Mohanlal Arora Vs. Kailash Financiers Calcutta Pvt. Ltd. and anr. - Court Judgment

Excerpt:
- orderb.c. basak, j. 1. this is an application under sections 30, 33 and 41 of the arbitration act. 1940 (hereinafter referred to as the said act) praying that the award made on is march, 1969 in the arbitration proceedings between kailash financiers (calcutta) private ltd. and ser-am-pore mill stores be set aside; (b) that the decree passed in the award case no. 74 of 1974 be set aside; (c) that all proceedings including execution proceedings under the said award dated 1st march, 1969 and/or the decree dated 17th august, 1970, including all steps in aid of execution, be stayed permanently. 2. the facts of this case, so far as relevant for the purpose of this application are as follows: 3. at all relevant times the petitioner was and still is carrying on business under the name and style.....

Judgment:
ORDER

B.C. Basak, J.

1. This is an application under Sections 30, 33 and 41 of the Arbitration Act. 1940 (hereinafter referred to as the said Act) praying that the award made on is March, 1969 in the arbitration proceedings between Kailash Financiers (Calcutta) Private Ltd. and Ser-am-pore Mill Stores be set aside; (b) that the decree passed in the Award Case No. 74 of 1974 be set aside; (c) that all proceedings including execution proceedings under the said Award dated 1st March, 1969 and/or the decree dated 17th August, 1970, including all steps in aid of execution, be stayed permanently.

