Full Judgment Text
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PETITIONER:
SMT. SANTA SILA DEVI AND ANOTHER
Vs.
RESPONDENT:
DHIRENDRA NATH SEN AND OTHERS
DATE OF JUDGMENT:
26/04/1963
BENCH:
AYYANGAR, N. RAJAGOPALA
BENCH:
AYYANGAR, N. RAJAGOPALA
SINHA, BHUVNESHWAR P.(CJ)
SHAH, J.C.
CITATION:
1963 AIR 1677 1964 SCR (3) 410
ACT:
Arbitration-Incompletion of award-Silence of Arbitrator on
plea placed for decision-Implies rejection of the Plea-
Validity of award-Should be upheld if reasonably possible-
Arbitrator need not decide every matter of dispute unless
specifically required-Arbitration Act, 1940 (X of 1940), s.
30.
HEADNOTE:
The appellant as well as the respondents are the heirs of
one Hemendra Nath Sen who died intestate in 1929 leaving
considerable properties. Dispute having arisen between his
heirs an agreement for partition was entered into
determining their shares Among other provisions there was
one by which the 2nd appellant was to have 5 annas shares in
a glass factory and the rest of the members dividing the
balance of the II annas share Further disputes arose and
the parties executed an arbitration agreement in which the
dispute between the parties was set out Before the
reference was submitted to the arbitrator the respondents
applied to the High Court under s. 20 of the Arbitration Act
for an order directing the agreement to be filed in the
Court and for making a reference to the arbitrator appointed
by the parties. The present appellants were impleaded as
respondents. The court made an order referring the disputes
to the
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arbitrator named in the agreement. The arbitrator entered
on the reference and after following the prescribed
procedure he pronounced the award. The award was filed in
the court where upon the appellants applied for setting it
aside on various grounds the principal of which was that the
award was incomplete., in that all the disputes which had
been referred for arbitration had not been disposed of by
it. The Single judge before whom the application came for
hearing rejected the application and directed a decree to be
passed in terms of the award. The two appeals filed by the
appellants in the High Court, one from the order refusing to
set aside the award and the other from the decree in terms
of the award were dismissed. The present appeal is by way
of special leave granted by this Court
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The main contention raised was that the award was incomplete
in as much as the award did not dispose of three matters
referred to the arbitrator. These three matters were (a)
the award bad given no direction regarding the rendition of
accounts and profits with reference to a lease of the Glass
Works Ltd. which the award had declared invalid (b) the
award had failed to comply with the request, contained in
the arbitration agreement, that the arbitrator should give
directions as regards the future management of the Glass
Co., (c) there was an allegation in the arbitration
agreement as regards which evidence was led before the
arbitrator, in relation as to miappropriation of moneys by
6th respondent but the arbitrator had not specified in the
award whether this allegation had been made out or not and
no direction had been given in regard to the matter.
Held that a court should approach an award with a desire to
support it if that is reasonably possible, rather than to
destroy it by calling it illegal.
Salby v. Whitbread and Co.. [1917] I.K.B.736 referred to.
Unless the reference to arbitration specifically so requires
the arbitrator is not bound to deal, with each claim or
matter separately, but can deliver a consolidated award.
Re Brown and the Croydon Canal Co. (1839) 9 Ad & E11 522 :
112 E.R. 1309 and Jewell v. Christe (1867) L.R. C.P. 296,
referred to.
The silence of the arbitrator upon the subject placed before
him means that the arbitrator has negatived such plea.
Unless the contrary appears the court will presume that the
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award disposes of finally all the matters in difference.
Where an award is made de praemissis, the presumption is
that the arbitrator intended to dispose finally of all the
matters in difference and his award will be held final if by
any intendment it can be made so.
Harrison v. Creswick, (1853) 138 E. R. 1284 referred to.
Since the impugned award expressly states that it is made
--de praemissis", i.e.. of and concerning all matters in
dispute referred to the arbitrator, there is a presumption
that the award is complete. 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 the relief.
