G.N. Prasad, J.
1. This is an appeal by defendants Nos. 1 to 3, 5, 7, 8 and 16, and it arises out of a suit instituted by the plaintiff (respondent No. 1) for declaration of his title and confirmation or, in the alternative, recovery of possession over 13,42 acres of land Appertaining to Khatas 67 and 68 in village Khurmabad (Old Tauzi No. 6361 corresponding to new Tauzi No. 12173), and for a further declaration that an award of the arbitrators dated the 3rd September 1947 is void, inoperative, fraudulent and not binding upon the plaintiff.
2. It is common ground that in the survey record of rights (Exts G/1 and G-1/1), the suit lands stood recorded in the names of Jageshwar Mahto and Damri Mahto, sons of Jhakri Mahto. Defendants 1 to 8 are the sons of Jageshwar Mahto and defendant No. 16 is the sou of Damri Mahto. Defendants 4 to 10 are other members of the same family. There were several properties of the Tauzi. One of them was Chaudhary Keshari Sahai Singh who had -/6/5 pies proprietary interests. In 1918, Choudhary Keshari Sahai Singh instituted a batch of rent suits against several tenants. Rent Suit No. 464 of 1918 in respect of khata No. 67, and Rent Suit No. 474 of 1918 in respect of khata No. 68, were instituted against Subhag Koeri, another brother of defendants 1 to 3. Another suit of the same batch, namely, Kent suit No. 477 of 1918 was instituted against Dilbaso Kuer and Kawalbas Kuer, widows of one Baldeo Singh. All these rent suits were decreed, on admission of the defendants as to the incorrectness of the survey entries, against Dilbaso Kuer and Kawalbas Kuer only. The judgment of the rent suits, which was passed on the 32nd May 1919, is on the record as Ext. 18(a).
On the 5th December 1923, Dalbaso Kuer and Kawalbas Kuer, along with one Jagrup Singh, executed a sale deed (Ext.1) in respect of the lands of Katha Nos 67, and 68, besides other Khatas, in favour of Radha Mohan Singh, a brother of the plaintiff. Subsequently, in November 1940, by a partition between the two brothers, the lands of Khata Nos. 67, and 68 were allotted exclusively to the plaintiff. Meanwhile, the proprietary interest of Choudhary Keshari Sahai Singh was acquired by Choudhary Bhagwat Saran Singh, the father of the plaintiff, who thereupon became the sixteen annas proprietor of the Tauzi. In 1936, the plaintiff was mutated along with certain other persons in place of Choudhary Bhagwat Saran Singh in respect of the entire proprietary interest in the Tauzi. But in 1941, the plaintiff alone was mutated in respect of sixteen annas interest in the Tauzi.
3. The case of the plaintiff is that the suit lands are his bakasht over which he has all along been in possession since after the execution of the sale deed (Ext.1) in favour of his brother by Mossmat Dilbaso Kuer and Kawalbas Kuer. In the year 1947, there was an agrarian trouble in the village, and the heirs of the recorded tenants put forward a claim to the disputed lands. However, in order, to ease the situation, the plaintiff entered into an agreement with the defendants, who are the members of the family of the recorded tenants, to refer the dispute with respect to the suit lancis to the arbitration of certain persons. Accordingly, on the 8th July 1947, a registered deed of agreement (Ext.B/1) was executed by the plaintiff, on the one side, and Rambilas Matho (defendant No. 1) representing defendants Nos. 1 to 10 and 16, on the other, appointing five arbitrators, namely, Adit Pande (defendant No. 11), Badri Pande (defendant No. 12), Mahesh Pandey (defendant No. 13), Dadri Tewari (defendant No. 14), Mir Ismil Hussain (defendant No. 15) and one Subhekha Pande who is since dead and who was the brother of Mahesh Pande (defendant No. 13).
Subsequently, the plaintiff lost his confidence in the arbitrators and on the 1st September 1947, he posted a notice to the arbitrators, asking them not to give any award because they were in collusion with the defendants. The notice, which is on the record as Ext. 13, was received by the arbitrators on the 3rd September 1947. In spite of the notice however, the arbitrators surreptitiously gave their award (Ext. C/1) on the 3rd September 1947 and got the same registered on the 4th September 1947. On the 1st June 1948, therefore, the plaintiff instituted the present suit for the reliefs set forth above, besides certain other consequential reliefs.
4. The appellants were the main contesting defendants in the suit. Their case is that the plaintiff had neither title nor possession over the disputed land which was their ancestral land and over which they had all along been in cultivating possession. The survey entries were correct and the vendors had no title in the khatas in suit which could have passed to Radha Mohan Singh or to the plaintiff under the sale deed (Ext. 1). The case of the defendants further is that the award (Ext. C/1) is not open to challenge on any of the grounds put forward by the plaintiff, that it is binding upon the plaintiff as much as upon the defendants and that Section 32 of the Arbitration Act is a bar to the maintainability of the suit. The suit is also said to be barred by limitation.
5. The learned Additional Subordinate Judge came to the conclusion that the correctness of the survey entries in respect of the suit lands has not been rebutted: that defendants 1 to 10 and 16 held raiyati interest in the khatas in question; that Dilbaso Kuer and Kawalbas Kuer had no interest which they could convey to Radha Mohan Singh or to the plaintiff under the sale deed (Ext. 1); and that the suit lands are not the bakasht lands of the plaintiff. He further held that the ancestors of the defendants first party were and the defendants first party are all along in possession of the suit lands and that Radha Mohan Singh or the plaintiff was never in possession of the same. No title was acquired by the plaintiff even by adverse possession and that, in any view of the matter, the suit is barred under Article 142 of the Limitation Act, 1908.
