KESHAB RANJAN SEN v. COAL INSPECTION SERVICE — 1996 DIGILAW 549 (PAT)

JUDGMENT Prasun Kumar Deb, J 1. This revision petition has been filed by the above named petitioner who was opposite party in Miscellaneous Case No. 26 of 1994 against the order dated 6-5-1996 passed by the Principal Sub-ordinate Judge, Dhanbad, whereby and whereunder, the miscellaneous case registered on an application under Section 33 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') filed by the opposite party was held to be maintainable. 2. The fact of the case are required to be reiterated for appreciating the points involved in this revision petition. 3. The petitioner and the opposite party were partners of a registered partnership firm along with three other partners, namely, T. Gupta, T. Roy and D. K. Ghosh. When certain dispute arose between the partners relating to retirements of the petitioner from the said firm, then by mutual consent of all the partners, the dispute was referred to the joint arbitrators, namely, K. S. Murthy and R. N. Rudra, who published their award on 18-5-1992 along with other terms and conditions. The petitioner was directed to be paid a sum of rupees twelve lacs in full and final of his dues, good will, rights, shares, assets in the firm as on 31-3-1992. For his retiring from the and in addition to the said payment, the petitioner was further held to be entitled to be paid Rs. 5,000 (Rupees five thousand) every month payable by 10th of each month for the period April 1992, onwards by way of interest due to the payments being made to him on installment till the date of final settlement of the petitioner's dues. The said award of the joint arbitrators was made a rule of the Court by terms of the order dated 16-12-1993 by the Principal Sub-ordinate Judge, Dhanbad, in Title (Arbitration) Suit No. 156 of 1992. It should be mentioned here that before making the award a rule of the Court, objections were raised and filed under Section 30 of the Act. The dispute was mainly with respect to incorporation of trade restraint clause in the award as according to the opposite party, such was the decision arrived at by the joint arbitrators at the time of arbitration proceeding. The dispute was mainly with respect to incorporation of trade restraint clause in the award as according to the opposite party, such was the decision arrived at by the joint arbitrators at the time of arbitration proceeding. The learned Subordinate Judge issued notice in respect to the arbitrators and in reply the arbitrators had mentioned by a letter addressed to the Court to the effect that the such restraint clause was a matter in issue before the arbitrators and the same was also agreed upon between the parties. On the basis of that, the award of the arbitrators was made a rule of the Court by incorporating the restraint clause in the decree itself. The restraint clause runs as follow : "Srikeshab Ranjan Sen will not start at Dhanbad or any place where M/s. Eskaps/Coal Inspection Service in carrying on business in like nature directly or indirectly. Sri Keshab Rajan Sen will not interfere with any manner the business of M/s. Coal Inspection Service and its allied concerned i.e., Coalfield Agencies of M/s. Eskaps (India) Private Limited for a period of two years from the date of Award." 4. After the award was made a rule of the Court on incorporation of the restraint clause itself, the decree was prepared accordingly and as per contention of the petitioner some payments as per award were made in favour of the petitioner but then the opposite party stopped payment and, as such, the petitioner levied the decree into execution. It must be mentioned that against the award being made a rule of the Court and a decree being passed, the petitioner challenged such incorporations of the restraint clause in Miscellaneous Appeal No. 29 of 1994 (R) but the said appeal was dismissed on 1-8-1994 as by that time, the time limit fixed for the trade restraint clause has expired by them when the execution case was levied, the opposite party came up with an application under Section 33 of he Act for the following prayers : "(a) For determination of effect of Award and to give an order that the amount of Rs. 12,00 lakhs and interest as specified in the Award dated 18-5-1992 is not payable by the petitioner to the opposite party in view of his above breaches. (b) For costs etc. ........" 5. 12,00 lakhs and interest as specified in the Award dated 18-5-1992 is not payable by the petitioner to the opposite party in view of his above breaches. (b) For costs etc. ........" 5. By above breaches as mentioned in the prayer portion, it was envisaged in the petition that the petitioner had broken the trade restraint clause as incorporated in the award and decree by a opening a business of the same nature as that of the partnerships firm to the total detriment of the interest of the opposite party and that by such breach of the clause of the award, the petitioner is not entitled to the payment of rupees twelves lacs as mentioned in the earlier clause of the award." 6. The main contention in the petition under Section 33 of the Act is to give verdict on the effect of restraint clause as incorporated in the award/decree inasmuch as whether such restraint clause shall stand as precondition of payment to the petitioner. The said petition under Section 33 of the Act filed by the opposite party was registered in the court of the Principal Subordinate Judge at Dhanbad which originally dealt with the arbitration matter as Miscellaneous Case No. 26 of 1994. The petitioner in turn filed objection on the ground that such petition under Section 33 of the Act is not maintainable on the ground of limitation and secondly when the award of the arbitration had already been made a rule of the court, and the decree was passed on 18th May, 1992, then such petition challenge or clarifying or modifying the award as contemplated under Section 33 of the Act is not maintainable. 