2. The facts of this case, so far as relevant for the purpose of this application are as follows:

3. At all relevant times the petitioner was and still is carrying on business under the name and style of Seram-pore Mills Stores as a sole proprietor thereof (hereinafter referred to as the petitioner). The respondent No. 1 was and still is a private limited company having its present registered office at Calcutta. The respondent No. 2 was a private limited company having its registered office at Jullandher and a branch office at Calcutta. On the 31st March, 1966 the petitioner became member of Group SFB/2 promoted by Kailash Financiers Private Ltd the respondent No. 2 herein. On the 5th of May, 1966 the petitioner became member of Group OB-8 promoted by the respondent No. 2. On the 31st October, 1966 it is alleged that the business of the Calcutta branch of the respondent No. 2 was taken over by the respondent No. 1 herein. It is alleged that intimation of the said take-over was sent to all members including the petitioner. It is further alleged that thereafter the petitioner all along dealt with the respondent No. 1 in respect of its membership of the aforesaid two groups, paid all subscriptions to the respondent No. 1 and obtained receipts from the respondent No. 1. It is also alleged that thereafter the petitioner became a successful subscriber by offering highest tender to the respondent No. 1 and obtained loan from respondent No. 1. This loan was in respect of group OB-8 and the petitioner executed a promissory note and a Receipt in favour of the respondent No 1. It is also alleged that the petitioner became successful subscriber by offering highest tender to the respondent No. 1 under the rules and regulations of respondent No. 1 and obtained loan from the respondent No. 1 under rules and regulations of respondent No. 1 in respect of Group SPB-2 and executed a promissory note in favour of respondent No. 1. So far as the award in question it is suggested in the petition that the petitioner was ignorant of the decree passed thereon until receipt of a notice dated 23rd July, 1974 under Rule 22 (1) of Order 21 of the Code of Civil Procedure towards the end of August. 1974. This is denied in the affidavit-in-opposition wherein detailed facts have been set out showing the knowledge of the petitioner regarding same. It is to be pointed out that there is no specific or sufficient denial to the same by the petitioner in its affidavit-in-reply. From the facts stated in the affidavit-in-opposition it appears that on the 7th January. 1969 as disputes arose between the petitioner and the respondent No. 1 in respect of both the above groups, the matters were referred to arbitration by the respondent No. 1 to the Managing Director of the respondent No. 1. It is alleged that under clause 15 of the Rules and Regulations of the respondent No. 1 such disputes were referable to the managing director of the respondent No. 1. On the same date i. e. 7th January, 1969 Arbitrator gave notice to the petitioner to appear before him on 25th of January, 1969 at 12 noon to answer the claim of the respondent No. 1. It is further alleged that the statement of claim in respect of both the groups were sent to the petitioner it is alleged that on the 8th of January, 1969 notice dated 7th January. 1969 was sent by registered post with acknowledgment due and was duly received by the petitioner. It is also alleged that the acknowledgment card has been filed along with the award. The petitioner did not appear before the Arbitrator pursuant to the notice dated 7th January, 1969 and the meeting was adjourned till 1st of March, 1969. On the same day i. e. 25th January, 1969 another notice was sent by the Arbitrator to the petitioner to the effect that the next meeting will be held on 1st of March, 1969. By the said notice the petitioner was also informed by the Arbitrator that in default of appearance the Arbitrator would proceed ex parte. It is further alleged that the said notice dated 25th January, 1969 was sent by registered post with acknowledgment due and was received by the petitioner on 29th January. 1969. It is further alleged that the postal acknowledgment due has been filed with the Award. Admittedly the petitioner did not appear before the Arbitra for pursuant to the notice dated 25th of January, 1969. The Arbitrator thereafter proceeded with the reference and made an ex parte award for the sum of Rupees 13,360 in favour of the respondent No. 1 and against the petitioner. It is alleged that on the same date i.e. 1st March, 1969 the petitioner was duly informed by a notice about the making and signing of the award by Arbitrator on that day i. e. 1st March, 1969. It is alleged that the said notice was sent by registered post with acknowledgment due and was received by petitioner on the 6th March, 1969. It is also alleged that the acknowledgment due has been duly filed with the award. On the 18th March. 1969 Bose & Dutt, Solicitors wrote to the petitioner intimating it about the making of the award and asking for payment. The letter was sent by registered post with acknowledgment due and was duly received by the petitioner on 31st March, 1969. A copy of the said letter with the copy of the acknowledgment due is annexed to the affidavit-in-opposition. On the 20th of March, 1969 a reply was received from the petitioner, whereby the claim of the respondent No. 1 was repudiated. A copy of the said letter is annexed to the affidavit-in-opposition. By a letter dated 18th June, 1969 the respondent No. 1 again informed the petitioner about the award dated 1st March, 1969 and further placing on record that it promised to clear the dues and accordingly the award was kept pending and not filed in Court. The letter further placed on record the fact that a cheque for Rs. 1,000 being cheque No. 233902 dated 2-6-69 drawn in favour of the respondent No. 1 in part payment of its dues under the said award dated 1st of March, 1969 was dishonoured. It is alleged that this letter was also sent by registered post with acknowledgment due and was duly received by the petitioner on 25th of June, 1969. A copy of the said letter and the acknowledgment due are annexed to the affidavit-in-opposition. On the 15th July 1969 the award along with necessary papers were sent to this Court for filing but the same was not filed till 8th June, 1970. Notice under Section 14(2) of the Arbitration Act was issued on 2nd July, 1970 fixing 17th August, 1970 for pronouncing judgment upon award. On the 15th July, 1970 notice under Section 14(2) of the Arbitration Act was served on the petitioner. On the 17th of August, 1970 judgment upon the said award was pronounced. By a letter dated 17th July, 1974 Shyam gundar Bose, Solicitor informed the petitioner about the award dated 1st March. 1969 and the decree thereon dated 17th August, 1970 and demanded payment. It is alleged that the said letter was sent by registered post with acknowledgment due and was received by petitioner on 19th August, 1974. A copy of the said letter and a copy of the acknowledgment due are annexed to the petition (sic) On the 23rd July, 1974 Tabular Statement filed and notice under Order 21, Rule 22 (1A) of the Code was directed to be issued On the 13th August, 1974 the said notice under order 21. Rule 22 (la) was served on the petitioner. On the returnable date of the notice the judgment-debtor did not appear and after three usual calls the learned Master was pleased to make an order directing issue of attachment in terms of clause 10 of the Tabular Statement. On the 25th September, 1974 the present application was made.