The learned Judge further held that the award (Ext. G/1) is neither void nor liable to be set aside in the present suit and that it is binding upon the plaintiff since it is not vitiated on the ground of misconduct or on any other ground put forward by the plaintiff. The arbitrators had given notice of their award both to the plaintiff and to defendant No. 1 on the 5th September 1947 and, therefore, the remedy of the plaintiff was to have got the award filed in Court and then to file an application for setting it aside in accordance with the provisions of Sections 14(2) and 15 of the Arbitration Act, 1940, but since the plaintiff did not follow this course, Section 32 of the Act precluded the plaintiff from challenging the validity of the award or seeking any relief for setting it aside. Principally upon these findings, the learned Additional Subordinate Judge dismissed the plaintiff's suit.
6. On appeal to this Court, Rajkishore Prasad, J., reversed all the aforesaid findings of the learned Additional Subordinate Judge. The learned Single Judge has come to the conclusion that the survey entries have been proved to be incorrect in view of the judgment (Ex. 18/a) in the batch of rent suits, which was given subsequent to the final publication of the record of rights, and that Dilbaso Kuer and Kawalbaso Kuer had title in the suit lands which had been validly conveyed to Radha Mohan Singh and the plaintiff by the sale-deed (Ex. 1). In view of the Full Bench decision of this Court in Jaldhari Matho v. Rajendra Singh, 1958 BLJR 258: (AIR 1958 Pat 386) (FB), the learned Single Judge pointed out that the proper article of the Limitation Act which was applicable to the present suit was Article 144, and not Article 142. Accordingly, the onus lay upon the defendants to establish the tenancy rights which they were claiming in the disputed holdings. The learned Judge has then considered the entire oral and documentary evidence adduced in the case on the question of possession and summed up his conclusions in the following terms:
"For the reasons given above, I would hold, in disagreement with the Court below, that the suit lands are bakasht lands of the plaintiff, and, that they are not and were never even before, bakasht lands of the defendants first party, namely, defendants 1 to 10 and 16, and that the defendants first party have not proved their tenancy rights or possession over the lands in suit, and, therefore, they have not acquired any occupancy right in these lands, and, consequently, they have failed to prove even their possession, much less their adverse possession against the plaintiff so as to destroy his admitted title to the lands in suit."
6A. Adverting to the question as to the applicability of Section 32 of the Arbitration Act, the learned Single Judge has held that if the award was a bar to the suit, then it was also a bar to the defence put forward by the defendants. According to the learned Single Judge, however, the award was altogether void on the ground that it had not been made a rule of the Court as required by Section 17 of the Arbitration Act. The plaintiff's suit, therefore, cannot fail by reason of the provision of Section 32 of the Act. In this connection the learned Single Judge has pointed out that the plaintiff claimed two reliefs in the suit; one on the basis of his title and another in respect of the award. These are separate and distinct reliefs. Therefore, the learned Single Judge thought that there was no reason, in principle, why the suit should fail and the plaintiff should not be given a decree based on his title simply because the plaintiff had also claimed a second relief which was redundant. In the result, the learned Single Judge has set aside the judgment and decree of the trial Court and has decreed the plaintiff's suit.
7. In appeal under the Letters Patent, it is contended by Mr. Dasu Sinha appearing on behalf of the appellants that the judgment of the learned Single Judge is vitiated by erroneous view of the law of arbitration. According to the learned counsel, Section 32 of the Arbitration Act, 1940, is a complete bar to the maintainability of the suit and the learned Single Judge was in error in deciding the dispute between the parties on the footing that the plaintiff had claimed two distinct and separate reliefs; one in relation to the award (Ex. C/1) and the other on his original cause of action, because whatever rights in the suit properties the parties had, must be deemed to have merged in the award given by the arbitrators upon the reference made to them by the parties. It is submitted that the only course available to the plaintiff, if he wanted to get over the situation arising from the existence of the award, was to have it set aside by taking appropriate proceedings under the Arbitration Act, and having failed to avail himself of such remedy, it is not open to the plaintiff to fall back upon his original cause of action. It is the award alone which must govern the rights of the parties even though it has not been made a rule of the Court, The contention further is that the view of the learned Single Judge that Section 32 of the Act precludes the defendants from pleading the award, by way of defence in the action, is not sound. In support of his contentions, Mr. Dasu Sinha has relied upon a number of reported decisions which will be referred to in due course.
8. For a proper determination of the questions raised before us, it is necessary to examine the relevant provisions of the Arbitration Act, 1940. Sub-section (1) of Section 14 enjoins upon the arbitrators to sign the award and to give notice of the fact in writing to the parties. Sub-section (2) provides that at the request of any of the parties, the arbitrators or umpire shall cause the award or a signed copy thereof to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award. Sections 15 and 16 empower the Court to modify or correct the award or to remit it to the arbitrators for further consideration. Section 17 lays down that where the Court sees no cause to remit the award for reconsideration or to set it aside, it shall.
"after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce Judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it Is in excess of or not otherwise in accordance with, the award."
The provision for making an application to set aside an award is contained in Section 33, which says that any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or as award shall apply to the Court. By reason of Section 31, the Court where an award may be filed is the Court having jurisdiction in the matter to which the reference relates. The same Section further provides that:
"all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been or may be filed, and by no other Court."
Then comes Section 32 upon which strong reliance has been placed by Mr. Dasu Sinha. It reads:
"Notwithstanding any law for the time being in force, no suit shall He on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act."
9. At this stage it will be convenient to refer also to two articles of the Limitation Act, 1908. One is Article 178 which provides a limitation period of ninety days, from the date of service of the notice of the making of the award, for presenting an application to the Court for a direction to the arbitrators to file the award under Section 14(2) of the Arbitration Act, 1940. The other is Article 158 whereby a period of thirty days, computed from the date of service of the notice of filing of the award, is allowed for making an application to set aside the award or to get it remitted for reconsideration. The real question which falls for our consideration is what is the effect in law if an award has been made and signed by the arbitrators and the notice contemplated by Section 14(1) of the Arbitration Act is served upon the parties, but no step is taken by any of the parties to have it filed in Court and to have it set aside or to obtain judgment of the Court in terms of the award, in consequence of which no decree is passed following upon such judgment. Does the bar envisaged under Section 32 apply when an award, though registered, has not been made a rule of the Court as aforesaid ? A further question to be decided is, does the bar of Section 32 also apply to a defence based upon the existence, effect or validity of such an award.
