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PETITIONER: MADAN LAL

       Vs.

RESPONDENT: SUNDERLAL & ANOTHER

DATE OF JUDGMENT: 09/03/1967

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. BACHAWAT, R.S. RAMASWAMI, V.

CITATION:  1967 AIR 1233            1967 SCR  (3) 147  CITATOR INFO :  R          1974 SC 968  (51)

ACT: Arbitration  Act  10 of 1940--S.  30,  objection  on  filing award--containing grounds for setting it aside-Whether  Art. 158 Limitation Act applicable.

HEADNOTE: An arbitration award in respect of certain disputes  between the  appellant  and the respondents was filed in  Court  and notice  of the filing served on the appellant  on  September 30,  1957.  ’Me appellant filed an objection on November  3, 1957 attacking the validity of the award on various grounds. The  respondents contended before the trial Court  that  the objection  was in the nature of an application to set  aside the  award and contained grounds which fell under s.  30  of the Arbitration Act 10 of 1940; therefore, as the  objection was  filed more than 30 days after notice was served on  the appellant.,  it was barred by limitation under Art.  158  of the  Limitation Act No. 9 of 1908.  The trial  Court  upheld the  appellant’s objection and an appeal to the  High  Court was dismissed. On appeal to this Court, HELD:Dismissing the appeal, The Arbitration Act contemplates making of an application to set  aside  an award on grounds mentioned in  s.  30.   This application  must  be  made within 30 days of  the  date  of service of notice as provided in Art. 158 of the  Limitation Act.   An  objection petition in the nature  of  a  written- statement  may  in  appropriate cases  be  treated  as  such application  provided  it  is filed  within  the  period  of limitation  prescribed.  Even if the court has the power  to set aside an award suo motu that power cannot be used to set aside an award on grounds falling under s. 30, if taken in a petition  filed  more  than 30 days  after  the  service  of notice,  for in that case the limitation provided  would  be completely negatived. [151 E, G-H; 152 D-E] Hastimal  Dalichand Bora v. Hiralal Motichand Mutha,  A.I.R. (1954) Bom. 243, Saha & Co. v. Ishar Singh v. Kripal  Singh, A.I.R  (1956)  Cal. 321 and Mohan Das  v.  Kessumal,  A.I.R. (1955) Ajm. 47, distinguished.

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JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 990 of 1964. Appeal from the judgment and decree dated April 15, 1963  of the Allahabad High Court, Lucknow Bench in First Appeal from Order No. 30 of 1960. B.   C. Misra and C. P. Lal, for the appellant. P.   K. Chatterjee, for respondent No. 1. S.   P. Sinha and P. K. Chatterjee, for respondent No. 2. 148 The Judgment of the Court was delivered by Wanchoo,  J. This is an appeal on a certificate  granted  by the  Allahabad  High  Court  and  arises  in  the  following circumstances.   On May 20, 1965, an agreement  was  entered into  between  the appellant and the  respondents  referring certain differences between them to the arbitration of three persons.  On January 19, 1956, an award was made, signed  by two out of the three arbitrators as the third arbitrator had refused to sign the award.  The award was filed in court  on September 7, 1957 and the respondents prayed for a decree in accordance  with the award.  Notice of filing of  the  award was  issued  to  the appellant and was served  upon  him  on September  30,  1957.  On November 3,  1957,  the  appellant filed an objection in the nature of a written statement.  By this  objection the appellant attacked the validity  of  the award on various grounds.  But the objection did not contain any  prayer at the end, nor did it indicate what relief  the appellant   desired,  though  there  were  as  many  as   43 paragraphs therein.  When the matter came to be heard in the trial  court, the respondents contended that  the  so-called objection  was in the nature of an application to set  aside the  award and contained grounds coming under s. 30  of  the Arbitration Act, No. 10 of 1940, (hereinafter referred to as the  Act).  Therefore, as the objection was filed more  than 30 days after the notice was served on the appellant, it was barred by limitation under Art. 158 of the Indian Limitation Act, No. 9 of 1908. The trial court held that the appellant’s objection was  not maintainable, as his remedy was to apply under s. 33 of  the Act,  if he wanted the award to be set aside on the  grounds raised  in the objection.  As he had not done so and as  the objection  was  itself  filed more than 30  days  after  the service  of  notice on him, he was barred from  raising  any ground for setting aside the award which fell under S. 30 of the Act.  The trial court also held that the objection could not  be treated as an application under s. 33 of the Act  in view  of the fact that it was beyond 30 days as required  by Art.  158 of the Limitation Act.  The trial court  therefore passed a decree in terms of the award. The appellant then went in appeal to the High Court, and the main  question urged there was whether the  appellant  could maintain  his  objection  when  he had  failed  to  make  an application  under  s. 33 of the Act for setting  aside  the award on grounds contained in the objection.  It seems  that there were other points. also before the High Court, but the High  Court  held  that if the main  question  was  answered against  the appellant it would not be necessary to go  into other points.  It seems therefore that other points were not pressed  before the High Court.  The High Court came to  the conclusion that the award could not be set aside on  grounds which fell under s. 30 of the Act, except on an  application under s. 33 149

