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1990 DIGILAW 223 (BOM)

Walchandnagar Industries Limited v. Nasik Sahakari Sakhar Karkhana Ltd

1990-06-29

A.C.AGARWAL

body1990
JUDGMENT - AGARWAL ASHOK, J.:---The present Notice of Motion has been taken out by the plaintiffs under section 17 of the Arbitration Act for passing a judgment and decree in terms of the Award dated 10th February, 1987. After passing of the aforesaid award, the defendants on 7th July, 1987 filed a petition bearing No. 147 of 1987 for setting aside the award. By judgment and order dated 7th April, 1989 the said petition was dismissed. Being arrived the defendants on 27th April, 1989 preferred, under section 39 of the Arbitration Act Appeal No. 683 of 1989 and by an order dated 7th July, 1989 the Appeal Court was pleased to admit the same. The present Notice of Motion has been taken out by the plaintiffs on 16th July, 1989. The plaintiffs have annexed at Exhibit-B to the affidavit in support a certificate of the Prothonotary and Sr. Master which recites the aforesaid facts namely that the petition for setting aside the award has been dismissed and the appeal therefrom is pending. 2. The short question that arises for my determination is whether the plaintiffs are entitled to a decree in terms of the award in the face of the pendency of the appeal filed by the defendants against the dismissal of their application for setting aside the award. 3. Mr. Bharucha, the learned Counsel appearing in support of the Notice of Motion has strenuously submitted that the pendency of an appeal would not automatically operate as a stay of the proceedings under section 17 of the Arbitration Act. According to him section 17 is a self contained code. All the ingredients, which are required for entitling the plaintiffs to a judgment and decree in terms of the award, have been satisfied and I am bound to pass a decree in terms of the award. He further submitted that section 39 of the Arbitration Act under which the defendants have preferred an appeal does not provide that the proceedings under section 17 would automatically be stayed during the pendency of the appeal. On the other hand section 41 of the Arbitration Act makes the provisions of the Civil Procedure Code applicable to all the proceedings before the Court. On the other hand section 41 of the Arbitration Act makes the provisions of the Civil Procedure Code applicable to all the proceedings before the Court. Order 41, Rule 5 of the Civil Procedure Code specifically provides than an appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of the decree be stayed by reason only of an appeal having been preferred from the decree. The defendants in the present case, he pointed out, have not obtained any order of stay from the Appellate Court. By placing reliance upon the definition of the term "decree" as found in section 2(2) of the Civil Procedure Code he contended that the order of the learned Single Judge dated 7th July, 1987 dismissing the defendants' petition for setting aside the award is a decree. Hence the same was not liable to be stayed in view of the provisions of Order 41, Rule 5 of the Civil Procedure Code and I am bound to pass a decree in terms of the Award. 4. Mr. Bharucha further contended that even in equity the plaintiffs would be entitled to decree as the award in question does not and cannot grant any interest. In case the passing of the decree is differed till the disposal of the appeal, the plaintiffs would be deprived of the interest till the disposal of the appeal. He submitted that even if the order dismissing the petition for setting aside the award cannot be construed as a decree as defined under section 2(2) of the Civil Procedure Code and has to be construed as an order even then the provisions of Order 41, Rule 5 of the Civil Procedure Code will be applicable even though the same has not been specifically incorporated in Order 43 which deals with Appeal from Orders. He, therefore, prayed that the Notice of Motion be made absolute. 5. Reliance was placed in the case of (Scottish Union and National Insurance Co. He, therefore, prayed that the Notice of Motion be made absolute. 5. Reliance was placed in the case of (Scottish Union and National Insurance Co. v. Smt. Saraswati Sajnani)1, reported in A.I.R. 1950 Calcutta 22, wherein it was held on facts similar to the facts of the present case that the Court is not called upon under the Act, to wait and find out whether its order refusing to remit or to set aside the award has become final and unassailable in the sense that the time for appeal is gone or that the appeal if taken is dismissed in order to assume jurisdiction to proceed to pronounce judgment in accordance with the award. The Court dealing with the award is not required to look beyond itself and proceed to deal with the matter on the footing that so far as it is concerned there is an order of refusal irrespective of the fact that an appeal might be taken or has been taken against the order or that the order passed by the Court might be set aside. Mr. Bharucha also pointed out a judgment delivered by me in Notice of Motion No. 2534 of 1989 in Award No. 3 of 1989 dated 5th June, 1990. In that case the defendants in their appeal against the order rejecting their petition for setting aside the award applied for stay and the Appellate Court was pleased to stay the operation of the impugned order on condition of depositing a certain amount. Being aggrieved, the defendants carried the matter to the Supreme Court but their S.L.P. was dismissed. They moved the Appellate Court for clarification. By its order the Appeal Court clarifies that the order of stay was clearly conditional and if there was no deposit as ordered then there is no order of stay. In the aforesaid facts I passed a decree in terms of the Award. 6. It can no longer be disputed that an appeal is a continuation of suit or original proceedings. The question that a Court has to consider under section 17 is whether it sees no cause to remit the award or any of the matters referred to arbitration for consideration or to set aside the award. 