10. It is pertinent to observe that before the 1st July 1940, when the present Arbitration Act came into force, the law governing "arbitration by agreement without the intervention of ft Court" was contained In the Indian Arbitration Act (Act IX of 1899). In that Act, there was no provision for passing a judgment or a decree on the basis of the award. The award, if validly made, was operative by itself. It could also be treated as an independent source of title and it could be enforced as if it were a decree of the Court. That is no longer the law, and an award made, after the Act of 1940 came into force, assumes validity and becomes effective or binding upon the rights of the parties when it has been made a rule of the Court. This follows clearly from the provisions of the Act referred to above, If an award would have been effective even without being made a rule of the Court, then it is difficult to appreciate why Section 17 of the present Act which occurs in the chapter relating to "arbitration without intervention of a Court" should have at all provide for the pronouncement of a judgment in terms of the award and for a decree to follow upon the judgment so pronounced. The necessity for making the award a rule of the Court cannot be an idle formality. It is obviously designed to clothe the award with the requisite sanctity. It is equally clear that an award which has not been subjected to the scrutiny of the Court cannot stand at par with an award which after the Court's scrutiny has become a rule of the Court. It seems to me, therefore, that the bar envisaged by Section 32 contemplates that the award has been duly made a rule of the Court under Section 17.
11. There is another aspect of the matter which is worthy of consideration. It has been seen above that the legislature in its wisdom has thought fit to impose a time limit for making an application for filing the award in Court. The question naturally arises, why should any such time limits have been provided if the award were to be effective without being filed or made a rule of the Court. It is well known that the scheme of the Limitation Act is to quiet titles or to extinguish claims which are not litigated within the prescribed period. Therefore, by fixing a time limit for an application for filing an award, and remembering that without the award being filed it cannot be made rule of the Court, the legislature undoubtedly intended that all rights or obligations created by the award must lapse, if no step is taken within the prescribed period to have it filed in Court and to have it incorporated in a decree of the Court.
I am, therefore, of the opinion that Section 32 contemplates an award that has been filed in Court under Section 14(2) and made a rule of the Court under Section 17, and that an award which has not gone through these processes is no better than a mere scrap of paper. Such an award cannot attract the provisions of Sections 32 and 33, Section 33 comes into play after an award has been filed in Court and notice of this fact has been given to the parties as contemplated by the second part of Section 14(2). The stage for making an application under Section 33 cannot arise unless the award has been filed in Court. It follows, therefore, that an award that has not been filed or made a rule of the Court is wholly ineffective and the parties are relegated to the position as if there was no arbitration and no award.
12. It is, true, as suggested by Mr. Dasu Sinha, that Section 32, in terms, does not prohibit an award, which has not been made a rule of the Court, from being set up by way of a defence in a suit relating to the same subject-matter. But Section 32 cannot be read in isolation. It must be construed in accordance with the entire scheme of the Act, which obviously is that all questions relating to the existence, effect and validity of an award must be determined in appropriate proceedings under the Act itself, and in no other manner. It is difficult to appreciate how an award that has not been filed in Court and made a rule of the Court can operate to the disadvantage of one party to the arbitration agreement, and not to the other.
In my opinion, it one of the parties cannot bring a suit for challenging the existence, effect or validity of an award, then another party who has taken no steps to have the award filed in Court cannot be in a better position and have it declared as valid by setting up such an award by way of defence in the suit. Thereby, the defendant, in substance, seeks a declaration that there is in existence a valid award whereby the rights of the parties have already been determined. But the scheme of the Arbitration Act, 1940, precludes the Court trying the suit from making any such declaration. Therefore, if a party desires to rest his case on award, then he can only do so successfully it he has taken steps to have it filed in Court and made a rule of the Court, But if he chooses to lie by, then he cannot, after the lapse of a considerable period of time plead the award in answer to a suit that may be brought against him.
13. It will presently be seen that the views which I hold are in accord with the consensus of judicial opinion prevailing in this Court, as also in some of the other High Courts.
In Sia Kishori Kuer v. Bhairvi Nandan Sinha, AIR 1953 Pat 42, a Bench of this Court had occasion to consider the effect of an award made on 23-5-1941 which had not been filed in Court and on the basis of which no judgment was pronounced by the Court under Section 17 of the Arbitration Act, 1940. In the suit which was one for partition, the stand taken by the. plaintiffs was that in accordance with the terms of the award, they had remitted a sum of Rs. 2,000 by money order to the defendants, but the money was refused by them and it was prayed that the plaintiffs might be allowed to deposit the aforesaid sum in Court in accordance with the terms of the award to the credit of the defendants and a decree for partition to the extent of the plaintiffs' half share in the property might be passed. The defendants while admitting the, reference to arbitration, disputed the validity of the award on certain grounds. They also took the defence that the property in question was not liable to partition since, it was the stridhan property of defendant No. 7, who was the appellant in the High Court. The trial Court rejected the defence and decreed the suit holding that although the plaint was mainly based on the award, the plaintiffs were not seeking relief on the basis of the award.