4. Mr. S. Tibrewal, learned counsel appearing in support of this application, submitted before me that the judgment upon award was a nullity inasmuch as it was filed on 8th June, 1970 when the City Civil Court at Calcutta and not this Court had jurisdiction to entertain any such award for passing judgment upon the same. He pointed out that with effect from 14th November, 1969 the pecuniary jurisdiction of this Court was in respect of amount exceeding Rs. 50,000 whereas the award in question was in respect of a sum less than that amount and accordingly after 14th November, 1969 no such award could be filed in this Court and no such judgment upon the award could be passed by this Court. According to him in view of the same the judgment passed upon the said award on the 17th August, 1970 was a nullity. He made it clear that though this application was intituled to be under Sections 30 and 33 of the said Act, this was in effect an application under the inherent jurisdiction of this Court under Section 151 of the Code of Civil Procedure read with Section 41 of the said Act According to him there was no time limit for such, an application. The judgment upon the award being a nullity it could be challenged at any stage in any proceeding. In this connection he relied on the decisions of Rajalakshmee Dassee v. Katyayani Dassee reported in (1911) ILR 38 Cal 639 at p. 667. Kiran Singh v. Cha-man Paswan : [1955]1SCR117 ; and Soorajmull Nagarmull v. Golden Fibre and Products : AIR1969Cal381 , Official Trustee West Bengal v. Sachindra Nath Chatterjee : [1969]3SCR92 , and Ganeshmal v. Kesoram Cotton Mills : AIR1952Cal10 . It was also sought to be contended that there was no arbitration agreement between the parties and accordingly the award was a nullity and the same ought to be set aside. In this connection it was argued that originally the arbitration agreement was between the applicant and the respondent No. 2 and there was no arbitration agreement between the applicant and the respondent No. 1 though an award was sought to be passed in favour of the respondent No. 1 in an arbitration proceeding between the applicant and the respondent No. 1.

5. Mr. Samaraditya Pal. learned counsel opposing this application, firstly con ended that the judgment upon the award was not a nullity. He contended that though the award was filed on 8th June, 1970 it was actually deposited with the Registrar, Original Side of this Court on 15th July. 1969 i. e. before the City Civil Court assumed jurisdiction on 14th November, 1969 in respect of an award of this nature. According to him this being a pending proceeding on 14th November, 1969, the mere fact that it was filed on 8th June, 1970 did not make any difference. Accordingly he submitted that this Court had jurisdiction to pass judgment upon award on 17th August 1970. In this connection he also placed reliance on the opinion of the then Advocate General of West Bengal which was directed to be followed by the then Chief Justice. In this connection he mentioned that it appears from the relevant files that directions were given by S. C. Ghose, J. and Masud, J. directing the Registrar, Original Side of this Court to file similar awards. In this context he also placed before me the file containing the relevant notes and directions in connection with this matter. Mr. Pal very fairly conceded before me that if the date of filing and not the date of deposit of the award is the relevant date, admittedly the judgment upon award could not have been passed by this Court on the 17th of August, 1970. It was next argued by Mr. Pal that in any event this application was barred by limitation. According to Mr. Pal even if the judgment upon award is a nullity, the only result is that it was open to the applicant to canvass the same as a defence in any proceeding against him including any execution proceeding. Mr. Pal submitted that, notwithstanding that, if the applicant chooses to file a substantive application challenging the said judgment on the ground that the same was a nullity or for a declaration to that effect the relevant provisions of the Limitation Act. 1963 would be attracted. According to him all suits and applications including applications under inherent jurisdiction of the Court, are governed by the Limitation Act and one or other article of the same would apply in each case. He submitted that if the present application is to be treated as made under inherent jurisdiction of the Court then Article 137 would apply and the time began to run from the date of the said judgment upon award. He submitted that the knowledge of the applicant regarding the said judgment is not relevant. In any event the applicant had all along full knowledge of the same particularly in view of the service of notice under Section 14(2) of the said Act. Lastly, it was contended by Mr. Pal that in any event, if it is a question of exercise of inherent jurisdiction of this Court, it is still a question of exercise of a discretion and the conduct of the applicant was such that the Court should decline to make any such order in its favour. In this context he relied on the relevant facts of this case as stated hereinabove. These facts were all set out in the affidavit-in-opposition and which have not been denied specifically by the applicant in its reply. He contended that the petitioner has deliberately concealed these relevant facts from this Court including the fact that he was all along aware of the arbitration proceedings and also the proceedings in this Court in connection with the filing of this award. He particularly pointed out the fact that the notice under Section 14(2) was served on the petitioner which was concealed from this Court For these reasons he submitted that the Court should refuse to exercise its jurisdiction and the application should be rejected.

