HASTIMAL DALICHAND BORA Vs. HIRALAL MOTICHAND MUTHA

JUDGEMENT

(1.) THIS appeal from order and revisional application have been filed by the defendants against orders passed by the learned Civil Judge, Senior Division, Ahmednagar, in suit No. 60 of 1948. It appears that there was an agreement between the plaintiff and the defendants in regard to the transfer of house No. 2665 at Ahmednagar. A dispute arose between the parties as to the nature of this agreement. The plaintiff alleged that it was an agreement to sell the property, whereas according to the defendants they had merely agreed to mortgage the property. This dispute was referred by the parties to arbitration on January 25, 1948. The arbitrator then made his award. He was of the opinion that the agreement between the parties was one of mortgage and not of sale and on that footing the award purports to direct defendants Nos. 1 to 3 to pay the plaintiff Rs. 8,500 and interest at the rate mentioned in the award. This amount was made payable by six monthly instalments of Rs. 1,000 each. The award then goes on to direct that if defendants Nos. 1 to 3 did not pay the amount to the plaintiff as directed, the plaintiff should proceed to recover that amount by sale of the property mortgaged through Court. If the sale-proceeds were not enough to pay the plaintiff the amount due to him, the plaintiff should proceed to recover the balance from the other properties of defendants Nos. 1 to 3. The award also provides for a default clause, but it is unnecessary to refer to this clause in detail. After the award was thus made, it was filed in Court and notice was served to the parties under Section 14 (2) of the Arbitration Act. On June 15, 1949, the defendants were served. On October 27, 1949, they filed their written statement, in which they raised several contentions. The principal contention with which we are concerned in the present appeal was that the arbitrator had no jurisdiction to pass a virtual decree on the mortgage as he has purported to do. The defendants' argument was that the parties had referred to the arbitrator the decision of the dispute as to whether the transfer of the defendants' properties should take the form of a sale or mortgage and nothing more. It was wholly outside his jurisdiction to direct not only that the mortgage deed should be executed by the defendants in favour of the plaintiff but that in certain contingencies the plaintiff would execute the award itself and recover the amount by sale of the mortgaged properties. The defendants, therefore, claimed that the award should be set aside. The learned Judge was not impressed with this plea; he held that the reference made to the arbitrator included the power to pass an award on a mortgage, if the arbitrator held that the agreement between the parties was to have a deed of mortgage by the defendants for the amount received by them; so he directed that a decree in terms of the award should be drawn. In the course of his judgment the learned Judge has observed that he saw no reason to set aside the award, though the final order merely directed that the award is ordered to be filed and that the decree in terms of the award should be drawn up. Treating this judgment as amounting to an order refusing to set aside the award, an appeal from order has been preferred by the defendants. In the alternative, against the decree which was subsequently drawn in terms of the award a revisional application has been preferred by them. That, in short, is the genesis of the two matters which have come before us for decision to-day.

(2.) IT has come to our notice in several cases that though the Arbitration Act was passed in 1940, Courts below do not seem to take judicial notice of the change which has been effected by the passing of this Act. Very often when awards are filed, proceedings are taken pursuant thereto as though the provisions of Schedule II to the Civil Procedure Code were still in force. In the present case the learned Judge has virtually adopted the same procedure. Otherwise, the first question to which he would have addressed himself would have been as to whether the defendants were entitled to raise the contention that the award should be set aside in view of the fact that they had not taken any proceedings by way of an application as they were bound to do under Section 33 of the Arbitration Act within the period prescribed by Article 158 of the Indian Limitation Act. It is common ground that the written statement has been filed by the defendants in the present proceedings beyond the limitation prescribed by Article 158, and it is conceded by Mr. Kotwal that Section 5 of the Limitation Act has not been made applicable and the Court has no jurisdiction to condone delay which a party may make in filing an application under Section 33. In other words, even if the Court was inclined to treat the written statement of the defendants as an application made under Section 33 of the Act, the difficulty created by the delay would be insuperable and the Court would have no jurisdiction to consider the contentions raised in such an application when it has been filed beyond time; and yet, without considering this point, the learned Judge has proceeded to deal with the merits of the contentions, though it is true that in the end he has rejected them.

(3.) THE scheme of the Act relevant for the purpose of this question is to be found in Sections 16, 17, 30 and 33 of the Act. Section 16 deals with the power of the Court to remit an award. Subsection (1) of this section provides that the Court may from time to time remit the award or any matter referred to arbitration to the arbitrators for reconsideration where the conditions mentioned in Sub-clause (a), (b) or (c) of the said Sub-section are satisfied. It would be noticed that this subsection does not in terms require that an application must be made to the Court to enable it to remit the award. Section 17 provides that where the Court sees no cause to remit the award or 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. Looking at the words of this section, it is fairly clear that it is open to the Court to see whether there is any cause to remit or set aside the award apart from the application which a party may make for the purpose of getting the award remitted or set aside. The section clearly lays down that if an application is made, it has to be decided on the merits, and if the application is rejected, a judgment is to be pronounced in accordance with the award. If the application is allowed, the award would naturally be remitted or set aside, in which case other appropriate orders would have to be passed. While making this provision the section does seem to contemplate that the Court may proceed to consider the question whether the award should be remitted or set aside even though an application may not have been made before it by any party to the award. In such a case if the Court 'suo motu' sees any cause to remit or set aside the award, the Court may make that order. If the Court sees no cause to remit or set aside the award, even so, the Court must wait until the period for making an application under Section 33 has expired, and, if an application is made, until the application is refused. It would, therefore, be clear that on a fair and reasonable construction of the words used in Section 17, the Court has jurisdiction to consider the question of remitting or setting aside the award 'suo motu'.