In appeal to this Court, it was contended on behalf of the defendants (i) that the suit was barred by reason of the award, and, (ii) that the suit was based on an award which had not been filed under Section 14(2) of the Arbitration Act and as such it was not maintainable by reason of Section 32. Both these contentions were rejected by the Division Bench. In dealing with the first contention, Reuben, C. J. (Sarjoo Prasad, J. concurring) pointed out that a vital change in the law of arbitration had been made by the Act of 1940. Under the law in force before this Act came, into force, a valid award was operative by itself and it could be enforced in two ways. It might be made a rule of the Court by an application under the Civil Procedure Code or under the Arbitration Act, 1899, as the case of the party might be or it might be treated as an independent source of title and enforced by suit. In either case, it was open to the opposite party to challenge its validity. But by the Act of 1940, the remedy by way of suit was taken away and it was provided that all forms of attack against the existence, effect or validity of the award must be made by application under the Act itself. Reuben, C. J. further pointed out that under the Act of 1940, the award only becomes operative when it is made a rule of the Court, and in support of his conclusion relied upon the following observations made by Ramaswami, J. (as he then was) in Ramchander v. Munshi ILR 28 Pat 569: (AIR 1950 Pat 48):
"Further, under the present Act no proceedings can be taken on the award till after it has been filed, and I fail to see how a party can possibly be prejudiced by the existence of an award which has not been filed in Court. Under the old Arbitration Act it was competent to a party who obtained an award without filing it to file a suit thereon. Further, the award became enforceable as a decree as soon as it was filed. But under the present Act all proceedings with regard to the arbitration agreement or the award have to be taken as provided by the Act and before the tribunal indicated by the Act. Section 32 specifically provides that no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award, be set aside, amended, modified or in any way affect otherwise than as provided in the said Act, and under Section 17 of the Act the Court has to pronounce judgment according to the award and a decree follows. It is only this decree that can be executed".
Then, upon an interpretation of the plaint, Reuben, C. J. held that the suit wan really based upon the plaintiffs' original title, and not on the award, and such a suit was not barred since the award had not been made a rule of the Court.
14. Another case in point is Lachhuman Singh v. Makar Singh, AIR 1954 Pat 27, which is also a Bench decision. In that case, a claim for partition was sought to he resisted on the basis of an award made by certain arbitrators sometime in June 1925. The trial Court negatived the defence and decreed the suit holding that the award was invalid and it was not acted upon. In the High Court, it was contended on behalf of the contesting defendant that the effect of the trial Court decree was virtually to set aside the award and that was contrary to the provisions of Section 32 of the Act of 1940. Das, J. who spoke for the Court recognised that such would undoubtedly be the effect of the decree, but rejected the contention that Section 32 operated to bar the suit.
His Lordship gave two reasons for upholding the decree of the trial Court; (i) that the Arbitration Act of 1940 has no retrospective effect and does not apply to an award made before its coming into force, and (ii) that if the plaintiffs could not bring a suit to set aside an award, the defendant also could not plead its existence by way of defence when he had taken no steps under the Arbitration Act to file the award. The decision in (AIR 1958 Pat 42) was cited with approval, and in regard to a contrary view expressed by the learned Judges of the Madras High Court in Suryanarayana Reddy v. Venkata Reddi, AIR 1948 Mad 436, Das, J. observed that the learned Judges had taken a narrow view to the effect that the inhibition in Section 32 was confined merely to a plaint by which ft decree upon the existence, effect or validity of an award was sought.
15. It may be mentioned that before the decisions of this Court in AIR 1958 Pat 42 and AIR 1684 Pat 27 were pronounced, a somewhat contrary view was prevailing in this Court. In Dewaram Tewari v. Harinarain Tewari, AIR 1948 Pat 820 the view taken by Manohar Lall and Mukherji, JJ. was that a private award relating to the right, title or interest in immovable property of the value of wore than Rs. 100 requires registration, and if it is not registered, it cannot be received in evidence of any transaction affecting such properly. It was further held that under Section 38 of the Act, an award could he questioned in Court without being filed under Section 14 of the Act. That a private award fell within the mischief of Clauses (b) and (c) of Section 17(1) of the Registration Act was also the view expressed by Reuben and Mukharji, JJ., in Jagadish Mahton v. Sundar Mahton, AIR 1949 Pat 393. Both these decisions were noticed by Reuben, C. J. in AIR 1953 Pat 42, and his Lordship doubted the correctness of the view taken therein. In 1958, however, the following questions were referred to a Full Bench for an authoritative pronouncement in Sheonarain Lal v. Prabhu Chand, AIR 1958 Pat 252:
1. Is an award on reference in arbitration without the intervention of a Court made subsequent to the coming into force of the Indian Arbitration Act, 1940, deciding questions of title to the immovable property worth one hundred rupees and upwards compulsorily registrable ?
2. Can such award, if not registered, be enforced so as to enable the Court to pronounce judgment according to it under Section 17 of the Indian Arbitration Act, 1940? and,
3. Can an objection to the award that, for want of registration or for any other reason, it could not be enforced filed after the expiry of the time for making an application to set it made, be entertained, and if not, is the Court bound in pronounce judgment according to it under Section 17 of the Indian Arbitration Act, 1940? The Full Bench answered the first question in the negative and the second question in the affirmative. AS to the third question, the opinion, of the Full Bench was that no objection can be entertained to the award for want of registration or for any other reason after the expiry of the time for making an application to have it set aside, and in such an event the Court is bound to pronounce judgment according to the award under Section 17 of the Arbitration Act, 1940. In answering the first question, C. P. Sinha, J. who spoke for the Court, upon a construction of Section 17 and other provisions of the Act, made the following observation:
"This shows in unmistakable terms that an award, though given without the intervention of the Court, has to be made it rule of the Court, and the Court will pronounce judgment on the basis of the award, and a decree shall follow, that is to say, the award by itself is of no effect.
Effect to the award is given only when a judgment has been pronounced on its basis followed by a decree."
His Lordship further observed:
"Under the present Act, as already pointed out, no other Court except the Court under the provisions of the Act can pronounce upon the award and if no proceeding is taken under the Act, the award is a mere waste paper..... .On a consideration of the different sections of the Act of 1940, as already indicated, I am of the opinion that the principle behind the present Act is that all awards made on reference to arbitration, whether with or without the intervention of the Court have been brought on the same level so that any uncertainty about the awards made on reference to arbitration without the intervention of the Court may not exist and that every award, to be effective and enforceable in law, must be made a rule of the Court under the Act."