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of  the Act within thirty days of the service of  notice  of filing  of  the  award  as  required  by  Art.  158  of  the Limitation  Act.   The  High Court  further  held  that  the objection  of  the  appellant could not  be  treated  as  an application  under  s.  33, as, if it was  treated  as  such application,  it  would be barred by time.  The  High  Court therefore dismissed the appeal, but granted a certificate to the appellant to appeal to this Court. We have heard learned counsel for the appellant on the main. question raised in the High Court.  We may add that  learned counsel wanted to raise other points which were not  pressed before  the High Court, but we have not permitted him to  do so. We  are of opinion that this appeal must fail.  The Act  was passed  in 1940 and as the long title shows it is an Act  to consolidate  and  amend  the law  relating  to  arbitration. Before  1940,  the law relating to  arbitration  was  mainly contained  in  the  Second Schedule to  the  Code  of  Civil Procedure,  which  was repealed by the Act which  is  now  a self-contained  code  in  the matter  of  arbitration.   The scheme  of  the  Act is to  divide  arbitration  into  three classes.    The  first  consists  of   arbitration   without intervention of a court and is contained in Chap. 11 of  the Act  which has 17 sections from s. 3 to s. 19.   The  second consists  of arbitration with intervention of a court  where there is no suit pending, which is in Chap.  III of the Act, and there is only one section (s. 20) therein, as sub-s. (5) thereof applies the other provisions contained in the Act to this  type  of arbitration also so far as they can  be  made applicable.   The third type of arbitration is contained  in Chap.   IV,  namely,  arbitration in  suits.   This  chapter contains  5  sections, and s. 25 thereof applies  the  other provisions of the Act so far as they can be made applicable. Chapter   11  makes  various  provisions  with  respect   to arbitrations of the first type.  Reference may be made to  a few which are material for our purpose.  Section 5 lays down that  the  authority of an appointed  arbitrator  or  umpire shall  not be revocable except with the leave of the  court, unless a contrary intention is expressed in the  arbitration agreement.   Section 8 gives power to court to.  appoint  an arbitrator  or umpire in certain circumstances.  Section  11 gives  power to court to remove an arbitrator or  umpire  in certain circumstances and s. 12 gives consequential power to court  to appoint persons to fill vacancies which  may  have arisen.   Section 13 provides for powers of the  arbitrators and  s.  14 provides for the award to be signed  and  filed. When the award is filed the court has to give no ice to  the parties of the filing of the award under s. 14(2).  Under s. 15,  the court is given power to modify or correct an  award and  under  s.  16  the  court  can  remit  the  award   for reconsideration.  Section 17 provides for judgment in  terms of the award and reads thus :-  150               "Where the court sees no cause to remit  award               on any of the matters referred to  arbitration               for reconsideration or to set aside the award,               the court shall, after the time for making  an               application   to  set  aside  the  award   has               expired, or such application having been made,               after   refusing  it,  proceed  to   pronounce               judgment according to the award, and upon  the               judgment  so pronounced a decree shall  follow               and  no  appeal  shall lie  from  such  decree               except on the ground that it is in excess  of,               or  not  otherwise  in  accordance  with,  the

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             award." Section  19  gives  power  to the  court  to  supersede  the arbitration agreement in certain circumstances. This  analysis  of  the  relevant  provisions  of  the   Act contained  in  Chapter 11 which apply  mutates  mutandis  to arbitrations of the other two types shows that the court has to  pronounce  judgment in accordance with the award  if  it sees  no  cause  to remit the award or any  of  the  matters referred  to arbitration for reconsideration, or if it  sees no cause to set aside the award.  The court has to wait  for the time given to a party to make an application for setting aside the award and where such an application has been  made the  court has to decide it first and if it rejects  it  the court proceeds to pronounce judgment according to the award. It is clear therefore from s. 17 that an application to  set aside the award is contemplated therein and it is only  when no such application has been made within the time allowed or if such an application has been filed and has been  rejected that  the court proceeds to pronounce judgment in  terms  of the award.  The Act therefore contemplates the making of  an application  to set aside an award and the grounds on  which such  an application can be made are to be found in  s.  30. The grounds on which an application can be made for  setting aside  the  award are-(a) that an arbitrator or  umpire  has misconducted  himself or the proceedings, (b) that an  award has  been  made  after the issue of an order  by  the  court superseding the arbitration or after arbitration proceedings have  be-come invalid under s. 35, or (c) that an award  has been improperly procured or is otherwise invalid.  These are the only grounds on which an award cat be set aside under s. 30 and it will be seen that if a party wants an award to  be set  aside  on  any  of these grounds  it  has  to  make  an application.   Thus any party wishing to have an  award  set aside  on  the  ground that it was  improperly  procured  or otherwise  invalid has to make an application.  We may  also refer to s. 32 which lays down that "notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever  for  a decision upon the  existence,  effect  or validity  of an arbitration agreement or’ award,  nor  shall any  arbitration agreement or award be set  aside,  amended, modified  or in any way affected otherwise than as  provided in this Act.". 151 It  is clear therefore from the scheme of the Act that it  a party  wants an award to be set aside on any of the  grounds mentioned in S. 30 it must apply within 30 days of the  date of  service of notice of filing of the award as provided  in Art.  158 of the Limitation Act.  If no such application  is made  the  award cannot be set aside on any of  the  grounds specified  in  s. 30 of the Act.  It may  be  conceded  that there  is  no  special form prescribed for  making  such  an application  and in an appropriate case an objection of  the type   made  in  this  case  may  be  treated  as  such   an application, if it is filed within the period of limitation. But  if  an  objection like this has been  filed  after  the period of limitation it cannot be treated as an  application to  set aside the award, for if it is so treated it will  be barred by limitation. It is not in dispute in the present case that the objections raised  by the appellant were covered by S. 30 of  the  Act, and though the appellant did not pray for setting aside  the award  in his objection that was what he really  wanted  the court to do after hearing his objection.  As in the  present case  the  objection was filed more than 30 days  after  the notice it could not be treated as an application for setting