6. Mr. Tibrewal in his reply sought to contend that the opinion of the Advocate General and any Note/direct: on regarding the same cannot override the provisions of the Act. In any event he submitted that the same did not go against his contention inasmuch as the same contemplated about the awards being deposited before 14th November, 1969. According to him an award which was sent before 14th November. 1969 but in respect of which the Court-fee or the requisite stamps were put in after that date, was not an award deposited prior to 14th November. 1969 within the meaning of the said opinion. In this context he has relied upon Rules 13 and 14 of the Rules framed by this Court under the said Act So far as the discretion of the Court is concerned, he submitted that when the Court finds that an order has been passed by it without jurisdiction and which is a nullity, it is not merely A question of exercise of discretion but it becomes a duty of the Court to set aside such an order. In any event he submitted that there is no reason why in the facts of this case no such discretion should be exercised by this Court in favour of his client.

7. The main question to be decided in this application is whether this Court had jurisdiction to pass judgment on the 17th August, 1970 in respect of an award less than Rs. 50.000 in value. Admitted position is, that the award in question was sent to and deposited in this Court on the 15th July, 1969 that is, before the City Civil Court (Amendment) Act, 1969 (hereinafter referred to as the said Act) came into force, but that the requisite stamp on the said award was put in and the said award was filed afterwards. The admitted position, further, is that if the date of the deposit is not the relevant date but the date of filing is, then this Court had no jurisdiction to pass the said judgment upon the said award.

8. The City Civil Court Act, 1953 (West Bengal Act 21 of 1953} hereinafter referred to as the 1953 Act) came into force with effect from 23rd February, 1957. Section 5(2) of the said Act originally provided that the City Civil Court shall have jurisdiction and the High Court shall not have jurisdiction to try suits and proceedings of a civil nature not exceeding Rs 10,000 in value. Section 5(4) of the 1953 Act provided that the City Civil Court shall not have jurisdiction to try suits and proceedings of the description specified in the First Schedule to the said Act. The First Schedule to the said Act contained various items including item No. II which related to suits and proceedings under the Arbitration Act, 1940 other than the suits and proceedings under Chapter IV of that Act. Admitted position is that in view of the said provisions of the 1953 Act this Court could pass judgment upon award where the value exceeded Rs. 10,000. It is to be noted that the award in the present case is for Rs. 13,360. This position was changed by the Amending Act of 1969. By the said Amending Act of 1969 the word 'Rs. 10,000' was substituted by the word 'Rs. 50,000' in Section 5 (2) of the Act. Further the First Schedule to the said 1953 Act was amended by way of omitting several items which included item No. II referred to above. Section 6 of the 1969 Amending Act provided as follows:

'(6) Savings:-- Nothing in the Act shall apply to or affect any suit appeal or proceedings pending in the Calcutta High Court or, the Court of Small Causes. Calcutta at the date of commencement of this Act and such suit, appeal or proceeding shall be continued in such Court as if this Act had not been passed.''