It was argued before the Full Bench on the strength of Section 82 of the Act that though a suit might be held to be barred except in accordance with the provisions of the Act, a defence is not barred and, therefore, a person can refer to an award by way of defence, though by reason of Section 49 of the Registration Act, the award cannot be received in evidence for want of registration. The argument in substance was that if a Court of law has to consider the award, even though it be by way of defence, it cannot be said that an award without being made a rule of the Court under Section 17 of the Act cannot be said to be of no effect or value. The argument was rejected by the Full Bench with the following observation:
"In my judgment, there is no substance in this contention as well. If the only way to challenge the validity or otherwise of an award is by filing the award in Court under the Act and taking a decision upon it in terms of the award, then the matter cannot be agitated even by way of defence in a proceeding other than a proceeding envisaged by the Act itself".
And in this context, the following passage from the judgment of Das, J. in AIR J954 Pat 27 was quoted with approval:
"If the plaintiffs-respondents could not bring a suit to set aside an award, the appellant could not also plead the existence of an award by way of defence in a suit, when he had taken no steps under the Arbitration Act to file the award."
I may mention here that the decisions in AIR 1948 Pat 320 and AIR 1949 Pat 393 were cited before us by Mr. Dasu Sinha in support of his contention, but since they have been expressly overruled by the Full Bench in Sheonarain Lal's case AIR 1958 Pat; 252, it must be held that they do not lay down the law correctly.
16. Mr. Dasu Sinha, however, relied upon another Bench decision of this Court in Govt. of India v. Jamunadhar Rungta 1959 BLJR 527: (AIR 1960 Pat 19) in which Section C. Prasad, J. with whom Bai, J. agreed, formulated four propositions, out of which only the third and the fourth propositions are relevant. They are:
(3) The existence of an arbitration agreement or an award may be set up as a bar in defence to a suit based on the original cause of action arising out of rights and title which formed the subject-matter of such an agreement or award; and,
(4) Even if no such defence has been taken but at any stage of a suit before a Court of law, it comes to its notice that the subject-matter of the suit has been adjudicated upon by arbitration in pursuance of an agreement between the parties according to Jaw, and the parties haw accepted the award and have acted upon it or if the prescribed period of challenging the award has elapsed, it is the duty of such a Court to refuse to give any relief to the plaintiff or plaintiffs of such a suit.
It is true that different considerations might arise where an award, though not made a rule of the Court, has been accepted and acted upon by the parties. But where, as in the present case, there is nothing to show that the award has been acted upon by the parties, the proposition formulated by S. C. Prasad, J. cannot be accepted as laying down the law correctly. It is rather surprising that although S. C. Prasad, J. gave his decision almost one year after the decision of the Full Bench in AIR 1958 Pat 252, yet no reference was made by his Lordship to the aforesaid Full Bench decision. The attention of his Lordship was also not drawn to the earlier Bench decision in AIR 1934 Pat 27. It may be mentioned that the decision of S. C. Prasad, J. was cited before Ramaswami, C. J. and Kanhaiya Singh, J. in Mt. Habiba Khatoon v. Nawab Lal, 1961 BLJR 94: AIR 1961 Pat 372, but the view expressed by S. C. Prasad, J. was not accepted as authoritative by their Lordships:
"because it is contrary to the decision of the Full Bench of this Court in AIR 1958 Pat 252 and also to an earlier Division Bench of this Court in ILR 32 Pat 604: (AIR 1954 Pat 27)"
Their Lordships held:
"In our opinion the law is laid down correctly in the earlier Division Bench of this Court in AIR 1954 Pat 27 and also in the Full Bench decision of this Court in AIR 1958 Pat 252 which must take precedence over the decision of the later Division Bench decision in 1959 BLJR 827: (AIR 1960 Pat 19)."
And the legal position was reiterated that under the scheme of the Arbitration Act 1940, if the plaintiff cannot bring a suit to set aside an award, the defendant also cannot plead the existence of an award by way of defence in a suit, when he had taken no steps under the Arbitration Act to file the award.
17. These are all the decisions of this Court to which our attention has been drawn, and it will be observed that the opinion which has found acceptance in this Court is against the contentions put forward by Mr. Dasu Sinha before us.
18. In Pamandass Sugnaram v. Manikyam Pillai, AIR 1960 Andh Pra 59 (FB), the view taken by a Full Bench of the Andhra Pradesh High Court was similar to the view prevailing in this Court. In that case, A. Srinivasachari, J., who spoke for the Court, made the following observation:
"A party to an award cannot afford to be by and not take steps to get the award filed in Court and get it declared as valid and binding and after the lapse of a considerable period of time produce the award in answer to a suit that may be filed against him."
His Lordship further observed:
"For all the above reasons, our opinion is that it is not open to a defendant to set up an award as a bar to a suit filed on the original cause of action, where the award had not been filed and all proceedings relating thereto had not been gone through as required by the Arbitration Act."
18A. The view formerly prevailing in the Madras High Court was that the provisions of Section 32 of the Arbitration Act did not extend to a defence, as opposed to the filing of a suit, as a general proposition, and consequently, a defendant was not precluded from putting forward an award in answer to a claim by the plaintiff based on the original cause of action, although such an award had not been filed under the provisions of the Act and judgment obtained in terms of It. But that view characterised as narrow by Das, J. in AIR 1954 Pat 27, no longer holds the field in the Madras High Court, as will be apparent from the Full Bench decision of that Court in Mohamed Yusuf Levai Saheb v. Hajee Mohammad Hussain Rowther, AIR 1984 Mad 1 (FB), wherein the following observations were made.
"It will follow from the above that the principle on which an award was considered effective under the law as it stood prior to 1940, namely the merger of the original cause of action in the award which furnished a fresh cause of action to the parties, and also of itself operating as equivalent to a judgment has no longer any validity. It cannot also be said that the original cause of action is satisfied by the mere passing of the award, for without filing it and obtaining a judgment thereon the party cannot enforce it. Secondly an award by an arbitrator after the Act is but a stage in it scheme formulated therein for the adjudication of disputes by a private tribunal. The confirmation of the same by a judgment of Court is essential in order to render it an effective adjudication of the dispute. The mere fact that an unfiled award might have to be registered or stamped cannot be decisive of its effectiveness, as stamping and registration have to be done on account of statutory provisions and not because that It has any force by itself."
