Full Judgment Text
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PETITIONER:
RIKHABDAS
Vs.
RESPONDENT:
BALLABHDAS AND OTHERS
DATE OF JUDGMENT:
16/11/1961
BENCH:
SARKAR, A.K.
BENCH:
SARKAR, A.K.
GAJENDRAGADKAR, P.B.
WANCHOO, K.N.
CITATION:
1962 AIR 551 1962 SCR Supl. (1) 475
CITATOR INFO :
R 1987 SC 841 (10)
ACT:
Arbiration-Award-Arbitrator filing in court
unstamped award-Court’s power to remit-Arbitration
Act, 1910 (10 of 1940), ss. 13(d), 14(1), 15(b)
(c), 16(1)(c), 20-Code of Civil Procedure,
1908(Act 5 of 1908), s.151.
HEADNOTE:
An arbitration agreement was filed in court
under s. 20 of the Arbitration Act, 1940, and an
order of reference was made thereon. The
arbitrator entered upon the reference and in due
course filed his award in court. The award was
however, unstamped and on objection raised that no
judgment
476
could be passed on such an award, the trial court
passed an order remitting the award to the
arbitrator for re-submitting it to the court on
duly stamped paper. The High Court took the view
that want of stamp would be an illegality apparent
on the face of the award, which could therefore be
remitted under s. 16(1) (c) of the Act.
^
Held, that all unstamped award cannot be
remitted under s. 16(1) (c) of the Arbitration
Act, 1940, to the arbitrator to get it stamped,
because want of stamp is a defect dehors the award
or the decision of the arbitrator and does not
amount to an illegality apparent upon the face of
it within the meaning of that section.
Ramkumar v. Kushalchand, A.I.R. 1928 Nag. 166
and Lakshmichand v. Kalloolal, 1956 N.L.J. 504,
disapproved.
Nani Bala Saha v. Ram Gopal Saha, A.I.R. 1945
Cal. 19, approved.
Held, further, that after making an award the
arbitrator is functus officio, and s. 151 of the
Code of Civil Procedure cannot therefore give the
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court power to direct the arbitrator to make a
fresh award and re-submit it after writing it on
proper stamp paper.
Mordue v. Palmer, (1870) L.R. 6 Ch. App. 22,
relied on. Dubitante, it is doubtful if the fees
and charges mentioned in s. 14(1) of the
Arbitration act, 1940, include the stamp duty
payable on the award.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 144 of 1960.
Appeal by special leave from the judgment and
order dated July 26, 1957, of the Madhya Pradesh
High Court in Civil Revision No. 966 of 1955.
B. R. L. Iyengar and K. P. Bhatt, for the
appellant.
G. S. Pathak, S. N. Andley, Rameshwar Nath
and P. L. Vohra, for the respondents.
1961. November 16. The Judgment of the Court
was delivered by
SARKAR, J.-In this case an arbitration
agreement had been filed in court under s. 20 of
the Arbitration Act, 1940, and an order of
reference made thereon. The arbitrator in due
course entered
477
upon the reference and made and filed his award in
court on July 14, 1955. The award concerned
partition of certain properties between the wife
and children of one Bhairon Bux.
The award was however unstamped and
unregistered. An objection was taken to a judgment
being passed on such an award. On such objection,
the trial court passed an order remitting the
award to the arbitrator for re-submitting it to
the court on a duly stamped paper and after
getting it registered.
Against this order the High Court at Nagpur
was moved in revision. The learned Single Judge
hearing the revision application took the view
that the award required to be stamped. But he felt
that it could not be remitted to the arbitrator
under s. 16 of the Arbitration Act, which is the
only provision under which an award can be
remitted to an arbitrator. It appears that there
was an earlier judgment of the Nagpur High Court
in the case of Ramkumar v. Kushalchand (1) in
which it had been held that where the award was
unstamped it could under paragraph 14 of Schedule
I to the Code of Civil Procedure be remitted to
the arbitrator with a direction to re-write it on
a stamped paper and re-submit it to court. The
provisions of that paragraph of the Code have now
been substantially reproduced in s. 16 of the
Arbitration Act. The trial Judge had based himself
on this earlier judgment of the High Court. The
learned Single Judge was apparently not satisfied
with the correctness of the decision in Ramkumar’s
case (1) and he referred three questions for
decision by a larger bench of that High Court. The
questions referred were:
(a) Is the award made on a reference by
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the Court on an application under section
478
20 of the Arbitration Act chargeable to stamp
duty?
