Case: Madan Lal Vs. Sunderlal &amp; Another

On May 20, 1965, an agreement was entered into between the appellant and the respondents referring certain differences between them to the arbitration of three persons. On January 19, 1956, an award was made, signed by two out of the three arbitrators as the third arbitrator had refused to sign the award. The award was filed in Court on September 7, 1957 and the respondents prayed for a decree in accordance with the award. Notice of filing of the award was issued to the appellant and was served upon him on September 30, 1957. On November 3, 1957, the appellant filed an objection in the nature of a written statement. By this objection the appellant attacked the validity of the award on various grounds. But the objection did not contain any prayer at the end nor did it indicate what relief the appellant desired, though there were as many as 43 paragraphs therein. When the matter came to be heard in the trial Court, the respondents contended that the so-called objection was in the nature of an application to set aside the award and contained grounds coming under S. 30 of the Arbitration Act. No. 10 of 1940, (hereinafter referred to as the Act). Therefore, as the objection was filed more than 30 days after the notice was served on the appellant, it was barred by limitation under Art.158 of the Indian Limitation Act No.9 of 1908.2. The trial Court held that appellants objection was not maintainable, as his remedy was to apply under S. 33 of the Act, if he wanted the award to be set aside on the grounds raised in the objection. As he had not done so and as the objection was itself filed more than 30 days after the service of notice on him, he was barred from raising any ground for setting aside the award which fell under S. 30 of the Act. The trial Court also held that the objection could not be treated as an application under S. 33 of the Act in view of the fact that it was beyond 30 days as required by Art. 158 of the Limitation Act. The trial Court therefore, passed a decree its terms of the award.3. The appellant then went in appeal to the High Court, and the main question urged there was whether the appellant could maintain his objection when he had failed to make an application under S.33 of the Act for setting aside the award on grounds contained in the objection. It seems that there were other points also before the High Court but the High Court held that if the main question was answered against the appellant it would not be necessary to go into other points. It seems therefore, that other points were not pressed before the High Court. The High Court came to the conclusion that the award could not be set aside on grounds which fell under S. 30 of the Act, except on an application under S. 33 of the Act within thirty days of the service of notice of filing of the award as required by Art. 158 of the Limitation Act. The High Court further held that the objection of the appellant could not be treated as application under S. 33, as, if it was treated as such application it would be barred by time. The High Court, therefore, dismissed the appeal, but granted a certificate to the appellant to appeal to this Court.

Court's reasoning:
5. We are of opinion that this appeal must fail. The Act was passed in 1940 and as the long title shows it is an Act to consolidate and amend the law relating to arbitration. Before 1940, the 1aw relating to arbitration was mainly contained in the Second Schedule to theCode of Civil Procedure which was repealed by the Act which is now self-contained code in the matter of arbitration. The scheme of the Act is to divide arbitration into three classes. The first consists of arbitration without intervention of a Court and is contained in Chap. II of the Act which has 17 sections from S. 3 to S. 19. The second consists of arbitration with intervention of a Court where there is no suit pending, which is in Chap. III of the Act, and there is only one section (S. 20) therein, as sub-s. (5) thereof applies the other provisions contained in the Act to this type of arbitration also so far as they can be made applicable. The third type of arbitration is contained in Chap. IV, namely arbitration in suits. This chapter contains 5 sections and S. 25 thereof applies the other provisions of the Act so far they can be made applicable.This analysis of the relevant provisions of the Act contained in Chap. II which apply mutatis mutandis to arbitrations of the other two types shows that the Court has to pronounce judgment in accordance with the award if it sees no cause to remit the award or any of the matters referred to arbitration for reconsideration, or if it sees no cause to set aside the award. The Court has to wait for the time given to a party to make an application for setting aside the award and where such an application has been made the Court has to decide it first and if it rejects it the Court proceeds to pronounce judgment according to the award. It is clear, therefore, from S. 17 that an application to set aside the award is contemplated therein and it is only when no such application has been made within the time allowed or if such an application has been filed and has been rejected that the Court proceeds to pronounce judgment in terms of the award.It is clear therefore form from the scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in S.30 it must apply within 30 days of the date of service of notice of filing of the award as provided in Art 158 of the Limitation Act. If no such application is made the award cannot be set aside on any of the grounds specified in S.30 of the Act. It may be conceded that there is no special form prescribed for making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But if an objection like this has been filed after the period of limitation it cannot be treated an application to set aside the award for if it is so treated it will be barred by limitation.9. It is not in dispute in the present case that the objections raised by the appellant were covered by S. 30 of the Act, and though the appellant did not pray for setting aside the award in his objection that was what he really wanted the Court to do after hearing his objection As in the present case the objection was filed more than 30 days after the notice it could not be treated as an application for setting the award, for it would then be barred by limitation. The position thus is that in the present case there was no application to set aside the award on grounds mentioned in S. 30 within the period of limitation and, therefore, the Court could not set aside the award on those grounds. There can be no doubt on the scheme of the Act that any objection even in the nature of a written-statement which falls under S. 30 cannot be considered by the Court unless such an objection is made within the period of limitation (namely, 30 days), though if such an objection is made within limitation that objection may in appropriate cases be treated as an application for setting aside thethat the Court has power to set aside the award suo motu, we are of opinion that, that power cannot be exercised to set aside an award on grounds which fall under S. 30 of the Act, if taken in an objection petition filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Art. 158 of the Limitation Act would be completely negatived. The two cases on which the appellant relies do not in our opinion supportis not necessary in the present case to resolve the conflict between the majority and the minority Judges in Saha and Co.s case, AIR 1956 Cal. 321   (FB), for even the minority judgment shows that it is only where the grounds are not those falling within S. 30, that the award may be set aside on an objection made beyond the period of limitation, even though no application has been made for setting aside the award within the period of limitation. Clearly, therefore, where an objection as in the present case raises grounds which fall squarely within S. 30 of the Act that objection cannot be heard by the Court and cannot be treated as an application for setting, aside the award unless it is made within the period of limitation. Saha and Co.s case, AIR 1956 Cal 321   (FB), therefore, also does not help thethese facts the decision in that case may be right. But the Court seems to have made a general observation that Art. 158 cannot apply to a written-statement by a defendant in reply to an application to have the award made a rule of the Court. If by that general observation the Court means that even if the objection is of the nature falling within S. 30 and is filed more than 30 days after service of notice, it would be open to the Court to set aside the award on such objection, we are of the opinion that the view is incorrect.