It was further held by the Full Bench that where an award made on reference out of Court has not been filed into Court in accordance with the provisions of the Arbitration Act, 1940, it cannot ordinarily be pleaded as a defence to a suit instituted by a party thereto on the basis of the original cause of action. Such an award, however, if performed by one of the parties, affords a good defence to an action on the original cause of action by the other party, for if in pursuance of the award a party has done everything that he was obliged to do under it, then he should he deemed to have fulfilled his part of the contract and there would thereby be accord and satisfaction in respect of the original cause of action. This latter contingency contemplated by the Madras Full Bench does not, however, arise in the instant case since it has not been suggested before us that the defendants have performed some act which they were required to do in terms of the award.
19. Mr. Dasu Sinha then drew our attention to two cases from Madhya Pradesh; one reported in Nathulal v. Beharilal, AIR 1952 Nag 65 and the other reported in Shyam Singh Jaswant Singh v. Pralhad Singh, AIR 1962 Madh Pra 66. In the latter decision the view taken by Reuben, C. J. in AIR 1953 Pat 42 was dissented from and following the decision in AIR 1952 Nag 65, It was held that where an award has come into existence, the suit on the original cause of action is barred, but the defence is not barred on the ground that the award has not been made a rule of the Court. It will be noticed, however, that in AIR 1952 Nag 65, there was no discussion as to the effects of Section 17 of the Arbitration Act. Besides, the view taken in that case was expressly dissented from by a Division Bench of the Bombay High Court in Chandra Bhaga v. Bhikachand, AIR 1959 Bom 549. In the Bombay case, the principle laid down by this Court in AIR 1953 Pat 42 was referred to with approval by Gokhale, J. In his separate but concurring Judgment, and it was held that the suit on the original cause of action is not barred if the award has not been made a rule of the Court. I am, therefore, unable to adopt the view of the Madhya Pradesh High Court in preference to the view consistently held in this Court.
20. Mr. Dasu Sinha has next relied upon Cutte v. Punnoo, AIR 1963 Madh Pra 96, which is a decision of a learned Single Judge of the Madhya Pradesh High Court. It was held therein that an award is binding between the parties in all matters which it professes to decide and the fact that the parties to the award had not carried out its terms is not sufficient to deprive the award of its effect. It was further held therein that the principle embodied in Section 32 of the Arbitration Act is that where parties to a dispute have pursued arbitration proceedings resulting in an award, none of them can after the award is made, get rid of it by ignoring it. It is significant to note, however, that the learned Judge of the Madhya Pradesh High Court gave his decision without making any reference to Sections 14 and 17 of the Act, and the question as to the effect of the award not having been made a rule of the Court was not decided in the Madhya Pradesh case. As I have already indicated, Section 32 must be read in the light of Sections 14 and 17 of the Act, and if that is done, then the conclusion must be that to invoke the bar imposed by Section 32, it is necessary that the award should have been filed in Court and judgment obtained on its basis. Only then it would not be open to either party to challenge the existence or validity of the award on any pound whatsoever. The decision of the learned Single Judge in AIR 1963 Madh Pra 96, is, therefore, of no avail to the appellants.
21. Mr. Dasu Sinha has also relied upon Lutufallah Khudabakhsh v. Muhammad Sidik, AIR 1946 Sind 117 for the proposition that an award operates to merge and extinguish all claims embraced in the award and after the award is made, the award is the only basis by which the rights of the parties can be determined and that the award bars an action on the original demand. In the Sind case, however, the award was made before the present Arbitration Act came into force and, therefore, the principles laid down therein are no longer applicable.
22. Mr. Dasu Sinha also relied upon Municipal Committee, Harda v. Harda Electric Supply Co. (Private) Ltd., Harda, AIR 1964 Madh Pra 101). That, however, was a case, in which the award given by the sole arbitrator had been filed in Court and a judgment was obtained in terms of it. It was in that context that Shiv Dayal, J. made the following observation:
"Once it is filed in Court, the award extinguishes all claims embraced in the subject-matter and is conclusive of the matters which it defines. When the award become final, it puts an end to all the controversies between the parties and the points which were taken, either in attack or in defence, cannot be re-agitated. A judgment under Section 17 of the Arbitration Act amounts to a judgment by consent and is intended to put a stop to litigation just as much as on decision of the Court after the matter has been fought to the end".
This decision is, therefore, really against the contention of the learned counsel for the appellants in the present case.
22A. Mr. Dasu Sinha next relied upon Jawahar Lal Barman v. Union of India, AIR 1962 SC 378, wherein the scope of Sections 31 to 33 of the Arbitration Act, 1940, came up for consideration. Their Lordships held that the main object of introducing the provisions of Sections 31, 32 and 33 of the Act was to entrust the decision of the relevant, disputes to the specified Court and to require the parties to bring the said disputes for the decision of the said Court in the form of petitions and that remedy by a regular suit is intended to be excluded. Therefore, if a party affirms the existence of an arbitration agreement or its validity, it is not open to the party to file a suit for the purpose of obtaining declaration about the existence of the said agreement or its validity. Such a suit in terms is barred by Section
32. In the Supreme Court case, however, no question was raised as to the effect in law of the non-compliance of the provisions of Sections 14 and 17 of the Act and, therefore, the question which we are considering was not gone into by their Lordships. Jawahar Lal Barman's case, AIR 1962 SC 378 is, therefore, not really in point.
