NATHA SUBRAHMANYAM CHETTY Vs. MENTA SUBRAMAIAH AND SONS

JUDGEMENT

(1.) BY an order dated 31-12-1951, the Additional Subordinate Judge, Nellore dismissed three objection petitions made by Natha Subrahmanyam, the appellant before us, refusing to set aside the award or remit the same to the arbitrator for re-consideration. That award was made on 12-11-1951 by Sri K. Rama Rao a senior advocate of Nellore on a reference made by the Additional Subordinate Judge at the request of the parties to O.S. Nos. 202 of 1946 and 4 of 1947 and O.P. No. 73 of 1946 who sought to abide by the decision of the said arbitrator in all the three above matters. The circumstances under which these three matters arose, and an award and a decree in terms of the award followed may be briefly stated:--The appellant, Natha Subrahmanyam and the respondents, Mehta Subbaramayya and his son, Venkatachalapathi, are the merchants residing at Nellore. The latter who are the members of a Hindu joint family, brought a money suit against the former for a sum of Rs. 6,206-0-3 on the basis of their khata account. Their contention was that the defendant Natha Subrahmanyam, had money dealings with them and that he had borrowed amounts on several occasions making some payments from time to time towards them. These dealings started on 3-10-1944 and continued till 4-9-1946. As per the agreement, interest at the rate of 6 p.c, per annum was chargeable on the amounts thus borrowed. The entries of the borrowings and payments were regularly made in respective account books of the plaintiffs and the defendant. They were compared from time to time and it is said in token of correctness, the plaintiff used to obtain the signatures of Natha Subrahmanyam in their ledgers. On 4-9-1946 a sum of Rs. 3,643-1-1 was found due and the defendant made his signature acknowledging his indebtedness to that extent in the account Books of the plaintiffs. It is on this basis that the plaintiffs brought a suit against the defendant for a sum of Rs. 6,206-0-3 inclusive of interest up to 21-11-1946. They also applied for attachment before judgment and obtained orders accordingly.

(2.) THE defendant Natha Subrahmanyam while admitting his signature under the entry in the account book for Rs. 3,643-1-1 denied that this was in respect of the borrowings made by him. According to him, this amount constituted balance of capital advanced by the plaintiffs for the partnership run by the plaintiffs and the defendant under the name and style of Natha Subrahmanyam and that this partnership business continued up to 30-11-1945 on which date the stocks were divided between the parties though the accounts were not settled and the profit and loss was not ascertained. Later on it was discovered that the joint business had incurred a loss to the tune of Rs. 20,000.00and that the 2nd plaintiff had to give proper explanation and acconut for several deficits in stocks in several khatas. THE plaintiffs, it is said, sought to evade explanation and the defendant was therefore intent on bringing a suit for dissolution of the partnership and accounts. But before he could do so the plaintiffs themselves brought their suit on a false basis and obtained attachment orders. THE defendant took exception to the conduct of the plaintiffs in making a petition for attachment before judgment and sought remedy under Section 95 C.P.C. by making an application O.P. 73/46 claiming damages of Rs. 5,000.00. THEn he filed his own suit O.S. No 4 of 1947 for dissolution of partnership and rendition of accounts against the said persons. Menta Subbaramayya and Venkatachalapathi in reply denied that there was any partnership at will between Natha Subrahmanayani and themselves. THEir case is that as Menta Subbaramayya had Brown old and his son required some training in kosta business for a short time it was agreed between his son and Natha Subrahmanyam that they will purchase a few commodities at suitable prices and sell them for profit at places where they were in demand. THE terms were that Venkatachelapathy would advance Rs. 5,000.00 for this business and Natha Subrahmanyam would pay the balance required and that they would share the profits equally. This arrangement was only for two months. THEre was no separate shop for it and when they saw it was resulting in loss the partnership was dissolved, the stocks on hand were valued and the accounts were settled on 12-11-1944. THEreafter none of them had a joint business. Menta Subbaramayya had nothing to do with this business. Similarly Natha Subranrnanyam was in no way concerned with the joint family business of Menta Subbaramayya and Venkatachelapathi. Thus they pleaded that the suit of Natha Subrahmanyam is liable to dismissal. All these proceedings were pending when on 23-10-1951 the parties filed a petition for reference agreeing to abide by the arbitration of Sri K. Rama Rao. Accordingly, the Court passed the order of reference. THE copy of the order of reference has not been filed in the proceedings before us. As can be gathered from the impugned order of the learned Subordinate Judge, the terms of reference were general and provided inter alia that the arbitrator should make such enquiry as he considered tit including scrutiny of the accounts and other records and examination of the parties and witnesses and pass his award. THE reference did not require the arbitrator to record separate findings on various points at issue. THE parties in terms had made themselves bound by the award to be passed by the arbitrator. THEre were altogether seven issues and the fate of the proceedings rested mainly on the finding whether the dealings between the parties were on the footing of debtor and creditor as alleged by the respondents, or, those of partners whose partnership is still undissolved as alleged by the appellant. THE arbitrator in his award set out the issues framed in each of the suits, then mentioned that he scrutinised the documents filed on either side and recorded the statements of the parties and the witnesses examined by him. He further stated that after careful consideration of the oral and documentary evidence and a thorough scrutiny of several accounts, he came to the conclusion that O.P. No. 73 of 1946 should be dismissed as no attachment was effected, and the parties should bear their own costs, that O.S. No. 202 of 1946 should be decreed for a sum of Rs. 3,643-1-1 with interest at 6 per cent per annum from the date of decree and proportionate costs on that amount, and that the suit O.S. No. 4 of 1947 shall stand dismissed, the plaintiff however will bo entitled to institution fee and pleaders fee only on that amount at which he valued the suit. THE award did not contain the reasons for the conclusion. Along with the award were the records of the proceedings submitted by the arbitrator. THEse however contained inter alia the recorded impressions of the arbitrator.