6. It can no longer be disputed that an appeal is a continuation of suit or original proceedings. The question that a Court has to consider under section 17 is whether it sees no cause to remit the award or any of the matters referred to arbitration for consideration or to set aside the award. When a petition for setting aside the award is pending is appeal, whether this can be sufficient circumstances for refusing to proceed to pronounce judgment according to the award and to pass a decree in terms thereof it has to be noted that though an order setting aside or refusing to set aside an award is made appealable under section 39 of the Arbitration Act, no appeal is maintainable against a decree passed in terms of the award except on the limited grounds provided under section 17 viz. that the decree is in excess of, or not otherwise inaccordance with, the award. In my view, an order refusing to set aside the award cannot be construed as a decree as defined under section 2(2) of the Civil Procedure Code. An order setting aside or refusing to set aside an award is entirely distinct from a judgment that is to be pronounced in terms on the Award and a decree to be passed upon the said judgment. Section 17 itself makes a distinction between the two. The order setting aside or refusing to set aside the award is made appealable under section 39 of the Arbitration Act whereas a judgment and decree which are pronounce in terms of the award is made appealable only on limited grounds as provided under section 17. If appeal is continuation of the suit or the original proceedings, I fail to see how the plaintiffs would be entitled to a decree in terms of the Award which is subject matter of the pending appeal. It would be futile, in my view, to pass a conditional decree, as suggested by Mr. Bharucha, being dependent on the decision in the appeal. It would be futile, in my view, to pass a conditional decree, as suggested by Mr. Bharucha, being dependent on the decision in the appeal. Hence if the Court which is considering an application under section 17 of the Arbitration Act for pronouncing of judgment in terms of the award and for passing of a decree thereupon is informed of the pendency of the an appeal against an order refusing to set aside an award the same would be good cause to refuse to give reliefs to the plaintiff of the decree ion terms of the award. The Court while exercising jurisdiction under section 17 is not bound merely on account of the dismissal of application of the dismissal of application to set aside an award to pass a decree in terms of the award. The passing of a decree is not automatic. It is not a mere ministerial function to be performed on the dismissal of a application for setting aside the award. Rule 788 of the Original Side Rules enjoins upon a plaintiff before taking out a Notice of Motion for judgment in terms of an award to obtain a certificate from the Prothonotary and Senior Master that no application has been made to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, or if made, that it has been disallowed. Indeed, the plaintiffs in the present case have obtained a certificate from the Prothonotary and Senior Master and the same informs the Court that the appeal filed by the defendants against the order refusing to set aside the award is pending. In my judgment, it would not be proper to pass a decree in terms of the award during the pendency of the said appeal. 7. In regard to the decision in the case of Scottish Union and National Insurance Co. v. Saraswati Sajnani (supra) relied upon by Mr. Bharucha, I am afraid I am unable to concur with the observations that the Court is not called upon under the Act to wait and find out whether its order refusing to remit or to set aside the award has become final and unassailable in the sense that the time for appeal is gone or that the appeal if taken is dismissed in order to assume jurisdiction to proceed to pronounce judgment in accordance with the award. The Court dealing with the award is not required to look beyond itself and proceed to deal with the matter on the footing that so far as it is concerned there is an order of refusal irrespective of the fact that an appeal might be taken or has been taken against the order or that the order passed by the Court might be set aside. I am also unable to concur with the view that Order 41, Rule 5 of the Civil Procedure Code applies and the plaintiffs are entitled to a decree on the ground that the Appeal Court has not passed an order of stay of the operation of the order refusing to set aside an award. I also do not concur with the view that the moment the award is set aside on appeal the award is gone and the judgment and decree passed in terms of the award would be not in accordance with the award which has become non-existent as observed in the above case. In my view, it would be in appropriate or an exercise in futility to pass a decree and make it conditional upon the decision of the appeal namely that the decree would be valid and executable if the appeal is dismissed and would be invalid and stand vitiated in the event of the appeal being allowed. 8. Viewing section 17 of the Arbitration Act in its proper context, it would become clear that passing of an order to set aside or refusing to set aside an award is one thing and passing of a decree in terms of the award is entirely another. Whereas an order setting aside or refusing to set aside an award is made appealable under section 39(1)(vi) of the Arbitration Act, an appeal against a decree is made appealable only on limited grounds as provided in section 17 of the Arbitration Act. It would, therefore, be inappropriate to term an order setting aside or refusing to set aside an award as a decree or preliminary decree. The same is an order as specifically provided under section 39 of the Arbitration Act and the same is quite distinct from the judgment and decree which can be passed by the Court after the application for setting aside or refusing to set aside the award has bene finally disposed of. The same is an order as specifically provided under section 39 of the Arbitration Act and the same is quite distinct from the judgment and decree which can be passed by the Court after the application for setting aside or refusing to set aside the award has bene finally disposed of. Even when the conditions laid down in section 17 are present the Court is not bound to pass a decree in terms of an award. If, as is reflected in the certificate of the Prothonotary and Senior Master, the appeal against the order refusing to set aside the award is pending, it would be inappropriate to pass a decree in terms of the award. 9. In regard to my order dated 5th June, 1990 in Notice of Motion No. 2534 of 1989 in Award No. 3 of 1989 the same was passed on the facts and circumstances which were peculiar to that case. The same does not lay down any proposition of law that the plaintiff is entitled to a decree in all cases even though an appeal is pending. The defendants in that case had applied to the Appeal Court for stay. The stay was granted on condition of deposit. The defendants did not comply with the conditions but carried the matter to the Supreme Court and the same was dismissed. They moved the Appeal Court for clarification and the Appeal Court specifically clarified that if there was no deposit there will be no stay. It was in the peculiar circumstances of that case that I passed a decree in terms of the award. The said case does not lay down a proposition of law that despite pendency of an appeal, the plaintiffs in all case will be entitled to a decree in terms of the award. 10. The result of the above discussion is that the plaintiffs are not entitled during the pendency of the appeal for a decree in terms of the award. 11. The Notice of Motion is, therefore, dismissed. The plaintiff will, however, be at liberty to take out a fresh Notice of Motion after the disposal of the appeal. In the facts and circumstances of the case, there shall be no order as to costs. Notice of Motion dismissed. -----