7. It appears that the learned Subordinate Judge thought it proper to decide this maintainability matter at the time of hearing of the petition itself i.e., at the time of final disposal of the matter and passed orders accordingly. The petitioner came up before this Court in Civil Revision No. 1995 (R) wherein with consent of the parties, the revision petition was allowed and direction was given to the Court, below to decide the question of maintainability as a preliminary issue in accordance with law. 8. The again because of laches on the part of the petitioner, the Principal Subordinate Judge, Dhanbad, decided the maintainability point in favour of the opposite party practically ex parte. 8. The again because of laches on the part of the petitioner, the Principal Subordinate Judge, Dhanbad, decided the maintainability point in favour of the opposite party practically ex parte. Then again the petitioner came up before this Court in Civil Revision No. 131 of 1996 (R) which was disposed of by order dated 10-4-1996 (Annexure-3) giving necessary opportunity to the petitioner to argue on the point of maintainability and then the Court was asked to pass orders on maintainability matter in accordance with law. 9. Now after hearing learned counsel for the parties, by the impugned order dated 6-5-1996 it was held that as the limitation is not expressly provided under Section 33 of the Act, the omnibus/residuary Section of the Limitation Act would apply and as such the petition was held to be within the period of limitation as the same was filed within the period of three years from the date of decree. 10. On the point of maintainability of the petition under Section 33 of the Act even after the award of the arbitrators was made a rule of the Court was held in the affirmative basing on the decision of the Apex Court in the case of G.C. Kanungo v. State of Orissa ( AIR 1995 SC 1655 = 1995(2) Arb. LR 277.), Oil and Natural Gas Commission v. Western Co. of North America ( AIR 1987 SC 674 = 1987(1) Arb. LR 60.), dis-agreeing with the decision of Ved Prakash and others v. Ram Narain Goel and others (AIR 1977 Delhi 47.), and also in the case of Vineet Kumar v. Smt. Bhagwan Dei (AIR 1977 All 312.). 11. Mr. N. K. Prasad, appearing for and on behalf of the petitioner has argued that on the wordings of Section 33 of the Act to the effect that there is no scope of application of filing objection under Section 33 of the Act after the award has been made a rule of the Court under Section 17 of the Act. Mr. N. K. Prasad, appearing for and on behalf of the petitioner has argued that on the wordings of Section 33 of the Act to the effect that there is no scope of application of filing objection under Section 33 of the Act after the award has been made a rule of the Court under Section 17 of the Act. According to him, no where the word "decree" has been mentioned in the Section itself and, as such, even if there is no challenge of setting aside the award on any other hand legal ground as contemplated under Section 33 of the Act then also the effect of the award can only be considered by the court in its original jurisdiction when that court is in seisin of the award before the same became a rule of the court. 12. On the other hand, it is submitted by Mr. V. Shivnath, appearing for and on behalf of the opposite party that the decree as contemplated under Section 17 of the Act is not a decree as defined under Section 2 of the Code of Civil Procedure and it was rightly held by the Supreme Court that the award passed by the arbitrator become useful and lawful paper after life is infused by asking decree of the Court. His further contention is that award can be questioned under Section 33 of the Act before it becomes the rule of the court as per other conditions mentioned in the Section, but the effect of the award can be considered and entertained only by the Court which had passed the decree by making the award a rule of the Court, hence, the question of maintainability as raised by the petitioner has no force. It may be mentioned here that limitation matter as decided by the Court below has not been assailed by Mr. N. K. Prasad and he has given up that point of limitation. Practically, there cannot be any ground of limitation as it has now been established that only omnibus/residuary Section of the Limitation Act is applicable when there is no limitation prescribed under the Statute. For Section 30 of the Act, limitation is for 30 days. N. K. Prasad and he has given up that point of limitation. Practically, there cannot be any ground of limitation as it has now been established that only omnibus/residuary Section of the Limitation Act is applicable when there is no limitation prescribed under the Statute. For Section 30 of the Act, limitation is for 30 days. While there is no limitation for Section 33 of the Act prescribed, hence three years under the residuary section shall be applicable and the present petition has been filed within the period of three years and hence the limitation point has been decided by the learned counsel below correctly. 