Case: Smt. Santa Sila Devi And Another Vs. Dhirendra Nath Sen And Others

This is an appeal by special leave against the judgment of the High Court of Calcutta affirming the decision of a Single Judge of that Court refusing to set aside the award of an arbitrator dated May 27,Hemendra Nath Sen, father of the second appellant, died intestate in 1929 leaving his widow Premtarangini Debi and 8 sons. Respondents 1, 2, 3, 4, 6 and 7 are the brothers of the 2nd appellant. The 5th respondent is the widow of a deceased brother who died in 1933 while the 8th respondent is the wife of the 2nd respondent. The 1st appellant is the wife of the 2nd appellant. The parties were governed by the Dayabhaga School of Hindu law. Hemendra Nath left considerable properties and on his death disputes arose between his several heirs but an agreement dated January 31, 1933 these were settled. By then one of the sons the husband of the 5th respondent had died leaving a widow (the 5th respondent) and these viz., the widow, the 7 sons and the widowed daughter-in-law entered into this agreement by which the properties left by the deceased were partitioned among them. Broadly stated, the agreement specified the shares of the 9 parties thereto as equal i.e., one ninth each, with however the two widows being allotted their respective shares for their life as for their maintenance. There was also a provision that in regard to a glass factory the 2nd appellant was to have a 5 annas share, the rest of the members dividing the balance of the 11 annas (presumably because the 1st appellants money went in for the initial capital for starting the concern) till certain specified contingencies occurred. Fresh disputes however, arose between the parties and by a formal agreement dated May 11, 1953, they set out those disputes between themselves and agreed to refer the same to the sole arbitration of Dr. Radha Binode Pal - an eminent lawyer and jurist of Calcutta. As the terms of reference have some relevance to the points urged before us in the appeal it would be convenient to set them out. It read"We the undersigned hereby agree, First to refer all disputes arising out of or in connection with or in relation to the New Indian Glass Works Ltd., including the management thereof and the acts of any of the parties in respect of or in relation to or arising out of the said Company, and for future management thereof including the dispute regarding the alleged lease in favour of R. N. Sen (7th respondent) and of the alleged prior leases in favour of A. N. Sen (2nd appellant) and F.N. Sen (6th respondent) of the said Companys business, the legality and validity thereof and Secondly all disputes whatsoever in relation to the joint properties as per Schedule hereunder written or otherwise which were or are owned by the parties or some of them, to the sole-Arbitration of Dr. Radha Binode Pal, Advocate. The said Arbitrator is to enquire, ascertain and partition the said joint properties. We agree that the said Dr. Radha Binode Pal would have summary powers and the award which would be made by him would be final and conclusive and binding upon thewas followed by a Schedule in which the joint properties were specified and to this document all the family members affixed theirhowever, the reference was submitted to the arbitrator, the respondents made an application to the High Court of Calcutta on its original side on July 12, 1954 under s. 20 of the Indian Arbitration Act, 1940 for an order directing the agreement to be filed into Court and for making a reference to the arbitrator appointed by the parties. Notices were issued to the appellants who were impleaded as respondents to that application and after a hearing, an order was made on November 29, 1954 referring the disputes set out in the agreement to the arbitrator named therein. The arbitrator entered on the reference on January 16, 1955 and the parties thereafter filed statements of cases before him setting out their respective claims and contentions. Evidence was taken and counsel were heard and thereafter the arbitrator pronounced his award on May 27, 1955. It is the validity of this award that is under challenge in these proceedings. We might, merely to clear the ground, mention even at this stage that no misconduct is alleged against the arbitrator but the main ground on which the award is impugned is that it is incompleteThe award is a long document and purports to decide all the disputes which had been referred to him. It does not set out the arguments or even the contentions urged by the parties in regard to any specific matter or even the reasons for the particular decisions recorded but corresponds in form to what might for convenience be termed a decree in a civil suit. The award was filed into Court on June 29, 1955, and thereupon the appellants made an application for setting it aside on various grounds the principal of which was, as already indicated, that the award was incomplete, in that all the disputes which had been referred for arbitration had not been disposed of by it. The application came on for hearing before a learned Single Judge on the original side and it was dismissed on May 26, 1956, the learned Judge directing a decree to be passed in terms of the award. The appellants preferred two appeals one from the order refusing to set aside the award and the other from the decree in terms thereof. These were heard and disposed of by a common judgment dated January 29, 1957 which directed the dismissal of the appeals and thereafter they applied for and obtained special leave of this court and in pursuance thereof the present appeal which is a consolidated one against the judgment in the two appeals in the High Court has been filed

Court's reasoning:
In the circumstances the principle of construction enunciated by Parke, B. aptly covers the case and the silence of the award as regards the claim for accounting must, therefore, be taken to be intended as a decision rejecting the claim to thatshall next turn to the submission that the nature of the claim here made required a specific adjudication and the appellants were logically entitled to the relief of accounting when once the lease of the factory was declared void and that viewed from that angle the award must be treated as incomplete as not expressly dealing with a legal consequence of the declaration granted. We do not consider this contention sound, for two reasons : (1) If the lease were held to be void because of technical informality it need not necessarily involve any accounting since accounting postulates, the lease being for an improperly low rental. If the lease be set aside for such a reason, it would not necessarily follow that the relief of accounting was implicit in the declaration of the invalidity of the lease, (2) Non constant, the amount due on taking on an accounting has not been taken into account or adjusted in making the other provisions of the award. This objection, therefore, has to be repelledThe next item alleged as regards the incompleteness of the award was the failure on the part of the arbitrator to provide by his award, for the future management of the New Indian Glass Works Ltd. We consider that there is no substance in this objection either. The award had declared the shares of the parties in the Glass Company and by cl. 9(b) had set aside the agreements or arrangements put forward as regards the management of the affairs of the company regarding whose validity and propriety disputes had been raised. When those alleged agreements were set aside and declared not to be binding on the parties, the law would step in and the provisions of the Indian Companies Act as regards the management of the business and affairs of the company would come into operation, and the arbitrator may well have considered that the provisions contained in the law of the land sufficient to safeguard the interests of the shareholders. The silence of the arbitrator in this regard and his failure to made any specific provision therefor in regard to the management did not therefore leave any lacuna as regards the rights of the parties to manage but must be taken to have left the right of the parties to be determined by the relevant general law applicable to the management of the company. If the arbitrator considered that these provisions sufficiently secured the rights of the parties and did not consider that any special provision as regards this matter was needed the award would be silent on that point and that might be the explanation for the state oflast of the points urged was that the award had not referred to or decided the claim of the appellants to relief from the respondents or some of them on the ground that they had misappropriated the moneys of the company and were, therefore, bound to bring the money back into hotch potch for division among the parties. The absence of any provision in regard to this claim is capable only of one interpretation and that is that arbitrator rejected the claim. It is, therefore, an instance where the silence of the award is a clear indication, having regard to the adjudication being professedly complete and de praemissis, that the claim in that respect was not upheld. This would not render the award incomplete. We consider therefore that none of the three points urged in challenge of the validity of the award on the ground of its incompleteness has any substance.