23. Mr. Dasu Sinha has argued that there is no section in the Arbitration Act which says that an unfiled award is a nullity, and has relied upon an observation made to this effect by a learned Single Judge of the Calcutta High Court in Pushraj Puranmal v. Clive Mills Co. Ltd., AIR 1960 Cal 180. In that case, one Pushraj had entered into a contract to sell and deliver to the Clive Mills 500 bales of Jute cuttings on certain terms and conditions. The contract contained an arbitration clause whereby it was provided that all disputes, differences and claims arising between the parties would be referred to the arbitration of the Bengal Chamber of Commerce and Industry under the rules of its Tribunal of Arbitration and any award made by the said Tribunal shall be final, binding and conclusive on the parties. In accordance with this clause, there were three references to arbitration resulting in three awards of the Tribunal. By the first and the second awards, the Tribunal decided that the buyers would be entitled to make certain deductions in the stipulated price in respect of some of the bales supplied by the seller which contained dust and damaged fibre, but the buyers failed to get relief on the principle fixed by these two awards. By the third award, the Tribunal determined the actual amount payable to the buyers on account of the aforesaid defects in the supplies made by the seller and based its award on the principle determined by it by the two previous awards. The first two awards were not filed in Court, and when the third award was filed, the seller applied for setting it aside. One of the contentions put forward by the seller was that the Tribunal was not entitled to proceed upon the principle laid down in its earlier awards which were not filed in Court and no judgment was obtained on them.
Repelling this contention, P. B. Mukherji, J. held that it was competent to the Tribunal to proceed upon the earlier awards even though they had not been filed in Court because an unfiled award is not a nullity "for all purposes". His Lordship also pointed out that there was no necessity of filing the two previous awards because they were not executable as such being merely declaratory awards declaring fair tender and the rate of allowance without determining the amount payable. In my judgment this decision is no authority for the proposition that an award which has not been made a rule of the Court may be relied upon in a Court of law for determining the rights of the parties to a suit. If the Tribunal could rely upon them for the purpose of making their final award, it does not necessarily follow that a Court of law must regard them as finally determining the rights of the; parties. The two previous awards had really merged into the third award and it was in that context, that his Lordship said that an unfiled award is not a nullity for all purposes, which would mean that those documents were not non-existent merely because they were ineffective as awards under the Arbitration Act. This Calcutta decision is, therefore, of no assistance to the appellants before us.
24. The next contention of Mr. Dasu Sinha is that the Arbitration Act does not recognise any distinction between void and illegal or invalid awards and since it is a complete code on the law of arbitration, the only way in which a party to an arbitration agreement can get relief against the operation and effect of the award is to have it set aside by taking appropriate proceedings under the Act. In support of this contention, learned counsel has relied upon the Full Bench decision of the Calcutta High Court in Saha and Co. v. Ishar Singh Kripal Singh and Co. (S) AIR 1956 Cal 321. But a perusal of the Calcutta Full Bench decision will show that it only considers the scope of Sections 30 and 33 of the Arbitration Act from the procedural point of view. It does not deal with the effect of an award not having been made a rule of the Court upon the substantive rights of the parties; nor does it rule that the award is binding between the parties even though no judgment has been pronounced by the Court on its basis as contemplated by Section 17 of the Act. This decision does not, therefore, offer any solution to the questions which have arisen in the present case.
25. Mr. Dasu Sinha has also relied upon Seethamma v. Annapurnamma, AIR 1953 Mad 544, Narbadabai v. Natverlal Chunilal, AIR 1953 Bom 386 and Chaturbhuj Mohanlal v. Bhicam Chand Chororia and Sons, 53 Cal WN 410. The points decided in those cases were that no suit lies either to set aside an arbitration agreement or an award on the ground of fraud, or to enforce an award, because these are matters which could and should have been taken in proceedings under the Arbitration Act itself. But these decisions are not in point because the question as to the effect of non-filing of the award or the failure to make it a rule of the Court did not arise for consideration therein
26. Mr. Dasu. Sinha has next drawn out attention to Kurbauhussain Mahamdalli v. Husseinbhai Mithabhai, AIR 1948 Bom 101 (FB) which is a decision of the Full Bench of the Bombay High Court. The question referred to the Full Bench was whether an award which purports to create an interest in immoveable property is capable of creating such an interest if it has not been endorsed by a suit or followed by a decree under the summary procedure. The Full Bench answered this question in the affirmative observing that if the arbitrators had the necessary jurisdiction and the award is otherwise valid, then it has the same binding effect as a decree of the Court. It must be pointed out, however, that in that case the award was given in 1925, that is to say, long before the Arbitration Act of 1940 came into force. The Bombay Full Bench decision, therefore, is not an authority upon the present law of arbitration. It is, therefore, of no assistance to the appellants before us
27. Finally, we were referred to Kashinathsa Yamosa v. Narsingasa Bhaskarasa, AIR 1961 SC 1077, wherein the proposition laid down by their Lordships of the Supreme Court was that where an award made in arbitration out of Court is accepted by the parties and it is acted upon voluntarily, and a suit is thereafter sought to be filed by one of the parties, ignoring the acts done in pursuance of the acceptance of the award, Section 32 of the Arbitration Act, 1940 does not preclude the defendant from setting forth an award which had been fully performed by him but which was not filed in Court under Section 14 and on which a judgment was not pronounced or a decree given under Section 17 of the Act. Their Lordships pointed out that in such a case the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit, but the parties have by mutual agreement settled the dispute and that the agreement and the subsequent actings of the parties are binding. In such a case the defendant is not seeking to obtain a decision upon the existence, effect or validity of an award. He is merely seeking to set up a plea that the property was divided by consent of the parties. Such ft plea is not precluded by anything contained in the Arbitration Act.
The enunciation of the legal position contained in the Full Bench decision of this Court, referred to above and in other decisions, has, therefore, to be supplemented by this qualification alone. In other respects, even the Supreme Court decision is consonant indirectly with this view and reaffirmed the position. The decision is, however, distinguishable on facts because in the present case, as already pointed out, it has not been suggested that the award (Ex. C/1) was accepted by both the parties and acted upon voluntarily. Nor it has been shown that the appellants have in any manner altered their position by doing anything in terms of the award. An examination of the decisions cited by Mr. Dasu Sinha, therefore, shows that his contentions are not well founded and that no advantage can accrue to the appellants by reason of the award (Ex. C/1) which has not been filed in Court in accordance with Section 14 of the Arbitration Act, 3940, and which has not been made a rule of the Court under Section 17 of the Act. Such an award cannot he set up by way of defence in the present suit and it ran also not defeat the plaintiff's suit based on the original cause of action.