9. This Amending Act of 1969 came into force with effect from 14th November 1969 Therefore the position after 14th November, 1969 is that the High Court does not have jurisdiction to try any suit or proceeding, not exceeding Rs. 50.000 in value, including proceedings under the said Act, except in respect of the pending proceedings within the meaning of Section 6 of the 1969 Amending Act. Accordingly if the award matter was a pending proceeding on the 14th November, 1969 within the meaning of Section 6 of the 1969 Amending Act, then this Court had the jurisdiction to pass judgment upon the said award subsequently; whereas if the same could not be treated as a pending proceeding on the 14th November, 1969 then this Court could not have jurisdiction to pass judgment upon the said award. Therefore the question is when an award has been sent with the connected papers to the High Court and deposited with the High Court before the Amending Act 1969 came into force, but wherein the requisite stamp was put in and the award was formally filed after 'he said Amending Act, 1969 came into force whether it could be treated as a proceeding pending in the Calcutta High Court at the date of commencement of the 1969 Amending Act within the meaning of Section 6 thereof. It seems that some difficulties were felt in the department of this court in connection with the cases of this nature and similar other cases in view of the said provisions of the 1969 Amending Act. Accordingly certain questions were referred to the then learned Advocate General of West Bengal by the then Chief Justice of this Court. One of the questions referred to for the consideration of the learned Advocate General was whether awards received in the High Court before 14th November. 1969 but which were not filed before 14th November, 1969 should be entertained in the High Court. Mr. B. Das. Barrister-at-Law, the then Advocate General of West Bengal, in a very careful and well considered opinion stated that if the concerned awards were deposited with or furnished to the Registrar for filing before 14th November. 1969 then even if the actual act of filing did not take place before 14th November, 1969 the High Court would have the jurisdiction to entertain such awards. In this connection I may quote the relevant portions of the opinion of the learned Advocate General:--

'The question is whether the filing of an award in a matter not exceeding Rs. 50,000 in value, made by an Arbitrator outside the Court is a proceeding of a civil nature in the exercise of original jurisdiction of the High Court not arising out of a suit so as to attract Section 5 (2) of the City Civil Court Act as amended in 1969.

In my view the step taken to file the award under Section 14(2) of the Arbitration Act, is a proceeding of a civil nature in the exercise of the Original Jurisdiction of the High Court not arising out of a suit.

The next question is when an award of the nature contemplated is sent to or deposited with the Registrar with a request to file it, can it be said that the award is filed.

The recognised legal dictionaries say that 'a document is filed when delivered to the proper officer to be filed' Stroud Vol. II page 1087; Wharton 14th Edn. page 415, and Butterworths' Words and Phrases Legally Defined (Vol. II, 2nd Edn. page 241).

It was held in (1908) 1 Oh 152 at p. 157, a case under the English Company's Act 1900, that the expression 'filed with the Registrar' really means 'supplied to the Registrar for registration' or 'furnished to the Registrar for registration'.

As long ago as in the case- of Hunter v Caldwell (1847) 10 QB 69 at p. 81 = 116 ER 28 at p. 32 it was held that' the word 'filing' in reference to matter of practice is very commonly used to express the duty of bringing to the proper office for safe-custody or enrolment.

Accordingly it appears to me that when an award and its connected papers relating to an arbitration held outside Court is forwarded to the Registrar with a request to file the award, the award may be said to be filed. It follows that the awards which were so deposited or furnished to the Registrar for filing before 14th November, 1969 may be said to 'have been filed before Amending Act, 1969 came into force. A seemingly different view based on the authority of (1881) ILR 7 Cal 333 and AIR 1942 Cal 542 appears to me to be not in point as those authorities relate to the starting point of limitation for application to Court to file an award.