If the lease were set aside because of technical
informality. it would not necessarily follow that the relief
of accounting was implicit in the declaration of the
invalidity of the lease. Non constat, the amount due on
taking an account has not been taken into account adjusted
in making the other provisions of the award. Hence the
contention that the nature of the claims required a specific
adjudication is repelled.
The silence of the arbitrator on the question of the award
in the facts and circumstances of the case, on the question
of future management of the Glass Company and his failure to
make any specific provision in regard to the management did
not therefore leave any lacuna as regards the rights and
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.
The absence of any provision regarding the claims of the
appellants to relief from the respondents on the ground that
they misappropriated the money of the company is capable of
only one interpretation and that is that the arbitrator
rejected the claims.
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 197 of 1961.
Appeal by special leave from the judgments and decrees dated
January 29, 30, 1957 of the Calcutta High Court in Appeals
from Original Orders Nos. 122 and 156 of 1956 respectively.
413
G.S. Pathak, A.N. Sinha and P.K. Mukherjee, for the
appellants.
A.V Vismanatha Sastri, B. R.L. lyengar and S. N.
mukherjee for the respondents.
1963. April 26. The judgment of the Court was delivered by
AYYANGAR J.--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, 1955.
One 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
member dividing the balance of the II annas
414
(presumably because the 1st appellant’s 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 aribitration 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 I 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 Company’s 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
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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 the parties."
This was followed by a Schedule in which the joint
properties were specified and to this document all the
family members affixed their signatures.
415
Before, however, 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 heared 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 incomplete.
The 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 appli-
cation 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
416
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.
Before the High Court a very large number of objections
were taken to the validity or legality of the award and they
have been elaborately considered and dealt with by the judge
of first instance and by the appellate Bench. Most of
these, however, were not repeated before us and Mr. Pathak-
learned Counsel for the appellants intimated that he would
press only three of the grounds: (1) that all the disputes
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which had been referred to the arbitrator had not been
disposed of by the award, and that for this reason the award
was incomplete and had to be set aside. He submitted that
there was this incompleteness in respect of three matters :
(a) the award had given no direction regarding the rendition
of accounts and profits with reference to a lease of the
Glass Works Ltd., which the award had declared was invalid
and not binding on the Company in which all the shares were
owned by the parties, (b) the parties had specifically
required the arbitrator in their agreement of reference that
he should give directions as regards the future management
of the Glass Co.., but the award had failed to comply with
this request., (c) there was an allegation made in the
reference, and as regards which evidence was led before the
arbitrator, as to misappropriation of moneys by the 6th
respondent. The arbitrator had not specified in his award
as to whether this allegation of misappropriation had been
417
made out or not, nor had he given any direction in regard to
the matter. These related to the head of objections
touching the incompleteness of the award. (2) The second
ground urged was this : This award had directed that a piece
of land situated at Ketugram in the district of Burdwan be
allotted to the 7th respondent in trust for sale for meeting
the costs and charges of filing the award and other Court
proceedings in reference thereto and to distribute the
balance remaining after meeting the said costs and charges,
equally between himself and 6 other named. Learned Counsel
urged that it was beyond the power of the arbitrator to have
created this trust of the property in dispute. (3) The
values of the several items of property were specified in
the award and the division effected was on the basis of this
valuation. Learned Counsel urged that the arbitrator failed
in his duty in not valuing the properties himself but had
adopted the values suggested by one or other of the parties.
We shall now deal with these points. As however, we
consider that it is only the 1st of the above points about
the incompleteness of the award that merits any
consideration and that the other two have really no
substance and it would be convenient first to dispose of the
second and the third of the above points.