(3.) BEFORE we examine the points raised in detail, it is expedient to refer to the following provisions of the Arbitration Act which are relevant for our purpose:-- "Section 14 (1) x x Section 14(2): The Arbitrators or umpire shall at the request of any party to the arbitration agree ment or any person claiming under such party or if so directed by Court and upon payment for the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court and the Court shall thereupon give notice to the parties of the filing of the award. (3) x x x 16(1). The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit. (a) Where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) Where the award is so indefinite as to be insapable of execution; or (c) Where an objection to the legality of the award is apparent upon the face of it. (2) x x x (3) x x x (30) An award shall not be set aside except on one or more of the following grounds, namely:-- (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 become invalid under Section 35; (c) that an award has been improperly procured or is otherwise invalid." While Section 14(2) requires inter alia that the particular document should be submitted along with the award Section 16 refers to cases where remission of award is permissible and Section 30 enumerates grounds on which the award may be set aside. When a matter in difference is referred to an arbitrator, the Jurisdiction of the ordinary Court is ousted save for purposes of controlling the arbitrator, preventing misconduct and regulating procedure after the award. The arbitrator becomes the sole judge of law and fact in that matter and his award cannot therefore be reviewed or interfered widi by the Court except in the manner expressly provided for by the Arbitration Act. The parties too having made themselves bound by the decision of the forum of their choice cannot complain if they get something which may not appear to them just unless they make out the stringent grounds on which the award in law may be remitted or set aside. The main ground on which the award is attacked by a party in this case is that the arbitrator has gone wrong in the point of law and that the error of law appears on the face of the award. That no doubt can be a good ground only if it is established. The award as we have pointed out is a short one. Albeit it is complete in itself and capable of execution, it does not as it need not having regard to the terms of reference, state the grounds on which the conclusions are based. There is apparently nothing in the award suggesting that the arbitrator has gone wrong on a point of law which forms the basis of the award We are asked to look into the impressions of the arbitrator as though they form part of the award to find out whether there is any error apparent. Section 16(1)(c) lays down that an objection to the legality of the award should be apparent upon the face of it. Certainly the award must be taken at its face value. It is not open to the Court to read into the award words which are not there and then draw inferences therefrom. Further, it is the duty of the Court so far as it may be to look at the award in the way most favourable to its preservation. The learned counsel! argues that though it was not necessary for the arbitrator to give reasons for the award and he has in fact not given any in the body of the award yet, inasmuch as the award is accompanied by a note or his impressions it becomes a speaking award and may therefore be criticised, condemned, remitted or set aside on the story that it tells or the reasoning that in gives in the accompanying note. Reliance has been placed on the observations of Lord Goddard C.J. in Rex v. Northumberland Compensation Appeal Tribunal, Ex Parte Shaw, (1951) 1 K.B. 711 at pp. 714 and 722, We have also been referred to certain passages in Russel on Arbitration (14th edition, pages 273 to 275) for the propositions that a contemporaneous document may be looked into if it contains the reasons or is a document accompanying or forming part of the award. The law on the subject has been clearly stated by Williams, J. in Hodgkinson v. Fernie (1857) 3 C.B. (N.S.) 189 (202) in the following terms:--