1964 (8) TMI 89 - HC - Indian Laws

Summary

Issues Involved:
1. Right of appeal under by-law 202.
2. Applicability of by-law 202 to contracts entered before its amendment.
3. Ultra vires nature of the appeal provision under the Indian Arbitration Act, 1940.
4. Res judicata effect of the previous judgment.

Issue-wise Detailed Analysis:

1. Right of Appeal under By-law 202:
The appellants argued that by-law 202 did not confer a right of appeal to the second respondent firm. They contended that an appeal is a creature of statute or rule and must be expressly provided for, not inferred. The court acknowledged that an appeal is a statutory remedy and must be explicitly stated or necessarily implied. However, the court observed that the language of by-law 202, despite its imperfections, implied a right of appeal. Phrases like "whenever an appeal is preferred" and "the award against which such appeal is preferred" indicated that the parties to the initial award had a right of appeal. The court concluded that the right of appeal existed and must be exercised within the limitations provided under the Arbitration Act.

2. Applicability of By-law 202 to Contracts Entered Before its Amendment:
The appellants contended that by-law 202, introduced after the contracts were signed, could not confer a right of appeal for disputes arising from those contracts. The court referred to the Supreme Court's decision in Garikapati Veeraya v. Subbiah Choudhry, which established that the right of appeal is a vested right accruing from the date the lis commences. However, the court distinguished this case as it involved a private dispute governed by contract, not a statutory right of appeal. The contract explicitly stated that it was subject to the by-laws of the Madras Oil and Seeds Exchange Ltd., as amended from time to time. Therefore, the court held that the second respondent had a right of appeal under the amended by-law 202.

3. Ultra Vires Nature of the Appeal Provision under the Indian Arbitration Act, 1940:
The appellants argued that the appeal provision in by-law 202 was ultra vires the Indian Arbitration Act, 1940, which stated that an award shall be final and binding. The court noted that the finality of an award is subject to any right of appeal provided by the contract or governing by-laws. The court cited AIR 1927 Cal 647 and Russell on Arbitration, which supported the legality of providing for different stages of arbitration, including an appeal. The court concluded that the provision for appeal in by-law 202 was not ultra vires the Arbitration Act, and the final award by the appellate tribunal was valid and binding.

4. Res Judicata Effect of the Previous Judgment:
The appellants raised the issue of whether the judgment of Venkatadri J. in C.R.P. 1263 of 1959, which upheld the City Civil Court's opinion on the three points of law, constituted res judicata, preventing them from disputing the final award. However, the second respondent's counsel conceded that this argument could not be seriously pressed. The court did not address this issue further, as it was not actively contested.

Conclusion:
The court dismissed the civil miscellaneous appeal, upholding the appellate tribunal's award of Rs. 15,000 in damages and Rs. 500 in costs to the second respondent. The court affirmed that the right of appeal under by-law 202 existed, applied to the contracts in question, and was not ultra vires the Indian Arbitration Act, 1940. The appeal provision was valid, and the final award by the appellate tribunal was binding on the parties.