The trust created by the award to which point No. 2
relates is in the following terms. Clause 13 of the award
which the relevant clause runs :
"That the land at Ketugram, Katwa in the
District of Burdwan is allotted to Sri
Dhirendra Nath Sen, in trust for selling the
same to meet the costs and charges of filing
the award together with minutes of the
arbitration proceedings, depositions
and documents to be filed in court with the
award and to distribute the balance if
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any, left after meeting the said costs and
charges, equally amongst himself and the 6
other sons..."
and then the award proceeds to make provisions for the
contingency of the sale proceeds being insufficient. It was
submitted by learned Counsel that the arbitrator had no
jurisdiction to create a trust in respect of property which
he was called upon to divide between the parties. This
contention however proceeds on a misreading of what the
arbitrator had done, for he has done nothing of the sort
alleged. He has merely made provision for the payment of
the costs to be incurred in filing the award which
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obviously, if it were a valid award, would have to be borne
by all the parties whose property was being divided under
the award and he had made provision just for that purpose
and had directed a division of the surplus sale proceeds
among the parties entitled to the property. When this
aspect of the matter was pointed out to learned Counsel the
contention was not seriously maintained.
The third point about the arbitrator not having
determined the values of the property himself has even less
merit than the one we now disposed of The minutes of the
proceedings before the arbitrator were produced before the
court and those clearly showed that the estimated values of
the items, as set out in the award, were those to which the
parties themselves had agreed. The point, therefore, does
not call for any further consideration.
Coming next to the point regarding the in completeness
of the award, we shall deal first with the contention based
on the absence in the award of a direction to account for
profits with regard to a lease of the Glass factory which
was declared void. The relevant facts relating to this
objection are as follows. Under the arbitration agreement
the 1st
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head of the disputes referred was this "-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". This was amplified
in a statement filed before the arbitrator on February 12,
1955 by the 1st appellant.
"Para 12. Dhirendra Nath Sen, Phanindra Nath
Sen, Satyendra Nath Sen, Rabindra Nath Sen and
jitendra Nath Sen should render true accounts
of their dealings with the assets and/or
properties of the said Company (New Indian
Glass Works) and an award be passed for my
share of the amount found due on accounting.
13. The alleged leases in favour of Rabindra
Nath Sen and Phanindra Nath Sen were fraud-
ulently made in order to defraud me. I claim
for an adjudgment that the said leases are
void and I pray for accounts, against the said
alleged lessees and an award for my share of
the profits on accounting."
The arbitrator decided in paragraph 9 (c) of the award that
"the alleged lease of the factory to Rabindra Nath Sen to be
declared void and to be of no binding effect on the Company
or on the shareholders." The award contained, however, no
further direction ordering or refusing to order Rabindra
Nath Sen to account for the profits with regard to this
lease declared void. The point that is now urged is that
the award is incomplete, in that it has not followed up this
declaration or invalidity of the lease by making a
consequential order for accounting or by rejecting the claim
of the appellants to the accounting and for their share of
the amounts found due on the taking of such accounts. The
learned
420
Single judge on the original side as well as the appellate
Bench rejected this objection on the authority of an English
decision in Harrison v. Creswick (1), where Parke, B.,
delivering the judgment of the court, stated :
"The silence of the Arbitrator upon the
subject placed before him means that the
Arbitrator has negatived such plea."
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It was submitted by Mr. Pathak that this decision had been
misunderstood by the learned judges of the High Court, and
that, in fact, it was an authority in his favour. The
contention urged before the Court of common pleas as a
ground for setting aside the award was that the defendant
bad pleaded a cross-claim before the arbitrator and that The
award bad granted the- plaintiff a decree for a certain sum
without specifically allowing or negativing the defendant’s
cross claim. Dealing with this objection Parke, B. who
spoke for the Court, observed :
"The only question is whether the arbitrator
has not by his award impliedly, if not in
express terms, finally disposed of the matter.
The rule as laid down in the notes to Birks v.
Trippett is, that, where an award professes to
be made de praemissis ’Even where there is no
award of general releases, the silence of the
award as to some of the matters submitted and
brought before the arbitrator, does not per se
prevent it from being a sufficient exercise of
the authority vested in him by the submission.