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the  award, for it would then be barred by  limitation.  The position  thus  is  that in the present case  there  was  no application  to set aside the award as grounds mentioned  in S.  30  within the period of limitation  and  therefore  the court could not set aside the award on those grounds.  There can be no doubt on the scheme of the Act that any  objection even in the nature of a written-statement which falls  under s.  30  cannot  be considered by the court  unless  such  an objection  is made within the period of limitation  (namely, 30  days),  though  if  such an  objection  is  made  within limitation  that  objection  may  in  appropriate  cases  be treated as an application for setting aside the award. Learned  counsel for the appellant however urges that S.  17 gives  power  to the court to set aside the award  and  that such  power can be exercised even where an objection in  the form of a written statement has been made more than 30  days after  the service of the notice of the filing of the  award as the court can do so suo motu.He relies in this connection on Hastimal Dalichand Bora v. Hiralal Motichand Mutha(1) and Saha  & Co. v. Ishar Singh Kripal Singh (2).  Assuming  that the court has power to set aside the award suo motu, we  are of  opinion that power cannot be exercised to set  aside  an award on grounds which fall under s. 30 of the Act, if taken in  an  objection  petition filed more than  30  days  after service  of notice of filing of the award, for if that  were so the limitation provided under Art. 158 of the  Limitation Act  would be completely negatived. The two cases  on  which the  appellant relies do not in our opinion support him.  In Hastimars case(1) it was (1) A.I.R. 1954 Bom. 243. (2) A.I.R. 1956 Cal. 321. 152 observed  that  "if the award directs a party to do  an  act which  is prohibited by law or if it is  otherwise  patently illegal  or void it would be open to the court  to  consider this patent defect in the award suo motu, and when the court acts  suo motu no question of limitation prescribed by  Art. 158 can arise".  These observations only show that the court can act suo motu in certain circumstances which do not  fall within s. 30 of the Act. Saha  &  Co.’s case(1) was a decision of five  Judges  by  a majority  of 3 : 2 and the majority judgment is against  the appellant.   The minority judgment certainly takes the  view that  the  non-existence  or invalidity  of  an  arbitration agreement  and an order of reference to arbitration  may  be raised  after  the period of limitation for the  purpose  of setting  aside  an award because they are  not  grounds  for setting aside the award under s. 30.  It is not necessary in the  present  case  to  resolve  the  conflict  between  the majority  and the minority Judges in Saha &  Co.’s  case(1), for  even the minority judgment shows that it is only  where the  grounds  are not those falling within s. 30,  that  the award  may  be  set aside on an objection  made  beyond  the period  of limitation, even though no application  has  been made  for  setting  aside the award  within  the  period  of limitation.  Clearly therefore where an objection as in  the present case raises grounds which fall squarely within s. 30 of  the Act that objection cannot be heard by the court  and cannot  be treated as an application for setting  aside  the award  unless  it is made within the period  of  limitation. The  Saha & Co.’s case(-’) therefore also does not help  the appellant. Learned  counsel for the appellant also relies on Mohan  Das v.  Kessumal(2).  In that case the objection which was  made more  than 30 days after the service of notice was that  the

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award  had  been  filed by a person not  authorised  by  the arbitrator to do so.  The court held that such an  objection did not fall within s. 30 of the Act and therefore Art.  158 of  the  Limitation Act did not apply.  On these  facts  the decision in that case may be right.  But-the court seems  to have  made a general observation that Art. 158 cannot  apply to  a  written-statement  by  a defendant  in  reply  to  an application to have the award made a rule of the court.   If by  ,that general observation the court means that  even  if the  objection is of the nature falling within s. 30 and  is filed more than 3O days after service of notice, it would be open to the court to set aside the award on such  objection, we are of the opinion that the view is incorrect. In the result the appeal fails and is hereby dismissed  with costs.                             Appeal dismissed. R. K. P. S. (1) A.I.R. 1956 Cal. 321. (2) A.I.R. 1955 Aim. 47 153