1959 (11) TMI 54 - SC - Companies Law

Validity of the award made by the arbitrators to whom the matters in dispute between the parties were referred pending the present- litigation questioned Held that - High Court was right in answering the question against the appellants. Therefore the award is not open to the attack that it deals with immoveable properties out of the jurisdiction of the court. The award is not and does not purport to be a final decree in the proceedings and the proceedings before the arbitrators substantially correspond to the proceedings of the enquiry which the Commissioner would have held even under the order of the High Court. Therefore this, contention must also fail. The fact that a preliminary decree had been drawn up in the present case and it was based upon a judgment delivered by the court cannot exclude the application of s. 21. The judgment which had been delivered by the court not a final judgment contemplated by s. 21. The trial court would, therefore, have jurisdiction to make the order of reference. In the present case proceedings subsequent to the preliminary decree were pending before the trial court and so we must hold that the trial court was competent to act under s. 21. On that view the objection against the validity of the reference based on the provisions of s. 21 cannot succeed Appeal dismissed.

Issues Involved:
1. Validity of the arbitration award.
2. Jurisdiction of the court to refer matters to arbitration.
3. Alleged misconduct and partiality of the arbitrators.
4. Alleged coercion and undue influence in obtaining the arbitration reference.
5. Inclusion of immovable properties in Burma in the arbitration award.
6. Compliance with the High Court's stay order.
7. Competence of the trial court to make the arbitration reference under Section 21 of the Indian Arbitration Act.
8. Awarding of interest by the arbitrators.

Detailed Analysis:

1. Validity of the Arbitration Award:
The primary issue was the validity of the arbitration award made by the arbitrators to whom the disputes were referred during the litigation. The Supreme Court upheld the High Court's decision that the award was valid. The court found no misconduct or partiality by the arbitrators and no undue influence or coercion in obtaining the reference to arbitration. The award was not invalidated by the inclusion of immovable properties in Burma, as it did not actually determine the title to those properties but merely stated the legal position of the parties' rights.

2. Jurisdiction of the Court to Refer Matters to Arbitration:
The appellants argued that the reference to arbitration was invalid because it included immovable properties in Burma, which the court had no jurisdiction to adjudicate. The Supreme Court held that the reference did not include any claim regarding immovable properties in Burma. The court stated that the reference and the award only indicated the legal position of the parties' rights in those properties without actually determining the title.

3. Alleged Misconduct and Partiality of the Arbitrators:
The appellants alleged that the arbitrators were guilty of misconduct and partiality. The trial court and the High Court both found no substance in these allegations. The Supreme Court upheld these findings, stating that the arbitrators conducted a proper inquiry and the award was not open to any objection on the merits.

4. Alleged Coercion and Undue Influence:
The appellants contended that the reference to arbitration was obtained through coercion and undue influence. Both the trial court and the High Court rejected this contention, and the Supreme Court confirmed their findings, stating that there was no evidence of coercion or undue influence.

5. Inclusion of Immovable Properties in Burma:
The appellants argued that the reference and the award were invalid because they included immovable properties in Burma, which the court had no jurisdiction to adjudicate. The Supreme Court held that the reference and the award did not actually deal with the title to immovable properties in Burma. The award merely stated the legal position of the parties' rights in those properties and did not divide or determine the title to them.

6. Compliance with the High Court's Stay Order:
The appellants argued that the reference to arbitration was opposed to the High Court's stay order, which stayed the passing of the final decree. The Supreme Court held that the reference and the award did not contravene the stay order. The award did not purport to be a final decree, and the proceedings before the arbitrators were substantially similar to the proceedings that would have been conducted by the Commissioner under the High Court's order.

7. Competence of the Trial Court to Make the Arbitration Reference:
The appellants argued that the trial court was not competent to make the arbitration reference under Section 21 of the Indian Arbitration Act. The Supreme Court held that the trial court was competent to make the reference. The court stated that the word "court" in Section 21 includes the appellate court, and the word "suit" includes appellate proceedings. The court also held that a judgment delivered by the trial court in a partition suit followed by a preliminary decree is not a final judgment, and the trial court retains jurisdiction to make an arbitration reference.

8. Awarding of Interest by the Arbitrators:
The appellants argued that the arbitrators acted illegally in awarding interest. The Supreme Court did not allow this point to be raised as it was not urged before the High Court. The court noted that the appellants had not raised this contention during the hearing in the High Court, and therefore, it could not be considered at this stage.

Conclusion:
The Supreme Court dismissed all the appeals, confirming the High Court's order to pass a decree in terms of the arbitration award. The court found no merit in the appellants' contentions regarding the validity of the reference, the award, or the competence of the trial court to make the reference under Section 21 of the Indian Arbitration Act. The court also upheld the findings of the lower courts regarding the alleged misconduct and partiality of the arbitrators, coercion, and undue influence, and the compliance with the High Court's stay order.

← Previous Next →