(b) Is such an award compulsorily
registerable when it relates to partition of
immovable property of the value of one
hundred rupees and upwards?
(c) Has the Court powers under section
16(1) (c) of the Arbitration Act of 1940 or
otherwise to remit an award to the arbitrator
or umpire to get it stamped and/or
registered?
The matter was thereupon heard by a Division
Bench of the High Court constituted by two learned
Judges. Before them it was agreed by both the
parties that the award required to be stamped.
This disposed of the first question. The learned
Judges felt that it was not necessary at that
stage of the proceeding to answer the second
question, namely, whether the award required
registration. In the result they only answered the
third question as to whether an award could be
remitted under s. 16 (1) (c) of the Arbitration
Act to the arbitrator to get it stamped and they
answered that question in the affirmative. They
held that a want of stamp would be an illegality
apparent on the face of the award and therefore
the case would fall under s. 16(1)(c) of the
Arbitration Act. They also held, following the
case of Lakhmichand v. Kalloolal (1), that the
copying of the award on a stamped paper was purely
ministerial, and making of an award did not
deprive the arbitrator of the authority to copy an
award on the requisite stamp paper. They approved
of the decision in Ramkumar v. Kushalchand (1).
The present appeal is against this judgment of the
Division Bench. The only question argued at the
bar was whether the answer of the Division Bench
to the third question was correct.
479
Now s. 16(1)(c) of the Act is in these
terms:
S. 16 (1): The Court may from time to
time remit the award or any matter referred
to arbitration to the arbitrators or umpire
for reconsideration upon such terms as it
thinks fit-
...................................
(c) where an objection to the legality
of the award is apparent upon the face of it.
We think that the Division Bench of the High
Court was clearly in error. Under s. 16 of the
Arbitration Act an award can be remitted to the
arbitrators only for reconsideration. When it is
remitted for re-writing it on a stamped paper, it
is not remitted for reconsideration.
Reconsideration by the arbitrators necessarily
imports fresh consideration of matters already
considered by them. Now they can only consider and
give a decision upon matters which are referred to
them under the arbitration agreement. It follows
that the reconsideration can only be as to the
merits of the award. They reconsider nothing when
they re-write the award on a stamped paper. We
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think the matter was correctly put by Mitter, J.,
in Nani Bala Saha v. Ram Gopal Saha (1) in the
following observation:
"That cl. (c) means this and nothing
more: namely, that where the court finds an
error of law in the award itself or in some
document actually incorporated thereto on
which the arbitrator had based his award,
that is to say, finds the statement of some
erroneous legal proposition which is the
basis of the award, it can remit the award to
the arbitrator for reconsideration" and "Want
of registration is a defect dehors the award
or the decision of
480
the arbitrator, and so in our judgment is not
covered by cl. (c) of S. 16 (1), Arbitration
Act of 1940".
What was said there about a want of registration
is clearly equally applicable to a want of stamp.
Mr. Pathak appearing for the respondent
contended that under s. 14 (1) of the Arbitration
Act it was clearly the duty of the arbitrator to
inform the parties of the amount of stamp duty
payable on the award. Section 14 (1) is in these
terms:
Section 14 (1) When the arbitrators or
umpire have made their award, they shall sign
it and shall give notice in writing to the
parties of the making and signing thereof and
of the amount of fees and charges payable in
respect of the arbitration and award.
