Research › Search › Judgment

Andhra High Court · body

2008 DIGILAW 176 (AP)

Diddi Kumaraswamy v. Pathakala Bhaskar

2008-03-03

L.NARASIMHA REDDY

body2008
ORDER The petitioner filed EP No.92 of 2005, in the Court of District Judge, Warangal, for execution of a Settlement-cum-Award, dated 9.10.2002, said to have been rendered in an Arbitration, between himself and the respondents. It was pleaded that the father of the respondent No.1 borrowed a sum of Rs.14,000/- from the petitioner on 10.6.1993, and agreed to sell the house bearing No.15- 189/2, Narsampet, at the price that may be fixed by the elders. Possession was also said to have been delivered to the petitioner. It is stated that an agreement was executed by the father of the 1st respondent, stipulating the consideration for the property, at Rs.60,000/- and adjusting the amount of Rs.14,000/-, together with the accrued interest, amounting to about Rs.40,000/-. The petitioner alleged that when he offered to pay the balance of Rs.19,960/-, the 1st respondent and his father refused to receive it, and that there upon the matter was referred to Arbitrators. The petitioner prayed for enforcement of the Settlement-cum-Award, dated 9.10.2002. 2. The 1st respondent opposed the EP, denying the very existence of award, as well as the agreement, pleaded by the petitioner. The District Court dismissed the EP, observing that the petitioner approached it, on an earlier occasion, by filing EP.No.59 of 2003, for enforcement of that very award and that the same was dismissed. It was also observed that the petitioner himself is not sure, as to whether the one, sought to be enforced, is an award or settlement, and that there is nothing on record to disclose that the alleged dispute between the parties was referred to Arbitrators. The said order is challenged in this CRP. 3. Sri B. Harinath Rao, learned counsel for the petitioner, submits that the award, dated 9.10.2002, is binding on the parties and that the District Court was not justified in rejecting the EP. He contends that the earlier EP was dismissed with certain objections, and no decision was rendered, on merits. Learned counsel submits that on account of the rejection of the EP, the very institution of the proceedings, before Arbitrators, was defeated. 4. The execution sought for by the petitioner, is not of any decree, passed by a Civil Court. He wanted the District Court to enforce a settlement-cum- award, dated 9.10.2002. The District Court rejected the EP, on the grounds, that have already been mentioned in the preceding paragraphs. 4. The execution sought for by the petitioner, is not of any decree, passed by a Civil Court. He wanted the District Court to enforce a settlement-cum- award, dated 9.10.2002. The District Court rejected the EP, on the grounds, that have already been mentioned in the preceding paragraphs. Certain procedural, as well as substantive aspects, arise for consideration in this CRP. On procedural side, Section 36 of the Arbitration and Conciliation Act, 1996 (for short "1996 Act"), provides for execution of an award, rendered in Arbitration, as though it is a decree passed by a Civil Court. The provision reads as under: "Enforcement:- Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court." 6. Under the Arbitration Act 1940 (for short "the 1940 Act"), an award passed in Arbitration was enforceable, only on its being made, the rule of the Court, under Section 17 of that Act. Enforceability is attached to the award in the 1996 Act, once the time for making an application to set aside the same had expired, or an application under Section 34, for setting aside the award, is rejected. Neither under the 1940 Act, nor under the 1996 Act, the word "Award" is defined, with reference to its contents. The 1940 Act defines the word, under Section 2(b) as: "Award" means an arbitration award". In the 1996 Act, the definition is inclusive in nature, under Section 2(c). It reads, "Arbitral award" includes an interim award." From these definitions, it is difficult to understand or perceive the form, in which the award has to be rendered. This question assumes significance, from the point of view of enforceability. It is relevant to mention that even where an adjudication is undertaken, by a Judicial Forum, the enforceable part of the judgment, is reflected in a decree. Under the 1940 Act, there existed a facility to ascertain the enforceable part of an award, when it was made the rule of the court, under Section 19 of that Act, inasmuch as a decree ensues out of it. Under the 1940 Act, there existed a facility to ascertain the enforceable part of an award, when it was made the rule of the court, under Section 19 of that Act, inasmuch as a decree ensues out of it. Since an award rendered under the 1996 Act, becomes enforceable, without being made the rule of the court, heavy burden rests upon the person seeking the enforcement thereof, to satisfy the court that what is sought to be executed is an award, and that the same satisfies the other legal requirements, such as, registration, where it deals immovable property. Impleading necessary parties, to the proceedings, some times the arbitrators also, is another aspect. 7. The power of an executing court is limited, in the context of interpretation of the decree rendered by a civil court, or an award, in an arbitration. However, the court can certainly make an endeavour to satisfy itself, as to whether the document sought to be enforced, answers the description of an "award". The court cannot go into the merits of the terms of settlement, but it can certainly take into account, the antecedents of the award to satisfy itself, whether it is the outcome of an arbitration governed by the relevant statute. 