Assuming that the lodging of the award with the. Registrar for filing amounts to a 'proceeding' then such proceeding may be said to have been pending on the date when the Amending Act came into force. Such award will therefore be within the- saving provision in Section 20 of the City Civil Court Act, 1953 or Section 6 of the City Civil Court Act, 1969.' I agree with the aforesaid opinion of the learned Advocate General. I may also add a few words. In Re: Clagett', Estate Ford-ham v. Clagget. (1882) 20 Ch D 637 at p. 653 it was observed that a cause is said to be pending in a Court of justice when any proceeding can be taken on it. Applying this test in the present case, as the award was sent to the Court, this Court could take necessary proceeding regarding the same. According to Stroud's Judicial Dictionary Vol. 3, page 2141 a legal proceeding is pending as soon as it is commenced and until it is concluded, i. e. so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with therein. Fordham case and the passage from Stroud were quoted with approval in the case of Asgarali Nazarali v. State of Bombay, : 1957CriLJ605 . Asgarali case was followed in the case of S. K. Kashyap v. State of Rajasthan : 1971CriLJ832 wherein Ray, J. (as he then was) observed that the word 'pending' will ordinarily mean that the matter is not concluded and the Court which has cognizance of it can make an order on the matter in issue. In my opinion when the award was sent to the Court, this Court had cognizance of the same and otherwise could pass an order on the same. Accordingly it was a pending proceeding on the date the 1969 Amending Act came into force. In my opinion by sending and/or depositing the Award in Court, a proceeding was commenced and/ or initiated. Accordingly it was a pending proceeding at the relevant date. In this context reference may also be made to the case of Sherwood v. Ray. (1837) 1 Moo PC 353 and Hart v. Hart (1S81) 18 Ch D 670.

10. In my opinion even if the requisite stamp was not put in and even if the award was not form-ally filed till after 14th November, 1969 having regard to the fact that the award was sent for filing before 14th November, 1969. it was to be treated as a pending proceeding on 14th November,, 1969 i. e. the date when the 1969 Amending Act came into force. Accordingly this Court had jurisdiction to pass a judgment upon the said award on the 17th August, 1970.

11. There is nothing in Rules 13 and 14 of the Rules framed by this Court under the said Act which is in conflict with this conclusion. Rule 13 of the said Rules provides for forwarding the award by Arbitrator or Umpire and for requisite stamp and court-fees. Rule 14 provides that when the provisions of the Act and the Rule 13 have been complied with, the Registrar has to file the award. It cannot be said that in view of such Rules because the requisite stamp or court-fees were put in afterwards, it was not a pending proceeding on the 14th November, 1969.

12. In view of my finding that this Court had jurisdiction to pass a judgment upon the award in question, the further question as to whether there was any arbitration agreement between the parties or not does not strictly arise for consideration. Assuming that there was no such agreement it does not help the petitioner in any way. If there was no such agreement at the most the petitioner could have challenged the award on that ground and applied for setting aside the said award. But there are some difficulties in the way of the petitioner to that effect. Firstly, the time for making an application for setting aside the award has admittedly expired and accordingly this application, so far as the same is to be treated as an application under Section 33 of the said Act, is barred by limitation. Further, there is no application before me for condonation of delay. Secondly, if the remedy to challenge the said award by way of an application under Section 33 of the said Act is no longer available, then the petitioner has no remedy at all because the award cannot be set aside otherwise than in a proceeding under the said Act. Lastly I have already decided that the judgment passed on the said award was not without jurisdiction and that it is valid. The award has merged in the judgment/ decree. Accordingly, it is no longer open to the applicant to challenge the said award independently. Mr. Lala who followed Mr. Tebriwal also realised the futility of the said contention and did not press this point very strongly.

13. Having regard to my finding as above, it is not necessary to go into the question as to whether this application is barred by limitation even if it was held that the judgment upon award was a nullity. Accordingly, the question whether there is any period of limitation for an application for declaration that the judgment passed upon an award is a nullity and for setting aside the decree is left open. It is also not necessary for me to decide the question as to whether, when a judgment is a nullity and an application is made for a declaration to that effect, the Court can refuse to give such declaration in exercise of its discretion in view of the conduct of the appellant or like causes. However, I express my strong disapproval of the conduct of the applicant in the present case. Various material facts were concealed from this Court. An impression was sought to be given in the petition that the petitioner was not aware of the arbitration proceedings or the proceedings relating to the passing of judgment upon award. From the facts disclosed in the affidavit affirmed in opposition to the petition, as discussed hereinabove, it is clear that this is wholly incorrect. As already stated there is no specific denal by the applicants of the averments made in the affidavit affirmed in opposition to that effect.

14. Accordingly, this application is dismissed with costs.