HONOURABLE MR. JUSTICE v. NATH ORAL JUDGMENT Date
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA First Appeal No.50 of 1982 =========================================================== Hindustan Fertilizer Corporation Limited, Barauni Unit, a company duly incorporated under the Indian Companies Act, 1956, having its registered office at “ Madhuban” 55, Nehru Place, New Delhi and having a unit at Barauni, P.O.-Barauni Urbarak Nagar, District-Begusarai. Plaintiff- Appellant. Versus M/S Starling Supply Agency, 10 Clive Road 4th Floor, Room No.6, Calcutta- 700001. Defendant ----Respondent. =========================================================== Appearance : For the Appellant/s : Mr. Shanti Kumar, Adv. Mr K.N.Gupta, Adv. Mr Satayendra Krishna Prasad, Adv. Mr Dhananjay Kumar Tiwary, Adv. For the Respondent/s : None =========================================================== CORAM: HONOURABLE MR. JUSTICE V. NATH ORAL JUDGMENT Date: 29-08-2013 V.Nath, J This appeal has been filed against the judgment and decree dated 23.07.1981 passed by 4th Additional Sub Judge, Begusarai in T.S.No.29/1977/01/1981 whereby the counter claim of the defendant has been decreed and it has been held that the defendant is entitled to get the amount of Rs.13,759.86 paise with interest as compensation subject to the payment of the court fee.
Legal Reasoning
2. Heard the learned counsel for the appellant. 3. No body has appeared on behalf of the respondents when the appeal has been called out for hearing. 4. The factual matrix of the case would unveil that there had been an agreement between the plaintiff and the respondent by which the respondent was to supply nine items of specified quality to Patna High Court FA No.50 of 1982 dt.29-08-2013 2 the plaintiff on the agreed rate. The terms and conditions of the said purchase and supply were recorded in the agreement dated 02.07.1973 which also contained an arbitration clause. As the defendant failed to supply all the items as agreed, the plaintiff filed an application under Section 20 of the Indian Arbitration Act, 1940 praying for an appropriate order for filing the agreement and referring the dispute to arbitration. The said application was registered as Title Suit No.29/1977 before the Court of Sub Judge IV, Begusarai. Initially the defendant did not appear after service of notice and the matter was directed to proceed ex parte but later on the defendant appeared and prayed for recall of the order for proceeding ex parte. The said prayer of the defendant was allowed on 14.07.1978 and the written statement filed by the defendant was accepted. 5. After hearing the parties, the learned court by order dated 31.08.1978 allowed the application and pass the order directing the defendant firm to file the agreement and for referring the dispute to the arbitrator appointed by the parties. It had also been observed in the order that if the parties would fail to appoint an arbitrator, the dispute would be referred to an arbitrator appointed by the court. By order dated 16.09.1978, after the failure of the parties to nominate an arbitrator by agreement, the learned court below appointed the general manager of the Hindustan Fertilizer, Barauni Division as arbitrator Patna High Court FA No.50 of 1982 dt.29-08-2013 3 and further directed him to submit his award by 30th November, 1978 which he did. Thereafter the plaintiff filed petition praying to make the award rule of the court. The defendant however, filed objection praying for setting aside award. The said objection was filed on behalf of the defendant on 03.10.1980. Later on the defendant filed a counter claim on 14.02.1981 claiming an amount of Rs.28,882.26 paise including the interest from the plaintiff. The plaintiff filed rejoinder to the aforesaid counter claim and assailed the maintainability of the counter claim besides denying the said claim on facts also. 6. By the impugned judgment and decree, the learned court below has set aside the award and further has also allowed the counter claim of the defendant to the extent of Rs.13,759.86 paise with interest as compensation. 7. The learned counsel for the appellant has submitted that the jurisdiction of the court after referring the matter to the arbitrator under Section 20 of the Arbitration Act is confined only to consider the objection raised by the defendant under Section 30 of the Act, when the award is submitted and the prayer is made by the plaintiff to make the said award rule of the court. It has been urged that there was no jurisdiction in the court below to entertain a counter claim by the defendant and allow the same particularly when no such counter claim had ever been raised by the defendant when the matter Patna High Court FA No.50 of 1982 dt.29-08-2013 4 was heard at the stage of the reference or even before the arbitrator. It has also been proponed by the learned counsel that Section 17 of the Arbitration Act clearly circumscribes the jurisdiction of the court which has only jurisdiction to modify, remit or set aside the award but in no case it can entertain a claim by the defendant by way of counter claim under Order 8 Rule 6A CPC at this stage. It has been also argued that if the defendant had any such claim, he could have very well filed a suit in accordance with law and got his claim determined by the competent civil court. 