking the further action is only this court. There was also direction to the effect that the parties are at liberty to apply for extension of time for making the Award. In the absence of any other court having been invested with such jurisdiction by the order, the only conclusion that is possible is that such a request must be made only to the court which passed that order, namely, this court." Mr. In the absence of any other court having been invested with such jurisdiction by the order, the only conclusion that is possible is that such a request must be made only to the court which passed that order, namely, this court." Mr. B. Sarma, learned counsel for the opposite parties has submitted that the petitioner cannot raise the point relating to the jurisdiction of the Learned Assistant District Judge to entertain the award and to pass a decree and make the same as a rule of the court. Pointing to the prayer portion of the revision petition Mr. Sarma has submitted that the only prayer of the petitioner is to set aside the decree passed in terms of the award and no more. However, Mr. Sarma has not disputed the jurisdiction of this court to examine the point as submitted by Mr. Banerjee relating to the inherent jurisdiction and/or lack of jurisdiction of the learned trial court to entertain the award for further action. The learned counsel has also no dispute as regards the law enunciated by their Lordships of the Supreme Court as referred to above. The point as raised by Mr. Sarma is that the court is to examine whether this court only had complete control over the arbitration proceeding in view of the findings of their Lordships of the Supreme Court. In this context we refer to the earlier order of this court rendered on 2-8-1985 in M.A. (F) 90/84. While appointing the two arbitrators as suggested by the parties, this court put certain conditions, namely, to complete the arbitration proceeding within two months with a direction to the parties to pay the remuneration to the Arbitrators within a specified period. This court also directed the learned Assistant District Judge to transmit the necessary records to the newly appointed Arbitrators. From the above order it appears that this court had complete control over the proceeding before the arbitrators. In that view of the matter it can safely be said that the follow up action on the basis of the award exclusively lies to this court and not will any other court. When this court directed for completion of the proceeding within two months, time could not be extended by any other court even on application by any of the parties under Section 28 of the Arbitration Act. When this court directed for completion of the proceeding within two months, time could not be extended by any other court even on application by any of the parties under Section 28 of the Arbitration Act. Therefore, in view of the decisions of their Lordships of the Supreme Court referred to above, we are constrained to hold that the learned Assistant District Judge No. 1 at Gauhati had no jurisdiction to entertain the award and to pass any follow up order on the basis of the award. We therefore, hold that the impugned decree passed on the basis of the award is liable to be quashed which we accordingly do. In the result, the petition is allowed and the order and decree passed by the learned Assistant District Judge No. 1 on the basis of the award and making it a rule of court is set aside. The parties shall bear their own cost. We further direct the learned Assistant District Judge No. 1 to sent the entire records and the proceedings including the award of the arbitrators to this court at an early date. On receipt of the records and the award from the learned Assistant District Judge No. 1, the registry of this court shall register the proceeding in accordance with the Gauhati High Court Rules for further order.