We are unable to see how this section can provide
the basis for the order made in this case. It only
says that the arbitrators shall inform the parties
of the fees and charges payable. Even assuming
that the word ’charges’ includes duty payable for
the stamp to be affixed to the award, at best,
this section would support an order directing the
arbitrators to supply this information. It would
not justify an order requiring the arbitrators to
inscribe the award afresh on a stamped paper and
re-submit it to court. As at present advised, we
have grave doubts if the fees and charges
mentioned in s. 14 (1) include the stamp duty
payable on the award. Section 17 of the Stamp Act
requires that stamping should be at the time of
execution. Under s. 14 (1) of the Arbitration Act
it is only after the singing of the award that is
its execution, that the arbitrators are required
to supply the information about the fees and
charges. It is, of course, no part of the duty of
the arbitrators under the Act or otherwise to find
the costs of stamp themselves. Therefore
481
it is difficult to appreciate how the word
‘charges’ mentioned in this section includes
stamp. But on this question it is not necessary
for us to express any final opinion in this case.
Mr. Pathak contened that even if the case did
not come within s. 16 (1) (c) of the Arbitration
Act, the order in the present case can be
supported under s. 151 of the Code of Civil
Procedure which preserves the inherent power of a
court to make such orders as may be necessary for
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the ends of justice. It is true that s. 41 of the
Arbitration Act makes the provisions of the code
of Civil Procedure applicable to proceedings
before a court under the Arbitration Act. But it
is well known that after making his award the
arbitrator is functus officio. To cite one
authority for this proposition we may quote the
observations of Mellish, L. J., in Mordue v.
Palmer(1).
"I think the result of the cases at law
is that when an arbitrator has signed a
document as and for his award, he is functus
officio, and he cannot of his own authority
remedy any mistake."
In the present case, ex-hypothesi, the award has
already been made and the arbitrator has therefore
become functus officio. It is that award which
requires stamp. Section 151 of the Code cannot
give the court power to direct the arbitrator to
make a fresh award; that would be against well-
established principles of the law of arbitration.
It would again be useless to have another copy of
the award prepared and stamped for the copy would
not be the award and no action in a court can be
taken on it. The order cannot therefore be
supported by s. 151 of the Code. It is of some
interest to read here the following passage from
Russel on Arbitration 14th Ed., p. 325.
482
"The usual practice in preparing an
award is to have two copies made of it. One
the arbitrator signs, which then becomes then
the original award, and this is delivered to
the party who takes up the award. The other
copy is available for the other parties if
they apply for it."
"The original award, before it is
available for any purpose whatsoever, must be
duly stamped, but there is no obligation upon
the arbitrator to stamp it, and he does not
usually do so."
We should observe here that the last paragraph in
the aforesaid quotation does not appear in the
16th edition of Russel’s work. Perhaps this is
because in England an award is no more required to
be stamped by virtue of s. 35 Sched. 8, of the
Finance Act, 1949, which was passed after the 14th
edition was published.
Lastly, Mr. Pathak tried to support the order
under ss. 13 (d) and 15 (b) and (c) of the
Arbitration Act. A bare perusal of the provisions
mentioned would show that the order made in this
case cannot be based on any of them. Section 13
(d) deals with correction of clerical mistakes or
accidental slips in the award, neither of which we
think an omission to stamp is. Further more, s. 13
is only an enabling section giving certain powers
to the arbitrator. The arbitrator cannot be
compelled to exercise these powers. Section 15
deals with a court’s power to modify or correct an
award. In the present case, the Court did not
purport to exercise that power.
We, therefore, think that the Division Bench
was in error in thinking that an order could be
made remitting the award to the arbitrator with a
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direction to re-write it on a stamped paper and
resubmit it to court. That is the only point that
we decide in this case.
483
In the result this appeal is allowed. The
orders of the Courts below remitting the award are
set aside. The appellant will get the cost
throughout. Nothing that we have said in this
judgment will affect the right of the parties to
take such steps, if any are available to them at
law, for curing the defect arising from the award
being on an unstamped paper.
Appeal allowed.