8. There is no dispute that there was an agreement between the plaintiff and the defendant according to which the defendant was to supply goods according to the agreed terms and conditions. The said agreement also contained arbitration clause. On the basis of said clause, the plaintiff filed an application under Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred as Act) praying for direction to the defendant to file the agreement and to refer the dispute to the arbitrator. It is manifest by the order dated 31.08.1978 that the learned court below after hearing the plaintiff as well as the defendant decided to refer the dispute to the arbitrator. It however does not transpire from the said order dated 31.08.1978 that the defendant had raised any counter claim against the claim of the plaintiff and had prayed to refer such counter claim also to the Patna High Court FA No.50 of 1982 dt.29-08-2013 5 arbitrator. From the records it does not appear that the defendant raised any counter claim before the arbitrator also. 9. The arbitrator submitted his award in accordance with the direction of the court and thereafter the plaintiff filed petition praying to make the award the rule of the court. The defendant raised his objection to the prayer to the award and prayed for setting aside the award. In the said objection also the defendant did not disclose that he had a counter claim against the plaintiff. It is apparent from the records that much thereafter the defendant filed an objection on 14.02.1981 by way of counter claim wherein he claimed an amount of Rs. 28,882.26 paise with interest. 10. Section 30 of the Act reads as follows: Sec.30- Grounds for setting aside award:- 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. Patna High Court FA No.50 of 1982 dt.29-08-2013 6 11. The aforesaid section has been subject to interpretation in several decisions and it is also well settled that an award could have been set aside only on the three grounds mentioned in this provision. 12. From the manifested facts in the present case it is clear that the order dated 31.08.1978 by which the reference was made to the arbitrator was not challenged by the defendant. The defendant did not disclose therein that he had a counter claim against the plaintiff. It is also clear that even before the arbitrator, the defendant did not raise such a counter claim. Such counter claim had been raised after the award was filed in the court and the plaintiff made a prayer to make the same rule of the court. The jurisdiction of the court in such fact situation is governed by the provision of Section 17 of the Act which reads as follows: Section 17. Judgment in terms of award.- 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 and no appeal shall lie from such decree except on the ground that it is in excess of, or Patna High Court FA No.50 of 1982 dt.29-08-2013 7 not otherwise in accordance with, the award. 13. It is, clear therefore, that the court has the jurisdiction to either modify the award or remit the award and if it finds no reason to set aside the award than to pronounce the judgment in accordance with the award. There is no scope for considering the counter claim raised by the defendant at the stage when the matter of pronouncing judgment in accordance with the award was being considered. 14. The learned court below in the impugned judgment has observed that the defendant should not be driven to institute another suit for realization of the claim made by him but that cannot be the reason for usurping a jurisdiction to decide the counter claim for which entirely different procedure has to be followed. As such, I find that after setting aside the award and refusing the prayer to make the same rule of the court, the learned court below has exceeded its jurisdiction in allowing the counter claim of the defendant. Accordingly, this first appeal is allowed and impugned judgment and decree is set aside to the extent whereby the counter claim of the defendant has been allowed. In the facts and circumstances of the case, there shall be no order as to cost. Nitesh/- (V. Nath, J)