13. Regarding the applicability of Section 33 of the Act, it is the contention of Mr. Prasad that Section 33 itself contemplates only award and not decree and hence when the award has already become a rule of the Court, there is no question of its questioning under Section 33 of the Act as the award has already been merged into the decree. Section 33 of the Act runs as follows : "33. Arbitration agreement or award to be contested by application : Any party to an arbitration agreement or of any person claiming under him desiring to challenge the existence or validity of any arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits : Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particular as it may do in a suit." 14. In the present case, the applicant-opposite party had filed the application for consideration of the effect of the award decree and it was contended by Mr. V. Shivnath that there is no scope for any other Court to decide the effect of the award which has been merged into a decree except the court which had considered the award and then made it a rule of the Court. On the other hand Mr. Prasad submits that when the wordings of section contemplates only the arbitration agreement and the award then there is no scope of raising any objection regarding the award or the arbitration agreement after it become the rule of the Court and decree was passed accordingly. On the other hand Mr. Prasad submits that when the wordings of section contemplates only the arbitration agreement and the award then there is no scope of raising any objection regarding the award or the arbitration agreement after it become the rule of the Court and decree was passed accordingly. Normally, the submission of Mr. Prasad seems to be more cogent as after the award has been made a decree under Section 17 of the Act and when the decree has been levied for execution then any question regarding the decree may be raised before the Executing Court only under the provisions of the Code of Civil Procedure such as Section 47 or under Order XXI of the Code, but the case is a bit different in the present circumstances. 15. As stated earlier, the arbitration award was made by the arbitrators and the same was filed in the Court for making it a rule of the Court. The clause regarding restraint of trade made against the petitioner was not originally included in the arbitration award but after hearing both the parties and after hearing the arbitrators, the said clause was included and then a decree was passed. The question is whether that clause of restraint of trade was a pre-condition to the payment to be made to the petitioner. There is no averment either in the decree or in the award to that effect and definitely the effect of that restraint clause is required to be determined for the ends of justice and proper adjudication of dispute between the parties. Whether that restraint clause was against Article 14 of the Constitution of India or not cannot when the miscellaneous appeal filed against the decree was rejected by this Court. The only question now as the same was settled when the miscellaneous appeal filed against the decree was rejected by this Court. The only question now remains as to whether this restraint clause is a precondition for payment to the petitioner or not. This can be decided only by the Court which had can be decided only by the Court which had passed the decree after inclusion of the restraint clause in the arbitration award. 16. Mr. The only question now remains as to whether this restraint clause is a precondition for payment to the petitioner or not. This can be decided only by the Court which had can be decided only by the Court which had passed the decree after inclusion of the restraint clause in the arbitration award. 16. Mr. Prasad has further submitted that in the case of G. C. Kanungo (supra) has not directly dealt with the question of applicability of Section 3 of the Act challenging the effect of the decree and he has referred to paragraphs 16 and 17 of that judgment in support of his contention. He has also referred to a decision of the Supreme Court in Oil and Natural Gas Commission, (supra) (paragraph 14) wherein also the question of maintainability of Section 33 of the Act was not directly in vague and only while deciding the disputed question of facts, this point was dealt with. He has very much referred to a decision of the Delhi High Court in Ved Prakash (supra) wherein a Single Bench of Delhi High Court held that after the award of the arbitrator is made a rule of the court, no application lies under Section 33 of the Act and any question relating to the decree or award which has been merged into a decree can be raised by way of a petition under Section 47 of the Code of Civil Procedure. Same was the proposition of the Allahabad High Court in the case of Vineet Kumar (supra). In Vineet Kumar v. Smt. Bhagwan Devi (supra), it was held that the suit questioning decree on ground of fraud can be held maintainable as per not under Section 12 of the Code of Civil Procedure but under the provisions of Sections 30, 32 or 33 of the Act. It was held that the suit is maintainable when the question of fraud was alleged in arriving at the arbitration agreement or decree thereof by alleged consent of the parties. 