An award is good, notwithstanding the arbit-
rator has not made a distinct adjudiction on
each or any of the several distinct matters
submitted to him, provided that it does not
appear that he has excluded any......... Where
an award is made de praemissis, the presump-
tion is, that the arbitrator intended to
dispose
(1) (1853) 118 E. R. 1254.
421
finally of all the matters in difference; and
his award will be held final, if by any
intendment it can be made so. The rule is
this where there is a further claim made by
the plaintiff, or a cross demand set up by the
defendant, and the award, professing to be
made of and concerning the matters referred,
is silent respecting such, further claim or
crossdemand, the award amounts to an
adjudiction that the plaintiff has DO such
further claim, or that the defendant’s cross
demand is untenable : but where the matter so
set up from its nature requires to be
specifically adjudicated upon, mere silence
will not do."
It is this last sentence on which Mr. Pathak relies in
support of the submission that in the case now before us
there was a need for the arbitrator to have rendered a
decision in express terms accepting or rejecting the claim
for the accounting and that a rejection of that claim could
not be inferred from the mere failure of the arbitrator to
deal with it. Learned Counsel pointed out that a case of a
cross demand or a cross claim with which Parke, B. was
dealing was quite different from an independent claim such
as that for accounting made by the appellants in the present
case, for where a sum is decreed to a plaintiff it
necessarily involves the acceptance or rejection of the
cross claim made by the defendant but the position is
different where the claim made stands on independent
footing.
Before dealing with this point it is necessary to
emphasize certain basic positions. The first of them is
that a Court should approach an award with a desire’ ’to
support it, if that is reasonably possible, rather than to
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destroy it by calling it illegal (See Salby v. Whitbread and
Co., (1). Besides it is obvious that unless the reference
to arbitration specifically so requires the arbitrator is
not bound to deal with each
(1) [1917] 1 K. B. 736, 748.
422
claim or matter separately, but can deliver a consolidated
award. The legal position is clear that unless so
specifically required an award need not formally express the
decision of the arbitrator on each matter of difference.
(Vide Re. Brown and The Croydon Canal Co. (1) and Jewell v.
Christie (). Further, as parke, B. himself put it during
the course of arguments in Harrison v. Creswick (3) :
"Unless the contrary appears the court will
presume that the award disposes finally of all
the matters in difference."
and to repeat a sentence from the extract quoted earlier :
"Where an award is made de praemissis, the
presumption is, that the arbitrator intended
to dispose finally of all the matters in
difference ; and his award will be held final,
if by any intendment it can be made so."
We shall approach the argument addressed to us in the light
of these considerations. Now the award opens with a
paragraph which recites, after setting out the reference :
"Whereas I have heard and duly considered all
the allegations advanced, evidence adduced
before me regarding the respective cases of
the parties............ I do hereby make and
publish this, my award in writing as to all
the disputes mentioned above."
It need hardly be added that the arbitration agreement and
the statements filed extracts from which we have set out
earlier were among the documents incorporated with this
award and included among the matters considered by the
arbitrator which
(1) (1839) 9 Ad. & Ell. 522-112 E. R. 1309.
(2) (1867], L.R. 2 C.P. 296
(3) [1853] 138 E.R. 1254.
423
disputes he intended to resolve by this award. The award,
therefore, on its face intended and purported s to decide
all the disputesr aised for this adjudication and therefore
the Court will assume that he has Di, considered and
disposed of every claim made or defence raised. Since the
award now impugned or expressly states that it is made "de
pruemissis," i.e., of and concerning all the matters in
dispute referred to the arbitrator, there is a presumption
that the award is complete. 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 that relief.
We shall 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
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necessarily follow that the relief of accounting was
implicit in the declaration of the invalidity of the lease,
(2) Non constat, 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, there fore,
has to be repelled.
The 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
424
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 pro-
priety 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 make 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 of affairs.
The last 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
425
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.
The appeal fails and is dismissed with costs.