27A. Mr. Dasu Sinha. However, endeavoured to get over the difficulty facing his clients by urging that under the terms of the arbitration agreement (Ex. B/1), the parties had agreed that the award given by the arbitrators
''shall, by all means, be admitted and accepted by us. We shall not raise any kind of objection. If we do so, it will be null and void and illegal in face of this panchnama and will not be entertained in Court. The arbitrators' award shall, by all means, remain intact and in force."
The contention of Mr. Sinha is that in view of this term in the arbitration agreement, the award (Ex. C/1) given by the arbitrators in pursuance of it is binding upon the parties even though it has not been made a rule of the Court. In my judgment, this contention cannot be accepted as correct. An agreement of this kind cannot be held as valid to enable the parties to contract themselves out of the statutory requirements of Sections 14 and 17 of the Arbitration Act of 1940, which must govern every award upon arbitration without intervention of a Court. It the award without being filed in Court and made a rule of it is inoperative, the position is not in the slightest degree altered because these words arc incorporated in the agreement to refer the dispute to arbitration. To accede to such a contention would amount to defeating the mandatory provision and the clear policy of the law as laid down in the Act.
28. Mr. Dasu Sinha next contended that the law imposes a time limit of ninety days for making an application by the parties to the arbitration agreement for calling upon the arbitrators or the umpire to cause the award to be filed in Court. But the law imposes no time limit for the arbitrators or the umpire for filing the award in Court suo motu and, therefore, it is open to the arbitrators or the umpire to file the award whenever they choose to do so, even several years after it has been made. It is, therefore, contended that an award does not cease to have effect or validity even though the parties to the arbitrations agreement take no steps for filing the award and making it a rule of the Court, It is true that Article 178 of the Limitation Act, 1908 (and now Article 119 of the Limitation Act of 1963) does not, in terms, apply to the filing of the award by the arbitrators or the umpire on their own initiative But that does not mean that it is open to the arbitrators to wait for an indefinite length of time and then to file their award in court for the purpose of being made a rule of the court. It is manifest that the arbitrators have no personal interest in the dispute between the parties referred to them for arbitration and, therefore, they have no personal interest in filing the award in court. If the arbitrators file the award in court, they obviously do so at the instance of one of the parties or the other or both.
If, therefore, the arbitrators file the award in court long after the period of limitation prescribed by Article 178 of the Limitation Act, 1908, the implication obviously is that one or the other party has moved the arbitrators or the umpire for filing the award in court after the expiry of the period of limitation. It seems to me, therefore, that the act of filing the Award in court after the expiry of the period of limitation, though ostensibly the act of the Arbitrators or the umpire, is in reality the act of one, the other or both parties to the arbitration agreement or any person claiming under such party that is to say, that the award has been filed on behalf of the one or both the parties. Therefore, the award cannot remain effective or binding upon the parties if no steps are taken to file it in court within the time allowed for the purpose by the law and the rights of the parties cannot be affected by an award which has not been filed by the arbitrators in court for several years after it has been made and notice has been given by the arbitrators to the parties of making and signing thereof. If this view were not accepted, the arbitrators would be competent to file even after mi indefinitely long lapse of time since the pronouncement of the award
29. In the present appeal, an application purporting to be one under Section 34 of the Arbitration Act, 1940 for stay of the hearing of the Letters Patent Appeal has been filed on behalf of the appellants with the allegation that a certified copy of the award (Ext. C/1) was filed by one of the arbitrators in the court of the First Munsif at Sasaram on the 7th of February 1963 and this has given rise to Title Suit No. 34 of 1963 which is pending in that court The prayer made on behalf of the appellants, therefore, is that the hearing of the present appeal should be stayed until the disposal of the aforesaid title suit. This application must, however, fail on the simple ground that under Section 34, the right to apply for stay of legal proceedings must be exercised "at any time before, filing a written statement or taking any other steps in the proceeding". In the present case, the appellants, who were defendants in the trial court, not only filed their written statement and contested the suit but also resisted the First Appeal before the learned Single Judge. They have filed the present application nearly four years after the date of the decision of the learned Single Judge which has gone against them. It is too late in the day for them to ask for a stay of the hearing of the present appeal. I have, therefore, no hesitation in rejecting the application
30. Mr. Dasu Sinha, however, contends that this court must take notice of the fact that a copy of the award (Ext. C/1) has since been filed in court and that must have repercussions upon the rights of the parties in the present litigation. In my opinion, the belated action of one of the arbitrators in filing a copy of the award in court is not a bona fide act. It is obviously calculated to defeat the ends of justice by seeking to nullify the effect of the decree of the learned Single Judge. Even so, it has not been suggested that the award has yet been made a rule of the court. I am, therefore, of the opinion that the rights of the plaintiff, as determined by the learned Single Judge, are in no way affected by the fact that one of the arbitrators has since fifed a certified copy of the award in court. I am also not satisfied that this is in compliance with Sub-section (2) of Section 14 of the Arbitration Act, 1940, which contemplates the filing of the original award or a signed copy of it, and not the filing of a certified copy of the award. In any event, it would, in my opinion, be wrong to set aside the decree of the learned Single Judge and dismiss the plaintiff's suit in the light of the subsequent events relied upon by Mr. Dasu Sinha. The award (Ext. C/1) not having been filed and made a rule of the court, the suit of the plaintiff respondent on the original cause of action cannot in any manner be affected by it and it has rightly been decreed on merit.
31. For the reasons set forth above, I am satisfied that the decision of the learned Single Judge is correct and there is no merit is his appeal. The appeal is accordingly dismissed with costs payable to the plaintiff-respondent.
32. I agree.