8. Under both the enactments on arbitration, the emphasis is mostly upon the existence of an arbitration agreement, between the parties. Once that condition is satisfied, the form, in which the settlement, or arbitration is handed out, virtually becomes secondary. That is the reason why under both the Acts, the expression "arbitration agreement" is defined. Section 2(a) of the 1940 Act reads as under: ""arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not" The 1996 Act defined the same little elaborately, under Section 7 thereof, in the following terms: "Arbitration agreement:- (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in- (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract." 9. It may be observed that in an arbitration, existence of a written agreement to refer the differences, or disputes, is a sine qua non. The agreement can be in the form of an independent document, or a clause in a contract. 10. The question as to whether the award rendered under the 1940 Act, was preceded by an arbitration agreement, used to be considered, when proceedings under Section 17 thereof, were instituted. Since no such requirement is contemplated under the 1996 Act, the court in which the award is sought to be executed, can certainly look into that aspect, at the stage of execution, in the context of enforceability of the award, and not legality. If the party that seeks the execution of the award maintains silence, as to the existence of an arbitration agreement for the commencement of proceedings culminating in the award, the court can certainly refuse to extend its help, in the enforcement of such award. 11. Reverting to the facts of the case, the facts pleaded by the petitioner before the District Court are not only uncertain, but are contradictory in some respects. No mention is made to the existence of an arbitration agreement. In the affidavit filed in support of the EP, it is stated that the father of the 1st respondent borrowed a sum of Rs.14,000/- from the petitioner on 10.6.1993, agreeing to sell the house. It was alleged that the 1st respondent and his father executed an agreement to sell the house for a consideration of Rs.60,000/-. In the affidavit filed in support of the EP, it is stated that the father of the 1st respondent borrowed a sum of Rs.14,000/- from the petitioner on 10.6.1993, agreeing to sell the house. It was alleged that the 1st respondent and his father executed an agreement to sell the house for a consideration of Rs.60,000/-. However, the father of the 1st respondent is not made a party to the E.P. The affidavit and other documents are silent, as to whether the father of the 1st respondent is alive, or no more. The basis for impleading the wife of the 1st respondent is not indicated. Thus, while necessary party was omitted in the array of parties, unconnected one was included. In the affidavit, reference is made to respondents 1 to 3, whereas, two persons alone were impleaded. In the statement of the petitioner, appended to the EP, it was mentioned that the 1st respondent himself is the owner of the house and that he borrowed a sum of Rs.14,000/- from the petitioner. So much about the E.P. 12. As to the arbitration proceedings, it has already been mentioned that no reference was made to any written agreement. Ambati Venkateswaru, Y. Prathap Reddy, V. Sambaiah and others, are said to be the arbitrators. In the so-called award, only two persons, i.e. Y. Prathap Reddy and Ambati Venkateshwarlu, are mentioned as arbitrators. The document is silent, as to who must execute the sale deed. The petitioner and his wife figured as one party, and the respondents herein and one Shambu Prasad were shown as the opposite party, in the so-called arbitration. When admittedly Pathakala Venkataiah, the father of the 1st respondent, is the owner of the house, it is not known as to how any proceedings to which he is not a party, would bind him, or that the persons, who are not owners of the property, can transfer it to the petitioner. This is a serious defect from the point of substantive law. 13. Even if the procedural defects mentioned above, are to be ignored for a while, the award, which provides for transfer of an immovable property, is required to be engrossed on a stamp paper of the corresponding value. It was written on a white paper. The copies of signed awards are needed to be delivered to both the parties. 13. Even if the procedural defects mentioned above, are to be ignored for a while, the award, which provides for transfer of an immovable property, is required to be engrossed on a stamp paper of the corresponding value. It was written on a white paper. The copies of signed awards are needed to be delivered to both the parties. According to the petitioner, the signed copy was delivered to him and a xerox copy thereof was given to the respondents. Though the dismissal of an earlier EP does not operate as res judicata, when the petitioner was not able to satisfy the court on several aspects indicated above, it cannot be said that any illegality has crept into the order passed by the District Court. This court finds that the proceedings instituted by the petitioner suffer from procedural and substantive defects. 14. The CRP is, accordingly, dismissed. There shall be no order as to costs.