17. Mr. N. K. Prasad by referring to that judgment and a paragraph of the petition under Section 33 of the Act has submitted that if the petitioner has violated the restraint trade condition, the suit for damages may be made maintainable but in no way a petition under Section 33 of the Act can be made maintainable questioning the decree itself. N. K. Prasad by referring to that judgment and a paragraph of the petition under Section 33 of the Act has submitted that if the petitioner has violated the restraint trade condition, the suit for damages may be made maintainable but in no way a petition under Section 33 of the Act can be made maintainable questioning the decree itself. In Vineet Kumar (supra) also, the question of filing of a fresh suit to set aside the decree was held to be not barred under the provision of Sections 32 and 33 of the Act but, in the present case, the decree was not challenged rather its effect is sought to be determined as mentioned earlier regarding the restraint clause as a pre-condition or not for making payment to the petitioner on the other terms and conditions of the award/decree. The decree passed under Section 17 of the Act on the basis of the award is not the same as a contested decree passed as per the definition under Section 2 of the Code of Civil Procedure. All question relating to the arbitration agreement award can be decided within the various provisions under the Act itself Even if the award is made a decree, it has not the same effect as that of the decree as contemplated under the Code of Civil Procedure. So the provisions of Section 47 may not have application in the present circumstances of the case. If there was whole challenge of the award then the same might be done before the award being made a decree of the Court as held by this court in Basant Lal v. Surendra Prasad and other (AIR 1957 Patna 417.), and reiterated in Bihar State Co-operative Bank Ltd. v. The Phosphate Company Limited and another (AIR 1975 Patna 63.), but here, in the present case, only effect of the award which has been merged into a decree was sought to be determined by the court can in that view of the matter, the petitioner can be held to be maintainable even after the award has been made a rule of the court. 18. 18. Then it may be argued that the restraint clause has been incorporated in the decree which has not the original arbitration award and, as such, challenge regarding that restraint clause can only be questioned before the Executing Court and not under Section 33 of the Act regarding its effect but from the facts and circumstances of the case, it could not found that it was agreed upon between the parties regarding incorporation of restraint clause within the arbitration award but the same was not done inadvertently and then after hearing the parties and also after taking opinion from the arbitrators such restraint clause was incorporated and such incorporation can be deemed to be an incorporation under the arbitration award itself and not an isolated clause being included in the decree while making the arbitration award a rule of the Court. Decree sought for by the petitioner for execution included the restraint clause also. The effect of that restraint clause can in no case be decided by a separate suit as prescribed under Section 32 of the Act. The effect of that clause whether as a pre-condition for payment or not can only be considered by the Court which passed the decree making the award as a rule of the Court. The damage suit may come afterwards when the effect of the clause is determined by the Court and that effect can be determined only under Section 33 of the Act. It has already been held by the Apex Court in G. C. Kanugo v. State of Orissa, (supra) that the decree passed under Section 17 of the Act is not the same as defined under Section 2(2) of the Code of Civil Procedure and as such that question raising effect of the clause in the decree cannot be decided by the Executing Court under Section 47 of the Code of Civil Procedure. The restraint clause was included by the Court when making the award a rule of the Court and that court is only a forum which can determine its effect and no other Court. The restraint clause was included by the Court when making the award a rule of the Court and that court is only a forum which can determine its effect and no other Court. Moreover, if we follow the analogy as expressed by their Lordships in Oil & Natural Gas Commissions, (supra) that life is infused into the award after its becoming inforceable when made a rule of the Court, the effect of such award merged into a decree can only be decided under Section 33 of the Act and not by a separate suit or by any other decision before the Executing Court. 19. After considering all pros and cons of the different sections of the Act and after taking a realistic view of determination of the effect of award it is made a rule of the Court and a decree has been prepared under Section 17 of the Act, the same can be determined only by the Court which passed the decree or dealt with the arbitration matter under Section 33 of the Act, hence this revision petition has got no force and the learned Court below was right in holding that the petition under Section 33 of Act is maintainable even after the arbitration award has been made a rule of the Court for the purpose of determination of its effect. Regarding merit of the petition and its factual aspect has not been considered by this Court and the same is left to the Court below to determine and if any observation or comments are made in this order in respect of merit, the same should be considered as per incurium and not binding on the fact finding lower Court. 20. In the result, this revision petitions is dismissed, but in the facts and circumstances of the case, I shall make no order as to costs. Revision petition dismissed.